According to the latest Resources and Energy Quarterly report by the Department of Industry, Science, Energy and Resources (DISER), Australia’s resource and energy exports are forecast to hit a record $296 billion in 2020–21, which is a strong result considering the COVID-19 pandemic.
The improved outlook reflects the ongoing rollout of vaccines, and the momentum this is providing for economic activity and trade amongst many of Australia’s major trading partners.
Ongoing success in managing COVID-19 and reduced supply disruptions are expected to restore global demand for resources and energy commodities over the five years.
As prices moderate, Australia’s resource and energy exports are forecast to ease slightly to $288 billion in 2021–22, and remain stable over the outlook period to 2025–26.
The report outlines that the Asian liquified natural gas (LNG) spot price is forecast to average US$6.90/mmBtu in the June quarter 2021, as heating demand eases.
Over the rest of 2021, prices are expected to stabilise at relatively low levels, as supply disruptions facing major exporters recede.
Spot prices are expected to increase gradually between 2022 and 2026, as global consumption growth resumes following the largest impacts of the COVID-19 pandemic.
Australia’s LNG export volumes are forecast to fall to 78 million tonnes in 2020-21 due to technical issues at the Prelude and Gorgon LNG plants. Exports are then forecast to recover to 81 million tonnes in 2021–22, and remain around these levels out to 2025–26.
Moreover, Australia’s LNG export earnings (in real terms) are anticipated to increase from $33 billion in 2020–21 to $45 billion in 2025–26, as prices recover.
Oil prices throughout 2021 are forecast to remain around US$60 a barrel, as production increases and containment measures are relaxed. Brent prices are estimated to average US$58 a barrel in the March quarter 2021.
Prices are estimated to increase further to US$62 a barrel in the June quarter 2021, reflecting lower stock levels and assumed supply restraint from major producers. However, DISER notes that prices are forecast to decline marginally over the rest of 2021, as production increases.
Brent prices are expected to average US$61 a barrel in the September quarter 2021 and US$60 a barrel in the December quarter 2021.
In 2021, Australian crude and condensate output is forecast to decline marginally to 370,000 barrels a day, as condensate output was affected by the temporary shutting of the Prelude FLNG project. Prelude was offline between February 2020 and January 2021, affecting Australian crude and condensate production for most of 2020–21. Gorgon is also experiencing ongoing technical issues, affecting Australia’s condensate production.
Later in the projection period, DISER notes that the deferral of final investment decisions (FID) for several gas projects may affect future condensate and LPG production, with the production of both commodities typically associated with gas production.
The latest Resources and Energy Quarterly is available on DISER’s website.