The value of gas exports will surge by nearly 60% in the next two years, from $22.3bn to $35.4bn, as Australia becomes the world’s biggest exporter of LNG. Last week gas exporters agreed to guarantee supply for Australia’s eastern gas market to prevent a looming shortfall next year. Figures published in Resources and Energy Quarterly on Friday show the surge in gas production will predominantly come from Australia’s western and northern gas markets, when three large LNG projects under construction (Wheatstone, Icthys, and Prelude) come online.
Turnbull renews pressure on NSW premier to approve Narrabri gas project but there could be strong growth in exports from the eastern gas market, depending on the deal struck with Malcolm Turnbull last week. “That might be price growth or volume growth, or it might be both,” the head of the Australian Petroleum Production & Exploration Association, Malcolm Roberts, told Guardian Australia. “It will depend to some extent on local demand, because local customers will be getting first dibs on uncontracted gas [next year].”
In a move hailed as a win by the government last week, Santos, Origin Energy and Shell agreed to quarantine additional supply for the eastern gas market. “They have given us a guarantee that they will offer to the domestic market the gas that was identified as the expected demand shortfall by [the Australian Energy Market Operator] in 2018,” Turnbull said after his meeting with gas bosses last week. “They stated that they will provide a similar guarantee over two years, that’s their intention … they’ve stated that they will offer first, as a first priority, domestic customers any un-contracted gas in the future as a priority.”
Roberts said on Thursday there would still be “considerable growth” in gas exports over the next two years, even though Queensland plants were not operating at capacity. It’s our choice: renewable energy superpower or Asian Pacific rust belt Pat Conroy, he said some plants were not operating at capacity because there was oversupply in the market, and some projects had not sold some spot cargoes since April. “They’ve basically all put more gas back into the domestic market [in recent months], so they’re producing to contracted supply and spare gas is being offered to the domestic market … so there’s a bit of a switch happening.”
The Resources and Energy Quarterly, released on Friday, shows LNG is set to overtake metallurgical coal as Australia’s second largest resource and energy export in 2018-19, helping Australia to overtake Qatar as the world’s biggest exporter of LNG. Qatar exports 74m tonnes of LNG a year, a figure forecast to remain broadly stable over the next two years, according to the report.
Australia’s LNG export volumes are forecast to match 74m tonnes by 2018-19, up from 52.2m tonnes this year, with capacity growing to 88m tonnes when Wheatstone, Icthys and Prelude are completed. However, Qatar’s decision in April to lift its moratorium on new gas development at its huge North gas field may lead to a large expansion in its production. The forecast for Australia’s overall resources and energy export earnings in 2017–18 has been revised up in the September quarter by $4.1bn (2%) to a record $211bn.