Australian government’s Department od Industry and Science released its Resources and Energy Quarterly report showing that Australian liquefaction capacity will support the global LNG market growth over the next year.
The report anticipates that Australia’s gas production and exports will also grow, but sustained contract and spot price weakness will temper increasing export values.
March quarter LNG prices into Northeast Asia began to respond to the fall in oil prices that occurred in the second half of 2014. The landed price in Japan has declined in each consecutive month since October last year, averaging $US14.20 a gigajoule in the March quarter, down from US$16.60 in December. Prices in South Korea and China were also down.
Oil prices are forecast to remain relatively flat which will result in slight falls to contracted LNG prices in the June quarter before levelling out through the remainder of 2015 and into 2016. Spot prices are expected to remain weak as extensive new regional supply continues to come online, the reports shows.
Australian gas production rose slightly in the March quarter to 16.0 billion cubic metres as increased CSG production associated with Queensland LNG projects offset flat conventional gas production. Australia is estimated to have produced 65.7 billion cubic metres of gas in 2014–15 (equivalent to 48 million tonnes of LNG), a 4.4 per cent increase on 2013–14.
In 2015–16, new LNG plants will remain the predominant source of gas production growth in Australia, driving a 30 per cent rise in output to 85.1 billion cubic metres (62 million tonnes). GLNG, currently around 95 percent complete, is expected to achieve first LNG in coming months and will be followed later in 2015 by APLNG, now 91 percent complete, and Gorgon LNG, around 90 per cent complete. These three projects will ramp up production and bring trains online throughout 2015–16, resulting in strong quarter to quarter growth over the outlook period according to the report.
Quarterly LNG exports reached an all-time high of 6.6 million tonnes in March due to higher loadings from the North West Shelf and Pluto projects and the start up of QCLNG. Australian LNG exports are estimated to have reached 25.5 million tonnes in 2014–15 and are forecast to continue growing to 38.1 million tonnes in 2015–16. The start-up of APLNG, GLNG and Gorgon, along with ramp up at QCLNG, are underpinning that 49 percent growth.
Australia exported $4.6 billion worth of LNG in the March quarter, slightly below the December quarter as lower oil prices offset higher volumes. Exports are estimated to reach $18.0 billion in 2014–15 and $24.4 billion in 2015–16 due to strong volume growth and modest currency depreciation effects.
LNG World News Staff; Image: BG Group