(EnergyAsia, November 19 2016, Saturday) — Australia expects its earnings from liquefied natural gas (LNG) exports to surge by 41.1% to A$23.4 billion in the current fiscal year to June 30 2017, thanks to a combination of expanded plant capacity and higher prices.
According to the Department of Industry and Science, Australia’s domestic LNG production will rise by 39.6% from 37 million tonnes in the last fiscal year to 51 million tonnes in FY2016. The additional production at the Gorgon project off Western Australia and new capacity starting up on the east coast will boost the country’s LNG export earnings from A$16.6 billion in FY2015, (US$1=A$1.35).
Australia’s LNG exports FY2015 FY2016* %
Volume, in million tonnes 37 51 39.6
Value in A$ million $16,557 23,357 41.1
Source: Department of Industry and Science
“LNG contract prices, under which most Australian LNG is sold, are forecast to increase in line with oil prices. Higher export volumes will be driven by the addition of around 15 million tonnes of LNG export capacity, bringing total operational capacity to around 66 million tonnes by mid-2017,” said the Department.
The outlook for Australia’s LNG industry has been lifted significantly by the recovery in the fuel’s global trade after recent years of flat-to-negative growth.
The industry department said it expects the global LNG trade to increase by seven percent in 2016 and by another 10% in 2017 to reach 285 million tonnes.
“Growth will be driven by demand in emerging Asia and Europe and supported by a major expansion of LNG export infrastructure in Australia and the US,” it said.
Coal seam to continue driving gas production
Australia’s gas production is seen growing by more than 26% from nearly 61 million tonnes in FY2015 to 77 million tonnes in FY2016. Most of the new supplies, derived from the country’s rich coal seam (also known as coalbed methane) reserves are processed into LNG for export.
Graeme Bethune, CEO of consulting firm EnergyQuest, attributed Australia’s LNG surge to several major projects producing above nameplate capacity.
For October, he counted 65 export cargoes weighing a combined 4.3 million tonnes, compared with 61 cargoes in September, weighing four million tonnes.
“There was a particularly strong performance by LNG projects on the west coast,” Bethune said.
“Western Australian projects in October shipped 2.4 million tonnes (36 cargoes), up from 2.2 mt (33 cargoes) in September. Woodside’s Pluto project shipped seven cargoes in October, up from five cargoes in September.”
Chevron ramped up its Gorgon project to sell an additional cargo in October while rival ConocoPhillips added two cargoes to make it five.
Offsetting these gains, Bethune said the two plants in Gladstone on Queensland’s east coast exported 24 cargoes in October, down from 25 in September. One of the plants, operated by upstream firm Santos, made a breakthrough sale by exporting Australia’s first LNG cargo to Mexico.