In addition to comprehensive LNG statistics, our December 2022 Australian LNG Monthly report carried two important stories:
$78/GJ gas price cap in Europe, $12/GJ in Australia.
Coincidentally both the EU and Australia announced gas price caps in the week before Christmas. However, the timing is where the similarity ends. The EU cap will begin from 15 February 2023 if the Dutch TTF month ahead price exceeds 180 euros/MWh, (US$56/MMBtu, A$76/GJ) for three days and if it is 35 euros higher than a reference price for LNG on global markets for the same period. Once triggered the mechanism will remain active for at least 20 days. While the EU cap would have been triggered from early August to mid-September, the TTF is currently well below the trigger level. The TTF benchmark was US$20.62/MMBtu (A$27.80/GJ) on 16 January. Also on 22 December, in Canberra, the federal government signed an instrument to bring the Australian A$12/GJ gas price cap into effect from the following day. Clearly the federal government and the ACCC must believe that Australian industry is unable to compete against these high European energy prices.
International spot gas prices falling
Other big news is the extent to which spot gas prices are falling internationally and on the east coast. European spot prices are now down 80% from their 2022 highs due to warmer-than-expected weather, demand destruction and LNG imports. High European gas prices pulled up Asian spot prices in 2022. However, falling European prices now together with warm weather and demand destruction in Asia (exacerbated by the Chinese lockdown) are now pulling down the JKM to US$18.78/MMBtu on 16 January. East coast spot prices are down too. In December east coast spot prices were down by 15.0-28.1% compared with November. The JKM was down by 19.3% and there are likely to have been local factors at work too. Gas-use for power generation was 26% lower, with higher coal and renewables. East coast LNG exports were only slightly lower than in November and December was a warmer month than November.
Information about the EnergyQuest Australian LNG Monthly is available by clicking here.