Australian LNG Monthly Report – May 2023

Winter is coming
The cold weather approaches, and with it the second decision from Minister King on whether to activate the Australian Domestic Gas Security Mechanism (ADGSM) due at the end of June. 

The ACCC’s March 2023 interim gas inquiry report indicated a shortfall of 11 PJ in the third quarter of 2023 and a surplus of 18 PJ in the fourth quarter. This isn’t a large deficit overall and shouldn’t present a problem, but the issues in winter 2022 stemmed from greatly increased peak demand rather than overall demand/supply balance. 

The long-range forecast for the east coast energy market isn’t good. Demand isn’t decreasing, no new projects have been sanctioned in six months, and supply is forecast to decline in coming years. 

On the brighter side, the weather outlook has improved. The Bureau of Meteorology’s outlook has recently shifted to an El Nino alert, which brings dry and warm conditions for most of Australia this winter – a positive for a stressed east coast energy market.

Downward pressure on LNG prices in the short term
Mild weather in the northern hemisphere and burgeoning gas storage inventories are putting downward pressure on European Union (EU) and Asian spot prices.

Overall, Japan’s LNG imports in May 2023 were the lowest in over 20 years and about 30% lower than May 2022. Japan has so much LNG stored that its importers were offering shipments for sale in May. 

Some of the statistical highlights in this report are:

  • Australian LNG projects shipped 6.822 Mt in May (99 cargoes), up on 6.7 Mt (97 cargoes) in April. 
  • Australian LNG export revenue in May was $6.3 billion, higher than the $6.0 billion in April, and down by 3% on May 2022. 
  • Queensland exported gas to the other states in May, with daily net flows to southern states throughout the month. 
  • Queensland had the lowest average spot gas prices in May at $17.06/GJ, with southern states at $18.20 – $19.57/GJ: all well above the $12/GJ price cap, even allowing for transport costs.

Information about the EnergyQuest Australian LNG Monthly is available by clicking here.