EnergyQuarterly June 2020

The June 2020 EnergyQuarterly report has just been released, with comprehensive Australian oil and gas data for the March Quarter plus analysis of the latest developments. 

In the Observations Section we have  a number of articles commenting on topical issues:  

  • COVID-19 up-ends business-as-usual
  • East coast gas outlook: all agreed?
  • How much gas does the east coast have?
  • West-East gas pipeline proposals are back
  • What is the state of manufacturing?
  • LNG prices plummet
  • Reliance on the Chinese market
  • Improving Australia’s liquid fuel security

Some of the highlights are:· 

  • Globally LNG is being hit by the proverbial perfect storm: LNG oversupply, which was underway before the pandemic, reduced energy demand due to the pandemic, resulting lower oil and gas prices and rising geopolitical tensions between China, the US, Australia and other countries.
  • Australian LNG exports are holding at near-record levels, despite the global surplus of LNG and the contraction of economic activity due to COVID-19.
  • Queensland’s LNG projects maintained gas production and LNG exports at a high level in Q1 2020.
  • The resilience of Australian LNG exports is underpinned by continued growth in demand in North Asia.   
  • Unlike the situation in the US, it seems unlikely that there will be trains shut-in or major output cuts from Australian projects due to lower oil and LNG prices.
  • We expect total LNG export revenue for 2019-20 to be around $50 billion, similar to the previous financial year.
  • East coast gas supply (production plus NT imports) increased marginally by 4.0 PJ qoq from 458.2 PJ to 462.2 PJ, despite a decrease in conventional production by 9.7 PJ to 83.1 PJ, the lowest since the Longford explosion in 1998.
  • Despite the shortfall, the simple average of short-term east coast gas prices in Q1 was $5.72/GJ (US$3.99/MMBtu), down by 42.3% from an average $9.91/GJ in Q1 2019 and down by 23.6% from the Q4 2019 average of $7.49/GJ.
  • The price of domestic gas sold by APLNG in Q1 was $4.63/GJ, down 3.5%.
  • Lower east coast gas prices reflect significant falls in international prices with the Brent oil price down 20.3% qoq and the three-month lagged Japan Customs Cleared (JCC) crude oil price (to which LNG contracts are typically indexed.
  • WA gas prices remain low. Woodside’s average realised domestic gas price in Q1 was $3.52/GJ (4.1% lower qoq).

Further infomation, including the brochure with full table of contents, can be obtained by clicking here.