EnergyQuarterly September 2021. Mega-deals allow Woodside and Santos to buy time

The September 2021 EnergyQuarterly report has just been released, with comprehensive Australian energy data for the June Quarter 2021 and the 2021 Financial Year plus analysis of the latest developments. 

The cover story is the proposed Woodside-BHP Petroleum and Santos-Oil Search deals. The report analyses the  drivers for both Woodside and Santos and BHP’s rationale in disposing of a business which they have had since the 1960s and which pioneered oil and gas exploration in Australia.

Following on from our analysis of the IEA Net Zero report last quarter there is more on net zero in this report. We review the recent IPCC report and its implications for Australia’s climate and environment.  We also consider Japan’s new Energy Plan aimed at achieving net zero, New Zealand’s journey to net zero and Victoria’s gas substitution plan aimed at moving Victoria to net zero. The good news is that Tasmania is already there.

Global gas prices have rebounded from the COVID-19 affected lows of 2020, reaching extraordinary levels. As of 2 September, the Platts JKM Asian LNG spot price is US$19.66/MMBtu (A$25.06/GJ) and the UK National Balancing Point price is US$17.64/MMBtu (A$22.49/GJ). Australian east coast domestic spot prices have increased since Q2 2020 but nothing like increases globally.

Other highlights include:

  • Australian petroleum production fell significantly in the year to June 2021 due to a rolling shutdown at Gorgon and a weaker performance by the NWSAustralia exported 77.6 Mt of LNG in FY 2021, less than the 79.3 Mt in FY 2020, but a good result given the ongoing maintenance required at Gorgon.
  • CSG production increased to a record 1,519.2 PJ in FY 2021, up 11.9 PJ or 0.8% compared to FY 2020. Queensland’s LNG projects shipped a record 23.3 Mt in FY 2021, up 1.0 Mt or 4.5% yoy.
  • Australian conventional gas production decreased by 33.1 PJ or 3.7% to 862.3 PJ in FY 2021, the lowest level since FY 2016.
  • Total east coast gas demand in Q2 (both export and domestic) was 509.6 PJ (up by 25.2 PJ qoq), while supply was 498.6 PJ (up by 11.1 PJ qoq), with a deficit of 11.0 PJ compared with a 3.1 PJ surplus a year earlier. The deficit was met by a rundown in storage.
  • Notwithstanding the start-up of production from the West Barracouta and Sole gas fields, Victorian gas production is trending down and by 2030 is expected to be only 96 PJ, 68% below the level in 2020. In contrast, the recent report from Infrastructure Victoria on options to reduce Victorian gas demand to achieve zero emissions by 2050, assumes Victorian gas demand in 2030 is 233 PJ. Victoria is likely to need gas imports and sooner rather than later.
  • National oil production has resumed its long downward trend after a disappointing year for many of the country’s major projects. Production decreased by 14.4% yoy to 43.7 MMbbl in FY 2021. 

The 174-page report also has 84 Tables and 65 Charts, providing the latest numbers on Australian energy in 2021.

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