EnergyQuest has just released its December 2018 Monthly LNG Report. Some of the highlights from the Report are:
- Australian LNG exports reached 69.5 million tonnes (Mt) in 2018, up 23.0% from 56.5 Mt in 2017.
- The start-up of the Ichthys project during 2018 and continued good performance of Wheatstone, which started production from Train 2 during 2018, has made a major contribution to the growth in Australian exports. The long-awaited Prelude project began production in late December with the first cargoes expected in early 2019.
- Notwithstanding media headlines about “record” Queensland LNG exports (Platts 8 January, The Australian 9 January) east coast exports only grew by 0.3 Mt in 2018. The east coast projects continue to perform below capacity, due to the increasingly tight gas supply in the east coast market. West coast producers, however, continue to outperform, with North West Shelf (NWS) continuing to be the largest producer. Gorgon has remained in second place having consistently high production rates during 2018.
- There will be further increases in exports in 2019 as Prelude comes on line, and Ichthys and Wheatstone ramp-up to full capacity.
- Total Australian LNG shipments were steady in December at 6.6 Mt (98 cargoes), compared with 6.6 Mt (98 cargoes) in November. The continued performance in Australian shipments reflects the good start of Ichthys.
- Australia’s December shipments were 78 Mtpa on an annualised basis.December production was prior to Ichthys reaching full capacity (8.9 Mtpa capacity) and the start-up of Prelude (3.6 Mtpa capacity).
- Australia continues to be the largest LNG supplier to China, supplying 46% of Chinese LNG imports in November.
- The fall in the Brent oil price from US$85.16/bbl on 9 October to US$50.57/bbl on 27 December, (-41%) has been accompanied by a fall in the Sling North Asian spot LNG price from US$10.54/MMBtu (November delivery) to US$8.71/MMBtu (February delivery). Spot prices at the same time last year were US$11.11/MMBtu. Spot price futures for February and March continue to moderate to US$8.97/MMBtu and US$8.68/MMBtu respectively. The ACCC’s forecast of Wallumbilla netbacks for 2019, based on the futures curve at mid-December, averages A$9.60/GJ, up from A$9.01/GJ at the end of November.
- East coast LNG shipments decreased to 1,795 kt in December (1,939 kt in November), with 27 cargoes in December compared to 29 in November.
- There is a seasonal pattern of gas flows to Queensland from the southern states. Queensland imported gas from other states over the month, with flows mostly in an easterly direction across the month. Net gas flows to Queensland from other states were 2.2 PJ in December. This is similar to the pattern in December 2017 but with a lower level of Queensland imports (7.8 PJ in December 2017).
- CSG production from fields operated by the LNG producers was 116.8 PJ in December, up 8.8 PJ from 108 PJ in November. Total LNG pipeline flows were 113.6 PJ in December, up from 106.5 PJ in November.
- Queensland short-term domestic gas prices in December were higher compared with those in November at Wallumbilla, averaging $10.07/GJ ($9.57/GJ in November), but lower at $10.15/GJ in Brisbane ($10.34/GJ).
- Southern short-term domestic gas prices in December were mixed compared to November levels. Average prices in December were above November levels at $10.81/GJ in Adelaide ($10.60/GJ) and $10.14/GJ ($9.93/GJ) in Victoria. Average December prices were below November prices at $10.58/GJ in Sydney ($10.75/GJ).
- Notwithstanding variable short-term domestic prices, EnergyQuest estimates of east coast LNG netbacks were higher than east coast domestic short-term gas at the end of December. Based on North Asian spot LNG prices of US$8.97/MMBtu the EnergyQuest estimate of the Wallumbilla netback was $8.86/GJ at the end of December (below the ACCC end-December estimate of $11.20/GJ). Taking account of transport costs LNG netbacks were $9.54/GJ in Brisbane (end-month STTM $9.15/GJ), $10.93/GJ in Sydney ($9.20/GJ), $10.71/GJ in Adelaide ($8.97/GJ) and $11.31/GJ in Victoria ($9.43/GJ).
- East coast gas-use for power generation was down by 42% (6.8 PJ)compared with a year earlier, and lower than in November. Gas-use was down by 1.3 PJ in NSW, 1.5 PJ in Queensland, 1.7 PJ in South Australia, 1.2 PJ in Victoria, and 1.1 PJ in Tasmania.
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