EnergyQuest November 2018 LNG Report

12 December 2018

EnergyQuest has just released its November 2018 Monthly LNG Report. Some of the highlights from the Report are:

  • Australia became world’s largest exporter of LNG during November.  Total Australian LNG shipments were up in November at 6.6 million tonnes (Mt) (98 cargoes), compared with 6.4 Mt (95 cargoes) in October.  
  • Australia’s November shipments were 81 Mtpa on an annualised basis. 
  • In November China passed Japan as the world’s largest importer of LNG.
  • Australia continues to be the largest LNG supplier to China, supplying 49% of Chinese LNG imports in October. 
  • The fall in the Brent oil price from US$85.16/bbl on 9 October to US$60.71/bbl on 10 December, (-29%) has been accompanied by a fall in the Sling North Asian spot LNG price from US$10.54/MMBtu (November delivery) to US$8.83/MMBtu (January delivery). Spot prices at the same time last year were US$9.94/MMBtu. The fall in spot prices so far is only 16% and is likely to have further to go, with predictions of a milder winter in North Asia this year, together with burgeoning supply from new projects. Spot price futures for January and February have moderated to US$9.50/MMBtu and US$9.30/MMBtu respectively
  • Other things being equal, lower international prices should reduce the pressure on east coast domestic gas prices. The ACCC’s forecast of Wallumbilla netbacks for 2019, based on the futures curve at the end of November, averages A$9.01/GJ, down from A$10.88/GJ at the end of October.
  • East coast LNG shipments increased to 1,939 kt in November (1,766 kt in October), with 29 cargoes in November compared to 26 in October. This is the highest monthly export volume since December 2017, and the second highest volume since exports began in January 2015.  East coast exports do appear to peak towards the end of the year, coinciding with higher Asian spot prices.
  • Similarly, there is a seasonal pattern of gas flows to Queensland from the southern states. Queensland imported gas from other states over the month, with consistent flows in an easterly direction across the month.
  • Queensland short-term domestic gas prices in November were higher compared with those in October, averaging $9.57/GJ at Wallumbilla ($9.17/GJ in October) and $10.34/GJ in Brisbane ($9.53/GJ).
  • Southern short-term domestic gas prices in November were above October levels. Average prices in November were $10.75/GJ in Sydney ($9.57/GJ), $10.60/GJ in Adelaide ($9.66/GJ) and $9.93/GJ in Victoria ($9.35/GJ).
  • Notwithstanding higher short-term domestic prices, EnergyQuest estimates of east coast LNG netbacks were higher than east coast domestic short-term gas prices in Sydney and Victoria, but netbacks were lower in Brisbane and Adelaide at the end of November. Based on North Asian spot LNG prices of US$9.69/MMBtu the EnergyQuest estimate of the Wallumbilla netback was $9.25/GJ at the end of November (below the ACCC end-November estimate of $9.88/GJ). Taking account of transport costs LNG netbacks were $9.93/GJ in Brisbane (end-month STTM $10.15/GJ), $11.32/GJ in Sydney ($10.20/GJ), $11.10/GJ in Adelaide ($11.50/GJ) and $11.70/GJ in Victoria ($9.99/GJ).
  • East coast gas-use for power generation was down by 48% (9.2 PJ)compared with a year earlier, although slightly higher than in October. Gas-use was down by 1.3 PJ in NSW, 0.8 PJ in Queensland, 2.6 PJ in South Australia,3.5 PJ in Victoria, and 1.0 PJ in Tasmania.

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