EnergyQuest has confirmed that significant growth in gas demand post COVID-19 has been reported in both North Asia and Europe, creating competition for LNG cargoes, predominantly from the US and Qatar.
EnergyQuest said Australian LNG market is relatively unaffected, with most projects already operating near capacity and with revenue largely linked to oil prices, rather than spot prices.
However, the energy advisory noted that high global gas prices have pushed up LNG setbacks into double-digits.
Notwithstanding higher Queensland LNG exports, east coast spot gas prices have fallen to $7-9/GJ.
Over the last two weeks, international gas prices have gone further into overdrive: on 28 September, the LNG benchmark price was assessed at US$31.65/MMBtu for Japan, Korea, China and Taiwan.
UK natural gas prices were also poised at US$29.00/MMBtu.
Because Australian LNG exports are largely linked to oil prices, LNG producers are likely to do well with higher oil prices but on average earn nothing like LNG spot prices.
While the global gas price surge has impacted the ACCC Wallumbilla LNG netback estimates – calculated on 16 September as A$22.18/GJ for October 2021 – domestic short-term prices still reflect lower domestic gas demand for power generation.
In addition, EnergQuest stated that one of the major unknowns is weather, whether the coming northern winter is or isn’t warmer than expected.
“Along with the COVID recovery, one of the major drivers of gas prices has been last year’s colder than expected winter, which pushed up prices back in January. Since then LNG buyers have been scrambling to replenish storage while contending with a warmer than expected summer in some countries,” EnergyQuest outlined.
Information about the EnergyQuest Australian LNG Monthly is available by clicking here.
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