AUSTRALIA

Aussie LNG exports spike

PREDICTABLY, given new LNG plants are regularly moving from construction to production, Australia...

Aussie LNG exports spike

Total June output climbed to 3.6 million tonnes - a surge of 560,000t over the May total with strong contributions from the Woodside-operated North West Shelf and Pluto plants in Western Australia and the QCLNG project at Gladstone on the Queensland coast.

And despite low oil and LNG prices, Australia's six LNG projects all maintained high levels of production in June, in many cases above nameplate capacity.

The update is contained in the just-released June Monthly LNG Report from independent energy analyst, EnergyQuest.

The monthly report is a new EnergyQuest service, allowing users to monitor the growth in Australian LNG by project, together with developments in major markets, progress by competitors and interactions between Australian LNG projects and domestic gas markets.

The ramping up Queensland plants consumed 87 petajoules of conventional and coal seam gas during June, contributing to a short-term domestic gas price hike on the east coast as it shivered under unduly cold winter conditions.

As of 5 July Brisbane prices were $16 per gigajoule, Sydney prices $12.21/GJ and Adelaide prices $12.21/GJ.

"The strong growth in Australia's June LNG exports reflects a full month of resumed production from the Woodside-operated NWS, which underwent planned maintenance in May, together with particularly strong performance from Woodside's Pluto project and Shell's QCLNG project in Gladstone," EnergyQuest CEO, Dr Graeme Bethune, said today.

"We expect further growth in Australian LNG exports over the next six months as the second trains of the GLNG and APLNG projects come into production and the Chevron-operated Gorgon project in WA begins to ramp-up."

Gorgon gas been able to send two cargoes since March, but not without the drama of a number of mechanical issues, while the North West Shelf has returned to full production of an annualised rate of 16.5MMtpa, above nameplate, following maintenance, while Pluto continues to outperform, shipping at an annualised rate of 5.5MMtpa, ahead of the original design capacity 4.3MMtpa.

EnergyQuest speculated that the NWSV production was above publicly disclosed contracts of 14.7MMtpa so there appear to be additional short-term contracts, probably to Japanese buyers.

EnergyQuest said WA LNG projects should be able to achieve a positive cash margin supplying spot cargoes to North Asia at a price of $US5.35/MMBtu delivered, implying a netback at Karratha of around A$5.20/GJ, above marginal cash costs on the west coast.

The margin on the east coast would be finer, Dr Bethune said.

Total LNG export volumes out of Queensland of 1.4MMt (22 cargoes) in June, are now starting to shadow those of Western Australia, which exported 1.8MMt (27 cargoes) in June.

"The growth in Queensland exports is quite remarkable given that its first LNG project only commenced exporting 18 months ago," Dr Bethune said.

The Northern Territory exported 0.3MMt of LNG (five cargoes) from the Darwin LNG project in June.

Northern Territory exports will start growing from late next year when Inpex's Ichthys in Darwin also starts production.

EnergyQuest estimates that forty-four cargoes were delivered from Australian projects in June, mostly to traditional north Asian customers (22 to Japan, 15 to China, two to Korea and one to Taiwan) but there were also two cargoes each to India (where LNG demand is growing) and to Egypt.

The latest market data available, for May shows total Indian LNG imports from all countries were up by 0.45MMt in May, and 40% higher than May 2015, reflecting the strong growth in India's LNG sector seen all year up 41% or 2.2MMtpa for the first five months of 2016.

Chinese LNG imports grew by 27% in May compared with a year earlier. Total Japanese and Korean LNG imports continue to fall, down 4% and 5.8% respectively in May 2016 compared with May 2015.

US LNG exports have so far focussed on the Atlantic rather than Pacific Basin

The new Sabine Pass LNG project on the US Gulf Coast shipped five commissioning cargoes in June. Most Sabine Pass cargoes are going south to countries in South America, with no cargoes yet to North Asia and only one cargo to Europe, specifically Portugal.

A second European-bound cargo is heading to Spain.

Sabine Pass continues to ramp up at about the same rate as APLNG. The first commercial delivery under the Shell/BG contract commences in November.

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