‘LNG was already oversupplied’: COVID’s impact on exports
THE impact of COVID-19 and an oversupply of LNG globally appears to have hit Australian exporters, with one advisory firm pointing to fewer cargoes and more delays.
The latest report from independent energy analyst EnergyQuest states that Australian shipments were down by seven cargoes in May compared with the previous month.
"Australian LNG shipments in May were down by seven cargoes compared with April, primarily due to lower cargoes from APLNG and Ichthys," it states.
"APLNG buyers have exercised downward contract flexibility and the project has extended planned maintenance, originally planned for May 27-31 to May 27-June 18."
Australia Pacific LNG has a facility on Curtis Island near Gladstone and Ichthys has interests in northwestern Australia.
EnergyQuest tracking data shows many Australian cargoes were delayed during May.
"Of the 93 cargoes shipped during May, 35 cargoes were delayed by sitting at anchorage or steaming in circles, or steaming slowly prior to reaching their destination," the report states.
It said the global market was oversupplied due to a mild winter and extra supply starting up, and the pandemic reduced demand further.
"The global energy industry is still far from recovered from the demand reduction from the pandemic and there has been no sign of a co-ordinated response to address the gas glut," it states.
But over the next decade, Australia's domestic market is predicted to face the opposite problem.
"Over the medium-term (to 2030) supply constraints will become increasingly evident with the decline of production offshore Victoria and absence of major new gas discoveries," the report states.
"We expect one and possibly two of the Gladstone LNG trains to be closed as increased gas volumes are diverted from the LNG projects to the domestic market."
In March this year the State Government announced the first block in Australia to deliver gas solely for use in local manufacturing would be in production next year.
Mines Minister Anthony Lynham said the only way to boost gas supply and to stabilise prices is to find more gas and get it into pipelines to market.
"This is what Queensland is doing, despite a lack of incentive and investment from the Federal Government, so we can secure jobs well into the future," he said during the announcement.
Since 2015 the government has released more than 70,000 sq km of land for gas exploration, with over a quarter of it guaranteed for the Australian domestic market.