EnergyQuest: November LNG exports strongest since April

With 6.9 million tonnes shipped in November, it was the strongest month for Australian LNG exports since April this year, according to EnergyQuest.

EnergyQuest said in its latest report that the number was achieved despite supply disruptions from Gorgon, Australia’s second-largest project, and delays to the start-up of the Prelude FLNG project.

One of the reasons for the strong performance was record
production from the east coast LNG projects at Gladstone. Taken together, the
Gladstone projects exceeded nameplate capacity for the first time since exports
commenced in January 2015.

Total Australian exports for the year to November are
running 1.2 Mt ahead of the same period last year and EnergyQuest expects that
total exports for the year could reach a new record of 78 Mt, up on the 77.5 Mt
exported in 2019.

The two biggest markets for Australian LNG – Japan and China
– took 2.6 Mt in November each, higher than November 2019 in both cases. The next
two largest markets were Korea and Taiwan.

EnergyQuest added that export volumes have done well during
2020 but prices were gutted. In March, total LNG export revenue was $4.4
billion. By September it was down to $1.8 billion. The good news is that
revenue is starting to recover with higher oil and LNG spot prices. October
export revenue was $2.2 billion and EnergyQuest expects $2.9 billion in
November.

LNG spot prices have staged a remarkable recovery. As of 11
December, the Platts JKM for January was US$11.23/MMBtu, a more than 26-month
high and higher than oil-linked prices, currently around US$5.36/MMBtu. As
recently as June the JKM was US$2.00/MMBtu.

EnergyQuest further stated that supply issues at west coast projects could have indirect impacts on east coast domestic gas prices through their impact on LNG spot prices. Consistent with higher LNG spot prices, short-term domestic gas prices were higher in all east coast markets in November than in October, although still below levels in November 2019.

The massive volatility in LNG spot prices also leads to
massive volatility in east coast LNG netback prices. This is important amidst
calls for the federal government to require LNG producers to offer gas domestically
at netback prices.