U.S., Russian LNG supply puts Australian producers under pressure

Low cost supply of LNG into Asia may see Australian producers of the chilled natural gas struggle to renegotiate long-term sales.

Russian and U.S. projects will determine the price of LNG for China said Alberto Calderon a board member of Orica Ltd. at a Bloomberg seminar.

U.S. shale boom will see U.S. producers compete with the Australian suppliers while Russia will be able to export gas at a lower price than the producers of LNG in Australia.

“What is clear is that Australia will become a major producer of LNG,” said Calderon, reports Bloomberg. “The problem is that most Australian LNG production sits on the right hand side of the cost curve. Contracted tons will be under pressure.”

Australia is also on the right track to overtake Qatar as the world’s biggest LNG supplier with exports forecasted to climb to 83 million tons a year by 2020, more than the 79 million tons for Qatar.

LNG World News Staff, September 10, 2014; Image: Woodside