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Australian LNG exports stays in a good shape

Australian LNG exports stays in a good shape
Mining News Pro - Australian liquefied natural gas (LNG) exports in April continued apace, despite the global surplus of LNG and a slowdown in economic activity as a result of the Covid-19 pandemic, energy advisory EnergyQuest has found.
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In its latest report, EnergyQuest noted that in April, Australian LNG projects shipped 6.9-million tonnes, which was slightly higher than the 6.8-million tonnes shipped in March, and higher than the 6.7-million tonnes shipped in April of last year.

Of the 101 LNG cargoes delivered during the month of April, 40 went to China.

EnergyQuest noted that unlike the situation in the US, it was unlikely that there would be train shut-in or major output cuts from Australian LNG projects on the back of the lower oil and LNG prices, as most LNG from Australia was sold under long-term oil-linked contracts, with the oil price having to remain low for a significant duration to cause shut-ins.

Indications were that west coast LNG projects remained cash flow positive at an oil price above $15/bl, while east coast projects required an oil price above $25/bl.

However, EnergyQuest noted that there were likely to be fewer spot cargoes sold at the current prices, with no spot cargoes sold during the month of April from either the North West Shelf or the Gorgon projects.

Despite the current uncertainties, LNG continued to make a positive contribution to the Australian economy, with export revenue in the sector up by 8% in March, compared with the previous March, to reach A$4.6-billion on the back of higher production and a 12.1% decline in the Australian/US dollar exchange rate.

Meanwhile, domestic gas prices have fallen by more than 50% in April, and were at their lowest levels since 2016.

Australian Petroleum Production and Exploration Association (Appea) CEO Andrew McConville said that the EnergyQuest report has confirmed that sustained domestic supply and export revenue are not mutually exclusive.

McConville said that the global impact of the Covid-19 pandemic and related international supply and demand conditions meant that, along with many parts of the Australian economy, the oil and gas industry is facing the most challenging market conditions it has seen in many years.

“These market conditions are having a significant negative impact on the investment environment for the Australian oil and gas industry. This situation is not forecast to change in the short-term, given the global fall in demand for oil.

“As Australia looks towards an economic recovery, energy supply is essential. The Australian oil and gas industry will continue its focus to ensure safe operations and the sustainable, continuous supply of gas to all Australians who rely on it in their daily lives.

“The industry takes its responsibility to continue to power Australian homes, businesses, hospitals, schools and other industries very seriously. As we look to economic recovery in all sectors of the economy, not just oil and gas, maintaining access to open and competitive markets is in Australia’s best interest.”

McConville said governments must resist calls coming from some for intervention in the gas market that forces non‑commercial outcomes.

“Such approaches act as a tax on gas production, raising costs and can discourage long-term investment, reducing production and undermining long-term energy security,” he said.

“A better solution is to support investment that helps to increase supply. Markets work best without intervention.

“In the current challenging environment, governments can help ease pressures by releasing more acreage for gas exploration and development and removing unscientific bans on onshore gas development.

“Transparent, open and secure access to resources for exploration and development and developing access to domestic and international markets on globally competitive terms is the key for long‑term industry development.

“Going after a vigorous reform agenda, ensuring open and competitive markets and a tax system that helps us maintain our international competitiveness can see industry and governments work together to support the positive role the oil and gas industry can play in contributing to Australia’s economic recovery.”


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