Australia takes over as biggest LNG supplier to Japan

THE BOURSE WHISPERER: Australia has become the largest supplier to the world’s biggest Liquefied Natural Gas (LNG) buyer – Japan – for the first time.

According to the latest EnergyQuarterly Report – by energy economics group EnergyQuest – Australia exported 15.9 million tonnes (Mt) of LNG to Japan in 2012, overtaking Qatar, which exported 15.7Mt, and Malaysia with 14.6Mt.

The milestone was recorded in the 2012 calendar year and coincided with Australia achieving both record LNG export volumes and LNG export revenue during the same period.

One of the reasons identified for the country’s rise to the top position was the start-up of the Pluto LNG project in 2012.

“Australia has captured the biggest share of a growing market for LNG,” EnergyQuest chief executive Dr Graeme Bethune said.

“Japanese LNG imports were a record 87.3 million tonnes in 2012, 11 per cent higher than the previous year, and 18.2 per cent of that LNG came from Australia.

“One of the major reasons for the increase in Japanese LNG demand is the shut-down of nuclear reactors in that country following the devastating earthquake in March 2011.

“Japan’s imports from Australia are set to keep increasing as the Gorgon, QCLNG, APLNG, Wheatstone, Prelude and Ichthys LNG projects come into production over the next five years.

“The INPEX Ichthys project – offshore of north-west Australia – alone is expected to supply around 10 per cent of Japan’s LNG needs when it comes into production in 2017.”

According to Dr Bethune Australian LNG exports reached a record 21.8Mt in 2012, up 11 per cent from 2011, and the value of exports reached $13.8 billion – an increase of 25 per cent on the previous year.

This now makes LNG one of Australia’s major export commodities.

Bethune said exports were likely to increase further in 2013 with a full year of production from Pluto, and then each year thereafter to at least 2017 as new projects come into production.

Other highlights of the report include:

Australian natural gas production passed 2,000 Petajoules (PJ) for the first time in 2012 reaching a record 2,141PJ.

Global LNG trade fell slightly in 2012. Lower demand in Europe was largely offset by higher Asian demand. The global LNG market is expected to remain tight until 2015 when new Australian projects are in production.

Domestic gas production was a record 1,101 PJ reflecting the introduction of the carbon tax.
There was only modest growth in national proved and probable gas reserves (2PJ) in 2012, with a reserve replacement ratio (RRR) of 1.2. Over the past three years the RRR is 7.1.

2012 east coast gas consumption increased by 15.3PJ to 722PJ, with an 8.5PJ increase in gas-fired power generation. Gas consumption in WA increased by 3.4PJ to 347PJ.

Domestic gas prices continue to strengthen. Most indicators are now in the $4-6/GJ range rather than $2-4/GJ. Origin Energy and Santos are setting new benchmarks for east coast gas prices.

Australian oil production plummeted in 2012 to the lowest level since 1970. Reserves of oil and liquids (2P) fell. INPEX has Australia’s largest reserves of oil and liquids. Cooper Basin oil production was the highest since 1991.

Woodside has replaced BHP Billiton as Australia’s largest petroleum producer.