PERTH (miningweekly.com) – New data from energy advisory firm EnergyQuest has revealed that the value of Australian liquefied natural gas (LNG) exports could fall by as much as A$20-billion over the next year.
In its March research report, EnergyQuest CEO Dr Graham Bethune noted that while Australia’s LNG export revenues were expected to reach around A$50-billion in 2019/20, having already reached A$38-billion in the nine months to March, the lower oil prices would likely see LNG export revenues decline to as low as A$30-billion in 2020/21.
“Australian projects can continue to operate at current low oil prices,” Bethune said, noting that Australian projects had been selling spot cargoes at these prices and lower.
“At current oil prices, Australia’s LNG exporters will not thrive, but they will survive.”
However, Bethune noted that the long-term problem was that producers would not be able to afford the gas field development necessary to keep LNG plants at full capacity.
“Santos has pushed back sanctioning the A$7-billion development of Barossa, the field intended to backfill Darwin LNG following the end of life for the Bayu-Undan field. Similarly, Woodside has deferred A$53-billion of projects, Scarborough, Pluto Expansion and Browse LNG projects, deferring any backfill opportunities for the North West Shelf.”
Bethune warned that the project deferrals would have national economic implications.
“At the time of the global financial crisis (GFC) in 2009, Australia was just starting an LNG development boom. Between 2009 and 2015, the oil and gas industry spent A$273-billion on development projects, mostly LNG. This was instrumental in Australia avoiding the worst of the GFC.
“Now in 2020, the federal government is again having to step in to stimulate the economy, with measures costing around A$200-billion. Unfortunately, this time there is no accompanying surge in oil and gas investment and there is unlikely to be until oil prices improve.”