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US LNG Exports Undermine Australian LNG


Source: The Age, 17 January 2017

Close to $200 billion has been invested on a range of gas export projects in Queensland and northern Australia which have recently been commissioned and are ramping up production. 

Oil averaging around $U55 a barrel will ensure Queensland's gas export projects are profitable, in terms of paying down borrowings and generating returns for shareholders.

US gas exporters are able to source gas for close to the spot price there of around $US3.50 per million British thermal units, which is the standard used to price gas. The US spot price is believed to be significantly less than the price of gas in Australia.

The surge in US exports into northern Asia comes as the spot price rose to a two-year high of $US9.75/mmBtu. This is well above the contract price of most Australian shipments into the region of around $US7/mmBtu.

Part of the reason for the surge in the spot price coupled with the purchases from the US was due to production problems at the giant Gorgon project off western Australia which forced buyers to scramble to source gas supplies from alternative sellers.

While the US was shipping into Asia, some Queensland gas has recently been sold into the Mexican market, for example.

As many as five new export gas projects are planned to come onstream in the US over the next few years. At the same time, the export market will be absorbing output from the Wheatstone project off Western Australia which is to begin shipments mid-year, with output to peak at 15 million tonnes annually from 2018.

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