Leaders in LNG exports are likely to intermittently change in the next 20 years with Australia competing for the top place with plans to expand its export volumes by 25 million tonnes from 2016-17 to 2018-19, according to the latest report of Australian Department of Industry, Innovation and Science late on Monday.
Australia's LNG export volumes are forecast to reach 77 million tonnes in 2018–19, up from 52 million tonnes in 2016–17.
The report said that emerging markets in Asia, led by China, will drive growth in LNG demand and that Europe's LNG demand will also increase in the coming years.
However, the report noted that Europe is not a major destination for Australia's LNG exports but if LNG demand in Europe does not grow as strongly as projected, Qatar and U.S. LNG, the two main competing countries to Australia, may be displaced. This then would potentially bring increased competition to the Asia-Pacific market.
European LNG imports are forecast to increase from an estimated 41 million tonnes in 2017 to 72 million tonnes in 2019, the report showed.
'While gas consumption is expected to remain relatively flat, falling domestic production and a desire to diversify away from Russian pipeline supplies are expected to support LNG imports,' it said.
Australian officials said in the report that growing LNG export volumes, attributed to the completion of the three remaining LNG projects currently under construction - Wheatstone, Ichthys and Prelude - will underpin growth in LNG export earnings out to 2018–19, while declining iron ore and coal prices are expected to drive the forecast decline in overall resources and energy export earnings.
According to the report, higher export volumes will be driven by increased production at the Gorgon natural gas project, as well as the completion of the three remaining LNG projects under construction - Wheatstone, Ichthys and Prelude.
'These three projects will add around 21 million tonnes to Australia’s LNG export capacity, bringing total nameplate capacity to around 88 million tonnes,' it added.
Chevron’s Wheatstone project is likely to be the first of the three projects completed, with train 2 due online in the June quarter of 2018.
First LNG production at Inpex’s Ichthys project is expected in the March quarter of 2018, with some reports indicating that train 2 could commence operations as soon as a few months later. Shell’s Prelude Floating LNG project is likely to be the last of Australia’s recent wave of seven LNG projects to be completed, with Shell indicating Prelude will be completed between May and August 2018.
According to the report, Japan, South Korea and China are expected to be major destinations for Australia’s LNG exports. While prospects for growth in imports from Japan and South Korea are limited, Australian producers are expected to capture an increasing share of both countries’ imports.
- Other competitors
There is currently one in the U.S.- the Sabine Pass LNG export facility in Louisiana.
The fourth of five 4.5 million tonne trains at the Sabine Pass project was completed in October, bringing the U.S. nameplate capacity to 18 million tonnes.
According to the Australian report, by the end of 2019, all five LNG projects currently under construction in the U.S. are expected to have started production. However, U.S. exports are only forecast to rise to around 37 million tonnes in 2019, with many of these projects scheduled for completion late in the outlook period.
The report also confirmed that Qatar is currently the world's largest LNG exporter. It said that Qatar’s LNG projects have the lowest short-run marginal production costs in the world and its exports are forecast to be broadly stable over the outlook period at around 74 million tonnes.
- What's next?
The report also discussed projections for the biggest LNG exporter in the future and said that Australia is anticipated to overtake Qatar as the world’s largest exporter in 2019. However, Australia’s hold on the title may only be short-lived.
'Under the IEA’s [International Energy Agency] New Policies Scenario, some new Australian LNG projects come to fruition over the outlook period, but these are smaller incremental projects and there is no second investment wave comparable to the boom of the last 10 years,' the report said and added, in contrast, LNG exports increase rapidly in the U.S. during the 2020s, underpinned by the relatively low cost of production of domestic gas.
'This increase sees the U.S. become the world’s largest LNG exporting country in the mid-2020s. LNG shipments from the U.S. are projected to reach 86 million tonnes in 2025 and 115 million tonnes in 2040,' the department calculated.
'The U.S.' time as the world’s largest LNG exporter, however, is only expected to be temporary. Qatar’s large and low-cost gas resources provide the foundation for a continued expansion in its LNG exports over the next two decades. Qatar draws level with the U.S. in the mid-2030s before edging past the U.S. by the end of the decade,' forecasts in the report showed.
By Murat Temizer
Anadolu Agency
energy@aa.com.tr