Monday, March 28, 2011

Global Demand Pumps Up Australia's LNG Production

by Sarah-Jane Tasker, The Australian, Mar 9, 2011
AUSTRALIA'S liquefied natural gas production jumped 6.1 per cent [sic] last year, on the back of increasing global demand, which saw the value of exports hit a record $9.5 billion.

LNG production reached 19.8 million tonnes a year, compared with the previous year's 18.6 million tonnes, and the export value rose 24 per cent from $7.6bn, a report by energy economics group EnergyQuest revealed.

"The LNG momentum looks set to continue in 2011," EnergyQuest chief executive Graeme Bethune said.

"So far this year we have already seen another Gladstone LNG project, GLNG, in central Queensland, reaching sanction and the ConocoPhillips/Origin Energy APLNG project, also situated at Gladstone, reaching major milestones.

"Altogether, there are seven Australasian LNG projects aiming for final investment decisions in 2011, with combined capacity of around 40 million tonnes per annum." [...]

The report revealed that Australian natural gas production reached a record 1999 petajoules [some 1.8 tcf] last year [2010], up 5.1 per cent from the previous year's 1902PJ [1.7 tcf -- D.R.].

Australian domestic gas production increased 2.7 per cent to a record 1060PJ [nearly 1 tcf]. Despite the increases in production, the government's carbon tax proposal is set to have an impact on gas-fired electricity generation projects, with the uncertainty stalling the final go-ahead on plans. [...]

The results from last year also saw a turnaround in the nation's oil production, which reach 116 million barrels for the year [This was primarily owing to production from the Pyrenees, Van Gogh and Vincent oil fields, all situated off the northwest Western Australian coast -- D.R]. [Read more]

(Please see the latest EnergyQuest report here. Australia is the world's biggest coal exporter, and black coal is Australia's largest export, worth more than $A50 billion in 2008-09/year ending Jun 30. Also, Australia was the world’s fourth largest exporter of liquefied natural gas---LNG---in 2009, after Qatar, Malaysia, and Indonesia. Australia's LNG exports are expected to more than double by 2015-16, with the start-up of several major LNG projects, the Australian Bureau of Agricultural and Resource Economics and Sciences/ABARES, said in a report on Mar 1. Higher demand from consuming countries, especially China and India, in addition to Japan, South Korea, and Southeast Asian countries will also boost Australia's LNG export growth. Australia plans to export more than 60 million mt of LNG by 2020, to become the world's second-biggest LNG supplier behind Qatar. On Mar 29, 2011, Australian coal seam and shale gas explorer Icon Energy signed a binding agreement to supply China's Shantou Sinogas Energy Co., Ltd with 40 million mt of LNG over 20 years from mid-2016. Australia, with its 110 trillion cubic feet---tcf---of proved gas reserves, is the twelfth largest holder of natural gas reserves in the world, as of Jan 1, 2011---please see my post "World's Top 22 Natural Gas Proven Reserve Holders, Jan 1, 2011 -- OGJ," here. Moreover, according to The Oil and Gas Journal, Australia had 110 tcf of proven natural gas reserves as of Jan 1, 2010, triple OGJ's 2009 reserves estimate of 30 tcf. The upgrade is largely a result of increased exploration and development of its unconventional as well as conventional gas sources. It has been reported that unconventional gas deposits, i.e., coal seam and shale gas deposits, have become an increasingly larger component of gas reserves due to technological advances---please see EIA's analysis here. Japan is the primary destination of Australia's LNG. Japan accounted for 65% of Australian LNG exports in 2009. Fitch Ratings says the accident at the Fukushima nuclear power plant could lead to a boost in Japanese demand for Australian thermal coal. An international credit-reporting agency also says increased Japanese demand for LNG could support additional LNG trains at the Browse and Pluto Basins, both offshore from northwest Western Australia. Australia was Japan's second-largest LNG supplier in 2010, after Malaysia---please see bar chart and pie chart below. Australian LNG shipments accounted for 19% of Japan's total LNG imports in 2010. For Japan's LNG imports in 2010, please see my posts here and here -- D.R.)
             [Click on bar chart to enlarge]
Source: Flower LNG via Reuters -- Reuters graphic/Stephen Culp, here. Notes: Obviously, Malaysia also includes East Malaysia/Malaysian Borneo (not indicated above). Also, the Musandam peninsula is an exclave of Oman (not indicated). Furthermore, publication date is incorrect. -- D.R. 
Source: U.S. EIA, Japan Country Analysis Brief, March 2011, here

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