Australian LNG

Australian LNG has a long history of pioneering investment. From the North West shelf to the first floating LNG project ever constructed.

Like other Australian commodities this history aligns with that of development economics of Asia. The first wave of Australian LNG development grew to service a modernising Japan and its demand for energy.  This bilateral relationship has a long history of cordial relations, share-equity investment and oil-linked contract pricing to satisfy both parties.

The second wave of Australian LNG was far more chaotic, matching the staggeringly swift rise of the much larger Chinese economy. It began along with the pre-GFC oil boom and Malthusian assumption that the world was going to fall short of everything as the enormous Chinese and then Indian middle classes ballooned and consumed more energy per capita.

Multitudinous LNG projects were sanctioned in Australia which found itself by 2010 developing no fewer than seven LNG project simultaneously. Needless to say this did not end well with gigantic cost blowouts for all as they competed for labour and other resources.

Yet, as the commodity super cycle peaked in 2011, demand suddenly fell well short of expectations and kept doing so over the next four years. Making matters worse, the US shale revolution suddenly turned that nation from net LNG importer to net exporter of a magnitude equal to Australian LNG. The global glut from 2015 was enormous.

The Australian LNG boom included a particularly cavalier offshoot in QLD where coal seam gas was liquefied via three projects on Curtis Island. As the boom subsided, and oil-linked prices crashed, the companies involved were all either sold or destroyed.

The legacy left by the projects was one of very high Australian gas prices with very low Asian gas prices, also delivering an huge blow to the competitiveness of the east coast economy. Thus the $200bn investment proved to be the greatest single capital mis-allocation in the history of the Australian economy (and surely global energy markets) and was little more than a monument to Banana Republic economics as tax takes failed, income fell and hollowing out transpired on raised local costs.

MacroBusiness was the only analytic house to call the Australian LNG bubble early, track it and predict its demise. It continues to cover the LNG sector with daily updates and a large grain skepticism and is a must read for anyone that needs to know the economic forces coming to bear on the sector.

Also check – Daily Iron Ore Price, Australian Dollar

24

Labor should back Tunbull’s energy plan

Via the AFR: Labor states – or a future federal Labor government – that pursue more ambitious renewable energy targets than those set under the Turnbull government’s proposed new Reliability and Emissions Guarantee will face more costly reliability standards, which could increase the cost of electricity in their markets. Energy Security Board chairman Kerry Schott

35

Has Do-nothing Malcolm “ended the climate wars”?

I am going to do back-flip with a triple pike here. Do-nothing Malcolm has circumvented Tony Abbott on carbon: The Coalition party room has endorsed the government’s new energy plan, despite objections from Tony Abbott and others that the policy still has a component aimed at reducing emissions….Energy retailers will be required to meet standards

27

Coal Energy Target is some serious skullduggery

My head is exploding on this new energy stuff. The Greens are in uproar: Greens leader Richard Di Natale says the government has “effectively pulled out of the Paris Agreement” as he labelled Malcolm Turnbull “hollow” and “cowardly”. Senator Di Natale said the government would “argue against the laws of physics” by saying it could

9

Climate flip-flopping Coalition condemns Abbott climate flip-flopping

Via The Guardian: Statements by Tony Abbott suggesting that climate change is “probably doing good” are different to his opinion while he was prime minister and it is up to him to explain why he has changed his view, Julie Bishop has said. Speaking from South Korea on the ABC’s 7:30 on Thursday, the foreign affairs minister

21

Why importing LNG is another disastrous idea

Via Matthew Stevens today: The federal government might question Andy Vesey’s standing as a good corporate citizen, but a commercial nation facing further gas supply and price shocks from 2019 might well urge those working to craft a functioning energy policy to take stock of the savvy energy trader’s plans. Vesey’s thought crime, of course,

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Will Labor be any better on energy?

Bill Shorten has also spoken on energy today at the AFR Summit: Mr Shorten said Labor would also introduce a national interest test for all new LNG facilities to “guard against a repeat of the current crisis”. He said Labor also supported the “responsible” development of onshore gas although fracking was largely a state issue.

9

CET goes way of carbon price

Farewell CET: Energy Minister Josh Frydenberg has all but ruled out a clean energy target, saying the transition to lower greenhouse gas emissions cannot come at the expense of the reliability and affordability of our electricity system. Mr Frydenberg told the National Energy Summit in Sydney that emissions in the electricity sector had fallen over

9

Daily energy disaster update

Judith Sloan lost it on energy over the weekend: Move over, Ponzi; forget Bernie Madoff; ignore Enron; and dismiss collateralised debt obligations ­associated with subprime mort­gages. Without a doubt, the biggest scam perpetrated against taxpayers and consumers is ­renewable energy. And if you think this scam is just an Australian phenomenon, think again. With very few

12

Finally the great gas smash begins

It’s taken five years but the great gas smash has finally begun. The media is full of frenzied options and commentary today on how to fix it. A magnificent stoush is underway between Do-nothing Malcolm and Alan Jones: Malcolm Turnbull and his government are headed for a showdown with highly influential broadcaster Alan Jones amid

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Australia Institute: Keep cheap gas here

Cross-posted from Australia Institute: Australia has plenty of cheap gas. The problem is private companies are selling it all overseas, writes principal adviser at The Australia Institute Mark Ogge. Hard to believe, isn’t it? But it’s true: in the last decade, tens of thousands of square kilometers of Queensland farmland has been covered in gas fields.

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Break the gas cartel or pay!

Via the AFR: …prices could be higher based on the spot Asian LNG price for the first quarter next year, translating to at least $11 a gigajoule for a large manufacturer in Victoria, and even more for a smaller one, said Mark Samter, energy analyst at Credit Suisse. The analysts are among energy market watchers that

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Gas reservation spiking global LNG prices?

From the AFR today: Even now that Canberra has backed away from triggering the export controls, Tuesday’s deal is seen having a similar effect as Queensland’s exports of gas will be essentially limited to long-term contracts. Gas and petroleum exploration and the production, treatment and marketing of natural gas, crude oil, condensate, naphtha and liquid

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Is Do-nothing Malcolm about to become a gas trader?

Via The New Daily: Australia’s gas producers are pushing the government to guarantee the purchase of gas in the domestic market, in a proposal that could cost taxpayers tens of millions of dollars. On Wednesday, Prime Minister Malcolm Turnbull revealed he had cut a deal with Australia’s three biggest gas producers – Origin, Santos and Shell – that would solve