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


Aussies plundered as ScoMo sends cheap gas to China

Via The Australian comes another useless sop to the gas export cartel: Scott Morrison has struck a two-year deal with large east-coast LNG exporters to offer uncontracted gas first to Australian companies, in a bid to keep prices down and lower costs for manufacturers as part of the government’s COVID-19 recovery plan. But the deal,


CCP instructs media on how to report Aussie trade war on itself

Via CCP mouthpiece, The Global Times: The price of liquefied natural gas (LNG) has surged to record highs in recent tradings, with the weekly spot price assessment settled at an all-time-high price of $21.45 per million British thermal units. While most market analysts are focusing on the underlying market factors including seasonable price movement, a


Goldman’s 10 reasons for a new commodity super cycle

Via Goldman: 1) OPEC and Georgia help neutralize near-term risks. The events of last week substantially reduced the downside risks to our bullish commodity narrative — a fact reflected in the rise in oil and copper alongside the sharp decline in gold. First, Saudi Arabia agreed to a unilateral production cut that neutralized current lockdown


China trade war on itself sends LNG prices mad

Via Argus: Strong consumer demand, lower-than-expected temperatures across northeast Asia and a severe shortage of prompt LNG supplies and spot tanker availability have combined to send northeast Asian spot LNG prices to an all-time high — just nine months after hitting record lows. The front half-month ANEA price surged to $21.785/mn Btu for first-half February


WoodMac: LNG doomed!

Via Oilprice: …if governments decide to double down on their climate change targets and start aiming for the more ambitious 2-degree scenario under the Paris Agreement, LNG growth will suffer. The so-called 2-degree scenario refers to efforts aimed at curbing the rise in average global temperatures to 2 degrees Celsius. A less realistic scenario is


Energy Quest entirely wrong on LNG

There is a reason that Energy Quest gets all of the research from the gas cartel. Today it blasts out complete economic drivel on price controls: “This kind of policy is more common in third-world countries. Given that most LNG is sold at oil-linked prices, which are generally higher than oil-linked prices, this could require


ACCC backs gas price controls

It’s taken me years to beat sense into the ACCC. It began to turn a few years ago but now it’s 100% on board. At The Australian: The competition regulator and major gas buyers say Australia’s big east coast LNG exporters have nothing to fear from the potential introduction of formal price controls, arguing the


Lordy, is gas resrevation back on the agenda?

Have I called the bottom? Via The Australian: Australia’s big east coast LNG exporters face the introduction of formal price controls on their supplies for the first time in a radical shake-up floated by the Morrison government as it pursues a gas-fired economic recovery. A draft heads of agreement sent to Queensland’s three LNG producers


Manufacturers demand gas reservation price trigger

Via The Australian: Major gas users including billionaire Anthony Pratt’s Visy Industries, Qenos, Incitec Pivot and Orica took part in a high-level meeting on Thursday with Resources Minister Keith Pitt and Energy Minister Angus Taylor to put forward their case for the radical policy change. Sources said a draft heads of agreement was set to


Joel Fitzgibbon crushes all hope of cheap eastern energy

Via the AFR: …energy spokesman Mark Butler said NSW needed the gas from the proposed $3.6 billion development. “NSW has relied upon other states for their gas supplies for many, many decades,” he said. “As their traditional supplies from Bass Strait or offshore Victorian fields drop off over coming years, as they will, NSW has


Gas lobby dreams turn nightmare!

The oil and gas lobby is having itself on big time at the AFR: Nationally consistent policy, improved regulation and better tax rules could help unlock billions of dollars in investment in Australia’s oil and gas sector and create thousands of jobs, according to a new report. Industry lobby the Australian Petroleum Production and Exploration


NSW has destroyed Morrison’s “gas-led recovery”

At the AFR comes the Morrison’s Government worst minister (and that’s saying something): Federal Energy Minister Angus Taylor has demanded the NSW government hand over the modelling behind its energy infrastructure road map amid worries in Canberra it will push up power prices and among electricity suppliers that the policy will derail planned new gas


Coalition digs its energy hole so that it can fill it in

Here’s what Coalition brains trust, Brian Fisher, author of the Menzies Research Centre report Powering out of Pandemic: Unleashing the Potential of Gas, writes today at the AFR: The competitive advantages of natural gas in our changing energy mix are too great to be ignored, even by its would-be detractors. With two-thirds of Australia’s coal


Grattan: Morrison Gas Unplan to lift power prices

From Tony Wood at Grattan: Far from fuelling the recovery from the COVID recession, natural gas will inevitably decline as an energy source for industry and homes in Australia, according to a new Grattan Institute report. Flame out: the future of natural gas shows that a combination of economics and environmental imperatives imperil the industry. Australia


Morrison Gas Unplan to burn taxpayer dough in stranded assets

Via the ABC: The Federal Government’s planned gas-led recovery could turn out to be a mirage, according to energy experts who question the economic case for investing in gas infrastructure when fossil fuels are being rapidly replaced by renewable energy sources. In September, Prime Minister Scott Morrison announced a plan to “reset the east coast


Then there were three. Another Aussie oil refinery dies

Down to three from seven over a decade. Via Yahoo: BP Plc will cease fuel production at its 65-year-old Kwinana refinery in Western Australia, citing low margins and tough competition from Asia, and will transition the facility into an import terminal. The U.K. company’s move will leave Australia with just three remaining refineries, with the


The gas cartel wins

The new energy issues paper released by the Minister for the Gas Cartel, Keith Pitt, has produced a debate as devoid of ideas and facts as the paper itself. As usual, it is all rentier and no Australia at the AFR: A new Morrison government discussion paper on gas reservation has flagged a sensible backflip


Morrison gas unplan to lift power bills

Sadly, yes, at Domain: Prime Minister Scott Morrison’s push to deliver 1000 megawatts of new gas-fired power capacity into the nation’s main energy grid could discourage investment in battery technology, imperil the clean energy transition and risk financial losses for the taxpayer-backed Snowy Hydro scheme. Experts and industry insiders told The Sydney Morning Herald and


Gas cartel readies to gouge imports of our own gas

Gas cartel apologist, Energy Quest, is doing the dirty work as usual, at The Australian: …Transporting gas from the three Queensland LNG export plants at Gladstone down to Melbourne would be cheaper by LNG tanker than pipeline, according to EnergyQuest, although liquefaction costs need to be taken into consideration. It estimates a cost of 54c


LNG imports are essential

Let me preface this argument by saying that LNG imports are calamitously stupid given all we really need is fixed price gas reservation for our own gas export cartel. That said, without such policy sense, LNG imports are the only sane alternative path. Via the AFR: Prices for gas consumed in Victoria will be on


Benefit of LNG imports “unquestionable”

Via AFR: Energy Projects and Infrastructure Korea (EPIK) is targeting financial close on its Newcastle GasDock venture in the September quarter of 2021, with a view to the terminal starting up by early 2023. A spokesman said the Narrabri approval would not change that, pointing to how quickly domestic supply was tightening, the expiry of


How to kill the Narrabri gas shocker

Via The Fake Left: A former New South Wales judge has called for “independent” to be dropped from the name of the state’s planning commission after it approved the controversial Narrabri coal seam gas development, arguing the body is effectively controlled by the government. The commission on Wednesday gave what it described as “phased approval” of the


Gas cartel wins again as Narrabri gets up

Knock me over with a feather. The nobbled NSW planning commission has approved the development of Narrabri gas by Australia’s most evil company, Santos. Via The Fake Left: A controversial proposal for a coal seam gas development at Narrabri, in northern New South Wales, has won final approval from state authorities subject to what they described


The hideous truth about Narrabri gas

Via the AFR comes another rubbish assessment of what is at stake in this week’s Narrabri gas approval. Let’s go through the claims one by one to get to the truth: The politics around the project are also heated at a state level. Under the $2 billion energy deal between the federal and NSW governments