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


Comedian tries to make sense of Aussie gas cartel

Is funding a new gas-fired power plant in the Hunter Valley “a grab for votes” in the upcoming by-election? #QandA — QandA (@QandA) May 20, 2021 It’s pretty simple and not funny: East coast LNG exporters lied about having enough gas when they built their export plants. They then bought all of the cheap


Morrison’s mates stuff their faces with power pork

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China to shift more LNG imports from Australia

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China drops jackboot on LNG, iron ore trade

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Gas cartel wins again

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MS: Oil cooked

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Oil supply discipline is breaking

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AEMO: Import LNG or Victoria freezes

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Is the oil rally cooked?

I have been bullish on oil because I expected it would take a little more time to break supply discipline than in the past as a strong demand rebound was underway. Make no mistake, oil is a very manipulated market so supply discipline is the only question that matters given a recovery in demand. Cornerstone


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Goldman’s bullish oil case

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ACCC: ScoMo Gas Unplan to deliver supply shortage, price spike

Here’s the ACCC take on the Morrison Gas Unplan: Gas prices fell significantly during the past year, driven in part by the COVID-19 pandemic. While lower gas prices are providing some relief to manufacturers and other gas users on Australia’s east coast, prices were still higher than export parity, the ACCC’s latest gas report reveals. The report,


How high for oil?

How high for the oil recovery is always an important question given its implications for inflation. At the moment, the oil market has returned to its usual bullishness with all sorts of analysts forecasting a new supercycle: For me, this is deja vu all over again. There is no doubt that the oil market has


Why Australia should buy Qatari gas

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LNG bubble pops

As it was always going to, via Platts: Booming demand for LNG in Asia due to frigid winter weather put LNG carrying capacity at a premium in January. With LNG shipping rates having retreated from record highs last month and with low stocks in Europe, the market dynamics could shift in February toward the latter


ScoMo’s secret carbon tax kills gas power

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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