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
Here’s what the Australian Industry Group said yesterday: “The cessation of gas trading by Weston Energy plunges hundreds of businesses across Eastern Australia into uncertainty around their energy bills and is a warning of more pressures to come on business and households from high energy prices,” Innes Willox, Chief Executive of national employer association Ai
There are lots of things for Albo to do and the last thing on his mind is picking a fight with resources firms. But that’s what he must do: Surging gas prices have claimed another victim with a major NSW wholesaler forced to shut its doors, saying thousands of jobs were being put at risk
While the gas cartel is busy forcing Australian energy bills up by sending our gas offshore, turns out the industry also pays minimal tax. According to a new report from The Australia Institute (TAI), major gas companies haven’t paid income tax in seven years despite earning $138 billion from their Australian operations: New analysis of
What kind of hogwash is this leading the AFR? The $500 billion a year economic benefit the oil and gas industry provides to Australia could be at risk if an incoming government is taken over by “misguided” politics, the new chairman of the industry lobby group has warned. “It would be an awful shame to
This is what happens when a corrupt government sponsors a gas cartel to capture your energy reserves: A fourfold increase in gas prices has inflicted huge losses on a Riverina-based manufacturer in NSW and may force the company to temporarily close its doors within months if there is no relief. Causmag International, which uses gas
Some commodities are starting to break down but the indexes are still very strong. GSCI Metals are coming off sharply and have just about erased the Ukraine jump: But softs are still firm: So is energy: Frustratingly, none of these indexes includes Australia’s key bulk commodities of iron ore and coal. Iron ore is
JPM with the data. It also expects Russian output to fall ahead as European bans advance and a tanker shortage means it can’t ship all of this displaced oil to China and India. I personally think thank the global economy will be reeling in recession before then but, if not, it sure will be shortly
The US has already overhauled Australia’s LNG super boom to become the largest exporter of gas in the world and it has another 1.5mt per month coming on stream this year: But the real action now is the second round of LNG super boom in the US. I have pointed out for ages that there
This is such a bad analysis that I don’t know where to look: Outages at coal fired power stations have pushed up gas prices on the east coast of Australia spiked, sending wholesale electricity prices surging across the National Electricity Market. Spot gas prices hit $19.31 a gigajoule in Brisbane on April 9, according to
Of all of the economic evils of the Morrison Government, this one is the worst. The new outlook for the AEMO for gas: In the short term, new greenfield infrastructure solutions are unlikely to be operating in time for the earliest identified risk of gas shortfalls, in winter 2023. Brownfield solutions, such as duplication of
This is so egregious that I don’t know where to look: Energy Minister Angus Taylor will warn the energy crisis facing Europe could happen in Australia unless new gas fields are opened up as he unveils budget funding to accelerate the development of seven projects. As the government moves to make energy security a feature
A side effect of Russia’s invasion of Ukraine has been the jump in oil and gas prices. The result is basically a global Putin carbon tax. Albeit with the proceeds going to Russia and OPEC rather than to national governments. When you add the re-realisation of commodity supply chain instability, there is now an increasing
JPM first: While energy is carved out from the sanctions package, this week it became clear that Russian oil is being ostracized. As of today, 66% of Russian oil is struggling to find buyers. PresidentBidenisfacingpressurefromlawmakersinbothpartiestocompletely cut off US imports of Russian oil and gas. In Europe,the conflict is leading to are think of European energy
Former chair of the Energy Security Board, Kerry Schott, is no climate change or renewables soft touch. She’s a hard-nosed, highly experienced, non-nonsense energy regulator. Today she swats the energy panic insects swarming the Cannon-Brookes AGL bid: The reason for the massive increase in wind and solar renewables is economic. In the wholesale electricity market,
Honestly, Tez, this is just poppycock: Thank you Mike for so promptly demonstrating the truth of what I wrote about Origin’s proposed closure of a real power station, Eraring. That it would have a cascading impact on all the other real – coal-fired – power stations; forcing their accelerated closures, because the totally destructive and
I’ve had my issues with Mike Cannon-Brooks over the years but his latest energy gambit is an absolute cracker: “In the absence of a proposal that provides appropriate value to AGL Energy shareholders on a control basis, the board continues to believe the demerger maximises value for shareholders and is in the best interests of
Honestly, the Morrison Government is an entire pack of psychos: An expansion of the proposed taxpayer-funded power station at Kurri Kurri in the Hunter Valley is being considered by the government amid a scramble to fill a baseload generation gap caused by the premature closure of the Eraring coal plant. Energy Minister Angus Taylor said
If you want to know what PM Scott Morrison is made of then you need only look at his record on the Australian gas sector. Recall this, via The Australian: Centre Alliance has received a written guarantee outlining the Morrison government’s gas policy, which the key minor party demanded in exchange for its support for
The energy debate in Australia remains paralytically stupid. Readers will recall the following: Gas exports via QLD skyrocketed local gas prices from 2014. Indeed local prices were pushed much higher than those in the export destinations of gas-poor north Asia. The price hikes from $2Gj to $20Gj cascaded through utility bills directly for gas and
As I have said throughtout the last six months of global energy chaos, there is no underlying shortage of anything. What there is is two many dollars chasing crazed narratives that blow prices sky-high in a period of days before collapsing again. To decribe this as a crazy outcome in the most capex demanding and
The Australia Institute has a new report out that should be the headline around the country but barely gets a mention: Australia’s giant offshore gasfields are paying almost no royalties, create few jobs and are a large and rising source of greenhouse gases, according to a new report from the Australia Institute. The “Gas-fired robbery”
The global energy shock that came out of nowhere last year and has rocked markets and economies ever since is once again easing, this time on a mild northern winter: European gas consumption is down and storage has lifted unexpectedly: The US has also been warm which has helped enable a flood of LNG across
It still gets the least amount of press of any of the Morrison Government’s disgraces thanks to comprehensive MSM stupidity. But pound-for-pound, there is no more horrendous pillaging of Australia than that conducted by the Morrison Government’s protected gas cartel. Over the Christmas break, there were significant developments in the global energy crisis that illustrate
The energy crisis is back but its causes are narrowing swiftly to Europe where things are getting worse. The European gas market is tightening as winter arrives and prices are up again: Driving JKM futures crazy: Lifting thermal coal: And coking coal: This all matters a lot to Australia. It also brings in iron ore
Chinese coal prices are still trending lower. Seaborne thermal coal has come off its latest spike: Inventories are still normalising: With demand now down materially on the year: China announced higher contract prices to local coal production robust for the future: China plans to raise the benchmark price for long-term coal contracts in 2022 after
