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
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,
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
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
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
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
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
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
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
This is how stupid it is: Woodside Petroleum said on Wednesday it would have to shut one of the five trains, or processing units, at the North West Shelf LNG plant in Australia as early as 2024 if no third party gas supply agreement is reached. North West Shelf LNG, operated by Woodside, is Australia’s
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
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
It’s funny watching the AFR do conferences. Why? Because it puts all of the rent-seekers in one room where they yell views at one another to no purpose. Yesterday it was energy and what a mess! First, Turnbull: Former Liberal prime minister Malcolm Turnbull says he is confident Scott Morrison will bow to global pressure
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
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
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
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
At the end of the day, bulk Australian gas consumers may simply too dumb to survive. At The Australian: Top domestic gas users have used a high-level “code of conduct” meeting to push for a change in the benchmark method for east coast prices, arguing local manufacturers are paying a premium for the cost of
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
For those in the know, it has been clear for a long time that the Coalition Government in NSW despises the Coalition Government in Canberra when it comes to energy and climate. That has never been more clear than today with the launch of the NSW renewable energy plan, at the ABC: Households and industry
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 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
I can’t find this paper, which is no doubt the intention, at The Australian: Scott Morrison is moving to reassure gas producers that a domestic reservation scheme will not jeopardise investment or put at risk Australia’s $49bn LNG export market, while ensuring there is enough cheap gas available for east coast energy users that are
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 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
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
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
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
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
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
Via Nick McKenna, CEO of APLNG and gas cartelier, at the AFR: As government and LNG producers renew discussions to extend the heads of agreement that assures domestic customers of access to gas, we must not let emotive calls for subsidised prices triumph over reason. It is well documented by both the Australian Competition and
