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
By now, most of you, like me, are sick of the new Labor government claiming that there is no “quick fix” for the collapse of east coast energy markets. This must be some kind of record for a new government, alienating every single Australian inside a week of taking power. To give you some idea
With friends like the AIG, who needs enemies? Tennant Reed, principal national adviser at the Australian Industry Group, said energy prices hikes for household of at least eight to 15 per cent were already backed by the regulator’s hike in the default price last week. It was likely this price would rise further over coming
Here it is: Woodside Energy will receive about $US1 billion ($1.4 billion) in cash as part of its $63 billion merger with BHP Petroleum that was completed on Wednesday – a deal that has turned it into a top-10 global independent oil and gas company. This will replace BHP with Woodside in the Gippsland JV
This is the Chanticleer takes on the eastern energy crisis: We are reliant on an ageing fleet of coal-fired power stations, whose poor reliability issues are causing increasing amounts of gas to be used to generate electricity. But for myriad reasons, we’ve been too slow to develop the renewable energy infrastructure the nation requires. There
If you want to know how up against it the Fed is in its fight to bring commodity prices under control today then look no further than the latest from Goldman: Hoarding tees up the next leg higher. In the past two months, hoarding by consumers has concealed just how weak commodity demand has been.
Here’s the hilarity of the east coast energy crisis laid bare: Origin Energy has slashed its energy markets earnings forecast for 2022 by a quarter and withdrawn earnings guidance for the 2023 financial year amid huge volatility in electricity markets and coal supply problems at its Eraring plant in NSW. The power operator said energy
Australia’s failed energy markets are now a full-blown national security crisis. Not a national interest crisis. A national security crisis. A war-profiteering energy cartel is pillaging the Australian economy, Most especially manufacturing, but absolutely everybody else as well. I am talking about scores of billions of dollars ripped from everybody’s pocket as if some greed
AIG today: “Apocalyptic rises in energy prices threaten chaos for industry and pain for households. They demand a national, integrated and strategic response,” Innes Willox, Chief Executive of national employer association Ai Group said today. “The extraordinary price rises, including a 50-fold spike in wholesale gas prices in Victoria, have seen market price caps imposed
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The Albanese Government had better look up the history of the Labor Scullin Government of 1929: James Henry Scullin (18 September 1876 – 28 January 1953) was an Australian Labor Party politician and the ninth Prime Minister of Australia. Scullin led Labor to government at the 1929 election. He was the first Catholic, as well as Irish-Australian, to serve as Prime Minister of
Fark. Come on, Albo: Prime Minister Anthony Albanese has ruled out adopting a so-called super profits tax on oil and gas producers to cover power price hikes as he flags additional measures to help ease cost of living pain. Albanese has told ABC AM he’s not tempted to follow the UK and adopt a similar
For the past few years, the Albanese opposition ran a small target opposition to put the toxic Scott Morrison at the center of the election. At least, that’s what some thought it was doing. As it turns out, the Albanese Government actually appears to be a policy coward. We weren’t seeing a strategy, we were
He may end up as energy minister so here’s Chris Bowen on the energy shock rising across the east coast: Labor frontbencher Chris Bowen says the release of the Australian Energy Regulator’s final default market offer for the next financial year represents bad news for households. While there are international factors at play, Bowen blames
This is now reaching proportions of madness reserved for Banana Republics like Venezuela. The east coast Australian gas price is $35Gj, $4Gj higher than the same Aussie gas is being sold to China. The sheer lunacy of this has shaken even the trickle-down wankers at the AFR: The first signs of the price surge feeding
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
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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
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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
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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
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