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 Sinocism today: It sure feels like things may be starting to spiral out of control on many fronts… The China events I am following today include: Xi’s Heilongjiang tour continues, while the full propaganda rollout and the follow-on exhortations to study his comments have not yet begun; A key theme of the tour is
Via the AFR yesterday on Santos: The company is targeting a final go-ahead for the Barossa project by the end of 2019, while an investment decision on the PNG LNG expansion is also due around that time. Mr Gallagher also said Santos is on track to ramp up sales at the GLNG venture in Gladstone to
As I noted this morning, suddenly Australia is back in fashion in Beijing, via the AFR: Beijing has signalled it is willing to rebuild its relationship with Australia under the Morrison government, and says there is no conflict between the two nations in the South Pacific despite concerns about China’s growing influence in the region. The
Suddenly Australia is back in fashion, via the AFR: Beijing has signalled it is willing to rebuild its relationship with Australia under the Morrison government, and says there is no conflict between the two nations in the South Pacific despite concerns about China’s growing influence in the region. The upbeat assessment of Australia’s relationship with
Via the Herald Sun: UNLEADED petrol prices in Melbourne surged as high as 167.9c a litre on Monday, in the biggest hip-pocket hit at the bowser in a decade. About half of the metropolitan petrol stations monitored by the RACV had moved to the new high price by Monday afternoon. Leading fuel data source MotorMouth
After years of energy war from the Coalition that has included: backing emissions trading; trashing emissions trading; backing renewable energy targets; trashing renewable energy targets; backing direct action; trashing direct action; backing the Chief Scientist; trashing the Chief Scientist; backing a National Energy Guarantee; trashing a National Energy Guarantee. Today we get the new vision from
Via The Australian: In documents submitted to the Victorian government this week, AGL said it wanted the Crib Point import terminal, 65km southeast of Melbourne on the Mornington Peninsula, operating in the first half of 2020. “Victoria, and the other states – South Australia, New South Wales and Tasmania – that rely heavily on gas
Via Chanticleer today comes Michael Thawley weighing into the CK Group acquisition of APA, Australia’s gas pipeline monopoly: FIRB has no doubt received the same anonymous documents sent to Chanticleer pointing out the fact that one of Hong Kong’s power utilities, HKEI, is one-third owned by CK Group and one-fifth by State Grid. …”You might
Or so says The Australian: Energy producers on Australia’s east coast may escape the threat of government intervention after signalling the extension of a deal to offer uncontracted gas for domestic use before export, and agreeing to make gas available at peak demand periods for the power grid. Following meetings in Canberra yesterday, gas players
Origin (ORG) wants out of the gas cartel. And who could blame it? There’s a war brewing between the cartel and various Australian governments and it will not be good for shareholders. Via The Australian: Origin Energy is believed to be embarking on a strategic review of its upstream assets worth at least $8 billion
Via The Australian: Gas prices on Australia’s east coast are set to surge by up to 70 per cent over the next decade with the southern states forced to rely on LNG imports to get through peak demand in winter, consultancy Wood Mackenzie has warned. Prices for gas could surge to between $14.30 and $15.90
Gas market legend Mark Samter is again promoting LNG imports today, at the AFR: …The debate then hit a new low last week with Bill Shorten’s “plan” to introduce a permanent gas export control trigger that can be pulled when prices are too “high”, not just based off a shortfall like the flawed Australian Domestic
Via The Age: Victorian homeowners will be paid nearly $5000 towards the cost of household solar batteries by a re-elected Andrews government in the latest move aimed at making the state Australia’s leader in domestic-scale renewable energy. The latest promise of subsidies for small-scale renewable energy will see households who already have solar panels able
The AFR is upset about the death of the NEG: Labor will take the National Energy Guarantee or something similar to the next federal election as business and industry clamoured for certainty and new data showed power prices had jumped since the NEG was scrapped. It is understandable that markets would bid up electricity futures
As predictable as the sun, via The Australian: Queensland’s three big gas export plants are shipping at their strongest rates in seven months as global LNG prices rise to four-year highs and southern winter demand pushed Sydney and Melbourne gas prices to records last month. The spike may inform talks gas producers and LNG exporters
Via Gottiboff comes Andrew Liveras: Liveris accepts as a given that Australia wants to reduce its emissions and to honour its gas exports contracts. If it doesn’t honour those contracts it will do great long-term harm to the nation. …Liveris plan starts with the requirement that New South Wales needs to exploit its gas and
Catherine Tanna that is, at the AFR: Competition czar Rod Sims has dismantled EnergyAustralia’s reasoning that the introduction of a default retail electricity tariff will mean higher prices for most of its customers, saying that the competitive market means those customers will still be able to get discounts as big as they do now by
From The Australian comes AGL: Australia’s largest power generator, AGL Energy, has warned Victoria faces gas shortages in the early 2020s as supplies from Queensland dry up, with the problem to be made worse should Labor introduce a price trigger to limit export volumes and free up domestic supplies. …“As we move into the 2020s,
Here it is from the ACCC: Importantly, the ACCC isolated gas prices as a very particular influencer of power bills. “Another major factor in wholesale prices has been the significant shortages in competitively priced gas at a time when gas-powered generation would often be the logical source of replacement for lost coal-fired capacity. Gas prices
The campaign against gas reservation has begun at the AFR. Santos CEO Kevin Gallagher: …Australia relies on foreign investment, but sovereign risk is rising fast. In a low-risk country, governments recognise that contracts between commercial parties must be honoured and not broken by governments favouring one party over another. In a low-risk country, governments do
At The Conversation we find joyful (24 hours late for you guys): Bill Shorten will turn the energy spotlight onto gas on Monday, proposing measures Labor says will put downward pressure on prices for manufacturers and power generators and so benefit jobs and households. A Labor government would introduce a permanent gas export control trigger
Can it be that at the cost of the east coast energy shock and one prime minister the gas cartel’s time has finally come? Via the AFR: Senior executives from Santos, Origin Energy and Shell are set to be summoned to a meeting with federal Resources Minister Matt Canavan within two weeks ahead of a
At The Australian PM Morrison’s new energy man, Angus Taylor, speaks: “I’m focused on getting prices down while I keep the lights on. I’ve got one KPI. I’ve got one goal,” he told The Australian. …The key points of the new Morrison-Taylor plan were flagged by Mr Turnbull last week after the collapse of the
From Gottiboff: What I want to see from Angus Taylor is the truth and the whole truth. A series of state politicians, led by those in New South Wales, Victoria and South Australia, set themselves high renewable targets and began subsidising vast investment in wind and solar farms, as well as other renewable projects, including
Via the ABC: Malcolm Turnbull’s son has lashed out at vested interests in the Queensland coal mining industry, who he says are exerting undue influence over the Liberal Party’s energy policy. Alex Turnbull, who describes himself as a keen environmentalist, studied economics at Harvard and runs a private hedge fund in Singapore. Before leaving Australia
Via Matthew Stevens at the AFR today: Why is NSW like Lithuania? Well, according to a bunch of clever Norwegians, it is because the Baltic nation and Australian state share similar sources and solutions to their individual energy challenges. The Norwegians in question work for Hoegh, the world’s leading provider of floating liquid natural gas
Finally somebody talking sense on energy and gas. And it wasn’t the other bloke.
As a PM, if you let your country get eaten alive by rent-seekers’ devouring the fundamentals of your civilisation then you deserve everything that you get. This is the sad and sorry truth now confronting Australia’s worst ever PM, Malcolm Bligh Turnbull. The Turnbull Government has been staggeringly slow to recognise the wreckage of the energy
Has a political party ever torn itself apart so spectacularly as the Coalition on energy? The AFR says the NEG will pass the party room: The Coalition party room is expected to endorse the National Energy Guarantee on Tuesday despite last ditch efforts by former prime minister Tony Abbott and former Nationals leader Barnaby Joyce to torpedo the policy.
Super news, Aussie gas suppliers have been trumped again by US, via Reuters: U.S. liquefied natural gas (LNG) company Cheniere Energy Inc said on Friday it had signed a 25-year deal to supply Taiwan’s CPC Corp, which CPC valued at roughly $25 billion. Cheniere said it will sell 2 million tonnes of LNG per year
