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

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Liveras maintains gas rage

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

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Gas directly responsible for power price spikes

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

31

Reserve gas or Australia dies

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

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Finally Canberra smashes gas cartel cone of silence

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

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Turnbull the Younger: Fix gas to end energy wars

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

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LNG imports are bat shit CRAZY

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

11

Malcolm Turnbull’s energy failure turns fatal

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

6

Coalition energy scab grab intensifies

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.

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Great news, US gas trumps Aussie again

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

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The lunacy of gas imports exposed

Via The Australian: Fresh gas shortages on Australia’s east coast could emerge from mid-2019 — two years sooner than official forecasts — due to a sharp decline in Victorian offshore gas production piling renewed pressure on domestic prices, a private firm fronted by former BHP executives has warned. Venice Energy, the Mitsubishi-backed venture that aims

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Giant LNG pirate ship arrives to plunder Australia

Via the AFR: Shell’s groundbreaking Prelude floating LNG plant off Australia’s far northwest coast has gone “live” ahead of the start of production later this year, chief executive Ben van Beurden has confirmed. LNG and liquefied petroleum gas have both been introduced into the plant in preparation for commissioning and testing of processes and systems

14

Australia’s astonishing gas debacle

Via Michael West comes Bruce Robertson is a gas analyst with the Institute for Energy Economics and Financial Analysis (IEEFA): “Australia may soon be importing gas.” What a bizarre, implausible statement. Australia is the second largest exporter of gas in the world. Why would we ever import gas? Our very own Department of Industry, Innovation and Science ranked

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Samter: Embrace imported LNG or doom

Via the AFR: Only LNG imports can save the Australian government from a nightmare scenario of having to choose between breaking gas export contracts with Asian buyers or subjecting the east coast to real supply shortages, according to the respected energy analyst that sounded the alarm on the “slow train crash” looming in the market

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Just do the opposite of whatever the ACCC suggests on energy

Australia’s primary energy market wrecker, the Australian Competition and Constanza Commission, is talking big today: Investors in AGL Energy and Origin Energy are right to be worried about the prospects for their electricity retailing businesses, according to competition tsar Rod Sims, who is leading the regulator’s crackdown on the way the big three players treat their most

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India squashes LNG shortage drivel

It’s all garbage: India’s renegotiated gas import deal with Russia’s Gazprom will save between Rs 8,500 crore and Rs 9,500 crore over the contract period ending 2040, Oil Minister Dharmendra Pradhan said today. State-owned gas utility GAIL India Ltd had in January taken advantage of the Russian company’s inability to deliver liquefied natural gas (LNG) from the

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ACCC energy idiocy exposed

From Bartho today: It is a measure of the complexity of the issues, the scale and number of the deficiencies and the difficulty of responding to them that the Australian Competition and Consumer Commission’s inquiry into energy affordability has come up with 56 recommendations. It is also a pointer to the convoluted nature of our

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Why would anyone listen to ACCC advice on energy?

The ACCC is breathing fire, via The Australian: The competition watchdog has called for radical reform of the ­National Electricity Market to bring down prices, claiming the gouging of households and business consumers has reached an “unacceptable” level with widespread abuse of market power by the larger energy companies. Recommending the most significant shake-up of