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
This is what happens when you get an artificial energy panic leading to draconian intervention to stabilise prices owing to politics: China’s daily coal output hit 11.7 million tonnes on November 3, close to the highest level this year, and output is expected to increase further as planned maintenance at coal mines gradually ends, the
This says it all about Australia at COP26: Is Australia even there? Or is it Santos with a national fag hag attached. There’s more here if you want to heave. Notice the finely crafted aboriginal motifs, the serene and clean ocean blue, the endorsement for CCS that doesn’t exist. This is why Scott Morrison attended
The global energy volatility machine rolled on yesterday. In China, the NDRC surprised the market and me by removing the jackboot: Traders took cue from a meeting earlier on Wednesday as the country’s top economic planner, the National Development and Reform Commission, told miners and power plants at a web-based conference that prices should not
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Via the ACCC: This is the July 2021 interim report of the Australian Competition and Consumer Commission’s (ACCC’s) inquiry into gas supply in Australia (the Inquiry). Gas prices in the east coast gas market through to February 2021 remained low. However, domestic spot and LNG prices have since risen considerably, and the supply outlook for
