Industry Trend Analysis - Domestic Gas Supply Commitments Building - NOV 2017
BMI View: Major LNG project operators in Eastern Australia are making greater efforts to divert more gas supply to the domestic consumers, in order to minimise the risk of potential limits on LNG exports. Australia proposed restrictions on LNG exports to priortise gas for domestic needs, though we maintain Australia's LNG exports will be minimally impacted.
LNG producers in Eastern Australia (EA) are stepping up efforts to boost gas supply to the local market as Canberra entertains the possibility of restricting LNG exports from the region. Australia is on course to surpass Qatar to become the world's biggest LNG exporter by 2019. However, a focus on targeting lucrative Asian export markets has left domestic markets undersupplied . This has led Australia to contemplate restricting exports from its three EA-based mega liquefaction plants to enhance supply security and lower gas prices for Australian end-users, which have reportedly tripled in the past two years. In July 2017, the government started a formal consultation process with key industry stakeholders to determine the likelihood of an EA gas shortage in 2018, and whether gas exports would need to be curbed as a result.
Santos, the operator of Gladstone LNG in Queensland, is spearheading moves to increase gas supply for the local consumers. GLNG has borne the brunt of the government's scrutiny, as the project often purchases third-party gas that would otherwise be sent to the domestic markets, in order to compensate for underperforming output at its caol-bed methane fields.
|More Pipelines, Gas Price Cuts Needed|
|Australia - Natural Gas Consumption & LNG Exports|
|f = BMI forecast. Source: JODI, BMI|