Australia, which is profiting from surging gas prices in Asia, remains the largest liquefied natural gas (LNG) supplier to North Asia. But its market position in the booming Chinese market is under threat, warned Australian consultancy Energy Quest.
“Chinese buyers have been very active this year in securing long-term LNG contracts, primarily with the US and Qatar, but not with Australia. Contracting with US projects has gone ahead, notwithstanding geopolitical tensions and tariffs and by the end of 2022 the Energy Information Administration expects US LNG export capacity to be the world’s largest, ahead of Qatar and Australia,” Energy Quest said in its latest monthly report released today.
“Australia remains far and away the largest LNG supplier to North Asia. In October it was the largest supplier to China, Japan, Korea, and Taiwan, with an aggregate market share of 36%, followed at some distance by Qatar with a 14% share, the US with 11%, Malaysia with 10% and Russia with 9%. Australia’s proximity to Asia, the fastest growing gas market, has been an advantage but also means it has its eggs in relatively few markets. These four markets accounted for 85% of Australian LNG deliveries in October, of which Japan was 29% and China 36%,” reported Energy Quest.
“The outlook for Japanese LNG demand continues to be uncertain. Notwithstanding this uncertainty, Australian LNG projects are still successfully doing deals with Japanese companies. A year ago, Santos signed a deal with Mitsubishi to supply 1.5 Mtpa for 10 years from Barossa and more recently it has sold down 12.5% of Barossa to JERA,” said the consultancy.
While future Japanese demand is uncertain, Chinese gas demand is booming. In the nine months to September, LNG demand increased by 23.0%, said Energy Quest.
In this environment the Woodside-led (ASX:WPL) Scarborough LNG development, which was recently sanctioned, in Western Australia, should be an obvious candidate for Chinese contracts, added the consultancy.
“Scarborough is still only 60% contracted, 44% when Woodside’s interest increases to 100%, so it has plenty of scope for further contracts. However, the apparent absence of Chinese interest in Scarborough is inexplicable in a situation where US producers are actively signing Chinese contracts,” said Energy Quest.