Australia’s LNG export volumes face growing pressure as gas projects age, according to an
assessment in the latest Resources and Energy Quarterly review.

The review, from the Office of the Chief Scientist, said Australia has 10 LNG facilities with combined output of around 80 million tonnes annually.

“However, this gas production is likely to come under growing pressure in the late 2020s,” the report said.

“Gas exploration has been persistently low for the last five years and there is a risk that the current pipeline of gas projects under development becomes insufficient to offset declining reserves.

“Several projects are likely to start running short of reserves in the next 5-10 years, including the
large North West Shelf project in Western Australia.

“There is potential for the North West Shelf to be supported by third party gas, which operator
Woodside and its partners are attempting to secure.

“However, falling reserves will affect a wider array of projects over time, and higher domestic gas
use (driven by the closure of domestic coal plants) could put pressure on supply.

“Progress at the Pluto LNG facility should help to shore up exports during the outlook period. The connected Scarborough field is also under development.”

The report said that while the Pluto Train 2 would add to export volumes initially, it would be offset by falling output at other facilities, and overall exports were
expected to start falling late in the five-year outlook period — and more rapidly beyond it — if no other significant developments occur.

Australian LNG export earnings are expected to fall to A$72 billion in 2023–24, easing further to A$45 billion by 2028–29 (in real terms), the report said.

“This decline is largely a result of falling prices, with export volumes projected to be broadly steady over the next five years,” it said.

“Revisions to the outlook Australian LNG export earnings forecasts have been revised down by just under $1 billion for 2023–24 and revised up by a similar amount in 2024–25.

“This reflects recent geopolitical events which have influenced prices slightly since the December 2023 Resources and Energy Quarterly.

“Export earnings projections for the subsequent two years of the outlook period have not changed significantly since the March 2023 edition. However, the earnings
projection for 2027–28 has been revised up by around $3 billion.”

In a statement, Federal Resources Minister Madeleine King said the report showed that Australia’s resources and energy export earnings were forecast to return to long-term trends over the coming two years on the back of softer world growth and improved supply, but the long-term outlook looked increasingly positive as prices stabilised and demand from India grows.

“China will remain a huge influence on resource and energy commodity markets, but India is likely to account for a significantly larger share of world commodity
demand by 2029,” Minister King said.

The Resources and Energy Quarterly March 2024 report is available here.

Return to eNews