Australia’s resource and energy export earnings are forecast to hit a record $425 billion in 2021-22, according to the Office of the Chief Economist.
The March Resources and Energy Quarterly report found the increased earnings were largely driven by the Russian invasion of Ukraine and were forecast to fall back to $370 billion in 2022-23 as bulk commodity prices return to more ‘normal’ levels.
According to the report, energy commodity prices rose 171 per cent year on year due to energy security concerns, intensified by global sanctions on Russian exports.
Australian coal and LNG exporters should achieve high prices over the next year because of energy shortages and issues with Russian supply, however, prices were expected to slide from 2022 as global coal and LNG supply increases and demand growth moderates.
A large contributor to the high export earnings was LNG, more than doubling to $70 billion in 2021-22, and forecast to reach $82 billion in 2022-23.
Trade is expected to expand at a slower rate after 2023 as the post COVID-19 rebound effect fades.
Global oil price forecasts remain uncertain because of the Russian invasion.
While oil consumption is 6.1 per cent higher than in 2020, it still sits 2.9 per cent lower than in 2019 because of COVID-19 uncertainties.
Oil export earnings increased 86 per cent in 2021-22, and were forecast to hold steady in 2022-23.
Demand growth is expected to be evenly matched by supply growth to 2025, and large projects set to come online in 2026 in the US and Qatar will result in
the market being over-supplied.
LNG in the regions:
China took the title of world’s largest LNG importer from Japan in 2021 as it raised imports to 80 million tonnes, a 20 per cent increase year on year.
Japan continued to decrease its reliance on LNG, importing 73.9 million tonnes in 2021. The 6th Strategic Energy Plan, released in October 2021, proposed a decline of gas in its energy mix from 37 per cent to 20 per cent by 2030.
South Korean demand for LNG recovered to record levels in 2021 at 46 million tonnes, up 13 per cent year on year. Although this is set to moderate in 2022 to 2023, it will likely show strong growth from 2024 as it plans to use LNG as a transition fuel.
Taiwan will likely see steady LNG demand over the five-year outlook period due to its existing import terminals operating at full capacity. Three new import terminals are expected to come online between 2024 and 2026, which will see imports grow from 19.6 million tonnes to 22 million tonnes by 2027.
High prices saw India’s LNG imports drop 8.6 per cent in 2021. Although demand could see up to 6 per cent annual growth to 2027, highly price-sensitive LNG imports could mean demand destruction if there is any escalation in prices.
European LNG imports were down 4 per cent despite the backdrop of an energy crisis that saw coal-fired generation increase 11 per cent year on year. An increased focus on renewable generation will continue to see LNG demand decrease, albeit seeing a temporary increase over 2022, decreasing once again from 2023 in line with overall gas demand.