With Prelude FLNG finally exporting its first LNG cargo in June and the Australian LNG line-up nominally complete, where does Australia stand?
The world’s three LNG Basins have continued on a path of continuous production growth on a year-on-year basis, by as much as – in the case of the Atlantic – 2.1 million tonnes (mmt), where exports have seen robust growth over the past 12 months due to the commissioning and ramp-up of capacity in the United States. Meanwhile, year-on-year growth was less dramatic in the Middle East as it predominantly consists of legacy plants, and which therefore is not surprising.
Much more noteworthy, however, is the even slower pace of year-on-year growth seen in the Pacific, where massive capacity additions in Australia were supposed to have catapulted the continent past Qatar to establish a new leader in LNG exports as of November 2018.
According to our data this has not yet happened, despite the iconic Prelude FLNG barge exporting its first commercial cargo in June.
There can be no doubt that Australia has achieved tremendous increments in nominal LNG production capacity, translating into cumulative export growth of roughly 17% over the past 24 months.
Nevertheless, total Australian LNG shipments over those past 24 months amounted to ‘only’ 139mmt, i.e. less than 63mmt in the first 12 months and a little more than 76mmt in the second 12 months.
In contrast, Qatar’s Ras Laffan LNG complex – consisting of RasGas I-III and Qatargas I-IV – shipped roughly 80mmt in the first 12 months and more than 83mmt during the second 12 months.
The key is the difference between nominal capacity and utilisation. Qatar’s nominal capacity remains where it has been for more than a decade: 77 million tonnes per annum (mtpa). Although the emirate plans to expand its nominal LNG capacity by 43% to 110mtpa, that increment may still be more than half a decade away. Meanwhile, Qatar has produced, and likely will continue to produce, consistently above nameplate capacity, effectively relying on equipment not to fail to avoid lengthy maintenance outages as a result of having the foot constantly on the accelerator.
Australia’s nameplate capacity, in contrast, has surpassed that of Qatar by 14%, totalling 88mtpa. However, our data shows that the continent’s exports only surpassed Qatar briefly in November 2018 – an event which give rise to some hyperbole – but was unable to sustain a growth rally that had unfolded since June 2018. Although more cautious observers highlighted that Australia’s November spike would likely be a flash in the pan, they pointed to summer 2019 for another growth spurt that would finally carry Australia past Qatar for good.
Summer 2019 is here but another Australian growth rally has yet to happen. On a cumulative basis, Qatar is already ahead by roughly 3.3mmt this year, which is the equivalence of all LNG shipments out of Ichthys LNG since its commissioning, which suggests the plant is currently operating at around 50% capacity on an annual basis.
Whilst it had previously been suggested that it would be the LNG cluster in Queensland that would slow Australian LNG growth due to gas shortages, the picture that has transpired since is a little more nuanced.
The cluster of three Queensland plants located in Gladstone harbour – Australia Pacific LNG, Queensland Curtis LNG and Gladstone LNG – has averaged 92% utilisation over the past 12 months. Similarly, the four plants in Pilbara – Gorgon LNG, NWS LNG, Wheatstone LNG and Pluto LNG – averaged 103% utilisation since July 2018.
The nuance lies in Australia’s largest LNG producers’ stellar performance that provides the base current for Australia’s overall performance as an LNG exporter, and which are vital but insufficient to push Australia past Qatar on its own. The peak in November 2018 was due to smaller plants – Darwin LNG, Pluto LNG and Gladstone LNG as well as Ichthys LNG’s first LNG exports – surfing that current coming from Gorgon LNG, NWS LNG et al.
Unfortunately, Darwin LNG, Pluto LNG and Gladstone LNG could not sustain their high production, and with a protracted downward trend in output by the Pilbara plants since December 2018, Australia struggles, and is likely to continue to struggle, to surpass Qatar once and for all – at least this year.Previous:
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