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Total Australian exports for the year to November are running 1.2 Mt ahead of the same period last year and EnergyQuest expects that total exports for the year could reach a new record of 78 Mt, up on the 77.5 Mt exported in 2019.
The two biggest markets for Australian LNG are Japan and China, which both took 2.6 Mt in November, higher than November 2019 in both cases. The third and fourth biggest markets were Korea and Taiwan. While export volumes have done well during 2020, prices have been gutted.
In March, total LNG export revenue was $4.4 B. By September it was down to $1.8 B. In October, export revenue was $2.2 B and EnergyQuest expects that it may have reached $2.9 B in November. As of 11 December, the Platts JKM for January was $11.23/MMBtu, a more than 26-month high and higher than oil-linked prices, currently around US$5.36/MMBtu. As recently as June the JKM was US$2.00/MMBtu.
Platts attribute the stronger spot price to a tighter shipping market, persistent supply disruptions and expectations of cold weather in China and South Korea. Some of the supply disruptions driving higher prices are Australian, reflecting not only the repair work at Gorgon but also possible issues at Wheatstone and Ichthys. Supply issues at west coast projects can have indirect impacts on east coast domestic gas prices through their impact on LNG spot prices.
Consistent with higher LNG spot prices, short-term domestic gas prices were higher in all east coast markets in November than in October, although still below levels in November 2019. The Wallumbilla price averaged $5.88/GJ in November, up from $4.99/GJ in October, although below $7.22/GJ in November 2019. The Wallumbilla price in November was similar to the ACCC netback estimate of $5.71/GJ.
The massive volatility in LNG spot prices also leads to massive volatility in east coast LNG netback prices.
In July, the ACCC Wallumbilla netback price estimate was $2.29/GJ, well below the cost of gas production. At the current LNG spot price of US$11.23/MMBtu the Wallumbilla netback price would be $12.53/GJ (using the ACCC methodology and a 0.75 exchange rate), more than most domestic manufactures can afford.
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