Australia to lose LNG export crown to Qatar and US by 2021
Australia is set to lose its crown as the world’s largest LNG exporter as Qatar and the US move ahead with new investments.
Australia will lose its crown as the world’s largest LNG exporter to rivals Qatar and the US by 2024, as the focus switches to keeping existing plants topped up and expansions over sanctioning new greenfield developments, Fitch Solutions has warned.
Australia and Qatar have been jostling for pole position in recent years, while in June the US exported more LNG than Australia for the first time on record. The US move marks a major new commodities rival and underscores heightened competition for Asian gas buyers.
The two competitors will start to pull away from Australia within three years, despite a move by Woodside Petroleum to sanction its $16.5bn Scarborough gas project to help fill an expansion of Western Australia’s Pluto LNG plant.
Australia “stands to lose out to the likes of Qatar and the US in the coming years, where greenfield-heavy project pipelines are expected to lead to more prominent rises in LNG output”, said analysts from Fitch Solutions, the research arm of credit ratings agency Fitch Group.
“This will require LNG exporters in Australia to adopt creative measures to stay competitive, including accommodating growing buyers’ demands for more flexible contract terms and pricing mechanisms.”
While the US will only develop a slender lead over Australia later this decade, Qatar has ambitions to add an extra 42 per cent of capacity. Qatar Petroleum will add four LNG trains, each with 8.25 million tonnes of capacity, equivalent to more than twice the capacity of Australia’s largest export facility, the North West Shelf LNG plant in WA. While the US outperformed in May, it still has some distance before it regularly tops its two main competitors. The US shipped 44 million tonnes of LNG in 2020 compared with Australia and Qatar, which tied on 77 million tonnes each.
For Australia, much of the focus is now on keeping ageing LNG plants such as the North West Shelf and Darwin LNG full as their legacy sources of supply begin to dry up.
The “pace of growth in Australia’s LNG output is forecast to be slower over the next decade, compared to the last, as development focus shifts to brownfield, primarily focused on maintenance and project life extension, rather than greenfield projects that prioritise absolute volume growth in output”, Fitch analysts said.
Woodside said in November it may shut off supplies in 2024 from the North West Shelf as concerns grow about the lack of gas for the facility.
The issue has been reignited following Woodside’s decision to send gas from the $16.5bn Scarborough field to prop up an expansion of its existing Pluto LNG plant, rather than filling a looming supply gas at its jointly owned NW Shelf facility, which is next door to Pluto.
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