p1-6_LNG 3 05/04/2018 11:36 Page 1 36 pages essential LNG news! April 2018 In this issue: 1 LNG projects LNG projects Wheatstone, Ichthys and Wheatstone, Ichthys and Prelude complete Prelude complete investment wave investment wave Australian plants have become a significant part of the Mining Industry and may benefit from flexibility Australian plants have become a significant part of the Mining Industry and may benefit from Australia may have to demonstrate more flexibility flexibility in its liquefied natural gas industry as it moves forward and 4 International Gas Union becomes the world’s largest producer, highlights China case with one area identified as spending on studies to back natural developing more natural gas reserves gas and LNG surge and importing volumes or shipping Monitoring in cities of Beijing, Shanghai and Urumqi show clear domestic cargoes from west to east for the health benefits of switch to cleaner domestic market. fuel The Australian government’s Office of the Chief Economist has published a 7 A round-up of latest report on “Flexibility and Growth” in the events, company and economy. industry news Expansion in LNG production resulted in significant annual growth in the sector For the Record Significance 18 Argentina sets date for The period of reform that began in the from GDP growth since 2013-2014,” said Australia began to grow more strongly 1980s shaped a new, more productive and the report. than the OECD average. first Atlantic licensing more flexible economy and brought forth “The completion of the three The first two Australian processing round to complement the LNG export industry. remaining LNG projects - Wheatstone, Trains come on stream at the Woodside shale gas efforts amid “LNG has become a significant part of Ichthys, and Prelude - in 2018 will largely Petroleum export plant at Karratha in LNG doubts the Mining Industry. Australia continued mark the end of the mining investment Western Australia in 1989. South American nation pursues combination of offshore to increase its gas liquefaction capacity boom,” it said. In the past, firms had been able to pass exploration and onshore shale-gas with the completion of the Gorgon project It noted that these LNG projects will on excessive input costs to customers projects in Western Australia, and the ramping up have collectively cost around A$100 because they were protected from 20 Outlook covering of production at three coal-seam gas billion when completed. international competition by a tariff wall. projects in the eastern states,” said “With falling levels of protection, local industry advances the report. Growth firms and workers were forced to improve examines place for “The expansion in LNG production The end of the LNG investment boom will productivity to remain competitive. LNG and other fuels resulted in significant annual growth in be followed by a return to more typical “Lower barriers to trade also provided in transport and power both export value and volume,” it stated. spending levels. access to imported goods for consumption For the first time UK major BP shares the outcomes of its analysis The report said that business “Looking further ahead, Mining and investment at reduced cost, allowing with the wider world investment had fallen in the past couple investment is expected to stabilise as households and firms to benefit from the of years, though there were some signs firms invest to maintain existing capacity comparative advantages of Australia’s 22 Exploitation of of improvement. and large-scale projects drive investment trading partners,” it explained. recondensing equipment “Business investment fell in 2016- from 2022,” it stated. on LNG carriers to 2017 to A$112.3 billion (US$86.9Bln), “By increasing dynamic efficiency, the Queensland minimize cargo losses down 10.4 percent over the year. reforms allowed Australian firms and One investment area to be looked at is during transport “The fall in business investment is due workers to realise opportunities that Queensland's coal-seam gas reserves. Maksym Kulitsa and David A. Wood, to a continuation of declining Mining improved productivity and competitiveness, These were written down by 1,341 FSRU and LNG consultants, report on key LNG transportation issue (including LNG) investment from the without generating the macroeconomic petajoules last year, more than all the gas peak during the mining investment instability that had plagued the economy estimated in the Cooper Basin, according 27 World Carrier Fleet: boom, with investment in other in the 1970s,” it said. to the annual reserves estimate by Details of LNG vessels industries failing to offset the fall. The report noted that gross domestic Australian consultancy EnergyQuest, product (GDP) growth in Australia The country's total gas reserves on a Performance during the 1960s was below the proven plus probable basis fell 4 percent 31 Tables of import and “Falling Mining investment has weighed Organisation for Economic Cooperation between December 2016 and February export LNG terminals heavily on recent economic performance, and Development (OECD) average but as 2018, down by 5,355 petajoules from and plants worldwide detracting a total of 4.8 percentage points the reforms began to take effect, 119,836 PJ to 114,481 PJ. p1-6_LNG 3 05/04/2018 11:36 Page 2 DEVELOPMENTS “As the reduction in reserves was more both increased domestic supply by countries of Spain, Russia and Mexico,” journal than the actual production in that time, importing LNG. it said. the reserves replacement ratio fell into “In other words, Australia is a negative territory, meaning Australia Reserves medium-sized economy failed to replace the reserves it produced,” In Australia this already occurs with “Australia’s international trade profile the EnergyQuest report explained. crude oil, which is both exported from, is unique amongst medium-sized The impact has been worst in eastern and imported into the country. economies. This is partly due to LNG The World’s Leading publication and southern Australia, with gas reserves The annual reserves assessment found geography but mainly due to policy. dropping by 6 percent. Australia's proven and probable gas Maritime Content Ltd reserves fell by 5355 PJ last year, more Medium-sized 1st Floor, 30 Warner Street Gas supplies than production of 4100 PJ. That put the “Decades of high exchange rates, high London EC1R 5EX EnergyQuest Chief Executive Graeme “2P” reserves replacement ratio for gas in tariffs, high trade costs, restrictive trade United Kingdom Bethune said significant additional 2017 at negative 32 percent. practices and reluctance to participate in www.LNGjournal.com +44 (0)20 7253 2700 sources of gas supply are needed, with Most write-downs of reserves were in multi-lateral trade negotiations have LNG imports. Queensland, in particular at a field held taken their toll.,” it said. Publisher These have been proposed by two rival by Shell's Queensland Curtis LNG, while “Australia’s integration into the global Stuart Fryer projects by AGL Energy and Australian Australia Pacific LNG and the Santos economy has been weak,” it added. Editor Industrial Energy and they could be part GLNG plant also cut reserves at fields. “Mining dominated exports in 2016- John McKay of the solution as they would avoid the Woodside Petroleum, meanwhile, 2017, with the largest share of total [email protected] pitfalls of large-scale government- reported write-downs of conventional gas exports and accounting for most top directed curbs on LNG export contracts. volumes at the North West Shelf and exports by category. Advertising “In our view there are two Pluto ventures in Western Australia, but “The value of the top two exports, iron David Jeffries Only Media Ltd fundamental misconceptions about the proportional impact was greater on ore and coal, increased by more than Tel: +44 (0) 208 150 5293 Queensland gas, one is that there is the East Coast. 30 percent. [email protected] plenty of it, the second is that the problem Meanwhile, the government report “The rise in export values for iron ore Subscriptions Sales Manager in the south can be fixed by diverting said that the weaknesses in the current and coal was driven by higher commodity Elena Fuertes modest gas volumes south without Australian economy and the areas that prices due to increased demand from China. Tel: + 44 (0) 7017 3416 violating international LNG contracts,” need reform into the future have been “However, weather-related disruptions [email protected] said the Bethune report. well canvassed by the Productivity constrained growth in the volume of iron He said the shrinking reserves mean Commission. ore and coal exports,” it said. Production the east coast has two gas challenges, the “What is less well covered is Vivian Chee Tel: +44 (0) 20 8995 5540 risk around reserves for the necessity of reform Decline [email protected] long-term LNG for Australia to “The large decline in Mining investment contracts improve its that has been detracting from growth in with the last few years is now tapering off. Subscription buyers “Record levels of Mining investment in in ...two fundamental previous years boosted LNG production £655/€810/US$1050 Print & online capacity, which is expected to contribute Online only £595/€795/US$950 misconceptions about to growth in the period ahead. “Business confidence is improving, and See website for more details www.lngjournal.com Queensland gas is that there businesses have indicated they intend to [email protected] increase investment in the coming year,” hotline +44 (0)20 7017 3416 is plenty of it [and] that the said the government’s report. “The pipeline of government problem in the south can infrastructure projects in 2017-2018 is also expected to boost government be fixed by diverting modest infrastructure spending growth. “Looking forward, conditions are in No part of this publication may be reproduced gas volumes south without place for a pick-up in economic growth in or stored in any form by any mechanical, 2017-2018 and for Australia to achieve 27 electronic, photocopying, recording or other violating international years of continuous economic growth.