A steady upswing in the growth of liquefied natural gas (LNG) exports since 2015 has led to Australia overtaking production powerhouse Qatar as the world’s top volume seller for the first time.
Statistics recently released by Refinitiv Eikon, the financial data arm of Thomson Reuters, showed Australia loaded 6.79 million tonnes (mmt) of LNG for export in November, compared to Qatar at about 6.2mmt.
This was a 15 per cent increase from the previous month for Australia and a three per cent contraction for Qatar, which sits on the world’s biggest conventional gas field and has dominated world trade for the past decade.
Strong November exports mark a major milestone for Australia’s LNG sector, which has attracted about $1 billion in investment and doubled outputs to an estimated annual value of $23 billion, during the past decade.
This has been driven most recently by the development of INPEX Australia’s giant Ichthys gas and condensate field in the Browse Basin off northern WA.
Ichthys has been the biggest discovery of hydrocarbon liquids in Australia in 50 years and sparked activity that has seen several LNG export projects start-up across Australia in the past three years, including the Royal Dutch Shell Prelude operation and Chevron’s Wheatstone development.
A 2017 report by the Federal Department of Industry, Innovation and Science (DIIS) estimated the completion of these major projects would lead to a combined nameplate LNG capacity of 88mmt per year, worth $39 billion in Australia by 2022-23.
Energy industry analyst Neil Beveridge, of Sanford Bernstein, told Reuters this month that as Ichthys continued to ship gas and new projects came online from 2019, Australia would further cement its pole position in world LNG trade.
But he warned Qatar would respond to this upsurge in activity, with a new wave of projects expected to be launched that would see the small nation regain its position as the globe’s leading gas exporter by the early 2020s.
Several industry experts attribute the slowdown in recent monthly LNG exports from Qatar to plants being closed for maintenance, but also predicted the country would be quick to bounce-back.
With a fourth LNG production line already in play, it is expected Qatar will boost its LNG capacity by 110mmt by early 2024, up from current production levels of about 77mmt. This represents 30 per cent of world LNG trade, of which it has the third-biggest reserves.
As part of this expansion, Qatar - which also exports about 600,000 barrels per day of crude oil – announced it was pulling out of the Organization of the Petroleum Exporting Countries (OPEC) from January 2019.
Wood Mackenzie analyst Nicholas Browne told Reuters the drop in Qatari LNG exports in November was due to maintenance, making Australia’s time at the top limited.
“Qatar will likely produce 6.5mmt in December, meaning it will again be the largest exporter,” he said.
“We expect Australia will regain the role of largest exporter from summer 2019, when Ichthys and Prelude have fully ramped-up, but the reality is Australia will only keep this title for a few years before Qatar retakes the crown.
“In the longer term, it will likely be a USA versus Qatar story for the top spot - with Australia in third place.”
Qatar is understood to be expanding the capacity of its Ras Laffan plant alone to about 110mmt per annum by the end of 2025, or early 2026.
But Dubai-based MUFG Bank regional research and strategy head, Ehsan Khoman, said Australia had a key advantage of being in close proximity to major gas importers.
“Lower transportation freight costs will remain the backbone of Australia’s comparative advantage as an exporter vis-à-vis Qatar, given its geographical closeness to the largest LNG importers in Asia, namely, Japan, China and South Korea,” he told Reuters.
“Rising LNG exports from the USA will add to the global market competition.”
Mr Khoman said the LNG industry was likely to undergo a major transformation in the coming years, driven by new USA supplies.
The USA is the biggest producer of natural gas, but a relative newcomer to the export market, with Cheniere Energy in 2016 shipping the continent’s first cargo of LNG in more than six decades.
“It is our expectation there will be a three-way tug of war between the US, Australia and Qatar and this will intensify in the medium-term for global leadership among LNG exporters, notably for a larger share of the key market in Asia,” Mr Khoman said.
Other top 10 LNG exporting nations include Malaysia with 25mmt in 2016 (10 per cent of global supply); Nigeria with 18.6mmt in 2016 (7.2 per cent of global supply); and Indonesia with 16.6mmt in 2016 (6.4 per cent).