COVID-19 caused a global slow-down of markets, however liquefied natural gas (LNG) exports from Australia have remained steady.
EnergyQuest’s June 2020 report attributed this to continued demand for LNG from Asia.
Although LNG prices have dropped, oil and gas companies are able to maintain production and export levels because of cost discipline and sound balance sheets, owing to lessons learned from the oil price collapse in 2014.
Part of the steady demand for LNG is due to demand for energy in China remaining strong.
According to the National Bureau of Statistics, the growth rate of natural gas imports in China has steadily risen, with imports up 3.7 per cent year on year in May.
S&P Global said natural gas consumption is largely driven by industrial, power, and residential and commercial activity.
The National Bureau of Statistics indicated that industrial power generation in China was up 4.3 per cent year on year in May, with thermal power up 9 per cent year on year, and hydropower rising by 16.5 per cent year on year in May.
Closer to home, domestic natural gas demand is also increasing, with Chevron signing a domestic gas sale agreement with BHP Nickel West.
Under the agreement, Chevron plans to supply BHP Nickel West with a total of 22 Petajoules of equity domestic gas over its 3.5-year term.
Strike Energy boss Stuart Nicholls told a recent Petroleum Club webinar that delays to the Browse and Scarborough gas projects could open opportunities for smaller operators and had sparked a flurry of movement as businesses sought to secure gas contracts.
“I think that the market has quickly turned on a dime from thinking we're going to see Browse and Scarborough proliferate gas into the West Australian market and I'm going to have my pick of the litter of cheap and affordable gas, to the major industrial customers of Western Australia now saying I need to secure gas for the mid part of the decade, because a lot of these major projects have been delayed.”