Declining gas a bigger threat to LNG exports than China

Declining gas supplies – rather than China – is the biggest risk to Australia’s world-leading exports of liquefied natural gas, according to research firm EnergyQuest, which has found that shipments are weathering the pandemic well with only a slight dip in cargoes last month.

Gas supplies to Santos’ Darwin LNG venture will soon decline, before a replacement field comes online, and technical problems have reduced shipments from the Woodside-run North West Shelf venture, which the firm said was also facing a drop in output as fields matured.

Technical issues have also plagued Chevron’s huge Gorgon venture and will continue to affect output this year.

LNG exports at the North West Shelf venture in Western Australia are expected to decline this year.

On the east coast, Santos’ GLNG venture has never run at its full capacity of 8.6 million tonnes a year because of limited gas supply, while the ability of Shell’s QCLNG venture to maintain current output depends on the development of fields owned by the major’s Arrow venture with PetroChina, which could be affected by political issues.

“Chinese threats are the ones that grab the headlines, but having insufficient gas to maintain exports [is] potentially more important,” EnergyQuest said in its latest monthly LNG report, released on Friday.