Bullish LNG Export Outlook

Good news in AUST today:

Oil surge to drive $8.1bn LNG windfall
RECORD EXPORT REVENUES FOR ECONOMY
Rebounding global oil prices are set to deliver an $8.1 billion windfall to export revenue over the next two years, as the nation’s expanding LNG sector gets a double benefit from rising output and higher prices, helping boost export revenues to a record $238bn this financial year, the federal government’s commodity forecaster says. The new figures were revealed yesterday in the June quarterly report by the Department of Industry, Science and Innovation’s Office of the Chief Economist.

The export boost is good news for liquefied natural gas exporters Santos, Origin Energy, Shell and Chevron on the east and west coasts. And it will provide more company tax and Petroleum Resource Rent Tax to the federal government, although this will be limited by big deductions for the LNG exporters after the construction binge over the past decade that is boosting volumes.
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The biggest contributor to the 2018-19 forecast boost is a $4.6bn, or 12 per cent, rise to LNG export revenue expectations, which are now at $43.5bn. This will make LNG the nation’s second-biggest export (after iron ore) for the first time, overtaking coking coal.
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LNG contract prices are linked to global oil prices, meaning a 57 per cent rise in Brent oil prices to a new three-and-a-half-year high near $US80 a barrel in the past year is adding to the nation’s export income in a big way, on top of providing pain for motorists. For 2019-20, LNG revenue expectations have been boosted by $1.8bn to $42.2bn. Australian oil export revenue forecasts for this financial year and next have been boosted by $1.7bn. “Prices for Australian LNG exports are projected to rise from $8.10 a gigajoule in 2016-17 to $10.50 a gigajoule in 2019-20,” the OCE said.

The stronger LNG prices mean east coast domestic gas users are likely to face higher prices too because the construction of three big LNG plants at Gladstone has opened the east coast to export-parity pricing. The nation’s LNG production has been rapidly growing as $200bn of boomtime investment comes on line. Export volumes are forecast to triple from around 25 million tonnes in 2014-15 to 77 million tonnes by 2019-20. There are no significant changes to export volume expectations in the latest report.

It comes amid rising global demand in the LNG market, with China driving the uplift in 2017. By 2020, global LNG trade is tipped to exceed 360 million tonnes, up 25 per cent from 2017, helped by Japan’s nuclear restarts and increasing imports from China, which is responsible for almost one-third of Australian exports.........'