(Montel) Australian LNG producers have begun to feel the impact of slumping demand among key Asian buyers due to the coronavirus pandemic, consultancy Energy Quest said in a report on Monday.
Exports fell 7% between April and May to 6.5m tonnes amid sharp reductions in purchases from Japan and South Korea, the world’s biggest and third-biggest LNG buyers, the Adelaide-based company said.
Deliveries to China were “still holding up” at 37 cargoes last month, down three cargoes on April and one year on year.
Though total exports remained flat relative to May 2019, the comparison obscured the extent of oversupply in the market that could be seen in a swathe of vessels with no clear destination.
“Energy Quest estimates 41 Australian cargoes have anchored offshore or are steaming slowly awaiting final destination orders during May and early June.”
This amounted to nearly half the 93 cargoes to leave the country last month – one vessel loaded in May and bound for Mexico was even delayed by three weeks, the company said.
“The global energy industry is still far from recovered from the demand reduction from the pandemic and there has been no sign of a coordinated response to address the gas glut.
“Top exporters still have not reduced output and stockpiles are nearing capacity (and expected to reach capacity in Europe in August) meaning the fallout could be deeper and longer than seen with the oil price.”
Energy Quest estimated margins on spot LNG exports to Japan from Australian west coast suppliers stood at just USD 0.08/MMbtu in May (EUR 0.24/MWh). By contrast, east coast suppliers likely recorded losses of USD 1.38/MMBtu (EUR 4.20/MWh) on spot sales.
Maintenance contributed to the decline in Australian LNG exports, with the APLNG east coast project extending work by almost three weeks to 18 June.
Australia is the world’s second-biggest LNG producer just behind Qatar.