Australia’s LNG surge: $63B in earnings
Australia’s LNG sector is set to show record exports and earnings, following an increase of 6.5% in volume to 82 million tonnes in 2021-22 and into 2022-23.
Earnings will double from last year’s paltry $30 billion according to the latest Resources and Energy Quarterly from the Office of the Chief Economist.
The dramatic hit to both oil and spot prices mean earnings will sit at $63 billion this year before evening out to $55 billion the following. This is driven by the oil prices surging and Australia’s exposure via three quarters of LNG being sold through long term oil-linked contracts.
The December outlook revised assumptions from the September issue.
Global LNG trade is anticipating a 2.5% growth in 2021, due to the global economy showing strong recovery from the Covid-19 pandemic.
Australia supplied 22% of world LNG, in line with Qatar. Last year, LNG only comprised 12% of global gas demands, down from 23% in 2019.
“The forecast for $311 billion (in total) export earnings in 2022-23 is up $12 billion from the September quarter 2021 REQ. Downward revisions to iron ore prices, have been more than offset by the impact of improved energy earnings in 2022-23,” stated the REQ.
Asia remains the main driver of import growth of LNG, with approximately 22% growth expected in 2021, mainly driven by the Chinese demand.
The global LNG trade is anticipated to increase by 7.2% in 2022 and 1.4% in 2023, as a result in demand growth flat lines following the recovery of Covid-19.
China’s gas demand will increase by 13% in the two-year outlook period, as the switching policies from coal to gas continue to drive this alongside industrial and residential demand.
The REQ sees China importing 80 million this year.