Australia Natural Gas Industry Outlook

  • An interconnected gas grid connects all of Australia’s eastern and southern states and territories. While traditionally focussed on domestic sales, this market is undergoing structural changes as a gas export industry
  • The western gas market is heavily focussed on exports, but also supplies domestic consumption in Western Australia
  • The northern gas market is Australia’s smallest producer. Its basins provide gas for export, and also for domestic consumption in the Northern Territory
  • The eastern gas region has some wholesale markets for gas, which allow retailers or large customers to purchase gas without entering into long-term contracts
  • AWE plans for two new domestic gas production facilities at Western Australia, namely Wheatstone at 200 TJ/day (by 2018) and Gorgon at 118TJ/day (by 2020), thereby increasing the total capacity by 19 percent by 2020

australia-natural-gas-marketNatural Gas Proved Reserves 

  • Australia’s natural gas proven reserves stood at 70 Tcf in 2017, i.e., 133 percent increase over 2016 
  • Explorations and discovery had increased Australia's proven natural gas reserves from 28 Tcf in 2012 to 70 Tcf in 2017, an increase of almost 150 percent
  • Australia has a R/P ratio of 44 years, which is lower than the world’s average of 52.8 years, indicating higher demand in the coming years, cautioning to increase explorations and productions
  • AWE reports independent review had increased by 78 percent the estimated reserves for Waitsia natural gas field in the Perth Basin of Western Australia which a largest onshore discovery for 40 years and is destined for the domestic market

Australia Natural Gas Price Analysis  

Historical Price

  • The Australian industrial natural gas price is averaged at AUD 9.41/GJ in Sept-Nov 2018, an increase of 13.49 percent as compared AUD 8.3/GJ in June-Aug 2018
  • Increase in price is mainly due to the highest summer demand for natural gas in power production across APAC regions
  • Insufficient coal supply, decrease in crude production by OPEC, and shortage of crude at a global level, due to the US–Iran disagreement, has added to the rise in natural gas price

Price Forecast 

  • During Dec-Feb 2019, average natural gas industrial price is expected to increase by 8.6 percent over Sept-Nov 2018 to average at AUD 10.2/GJ. This is due to an increase in demand for natural gas from the US and Asian Pacific regions, due to extreme low temperatures across these regions
  • Natural gas supply tightness from OPEC’s production cut down, increased record low winter demand from the US and APAC market will keep the Australian natural gas demand higher

Australia Natural Gas Price Drivers 

  • Domestic gas consumption and LNG exports are the key drivers in determining the wholesale price component of the final industrial natural gas prices
  • At the industrial level, load factor and Take or Pay levels can alter gas bills significantly, and therefore should be optimized