Australia has cut forecasts for the country's LNG exports for 2020-2021 (July-June) by some 6% to 75.6 million mt, citing the expected impacts of both the COVID-19 pandemic and domestic technical issues.
If realized, the forecast for the current fiscal would see volumes fall by 3.7 million mt year on year. They are expected to recover in 2021-2022 to 80.1 million mt, the Department of Industry, Science, Energy and Resources said Sept. 28 in a report.
In the December edition of the report, which came out prior to the widespread impacts of COVID-19, the department had forecast 2020-2021 Australian LNG exports to be as high as 81.3 million mt.
The latest edition noted that Australia's average capacity utilization is expected to fall in calendar 2020 on the back of some buyers having exercised rights to reduce contracted purchases by around 10%. Some of these volumes have been replaced by cheaper spot cargoes, it noted.
"Cargoes have also been delayed, several plants have undergone extended maintenance, and two LNG plants have faced technical issues," the report said.
Shell's Prelude FLNG has been shut since February due to technical issues and while the company has said the process to restart operations has begun, there has not been an official restart date set. The project, which shipped its first cargo in June last year, had still been ramping up to its nameplate capacity of 3.6 million mt, the Canberra-based unit said.
The other project facing issues is Chevron's Gorgon LNG, which is undergoing phased shutdowns because of the discovery in cracks in its heat exchangers.
"There is a risk of extended shutdowns in further cracks are discovered in these trains," the department said.
World gas production, demand trimmed
The state-owned unit also lowered its forecasts for world gas production and consumption.
In a similar trend to the Australian LNG exports, both world production and consumption of gas is expected to dip in 2020 to 3,917 billion cubic meters and 3,893 billion cubic meters, respectively. That's down from production of 4,047 billion cubic meters and consumption of 4,048 billion cubic meters in 2019, respectively. The 2020 forecasts are only marginally lower -- by less than 1% for each -- than the forecasts given in the June edition of the report.
The forecasts for 2021 and 2022, however, have been cut by 2%. Production for those two years is now forecast at 4,023 billion cubic meters and 4,139 billion cubic meters and consumption at 4,036 billion cubic meters and 4,141 billion cubic meters.
"Global LNG imports have shown tentative signs of recovery, as the impacts of COVID-19 ease and with the northern hemisphere summer boosting demand for gas-fired power for cooling," it said.
"Asian LNG imports are expected to recover over the rest of 2020, ahead of the northern hemisphere winter, providing ongoing price support. However, recovery in supply from the US and Australia over the same period will likely contain price rises," it added.
