Australia: Gas export values were at highs since Nov 2014 - Westpac

Martina Song, Research Analyst at Westpac, suggests that the Australia’s Aug trade balance showed that gas export values were at highs since Nov 2014.

Key Quotes

“While Australia’s LNG exports tend to be sold on long term contracts, pricing is indexed crude, lagged by a few months. So while volumes have increased by over 50% since 2014, Brent has dropped sharply from the $110/barrel seen then.

A number of new LNG projects began exporting this year and we should see more projects come on stream soon. Low international prices have seen first gas at some of these sites pushed back by several quarters compared to initial timeframes. Domestic pipelines have also been commissioned to take advantage of higher domestic gas prices.

Based on company reports, we expect the volume of LNG exports to double from around 40mt per year by end-2018.

While Australia is a net importer of oil, it is a net exporter of energy. Last week we saw the Australian dollar jump with oil prices, as OPEC unexpectedly announced it would be reducing production to support crude prices. The increasing amount of LNG exports should mean the AUD remains sensitive to oil price moves in the future.”