Two of Asia’s leading liquefied natural gas (LNG) suppliers said sales jumped significantly last year despite a pandemic that curbed global energy consumption.
Woodside Petroleum Ltd., Australia’s largest natural gas producer, said its annual LNG sales increased in 2020 year/year to 81.2 million boe from 75.3 million boe. Santos Ltd., the country’s largest domestic gas supplier, reported a similar upward trend. LNG sales hit a record 4.3 million tons (Mt) last year compared with 2.3 Mt in 2019.
Woodside and Santos also reported record annual oil and natural gas production last year, but revenue slid for both companies as commodity prices declined across the board from the economic impacts of Covid-19. But management at both companies said the outlook is improving.
Santos CEO Kevin Gallagher said “2020 saw us ride through the bottom of the cycle,” but he sounded a more bullish tone as global gas prices have increased to start the year and the company’s LNG projects have so far scheduled 10 spot cargoes for the first quarter, compared to just six in 4Q2020.
“Oil and gas prices have strengthened considerably heading into the first quarter of 2021,” added Woodside CEO Peter Coleman. “We agreed to our highest ever spot LNG price for delivery in the coming quarter, surpassing our previous record set in 2012.”
Global LNG trade proved more resilient than other commodities last year as demand for the super-chilled fuel has continued to grow. According to EnergyQuest estimates, Australia exported a record 78 Mt in 2020, despite the pandemic and production issues at the country’s Gorgon, Wheatstone and Prelude terminals. That’s above the 77 Mt nameplate capacity of Qatar, the world’s largest LNG exporter, EnergyQuest said.
However, the Australian consultancy added that the country’s export revenue declined to A$36.1 billion from A$48.7 billion a year earlier. Export income was “severely impacted” by lower oil prices and LNG spot prices seen through most of 2020, EnergyQuest said.
Australia is a major supplier throughout the Asia-Pacific region, where the bulk of contracts are still tied to oil prices, which fared poorly last year. Spot LNG prices have only recently spiked as supplies became tighter and the weather grew colder in North Asia and Europe.
Woodside said its realized LNG price was $4.80/MMBtu in 4Q2020, compared with $8.10/MMBtu in 4Q2019. Santos also reported a decline in its average LNG sales price, which came in at $5.34/MMBtu in the fourth quarter, down from $9.07 in the year-ago period.
Overall, Woodside said its revenue was $3.5 billion last year, down from $4.8 billion in 2019. Santos said revenue was $3.4 billion in 2020, compared with $4 billion in 2019.
The companies also continued to advance LNG expansion projects during the fourth quarter.
In December, Santos reached a 10-year deal with Mitsubishi Corp. subsidiary Diamond Gas International Pte. Ltd. to supply 1.5 million metric tons per year (mmty) of LNG from the Barossa project in northern Australia at a price based on the Japan Korea Marker. The fuel would be supplied from the Darwin LNG plant, which is slated to receive natural gas from the Barossa field when the Bayu-Undan field stops production.
Meanwhile, Woodside said it plans to make a final investment decision on the second train at its Pluto LNG facility in Western Australia. It also agreed to double the supply of LNG with an affiliate of German utility Uniper SE under a long-term agreement. Woodside will now supply the company with up to 1 mmty of the fuel beginning this year and 2 mmty starting in 2026.
Woodside also issued guidance and said it would produce 70-72 million boe of LNG this year, down from 75 million boe in 2020 as Trains 2 and 4 at the Northwest Shelf Project will each be shutdown for a month for maintenance.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 | ISSN © 1532-1266 |