“Suddenly, the global LNG market is being buffeted from all directions. The market was already soft with a warm winter in North Asia and rapidly growing US production. Now the outbreak of the coronavirus has hit oil prices (to which Australian LNG prices are indexed) and spot LNG prices.”
This is according to the latest EnergyQuest report which revealed that Brent had started the month at US$67.05/bbl (A$96.03/bbl) and rose to US$70.25/bbl (A$101.34/bbl) but then fell steadily through the month to US$54.00/bbl (A$80.65/bbl) on 3 February, reflecting the expected fall in Chinese oil demand.
Asian spot prices
“There has also been a dramatic fall in Asian spot prices with the Platts JKM spot price, dropping to below US$3.00/MMBtu. Spot prices have fallen as high inventories, warm winter weather, increased supply and the coronavirus all take their toll,” EnergyQuest Chief Executive Dr Graeme Bethune said.
Ichthys is believed to have awarded a spot cargo for at an unbelievably low price in the low US$2/MMBtu.
“There is also potential for delays in cargoes. Our tracking data suggests that Australian exports to China have been largely unaffected, at least so far, but as the largest supplier to China, any disruption to cargoes is likely to impact Australian projects, particularly those at Gladstone,” Dr Bethune added.
“Notwithstanding these market shocks, it was pretty much business as usual for the Australian LNG projects in January.”