Why China's new green could become our gold
STRONG demand for gas arising from new Chinese environmental policies has pushed LNG exports out of Gladstone to a seven-month high.
New figures released by Gladstone Ports Corporation last week show exports in August reached 1,760,197 tonnes, with Chinese imports accounting for the vast majority at 1,261,266 tonnes.
The total was the third-highest month on record and represented a rise of 7 per cent from July and 8 per cent from August last year.
This was despite a half-train maintenance outage at Origin Energy's APLNG plant towards the end of the month.
Analysts have attributed the rise in demand to the Chinese government's stricter pollution policies, with gas now favoured over thermal coal for heating in increasingly crowded cities.
LNG prices soared before Christmas last year, as northern hemisphere countries found themselves facing a gas shortage going into winter.
Analysts spoken to by The Observer said last month's rise in exports may be the result of Chinese companies looking to make sure they are not caught short again.
But EnergyQuest chief executive and gas expert Graeme Bethune warned against any overly optimistic forecasts, noting Curtis Island's LNG projects continued to operate well below capacity due to having insufficient gas.
Describing the 7 per cent month-to-month jump in export tonnage as "modest", Mr Bethune pointed out the increase in August LNG shipments from Gladstone represented just one LNG cargo.
"More importantly, capacity utilisation across Queensland's three projects is un-commercially low, falling to an average 77 per cent in the second quarter, compared with rates of over 100 per cent in Western Australia," Mr Bethune said.
"1.76 million tonnes of August shipments, annualised, is only 82 per cent of capacity."
Mr Bethune said one of the interesting things about the LNG market given the high prices was the lack of spot cargoes coming out of Gladstone.
"The best they can do is meet their contracts without a lot of room to spare," he said.
"There is not enough flexible gas in the LNG projects to offset declining Victorian production."
Last month's figures also showed coking coal exports were down 10 per cent from last year.
Gladstone Ports Corporation chief executive Peter O'Sullivan acknowledged the figures were down but noted GPC experienced strong rail performance during the month.
"Combined with strong demand and market conditions, we are anticipating a significant improvement over the coming month," Mr O'Sullivan said.