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October 03
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The Asia-Pacific natural gas market has suffered another blow after major natural gas producer Australia signaled it could potentially cut down liquefied natural gas (LNG) exports as the region battles tight gas supplies, high prices and, competition from gas-short European buyers, CNBC reported.

Australia is looking to trim its overseas sales in favor of domestic consumption ahead of a projected shortfall in local supplies next year

As energy protectionism takes hold globally, last week, the Australian Competition and Consumer Commission (ACCC) called on Canberra to protect domestic gas supplies and curb LNG—cooled natural gas—exports after projecting the east coast of the country could face a shortfall of 56 petajoules of gas next year.

For months, Asia-Pacific region has faced competition for fuel from European buyers looking to replace restricted Russian gas.

Most of the gas used on Australia’s east coast is produced by companies that are also LNG exporters to Asia-Pacific and other countries. The Australian Domestic Gas Security Mechanism (ADGSM) stops these producers from exporting LNG if there is a shortfall domestically.

Gas lobby group the Australian Petroleum Production & Exploration Association however has assuaged markets, saying despite the ACCC warning, there is more than enough gas next year and that there has never been an actual shortfall previously.

But if the mechanism is successfully invoked, new supply and price pressures will be felt by the region’s biggest LNG buyers such as Japan and South Korea as well as newcomers to LNG imports such as the Philippines, analysts say. 

“Since April, there had been no [spot] tender sales from the three major LNG export facilities on Australia’s east coast, indicating that some exports were slowing,” S&P Global Market Intelligence APAC LNG pricing regional manager Kenneth Foo said.

LNG prices have soared nearly 80% since before the Ukraine war started in late February, according to the Platts JKM pricing index.

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