Can the Asia Pacific market accommodate Australia’s LNG projects?*

Abstract

The portfolio of proposed Australian LNG projects continues to grow. What is the demand outlook for Asia Pacific LNG—and can it absorb the potential volume from these projects? Who are the key importers and what are the demand uncertainties within the Asia Pacific region? Can Australian LNG penetrate markets further afield?

What has driven the growth in Australian LNG projects and how many more might emerge? Where are the projects that will compete with Australian LNG? Is Australian LNG competitive relative to other supplies? Are project costs likely to increase further?

How is the LNG supply-demand balance likely to develop in the Asia Pacific during the next decade? Is there a looming surplus of LNG and, if so, what would this mean for Australia? Does the outlook presage a buyers’ market or a sellers’ market?

Will contract expiries from established LNG exporters increase supply availability in the Asia Pacific? What could this mean for oil indexation and long-term LNG contracts? Could alternative pricing mechanisms evolve and will we see an increase in short- and medium-term supply contracts?

This paper examines the outlook for the Asia Pacific LNG market—and the growing role Australian LNG is playing in meeting demand growth. It also reviews Australia’s competitive position and considers the way in which the structure of Asia Pacific LNG contracts may evolve over time.