A potential shortage of five percent of the global export or liquefied natural gas (LNG) is looming on the back of planned industrial actions by workers at two large LNG plants in Australia controlled by US energy titan Chevron.
The workers on Tuesday voted virtually unanimously in favour of more than 20 types of industrial action, including several work prohibitions and total shutdowns, starting on September 7, 2023.
Australia’s LNG market share
Australia is one of the biggest LNG exporters in the world and its supplies have helped to cool global energy prices, especially when Russia slashed supplies of natural gas to Europe after the start of the Ukraine war in early 2022.
Analysis of data from Statista revealed that Oz exported 3.97 trillion cubic feet (112.2 billion cubic metres) of LNG last year, only second to Qatar’s 4.09 tcf (114.1 bcf).
The country’s share of the global LNG market is estimated at 20.2 percent, according to data from International Gas Union, meaning that the country’s customers will look elsewhere to meet the shortfalls.
Who buys Australian LNG?
Approximately three-quarters of Australia’s LNG exports go to four Asian buyers: China, Japan, South Korea, and India, with most contracts being long-term, and nearly none to Europe.
Impact on Nigerian and African markets
Nigeria, Algeria, Egypt and Angola top global LNG exports in 2022, accounting for 1.66 tcf (47 bcf) trade internationally in the period.
Gas exported from Nigeria is sold as LNG through the Nigeria LNG long-term contracts with countries in Asia and Europe including Portugal.
The Bureau of Statistics of the largest economy in Africa revealed that Nigeria earned N2.1 trillion from exporting natural gas from January to September 2022, the highest in five years.
Joshua Olorunmaiye, an oil and gas analyst, said the market may see an an increase in European and global prices, due to disruptions caused by the strike and more potentially, the possibility of Asian buyers outbidding their European counterparts for LNG cargoes.
“This may invariably favour the African and particularly, the Nigerian market. This is materially because Nigeria is a key LNG supplier to Europe and our biggest buyers have been countries like Spain, France, Portugal and Turkey,” he said.
The NBS in its report revealed that Nigeria earned N622 billion from exporting the commodity in the first quarter of this year.
“The effect automatically means a gap in the supply chain once they down tools as the impact would be shorter supplies and higher costs of gas,” Jide Pratt, country manager of Trade Grid said.
According to him, African markets will have minimal impact as most of the initiatives to increase LNG production in Nigeria and Africa haven’t yielded yet as they are still in developmental stages.