Australian gas exporters are expected to benefit from higher gas prices caused by a decline in Russian gas exports to Europe following the escalating war in Ukraine and the recent destruction of the Nord Stream pipeline. .
Multinational investment bank UBS has raised its forecast for Australian liquefied natural gas (LNG) prices by 40% in Asian markets and 50% in European markets.
UBS analyst Tom Allen says Europe could lose 7 billion cubic meters of gas supplies by March 2023 due to pipeline closures to Germany and disruption of Russian gas supplies via Ukraine. said.
The bank said Europe has significantly increased LNG imports to make up for lost gas supplies.
This could be a boon for Australian gas companies as Australia is one of the world’s leading LNG exporters.
Many significant LNG projects are located in Western Australia and its offshore waters, including the Northwest Australian Shelf, Pluto, Gorgon, Wheatstone and Prelude. At the same time, the country’s east coast is also a major player in the gas market.
“We expect the gas market to remain tight until prices normalize when the next wave of LNG projects comes in 2026,” Allen said in a note to clients.
New gas hub to be built in Europe
On the other hand, the Dutch gas grid operator Gasnier Signed contracts with parties to build a new LNG terminal in Brunsbüttel to increase gas imports and reduce Europe’s dependence on Russia.
September, Australia’s largest independent oil and gas company woodside has signed a 16-year supply agreement with German industrial giant Uniper to supply up to 12 cargoes (equivalent to 1 billion cubic meters) of LNG annually.
As the energy crisis hits the continent, European households are being forced to reduce their energy consumption due to power shortages and rising prices.
Many countries, including France, have called on their citizens to reduce their energy use to avoid rationing or curtailing energy during the winter months.
Coal prices have risen significantly, but gas prices are still high, and some countries may turn to coal for power generation, USB said.
“This will further support the switch from gas to coal in the electricity sector, especially in coal-dependent countries,” Bank said.
“We expect this to continue over the next few years as the gas market is very tight.”