(March 27): Three Australian plants that provide about 8% of the world’s liquefied natural gas (LNG) have had their output curbed by a cyclone, in a further blow to mainly Asian buyers reeling from the halt of shipments from Qatar.
Karratha, the onshore processing facility that feeds Woodside Energy Group Ltd’s North West Shelf export plant in Western Australia, had a production interruption due to severe Tropical Cyclone Narelle, according to a company spokesperson. Meanwhile, Chevron Corp said one of the three production units at its Gorgon plant was stopped, as well as a platform that feeds its Wheatstone facility and domestic gas production.
The disruptions come at a precarious time in the global LNG market after the closure of the Strait of Hormuz and the halting of the world’s largest liquefaction plant in Qatar following attacks by Iran. Most of that supply went to buyers in Asia, who have been looking to offset the shortfalls and are also the most impacted by disruptions from Australia.
“Temporary shut-ins at Australian LNG plants come at the worst time for LNG buyers looking to replace supply from Qatar,” said Josh Runciman, lead analyst for Australian gas at the Institute for Energy Economics and Financial Analysis. “LNG spot prices are likely to increase on the back of the shut-ins, leading to further pain for buyers.”
LNG prices in Asia have risen more than 90% since the US and Israel first struck Iran at the end of last month. Gorgon, Wheatstone and North West Shelf accounted for almost half of Australia’s exports last month, or about 8.4% of global trade, according to advisory EnergyQuest.
See also: Crude oil and market volatility: what investors need to know
North West Shelf’s offshore workforce was evacuated in line with Woodside’s cyclone preparation arrangements and production is expected to recommence after they return, according to the company’s spokesperson. Output continues at the Macedon and Pluto facilities, and Woodside is continuing to supply domestic gas to its customers from its Western Australian portfolio, they said.
“Severe weather associated with the passing of Tropical Cyclone Narelle likely caused the interruptions to both Gorgon and Wheatstone operations,” the Chevron Australia spokesperson said in a statement. The Wheatstone outage occurred at 12pm local time on Thursday, while the Gorgon outage was at 3pm local time, they said.
Meanwhile, a spokesperson for Santos Ltd said its Varanus Island gas processing facility off the Western Australia coast also “tripped” as Cyclone Narelle passed over the region. Varanus supplies major mining and industrial customers in Western Australia.
See also: Oil drops as Trump pushes back timeline for Iran energy strikes
Narelle has had a long track from Queensland, over the Northern Territory, and then across Western Australia, forcing the temporary closure of mines. It is currently a category four storm, with wind gusts of 250km per hour, according to Australia’s Bureau of Meteorology.
Weather models have shown Narelle shifting slightly more to the east as it travels down the coast, bringing the storm closer to the Chevron and Woodside LNG facilities and exposing them to more severe impacts, said Alex Zadnik, business manager for Australia at MetraWeather.
The system is expected to continue bringing destructive gusts and heavy rains in its wake. Precipitation over the state’s southwest, known as the Wheatbelt, could be beneficial for the planting season.
Uploaded by Chng Shear Lane
