Australia has executed a rare commodities trade after shipping LNG to Europe, with Woodside Energy saying the gas volumes helped the continent’s search for supplies amid an ongoing Russian pipeline squeeze.
Woodside sold a cargo of 75,000 tonnes of LNG from its North West Shelf plant to Germany’s Uniper, a gas importer that will soon be nationalised after slumping to a â‚¬40bn ($62bn) loss, the biggest in the nation’s corporate history.
Gas from Western Australia arrived in Rotterdam on November 27 and will be sent on to northwest and central Europe, marking only the third time LNG has been shipped to Europe from Australia, according to consultancy EnergyQuest.
“Events over the course of 2022 have shown that the world cannot take reliable and affordable supplies of energy for granted, particularly as we strive to decarbonise,” Woodside executive vice-president Mark Abbotsford said. “At such times it is more important than ever that buyers and sellers work together to flexibly respond to market dynamics.” Sending gas vast distances to Europe underlined the precarious energy security situation, Credit Suisse said, as Russia threatened to further restrict gas flows to the continent. “It is very unusual to see Australian cargoes go to Europe, given it is generally more efficient to arrange swaps between the basins instead,” Credit Suisse analyst Saul Kavonic said.
“But Europe faces unprecedented market conditions leading it to resort to sourcing supply from much further afield.” EnergyQuest said it was only the third such trade following a single cargo to the UK in 2009 and an individual shipment to Spain in 2021. The bulk of Australia’s gas is exported to Asia. Russia’s invasion of Ukraine has roiled European gas markets an also filtered through to Australia with tariffs expected to increase by 20 per cent this year and in 2023-24 due to an ongoing supply crunch on the east coast and near-record LNG prices filtering through to the local market.
Australian LNG and coal producers have been raking in huge profits after the invasion created havoc in international commodity markets, sparking calls for the Albanese government to consider following the UK in creating a windfall tax to ease cost-of-living pressures for households.
Woodside delivered record production of 51.2 million boe in the September quarter, up 52 per cent from the prior three months, driving revenues to $US5.8bn, compared with $US3.4bn previously.
It achieved an average price of $US102 per barrel of oil equivalent while its average LNG price of $US32.70 per million British thermal units was the equivalent of $US207 per boe.
Woodside’s merger with BHP Petroleum catapulted the company into the top 10 of oil and gas producers in the world, with assets spread across the west and east coasts of Australia, the Gulf of Mexico and Trinidad.
Woodside’s first big decision as a unified company will be whether to give the go-ahead on its $US5bn ($7.5bn) Trion oil discovery in the Gulf of Mexico, with a decision expected next year. Woodside shares fell 2.7 per cent, or $1.01, to $36.96.