U.S. Gives Australian LNG Producers A Boost With Approvals Pause

U.S. uncertainty about the future expansion of its world-beating liquefied natural gas (LNG) industry has boosted interest in Australian gas companies which have been overcoming their own problems.

Within hours of the news about a U.S. pause in the approvals process for new LNG projects three Australian stocks posted modest stock market gains, moves which went against an overall decline in oil and gas prices.

Woodside Energy and Santos, the two Australian LNG leaders rose by 2.5% as the oil price slipped by 1.5%, while Beach Energy jumped 6% higher thanks to its maiden shipment of LNG.

Interest in Australian LNG producers has picked up in the past month after a damaging legal action against Santos was thrown out of court because an environmental group was shown to have fabricated evidence.

That loss, which pitched Santos against an organization called the Environmental Defenders Office (EDO), is having far reaching consequences including a proposal by the Opposition Leader in the Australian Parliament, Peter Dutton, to withdraw government funding from the EDO.

False Claims

Until a Federal Court judge ruled heavily against the EDO both Santos and Woodside were being dogged by environmental opponents who have effectively been silenced by the exposure of their false claims.

But the more import event for Australian LNG could turn out to be the U.S. decision to pause the approvals process on 17 proposed LNG projects after objections from climate change protestors.

U.S. President, Joe Biden, said the pause would allow time to take a close look at the effects of LNG exports on energy costs, America’s energy security and the environment.

The suspension of approvals ends an eight-year period of breakneck growth in U.S. LNG exports which gone from a standing start in 2016 to claim the title of world’s biggest single source of seaborne liquefied gas.

Rapid U.S. LNG growth gas seen it overtake Qatar and Australia which have dropped back, for now, to second and third places in a business which has boomed thanks to energy demand and a shift away by industrial customers from coal and oil.

But the biggest boost to the U.S. LNG industry has been Russia’s war in Ukraine which cause European energy buyers to shun Russian gas, replacing it with material from other sources, especially the U.S.

European governments were told about the U.S. approvals pause last week with American officials reported to have described the action as temporary.

Hot Issue

Not spelled out is the obvious issue of the U.S. Presidential election campaign where climate change and the effect of fossil fuels is an increasingly hot issue.

For Australian gas exporters the U.S. approvals pause is not an immediately important issue because most Australian gas is shipped north into the Asian market where most U.S. gas heads across the Atlantic to Europe.

However, LNG is a globally traded commodity which is in strong demand in countries suffering from an energy deficit.

Removing material, or slowing development of new projects, from the market will eventually feed to the price and benefit companies with new projects.

Both Woodside and Santos are bringing new projects online in the next few years and Beach, with its Japanese partner, Mitsui, has plans to double exports from gasfields in Western Australia.