Export price of liquefied natural gas

IBISWorld forecasts the average export price of liquefied natural gas to drop by 0.4% in 2024-25, to reach $16.01 per gigajoule. This stabilisation of export prices is largely due to an equilibrium in global supply and demand expected across the year. Australia is one of the world's largest exporters of LNG, accounting for around 20% of global exports. Approximately 80% of Australia's LNG exports are sold on long-term contracts, with sales prices based on the underlying price of Japanese Customs-Cleared Crude Oil. While the prices of LNG and crude oil have been less closely linked in recent times, oil prices remain a significant influence on the prosperity of Australia's LNG market, particularly due to the reliance on these long-term sales contracts. Oil prices have declined over the first half of 2024-25, with this trend forecast to continue over the rest of the year. Declining oil prices will place downwards pressure on the export price of LNG, barring any supply chain shocks in early 2025.

Like most energy sources, the pandemic and the Russia-Ukraine conflict caused disruptions to the global supply of LNG and added significant volatility to price movements. The pandemic caused global energy demand to fall, weighing heavily on LNG export prices in 2019–20 and 2020–21. Since 2021-22, demand has soared while supply chains have been hit by multiple negative shocks, particularly the Russia-Ukraine conflict, which led to a meteoric rise in global prices during the 2022 calendar year. Russia accounts for approximately 8% of global natural gas exports but sanctions, supply disruptions and restrictions on Russian gas exports have constrained global gas supply, causing LNG export prices to surge. European gas markets, which have traditionally relied on Russian gas supply, were forced to quickly search for alternative supply sources, which boosted demand for Australian LNG exports. This contributed to the unprecedented spike in export prices for Australian LNG across 2021–22 and 2022–23.

In February 2023, the Department of Industry, Science and Resources of Australia announced an intention to reform the Australian Domestic Gas Security Mechanism (ADGSM), giving the mechanism some additional powers. The reformed ADGSM reserved the power to review Australia's domestic energy needs quarterly and to curb LNG exports to prioritise the satisfaction of local demand. The reformed ADGSM has intensified competition between European and Asian buyers competing for Australian LNG cargoes. This competition has kept export prices elevated in recent years, despite a rise in export volumes stemming from the US and Qatar.

Global average temperatures consistently climbed across 2023-24, setting all-time highs in 12 consecutive months. This trend supported strong demand for LNG across some of Australia's largest Asian buyers, keeping export volumes largely consistent over the year. Despite strong demand from Asia, significant growth in US exports placed strong downwards pressure on Australian LNG export prices. Rising supply from the US market has increased competition among major exporting countries, including Australia. Declining prices caused export trade values to decrease by 25.4% in 2023-24. Overall, IBISWorld forecasts the average export price of liquefied natural gas to rise at a compound annual rate of 7.1% over the five years through 2024–25, despite having trended downwards over 2023-24 and 2024-25.