A powerful cyclone has forced production cuts across key Australian gas export plants, adding pressure to global energy markets already in short supply due to the war in the Middle East choking oil and gas flows.
Workers have been evacuated from Chevronโs Wheatstone gas platform โ 225 kilometres off the coast of Western Australia โ and liquefied natural gas (LNG) production has halted while Tropical Cyclone Narelle sweeps the region. The stormโs reach had extended to Chevronโs huge Gorgon gas plant on nearby Barrow Island, forcing the shutdown of one of its three LNG-production units, the company said.
Woodside Energy, the largest Australian LNG company, said on Friday it had demobilised its workforce from its North West Shelf offshore platforms that feed the Karratha Gas Plant, disrupting production.
Together, the affected projects on WAโs resource-rich coast account for as much as 8 per cent of global supplies of LNG, natural gas that has been super-chilled until it turns into a liquid so it can be shipped around the world.
The outages come at a time when demand and prices for cargoes of the fuel are rocketing amid the blockage of oil and gas tankers in the Strait of Hormuz off Iranโs southern coast, and missile strikes damaging major LNG facilities in Qatar.
Countries across Asia are particularly reliant on Qatari LNG shipped through the strait to power their heaters and electric grids and are increasingly looking to Australia โ the worldโs third-largest supplier of LNG, behind Qatar โ to make up for the drop-off in shipments.
Prime Minister Anthony Albanese is seeking to leverage Australiaโs role as a major LNG producer to make sure the country isnโt left behind in the global oil supply crunch.
โOur gas exports are very important in the region,โ Albanese said on Friday. โAustralia is a reliable supplier. We expect reciprocation in economic relations.โ
A spokesperson for Chevron Australia said Gorgonโs remaining two LNG-production units and its domestic gas facility continued to operate. The company said it would resume full production at both โonce it is safe to do soโ.
โChevron Australia is working to restore production at the Gorgon and Wheatstone gas facilities following production outages,โ a spokesperson said.
Perth-based Woodside said it continued to produce gas at its offshore Macedon gasfield and Pluto LNG plant. The company expects production at the North West Shelf to resume once workers can return to its offshore facilities.
โOur priority is the safety of our people, the environment and our assets,โ a Woodside spokesperson said.
โIf there is any material impact to production or assets, Woodside will update the market in accordance with its continuous disclosure obligations.โ
Since the war on Iran began on February 27, one-off LNG cargoes from Australian projects are said to have sold for more than double their pre-conflict prices, fetching up to $US25 ($35) per million British thermal units.
UBS energy analyst Tom Allen said the bank had lifted its forecasts for one-off cargoes of LNG in the North Asian market from $US13 per million British thermal units to $US23.60 for the rest of the year following attacks on Qatarโs Ras Laffan LNG hub. He said two of that plantโs 14 gas-processing trains might take โthree to five yearsโ to repair.
Even though Australia is a huge natural gas producer and exporter, price rises on global markets could also drag costs higher for Australian gas buyers if the increases hold, as LNG price swings influence local supply contracts. When LNG demand soared in 2022 amid the fallout of Russiaโs invasion of Ukraine, spiking gas prices became a major driver of a double-digit increase in household energy bills.
Resources Minister Madeleine King said the Australian gas market would be better insulated from the risk of price shocks this time compared with 2022 because of tougher requirements for exporters to improve supply for the local market.
But she said she wouldnโt deny that โthere can be ripple effectsโ.
โWe really have to keep a watchful eye on that,โ she said.
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Nick Toscano is a business reporter for The Age and Sydney Morning Herald.Connect via X or email.
