Record Australian LNG export income fuelled by war in Europe

Australia recorded an all-time high in liquefied natural gas export earnings last year, with volumes and prices buoyed by the energy security crisis that followed Russia’s invasion of Ukraine, according to a new government report.

The Federal government’s Resources & Energy Quarterly, released on Monday, shows LNG export earnings were revised up to a record A$92 billion (US$61.3 billion) over the past financial year as part of a A$460 billion return for the resources sector.

The record LNG performance for 2022-2023 was slightly higher than recent forecasts and up from A$70 billion in the previous year.

The report said gas exports were forecast to total A$68 billion this financial year as overall resources exports come off record highs to total A$390 billion. LNG exports are predicted to total A$60 billion next year.

“The fallout from the Russian invasion of Ukraine and US dollar strength helped deliver an estimated record A$460 billion in earnings for Australian exports of resource and energy commodities in 2022–‍2023. However, looking forward, export earnings are expected to fall as energy prices go back toward levels traded prior to the Russian invasion of Ukraine”, the government’s department of industry, science and resources said.

“Transport and infrastructure constraints remain a huge obstacle to the full diversion of Russian energy exports to nations with no sanctions. The net result is a fall in world energy supply, as some Russian output is stranded. Barring much weaker than expected global demand, energy prices are therefore likely to remain relatively high over the outlook period,” a statement from the department said.

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The Australian Petroleum Production & Exploration Association (APPEA) said the record export income translated to support for thousands of jobs, substantial direct government revenues and significant expenditure locally.

APPEA chief executive Samantha McCulloch said: “The Australian oil and gas industry is committed to domestic supply, but the importance of exports is once again in the spotlight.

“The industry’s A$400 billion investment in LNG projects over the past 15 years underpins the nation’s domestic energy security and delivers substantial economic benefits to Australia.”

She added that this export income supports thousands of jobs; produces direct government revenues which increased to A$16 billion in the past financial year; and expenditure such as the A$45 billion the industry spent on goods and services with Australian businesses last financial year.

“Even with a slowing of export returns in the cycle across the resources sector, gas is still a reliable and significant economic driver in the nation’s fortunes at a time when the economy is facing headwinds and uncertainty,” McCulloch said.

The report said Australia’s oil exports in 2022-2023 totalled A$13 billion and were expected to climb to A$14 billion this year before dipping to A$12 billion in the following 12 months.