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.