Australian Gas and LNG Tracker

About 

IEEFA’s Australian Gas and LNG Tracker is an interactive data set to visualise Australia's LNG infrastructure, demand and capacity outlook, and export flows. It is built by compiling data from a range of sources, including Kpler, ICIS, the Australian Energy Market Operator (AEMO) and IEEFA analysis.

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Key Findings

After a prolonged period of growth, Australia’s LNG sector is at a crossroads. Demand in Australia’s traditional markets is falling, and shifting to more price-sensitive markets in the region. In 2024, China overtook Japan to become Australia’s largest LNG export market despite China’s LNG imports remaining below 2021 levels. Surging new LNG supply, particularly from the US, is already intensifying competition, pushing down prices, including among Australia’s key markets (though the impact of tariffs on demand for US LNG remains to be seen).

Meanwhile, Australia’s domestic gas markets face increasingly tight market conditions due to high LNG exports, which represent the largest use of Australian gas, followed by LNG exporters themselves. In eastern Australia, high LNG prices have driven up gas prices, leading to higher energy bills and industrial demand destruction. 

In contrast, Western Australia (WA), with its gas reservation policy, has avoided the challenging market conditions besetting eastern Australia. This is despite most WA LNG exporters lagging on their domestic reservation commitments. However, gas prices in WA have increased materially (from a relatively low base) and gas shortages are predicted in coming years.

With LNG markets changing and long-term contracts expiring in the 2030s, there is an opportunity for governments across Australia to consider policy options that incentivise domestic gas supply and ensure domestic gas markets are prioritised over export markets. 

The growth and flow of Australia’s LNG exports

LNG exporters in WA and eastern Australia continue to export more LNG than required to meet their long-term contracts (into spot markets), which is why LNG plant utilisation is consistently high for most LNG projects. The quantity of LNG sold into spot markets is likely to increase next decade as long-term contracts expire (unless enough new LNG contracts are signed) and if LNG exporters continue to prioritise export markets over domestic supply. 

Australia’s annual LNG exports 

Asian LNG markets are shifting, with implications for Australia’s LNG exports. LNG demand in Japan, traditionally Australia’s largest market, is falling. In South Korea, demand for gas in electricity generation is anticipated to remain stable until 2030 before falling materially to 2038. Demand growth is shifting to China and other emerging markets, many of which are generally more price-sensitive than Japan and South Korea. 

In 2024, Australia’s largest LNG export markets were China (33%), Japan (32%), South Korea (15%) and Taiwan (10%), with all other countries accounting for about 9% of exports. 

• Japan, historically Australia’s largest export market, has been surpassed by China, which has had dramatic import growth over the past decade.

• Australia’s LNG exports to China increased by 8% in 2024 (following a 10% increase in 2023 and a 31% decrease in 2022), compared with 6% and 10% decreases in exports to Japan in 2023 and 2024, respectively. Exports to South Korea and Taiwan increased by 12% and 1% respectively in 2024, partly offset by a 14% fall in supply to other markets. 

• Notably, China, Japan, South Korea and Taiwan accounted for 90% of Australia’s total LNG exports, highlighting the sector’s reliance on a few key markets. 

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Spot sales prop up Australia’s high LNG export facility utilisation

Australia’s contracted LNG volumes are set to fall considerably next decade. In the absence of new contracts, Australian LNG exporters will either be exposed to volatile LNG spot prices or reduced utilisation of their export facilities, potentially undermining LNG project financial returns.

At a national level, utilisation of Australia’s LNG export facilities has been high, above 90% between 2021 and 2024. This is despite relatively low utilisation at the Gladstone LNG plant in Queensland and the Prelude floating LNG facility off WA. 

High utilisation largely reflects strong LNG spot export volumes topping up volumes exported to meet long-term contracts. 

Since 2013, the share of Australian LNG exported into spot markets (i.e. uncontracted), has grown considerably, making up 25% of total exports in 2024, and widening the imbalance between exports and domestic Australian gas supply. 

Periods of relatively low utilisation tend to coincide with new LNG projects coming online, and the time required to reach full production.

Generally, Australia’s LNG export facilities have demonstrated consistently high utilisation in non-growth periods, as LNG plant owners seek to recoup investment costs and minimise production costs. 

It is likely that Australia’s LNG exports facilities will continue to be highly utilised given the availability of feed gas, which may have implications for domestic gas supply. 

Australia’s LNG contract volumes will remain relatively stable to 2030, and then decline to 2040. Crucially, the expiry of these contracts coincides with forecast supply shortages in Australia, which may allow for additional domestic supply if LNG exporters are willing to see LNG plant utilisation.

Several new LNG sale and purchase agreements (SPAs) are scheduled to commence in 2026. They include new contracts to be met through Santos’s development of the Barossa gas field to backfill the Darwin LNG facility.  

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LNG exporters soak up majority of Australian gas supply

The LNG sector dominates Australia’s gas market, with LNG exports soaking up the vast majority of Australia’s gas production. This has had profound impacts on the domestic gas markets, leading to higher prices as LNG exporters prioritise export markets. Generally, the share of gas production flowing to domestic markets has fallen due to LNG exports.

Eastern Australia

The share of eastern Australia’s gas either exported or used by LNG exporters to run their liquefaction facilities has increased since 2019, while the share of east coast gas available to the domestic market has fallen from 30% in 2019 to 26% in 2024, a proportional decrease of 13%. 

Since Queensland began exporting LNG in 2015, the sector has become the largest gas user in eastern Australia, accounting for well over half of all gas supply, and driving up domestic gas prices. 

Gas volumes used in electricity generation were relatively stable between 2010 and 2017, but have since fallen materially. By 2024, gas consumption for generation was almost 100 petajoules (PJ) lower than in 2010 (a fall of about 45%). 

Industrial gas consumption peaked in 2012 and 2013, but had fallen 27% by 2024. 

Since 2020, Queensland has at various points been either a net exporter of gas to the east coast southern states or a net importer from them, with flows varying both from year to year and seasonally (reflecting southern state gas demand peaks in the Australian winter). 

Low LNG spot prices during the Covid-19 pandemic meant additional gas volumes were diverted to the domestic market, which led to net gas flows of almost 20PJ from Queensland to the southern states.

However, Queensland was a net importer of gas from the southern states during 2021 and 2022, with imports of 16PJ and 25PJ respectively. This likely reflected increased demand for LNG exports due to high LNG spot prices. 

Moderating LNG prices, and tightening southern state gas market conditions, likely explain net southern gas flows from Queensland in 2023 and 2024. 

Western Australia

The volumes of gas used domestically within WA have remained relatively steady around 12-13% since 2018, unlike the eastern states. This is likely due to WA’s reservation policy limiting the extent of price increases, though these volumes are below the required 15% of reserves. 

However, spot prices increased significantly from 2020 to 2024, likely reflecting tightening supply conditions in WA. Data on contract prices also suggests that prices in new bilateral gas agreements in WA have increased materially. Expected gas shortages forecast by the Australian Energy Market Operator (AEMO) as early as 2028 could drive further price increases.

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Multiple solutions exist for expected gas shortages

AEMO forecasts gas shortages in eastern Australia and WA in the coming years due to either declining production (eastern Australia) or increasing demand forecasts (WA). 

However, the anticipated timing of shortages in eastern Australia has been pushed back in recent years, in part due to government policies reducing residential gas demand, and industrial demand destruction. 

Stronger incentives for domestic gas supply, possibly through diverting a small share of spot sale volumes, would likely be enough to alleviate shortages across Australia. 

Supply Glut

Global LNG markets face a looming supply glut in coming years due to massive increases in LNG liquefaction capacity in a range of countries. 

Source: International Energy Agency. World Energy Outlook 2024.

The International Energy Agency forecasts that the new supply growth, along with relatively weak demand growth, means no additional new LNG liquefaction capacity will be required until 2040 even under its least ambitious transition scenario. 

Under alternative scenarios, aligned with faster transitions and less global warming, the LNG oversupply would be larger, with existing and under construction LNG projects either sufficient to meet LNG demand out to 2050 or sufficient to meet all future LNG demand. 

New LNG supply is placing downward pressure on LNG prices, which is already having an impact on Australian LNG projects. 

Asian LNG markets are shifting

• LNG imports in Japan, historically Australia’s largest LNG market, peaked in 2014, and by 2024 had fallen by 25%. In contrast, Korean demand grew over the same period, but not enough to offset falls in Japanese LNG demand.
• China’s LNG imports grew almost four-fold in the decade from 2014 to 2024. However, China’s demand growth has remained flat in recent years, with 2024 imports marginally below those in 2021.
• Conversely, LNG demand growth in South Asia has increased over the past 15 years, but the price sensitivity of South Asian LNG buyers resulted in a fall in LNG imports from 2021 to 2022-23. Much of South Asia’s LNG demand was met by Qatar.
• Qatar and Australia remain the two largest LNG suppliers to Asia, but the US LNG exports to Asia have grown considerably since the US became an LNG exporter.

Japanese companies resell large volumes of LNG as demand falls

Japan has been a major LNG player for almost 50 years, but it is changing from a buyer to a major trader. 

Australia’s LNG exports to Japan have remained relatively stable in recent years despite Japan’s total LNG import volumes falling materially over the past decade. By 2024, Australian LNG accounted for about 38% of Japan’s LNG supply, more than double that of Malaysia, Japan’s second largest supplier. 

Japan’s import volumes from the US have grown rapidly in recent years, increasing from less than 1 million tonnes (Mt) in 2017 to 6.5Mt in 2024. This growth mirrors the broader increase in US LNG exports, but may also reflect supply diversity and the destination flexibility typically offered in US LNG export contracts. 

In contrast, Japan’s LNG imports from Qatar fell by 82% between 2014 and 2024, which may reflect strict destination restrictions in Qatari contracts. 

Japan’s declining LNG demand has coincided with increased LNG sales by Japanese companies into third countries. From FY2018 to FY2023, the volume of LNG sold into third countries by Japanese companies  increased by just over 250%. 

These resales are large relative to Japan’s LNG imports, with FY2023 third-country sales equivalent to more than half of Japan’s total LNG imports.  

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China’s LNG demand growth falters as production and imports rise

China has widely been projected to be a key driver of LNG demand growth, but recent trends raise questions about such forecasts. 

LNG imports in 2024 were almost 8% higher than in 2023, but remained below 2021 levels after a relatively sharp drop in 2022 following global LNG price spikes. 

Australia’s share of Chinese LNG exports has decreased in recent years, falling from 45% in 2019 to 35% in 2024. This reflects both declining LNG imports from Australia and increasing imports from other suppliers, notably Qatar and the US. 

In recent years, Chinese companies have signed new LNG SPAs with Qatar and US companies, which means the Australian share of China’s LNG imports is likely to fall further. This trend will be exacerbated with the expiry of China’s existing LNG SPAs with Australian suppliers in the 2030s (unless they are renewed). 

While China is the world’s largest LNG importer, LNG makes up a relatively small portion of China’s total gas supply, equating to 25% in 2023. Domestic gas production and pipeline imports accounted for 58% and 17% respectively. 

From 2021 to 2023, China’s domestic gas production increased by almost 25 billion cubic metres (~1,000PJ), whereas China’s LNG imports fell by 10.5 billion cubic metres (likely reflecting higher LNG prices). 

The share of gas generation grew from 2.3% in 2014 to just 3.1% in 2024, showing that gas plays only a marginal role in China’s electricity system. The decline in the share of coal generation in China’s electricity mix has been driven by large increases in solar and wind generation, reflecting their lower cost. 

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