Energy exporters in Australia may focus more on natural gas shipments instead of thermal coal in the next seven years, following a report’s dire outlook on global demand.
The Institute for Energy Economics and Financial Analysis (IEEFA) released an analysis stating that the demand for thermal coal could fall by 28 per cent in 2025. Natural gas supply, on the other hand, continues to be abundant in Australia’s domestic market, which compels many companies to export surplus commodities.
As early as now, natural gas exporters should consider bolstering their investments on upgrading capacity, such as making sure poly pressure pipe systems could handle a potential uptick in demand. The preparations should be done quickly since the International Energy Agency likewise predicted that Australia would be the leading global gas exporter in 2040.
By that year, the IEEFA report said that the worldwide demand for thermal coal exports would further drop by 59 per cent. The country’s top four markets comprising China, Japan, Taiwan and South Korea may be transitioning to renewable energy, but other markets are yet to pick up on the practice of using non-fossil fuel sources.
Since the country has plenty of liquefied natural gas (LNG), the Resources Ministry said it would not curb export activity in 2019. Minister Matta Canavan said that there is no shortfall next year, and no export controls would be good news for its buyers, such as Japan.
Other than the Japanese market, Australia ships most of its LNG exports to China and South Korea as part of long-term contracts with each country.
Energy companies should beef up their pipeline capacities through strategic investments in natural gas distribution. Whether or not the demand for thermal coal may fall in the future, it pays to be prepared for any changes in global market trends.