(Bloomberg) — Three Australian plants that together produce about 8% of the world's liquefied natural gas (LNG) have faced output cuts due to a cyclone, adding to the challenges for Asian buyers already affected by a halt in shipments from Qatar.
The Karratha onshore facility, which supplies Woodside Energy Group Ltd.'s North West Shelf export plant in Western Australia, experienced production interruptions because of severe Tropical Cyclone Narelle, according to a company representative. Additionally, Chevron Corp. reported that one of the three production units at its Gorgon plant has stopped, along with a platform that supports its Wheatstone facility and domestic gas output.
This disruption comes at a critical time for the global LNG market, especially after the closure of the Strait of Hormuz and the shutdown of Qatar's largest liquefaction plant following attacks by Iran. Most of the affected supply was destined for Asian markets, which are now seeking alternatives to compensate for these losses amidst ongoing disruptions in Australia.
“The temporary shutdowns at Australian LNG plants come at the worst possible moment for buyers attempting to replace the lost supply from Qatar,” said Josh Runciman, lead analyst for Australian gas at the Institute for Energy Economics and Financial Analysis. “These shutdowns are likely to push LNG spot prices higher, causing additional difficulties for buyers.”
LNG prices in Asia have surged by over 90% since the US and Israel began their offensive against Iran at the end of last month. The Gorgon, Wheatstone, and North West Shelf plants accounted for nearly half of Australia's LNG exports last month, representing about 8.4% of global trade, according to EnergyQuest.
According to a spokesperson for Woodside, the offshore workforce at North West Shelf was evacuated following the company's cyclone preparedness protocols, and production is expected to restart once they return. They also noted that Woodside's Goodwyn A, Angel, and North Rankin platforms are currently offline.
Production continues at the Macedon and Pluto facilities, and Woodside is supplying domestic gas to its clients from its Western Australian assets, according to company representatives.
“The severe weather from Tropical Cyclone Narelle likely caused the interruptions to operations at both Gorgon and Wheatstone,” a Chevron Australia spokesperson stated. The Wheatstone outage happened at noon local time on Thursday, followed by the Gorgon outage at 3 p.m. local time.
Meanwhile, a representative from Santos Ltd. reported that their Varanus Island gas processing facility off the coast of Western Australia also experienced a shutdown as Cyclone Narelle passed through the area. Varanus serves significant mining and industrial customers in Western Australia.
Cyclone Narelle has traveled a long path from Queensland, through the Northern Territory, and across Western Australia, leading to the temporary closure of several mines. The storm is currently a category four system, with wind gusts reaching up to 250 kilometers (155 miles) per hour, according to Australia's Bureau of Meteorology.
Weather predictions indicate that Narelle may shift slightly further east as it continues down the coast, potentially bringing even more severe impacts to the Chevron and Woodside LNG facilities, according to Alex Zadnik, business manager for Australia at MetraWeather.
The storm is expected to cause destructive gusts and heavy rainfall in its aftermath. Rainfall in the southwest region of the state, known as the Wheatbelt, could benefit the upcoming planting season.