Key facts
- Chevron Australia expects elevated LNG prices to persist for several months.
- Middle East supply disruptions, particularly concerning LNG flows through the Strait of Hormuz, are driving high prices.
- Asian spot LNG prices have reached their highest level since 2022.
- High prices have suppressed demand in key Asian markets like China and India.
- Chevron's Australian LNG projects account for approximately 5% of global supply.
Chevron Australia anticipates that liquefied natural gas (LNG) prices will remain elevated for several months, citing significant supply disruptions stemming from the Middle East. Balaji Krishnamurthy, Managing Director of Chevron Australia, expressed difficulty in seeing prices decrease within the next six months.
These high prices are directly impacting demand in key Asian markets like China and India, with executives from PetroChina and GAIL noting reduced purchases due to price sensitivity. While some LNG shipments have reportedly been rerouted by transferring cargoes to other vessels outside the Strait of Hormuz, this limited recovery is insufficient to meet demand ahead of the winter heating season.
Asian spot LNG prices last week reached their highest level since 2022, driven by renewed tensions in the Middle East that have impeded LNG flows through the Strait of Hormuz. The average price for October delivery into Northeast Asia reached $26.00 per million British thermal units (MMBtu) on Friday. Chevron operates two major LNG facilities in Australia: Gorgon, with an annual capacity of 15.6 million tons, and Wheatstone, with an annual capacity of 8.9 million tons. Together, these projects contribute approximately 5% to the global LNG supply.