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Strikes on a Qatari LNG hub and disruption in the Strait of Hormuz have pushed one-off LNG cargo prices above $US25, prompting the Department of Industry, Science and Resources to lift its forecast for Australian LNG export revenue this financial year to as high as $70 billion, up $23 billion on the pre-war projection.
The war in the Middle East is delivering a huge windfall for Australian gas exporters, with new figures suggesting soaring prices could add $23 billion to their combined revenue this year.
Australian LNG Prices Surge
One-off cargoes of liquefied natural gas, or LNG, are fetching more than double their pre-war prices. That boosts earnings for producers that operate outside the Persian Gulf and can reliably dispatch shipments to customers. LNG is gas that is super-cooled into a liquid so it can be shipped overseas. It is one of Australia's biggest exports and one of the nation's most lucrative.
The price surge follows strikes on a key Qatari LNG hub and continued disruption of shipping through the Strait of Hormuz. That vital oil and gas shipping route has crippled up to 20 per cent of the world's LNG supply. Gas-dependent countries in Asia and Europe are scrambling to secure replacement cargoes to power their homes, factories and electricity grids. That has sent commodity prices sharply higher.
For the local and international operators of Australian LNG terminals, such as Woodside Energy, Santos and Shell, the price spikes have dramatically altered their near-term fortunes. Australia is one of the world's biggest gas exporters. Before the war began on February 28, federal government forecasts suggested export earnings from LNG terminals in Queensland, Western Australia and the Northern Territory would slip from more than $50 billion to $47 billion this financial year.
Export Revenue Forecast Revised
That expected decline was driven by an impending wave of new LNG projects in the United States and Qatar that threatened to push the market into oversupply. Instead, updated figures from the Department of Industry, Science and Resources, released on Friday, reveal LNG revenue is now expected to climb to as high as $70 billion this financial year. That is a potential $23 billion increase on the government's earlier forecast.
The report from the Department of Energy Science and Resources said the closure of the Strait of Hormuz has stymied a long-anticipated shift towards surplus supply. It said LNG cargo movements through the Strait of Hormuz remain intermittent, and rising US output has largely played a substituting role, with global net LNG supply set to fall in 2026. Department analysts say LNG prices have been higher for months and could remain elevated well into the future.
The Japan Korea Marker, the benchmark price for one-off LNG prices in North Asia, where the bulk of Australian exports are sold, has pushed above historical averages of $US10-11 per million British thermal units to reach more than $US25 last month. The report said that going forward, the prices of oil and LNG are likely to be higher than they otherwise might have been before the Middle East conflict.
Political Pressure for Higher Gas Taxes
It said disruption in the Strait of Hormuz in the future, and the increased use of alternative pipeline infrastructure to bypass the strait, would also add to the cost of oil and LNG, keeping upward pressure on prices. The forecast of higher revenue for Australia's LNG producers lands as the prospect of mega-profits in the gas industry continues driving political debate in Canberra. Climate groups, crossbench MPs and unions are pushing for higher taxes on multinational energy giants.
They argue the current federal offshore oil and gas tax, the Petroleum Resource Rent Tax, or PRRT, should be increased. The Albanese government has previously rejected independent senator David Pocock's popular campaign to impose a 25 per cent tax on gas export revenue. Despite the short-term market surge, the longer-term outlook for LNG shippers carries distinct risks, according to the report.
Demand Shifts Amid Price Volatility
Government projections suggest Australia's LNG earnings will begin to normalise, easing from $70 billion this year back to $42 billion by 2031. This year's extreme prices have also had immediate implications for demand. They are forcing price-sensitive buyers in Asia to shield themselves from soaring costs by lowering their consumption, including by pivoting back to dirtier sources of energy such as coal-fired power stations.
South Korea, one of Australia's top LNG buyers, lifted its thermal coal imports by around 40 per cent in the June quarter compared to a year earlier, while LNG imports fell 13 per cent, the report said. Some experts warn that this year's upheaval in the LNG market may have even longer-lasting consequences for demand if it drives countries to step up their investments in renewables and other sources of power.
For the second time in four years, Asian nations have been reminded of the risks of their heavy exposure to LNG, including price shocks and shortages amid geopolitical turmoil. In 2022, LNG prices hit unprecedented highs following Russia's invasion of Ukraine.
The departmental report said that in the long run, the disruption of strategic Middle East shipping lanes and worries over future disruptions seem likely to accelerate the push away from oil, gas and LNG to clean energy technologies and slow the fall in thermal coal usage. Woodside Energy, the largest Australian LNG producer, said it did not expect a long-term LNG demand reduction.
Woodside chief Liz Westcott said in July that Australian LNG suppliers could stand to benefit further in future if Asian LNG buyers reconsidered their heavy reliance on Middle Eastern suppliers and pivoted towards trade partners perceived as more geopolitically stable.
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theage:The Iran war is making Australia’s gas industry richer 
brisbanetimes:The Iran war is making Australia’s gas industry richerThis story was compiled and edited by the HeadTopics newsroom and HT AI from the reports above.
Middle East War Strait Of Hormuz Gas Revenue Forecast Petroleum Resource Rent Tax Strait Of Hormuz Disruption Department Of Industry Science And Resources Forec Petroleum Resource Rent Tax Debate Asian LNG Demand Shift
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