According to Reuters article published on February 27, 2023, Woodside Energy Group's (WDS.AX) chief executive said the global liquefied natural gas (LNG) market is "finely balanced" this year, with the market waiting to see how quickly China's economic activity ramps up.
Chief Executive Officer Meg O'Neill said while she expects Chinese economic activity to pick up as the year progresses, it is still "too early to point to any proof points".
LNG demand growth slowed last year in China, the world's second largest LNG importer, as strict COVID-19 curbs hit economic activity and as global gas prices rocketed. While prices have dropped from last year's record highs, they remain above historical averages.
O'Neill pointed to a flat forward curve for LNG prices for this year, which is unusual for a commodity that has seasonal peaks in demand.
"So we do expect that LNG demand will pick up, and I think the fact that the forward curve is so flat is a sign that the market really is quite finely balanced," O'Neill told Reuters.
O'Neill said the Australian goverment's recent gas market regulations seeking to keep a lid on prices have hit Woodside's ability to plan investments for the second half of the year for its Gippsland Basin asset off the southeast coast of Australia.
"We and the operator only approved the budget for six months this year, because we don't have that certainty to make investment decisions at the back half of the year," she said, referring to partner Exxon Mobil Corp (XOM.N).
"We've been in active discussions with buyers about contracting for 2024 and beyond. Those activities are also on pause at this point in time until we have more certainty."
At the same time, the government's market intervention has made Woodside's plan to supply LNG to a terminal planned by Viva Energy (VEA.AX) in Victoria state "challenging", she said, despite a strong need for gas.
"For us to work with a player like Viva, to bring LNG across, there needs to be something that's profitable for both players, for everybody," O'Neill said.
"We hope to influence the government and their markets process to get to an outcome that would allow us to bring that new supply into the market."
Woodside, Australia's top independent gas producer, on Monday reported its annual profit more than tripled after acquiring BHP's oil and gas assets and on higher LNG prices as buyers from Asia and Europe looked for alternative supplies following Western sanctions on Russia.
