The global energy crisis continued to expand on Friday as a tropical storm hit LNG production in Australia. Cyclone Narelle disrupted production at the two biggest liquefied natural gas plants of the country — run by Chevron and Woodside — exacerbating the supply crunch. The suspension will have direct consequences for Petronet LNG and other Indian buyers who rely on majors sourcing oil from Australia.
Cyclone Narelle triggered outages at the Wheatstone Platform operated by Chevron Corp as well as one of the units within its Gorgon plant — prompting a suspension of LNG and domestic gas production. The two liquefied natural gas plants account for about 5% of global production capacity, and the situation is likely to exacerbate the ongoing shortage. Woodside also said that production at its Karratha gas plant had been disrupted by the cyclone.
“Severe weather associated with the passing of Tropical Cyclone Narelle likely caused the interruptions to both Gorgon and Wheatstone operations…We will resume full production at both facilities once it is safe to do so,” reports quoted the Chevron Australia spokesperson as saying.
Gorgon is Australia’s largest LNG export facility — producing 15.6 million metric tons a year with three processing trains. The smaller Wheatstone consists of two trains producing 8.9 million tons. Meanwhile Woodside is Australia’s oldest and second-largest LNG project — currently producing 14.3 million metric tons a year.
How does this impact India?
Petronet LNG — the leading Indian importer of liquefied natural gas — buys about 1.5 million tonnes per year from the Gorgon project via ExxonMobil. The LNG supply is intended for the Kochi terminal in Kerala but volumes are occasionally diverted to its Dahej facility due to delays in pipeline connectivity from Kochi. The direct impact of Cyclone Narelle remains unclear at this time.
Indian companies like GAIL and IOCL may also face indirect issues due to the outage since they often buy from the “portfolios” of Shell and BP. Both of these are major partners in Gorgon who source from Australia. Any outage would eventually trickle down to Indian state utilities.