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Australian Energy Producers Journal Australian Energy Producers Journal Society
Journal of Australian Energy Producers
RESEARCH ARTICLE (Non peer reviewed)

A geopolitical nightmare: the battle of energy security and the energy transition

Daniel Toleman A * , Lucy Cullen B and Gavin Thompson B
+ Author Affiliations
- Author Affiliations

A Wood Mackenzie, Perth, WA, Australia.

B Wood Mackenzie Asia Pacific, Samsung Hub, Singapore.

* Correspondence to: daniel.toleman@woodmac.com

The APPEA Journal 63 S138-S141 https://doi.org/10.1071/AJ22030
Accepted: 20 February 2023   Published: 11 May 2023

© 2023 The Author(s) (or their employer(s)). Published by CSIRO Publishing on behalf of APPEA.

Abstract

War in Europe has transformed the global geopolitical landscape and Russia has weaponised its commodities. Europe’s energy market is now out of control. Europe will never rely on Russia for anything again. But, can Europe live with no gas supply from Russia at all? This has had far-reaching consequences for the global liquefied natural gas (LNG) industry. Volatility and sky-high prices are now an enormous risk to gas demand. Long hailed the ‘transition fuel’. Record gas prices pose a dilemma for governments who must balance climate change goals with mounting energy security concerns. Affordability is particularly pressing in the booming Asian markets that are underpinning much of the next wave of supply. It is in these markets that gas should play a critical role to facilitate the power sector transition from coal to renewables. In addition, about half of gas demand is in non-power sectors, contributing as industrial feedstock and heating fuel. In many of these sectors, gas simply cannot be replaced by renewables, and despite all eyes on Europe for now, the longer-term LNG story will remain centred around Asia. In this paper, Wood Mackenzie will argue that Asian gas demand can rebound and will remain robust as new supply emerges, reinforcing the longevity of LNG investments. But the race is on. Australian LNG must reduce its emissions and ensure contractual attractiveness to remain competitive against a wave of new low-cost, low-emission projects that are rapidly moving forwards around the world.

Keywords: activism, Australia, Australian LNG, carbon, China, commercial arrangement, company strategy, complex gas, demand response, energy transition, fuel switching, gas, gas commercialisation, global LNG, Japan, Korea, LNG, LNG buyers, LNG prices, majors.

Daniel Toleman joined Wood Mackenzie’s Australian Upstream and LNG research team in 2018 as a content lead. During this time, his focus has been on LNG and gas monetisation, project economics, corporate strategy and industry trends. Daniel has also participated in a wide range of consulting projects including new business development, market advisory, opportunity screenings and cost benchmarking. Prior to Wood Mackenzie, Daniel worked at Shell Australia across a variety of Planning, Finance and Treasury roles. Dan’s qualifications include his CPA (2015), as well as a Bachelor of Laws (LLB), Bachelor of Commerce (B.Com.) and a Bachelor of Economics (B.Ec.) (Hons) from the University of Western Australia (2012).

Lucy Cullen is a Director in Wood Mackenzie’s Asia Pacific Gas & LNG team based in Singapore. Lucy joined the team in Singapore in 2019. She is the lead analyst for Northeast Asia and the Australian LNG market analysis, including supply–demand forecasts and monitoring contracting activity, infrastructure and policy developments. She is a key contributor to Wood Mackenzie’s global fundamentals view and price forecast and regularly presents to clients and conference audiences. Previously, Lucy was part of Wood Mackenzie’s gas research team in Edinburgh with responsibility for developing Europe, Caspian and North African gas supply analysis. Lucy joined Wood Mackenzie’s Energy Markets research team in 2012. Lucy holds an M.A. (Hons.) in International Relations from the University of St Andrews, the United Kingdom.

Gavin Thompson joined Wood Mackenzie in 1997. His expertise spans across the Asia Pacific commodity sectors, and in particular, helping companies identify and build their international growth strategies. He has led a range of consultancy and research projects with domestic and international energy companies across the region, providing LNG project evaluation and provincial gas price forecasting. In 2017, Gavin took the role of Head of Asia Pacific research, and led a team of around 100 analysts. Most recently in 2019, Gavin was appointed Vice Chairman, Energy for the company’s Asia Pacific business. He is based in Singapore and frequently travels the region to meet with clients. His education includes a B.A. (First Class Hons), Newcastle University in Politics, Economics and Chinese language.


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