Cyclone Disrupts Australia's Biggest LNG Plants, Strains Global Market

A powerful tropical cyclone in Western Australia has disrupted production at the country's two biggest liquefied natural gas plants run by Chevron and Woodside. The cyclone, which made landfall on Friday, is a Category 3 storm that has caused outages at both facilities. As a result, global LNG flows out of the Middle East have also been upended by Iran's blockage of the Strait of Hormuz.

Australia became the world's second-largest LNG exporter after Qatar shut down production this month following damage to its facilities from Iranian strikes. This move has already had a significant impact on the global market, and the disruption caused by Tropical Cyclone Narelle will only add to the pressure.

Chevron said it was working to restore production at its Gorgon and Wheatstone LNG facilities in Western Australia following outages that were likely due to the cyclone. The Gorgon facility is Australia's largest LNG export facility, producing 15.6 million metric tons a year with three processing trains. Meanwhile, the smaller Wheatstone consists of two trains producing 8.9 million tons.

Woodside also said production at its Karratha gas plant had been disrupted by the cyclone. The gas plant is the onshore processing facility for the North West Shelf, Australia's oldest and second-largest LNG project, producing 14.3 million metric tons a year, down from 16.9 million tons a year after it shut down one of its five production trains.

MST Marquee analyst Saul Kavonic estimated that the cyclone was disrupting more than 30 million tonnes a year of Australian LNG supply. This is a significant amount, and combined with the shock from the Middle East, he said that more than a quarter of global LNG supply was currently affected.

The disruption will exacerbate gas market tightness in Asia and Europe, especially if it takes more than a matter of days to normalise Australian production levels again,

[

[

[

[

[