Despite the improving near-term outlook for Australian coal and gas,the fossil fuels’ long-term future is less certain and depends largely on how aggressively countries seek to decarbonise.
Russia supplies nearly 40 per cent of Europe’s natural gas needs,and 60 per cent of its thermal coal. While economic sanctions applied to Russia have so far excluded energy exports,financial restrictions on Russian banks are preventing some buyers from trading with Russian coal and gas suppliers.
“The Russia-Ukraine crisis has shocked the coal and the broader energy markets,” Wood Mackenzie,a global natural resources consultancy,said on Thursday.
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“Add to this the concern that sanctions could be expanded in the future and the impact on coal markets is hardly surprising,” Wood Mackenzie principal analyst Rory Simington said.
The rally lifted the share prices of some of Australia’s largest coal miners. Whitehaven and Yancoal finished the day trading nearly 11 per cent higher,while Perth-based oil and gas giant Woodside rose almost 3 per cent.
Australia is the world’s largest shipper of LNG,followed closely by Qatar and the United States. While Australian LNG companies lack the capacity to produce more gas to send to Europe,the industry is set to cash in as the tightening global market elevates prices for uncontracted cargoes in Asia.