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Tuesday, 01 September 20
COVID-19 PUSHES US LNG INTO A TIGHT SPOT - DREWRY
The pandemic-led weak projections for economic growth will derail US LNG exports in full-year 2020 with the country also losing ground in the long term due to major delays in liquefaction projects.
US LNG exports were strong between 2017 and 2019, driven by the shale gas boom, rising demand for natural gas in Asia and higher global LNG prices. The US exported 3.9 million tonnes of LNG in 2016 which increased at a whopping 114% CAGR to 38.2 million tonnes in 2019.
The US is currently the third-largest global LNG exporter with six operational LNG export terminals aggregating 62 mtpa of liquefaction capacity and another 41 mtpa capacity under construction. Brownfiled projects such as Sabine Pass, Corpus Christi, Cameron LNG and Elba Island will reach their full capacities between 2020 and 2027 and greenfield projects such as Golden Pass LNG and Calcasieu Pass will become operational during the same period.
Existing LNG production capacity in the US has been impacted by the pandemic with over 110 LNG cargoes being cancelled by Asian and European customers during June-August due to the low LNG spot price which narrowed the US-Asia and US-Europe price arbitrage. Moreover, major US LNG importers – Japan, South Korea and Taiwan – have seen their LNG demand dwindling, while US-China LNG trade has not been able to pick up as some would have hoped. With projections for LNG spot prices below $5 per MMBtu over the next few years, we expect more cancellations to occur in the coming years making the US a ‘swing LNG producer.’
The ‘second wave’ of LNG liquefaction including mega-LNG projects (such as Driftwood LNG, Port Arthur LNG, Golden Pass, Calcasieu LNG, Plaquemines LNG, Magnolia LNG, Jordan Cove LNG and Rio Grande LNG) constitute over 160 mtpa of planned liquefaction capacity. These projects were initially expected to be operational by 2025, but are currently facing major trouble in securing funding and long-term supply deals required for reaching an FID. Only two projects (Golden Pass and Calcasieu Pass LNG) have attained the FID and have started construction, while over 10 major LNG liquefaction projects which were expected to reach the FID in 2020 have been delayed due to low LNG prices and weak economic growth projections.
The future for these projects looks uncertain as most of them had fixed the all-inclusive selling price for LNG at $8 per MMBtu for Asia ($2 for Henry Hub, $3 for liquefaction, $2-3 transportation) which is highly uncompetitive in the current market. Only a marginal recovery in LNG prices is projected for the next few years which further increases the woes for promoters of the planned projects in securing funding and supply deals. Meanwhile, a major competitor for US LNG, Qatar enjoys a break-even price below $2 per MMBtu as well as proximity to the Asian market. Qatar’s North Field Expansion (NFE) project’s Phase-1 (33 mtpa) and Phase-2 (16 mtpa) are also backed by the government, increasing the probability of their completion and in the process creating more trouble for the planned US projects.
The pandemic has already created severe financial woes for some US projects. For instance, a deal between Driftwood’s promoter Tellurian and India’s Petronet LNG fell through, raising doubts over the proposed 27.6 mtpa project. Although negotiations are still underway, Tellurian faces high competition from Russian and African projects. Shell has also exited the Lake Charles LNG project, increasing the uncertainty of the project for the other participants, while Magnolia LNG’s promoter LNG Ltd has been taken over by another entity after it went bankrupt, delaying the project further.
Some projects like Lake Charles and Rio Grande have gone back to the drawing board and plan to reduce trains to decrease the capex cost while others are cutting workforce and raising loans to keep their projects afloat. Most project developers are hopingfor an easing of US-China tensions and the prospect of securinga share of the rising LNG demand in China, which is projected to grow at over 10% CAGR between 2020 and 2025. However, China’s LNG importers may not be too keen on long-term supply deals with US companies given the current low prices and the uncertainty over US-China trade relations. Ties between China and Qatar are also strengthening with the latter reserving 16 LNG carrier newbuild berths at a Chinese shipyard.
Overall, project delays are expected to hurt the US deeply in the long term while other LNG producers – Qatar, Russia and Mozambique – gain from the narrowing supply-demand gap from 2023 onwards. Qatar has already reserved LNG carrier newbuilding berths at shipyards and has selected a technology partner for the NFE project while Russia’s Arctic LNG-2 is on schedule with added investments made for Arc-7 LNG carriers and large FSUs to keep the Northern Sea Route (NSR) active most of the year.
US LNG woes have had a cascading effect on the LNG shipping market, depressing charter rates. The fall in US-Asia LNG trade has negatively affected shipping demand which, along with cancellations, has increased vessel availability in the market. At present, the fall in charter rates is arrested by a rise in floating storage, but this situation is not sustainable in the long term with LNG prices remaining depressed and over 120 LNG carriers scheduled to be delivered during 2020-21.
An estimated 140 new orders for LNG carriers during 2020-23 would be left hanging if the planned US LNG projects fail to progress. The loss of orders will impact LNG shipyards which have already begun to reel under low orders (only eight vessels were ordered in 1H20). While project-linked ordering from Qatar, Russia and Mozambique will bring some respite the drying up of speculative orders will most certainly be a huge loss for the LNG shipping market as a whole.
To conclude US LNG exports will grow at a slower pace in the coming years as long-term supply deals have already been signed for the under-construction projects. However, stiff competition from other producers amid low LNG prices will impact their share in the Asian market. The fall in US-Asia trade will negatively impact shipping demand and further reduce the number of vessels required for LNG trade. Overall, we expect US LNG exports to be seasonal in the long run with Europe playing a much larger role in the future.
Source: Drewry
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Thursday, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
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- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- The State Trading Corporation of India Ltd
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Sarangani Energy Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- PTC India Limited - India
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Jindal Steel & Power Ltd - India
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- SMC Global Power, Philippines
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Planning Commission, India
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- Neyveli Lignite Corporation Ltd, - India
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- Central Electricity Authority - India
- Eastern Coal Council - USA
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- South Luzon Thermal Energy Corporation
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- Bukit Baiduri Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- Minerals Council of Australia
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Borneo Indobara - Indonesia
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
- Posco Energy - South Korea
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
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