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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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Monday, 08 January 24
KOSPO TO BUY 80000 MT OF INDONESIAN LOW CALORIFIC VALUE COAL FOR FEB 2024
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for the supply of Indonesian Low Calorific Value Coal from qualified suppliers for Korean ...
Monday, 08 January 24
SEABORNE TRADE REACHES 12.4BN TONNES - CLARKSONS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Monday, 08 January 24
CAPESIZES START THE NEW YEAR ON POSITIVE NOTE - BALTIC EXCHANGE
Capesize
This week the capsize market has been marked by a mix of activities and challenges. Despite a slow start following the Christmas and N ...
Friday, 05 January 24
MORGAN STANLEY SEES LOWER OIL PRICES IN 2024 ON OVERSUPPLY CONCERNS - REUTERS
Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it ex ...
Friday, 05 January 24
INDIA'S COAL OUTPUT RISES NEARLY 11 PC IN DEC TO 92.87 MT - PTI
India’s coal production increased by 10.75 per cent to 92.87 million tonne in December 2023 as compared to the year-ago period, an official s ...
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- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Bhatia International Limited - India
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Parliament of New Zealand
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Singapore Mercantile Exchange
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Planning Commission, India
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Jaiprakash Power Ventures ltd
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- Essar Steel Hazira Ltd - India
- Jindal Steel & Power Ltd - India
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- Ministry of Mines - Canada
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- White Energy Company Limited
- Chamber of Mines of South Africa
- Power Finance Corporation Ltd., India
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- Africa Commodities Group - South Africa
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- IEA Clean Coal Centre - UK
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Makarim & Taira - Indonesia
- The University of Queensland
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Iligan Light & Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Rio Tinto Coal - Australia
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