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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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Friday, 01 December 23
COAL MINERS GROUP EXPECTS INDONESIA’S 2023 COAL OUTPUT TO SURPASS TARGET - REUTERS
The Indonesian Coal Mining Association (ICMA) expects the country’s 2023 coal output to surpass the official target of 695 million metric ton ...
Friday, 24 November 23
COAL IMPORTS TO INDIA IN OCTOBER 2023 REACHED HIGHEST LEVELS IN NEARLY A YEAR AND A HALF - VESSELSVALUE, VESON NAUTICAL
In October, coal imports to India reached 13.8 mt in October 2023, according to Oceanbolt, a Veson Nautical solution, the highest level since May 2 ...
Friday, 24 November 23
COAL SHIPMENTS TO ADVANCED ECONOMIES DOWN 17% SO FAR IN 2023 - BIMCO
In the first ten months of 2023, coal shipments to advanced economies fell by 17% y/y, as demand for electricity declined and the share of electric ...
Friday, 24 November 23
INTELLIGENT COAL MINES CONTRIBUTE TO IMPROVING SAFETY STANDARDS - CHINA DAILY
Mechanization, automation and intelligent upgrades have contributed to improved safety in coal mines, though the level of development of intelligen ...
Friday, 24 November 23
WHY AUSTRALIA'S COAL MINES ARE GETTING BIGGER - IEEFA
Australia’s largest coal mines are getting larger. Mines in New South Wales (NSW) are ramping up production following the state’s recov ...
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- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- Romanian Commodities Exchange
- Posco Energy - South Korea
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Toyota Tsusho Corporation, Japan
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- Vijayanagar Sugar Pvt Ltd - India
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- Larsen & Toubro Limited - India
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- Samtan Co., Ltd - South Korea
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- Attock Cement Pakistan Limited
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- Thai Mozambique Logistica
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- Petron Corporation, Philippines
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- PowerSource Philippines DevCo
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- Jindal Steel & Power Ltd - India
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- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
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- India Bulls Power Limited - India
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- Siam City Cement - Thailand
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- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
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- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- ASAPP Information Group - India
- Heidelberg Cement - Germany
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Parliament of New Zealand
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- Barasentosa Lestari - Indonesia
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- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Singapore Mercantile Exchange
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- Karaikal Port Pvt Ltd - India
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Planning Commission, India
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- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
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- Sree Jayajothi Cements Limited - India
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- Marubeni Corporation - India
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- The University of Queensland
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- Videocon Industries ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Savvy Resources Ltd - HongKong
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- Energy Link Ltd, New Zealand
- The State Trading Corporation of India Ltd
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- Australian Coal Association
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- Kohat Cement Company Ltd. - Pakistan
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- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- GVK Power & Infra Limited - India
- Wilmar Investment Holdings
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- Alfred C Toepfer International GmbH - Germany
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- New Zealand Coal & Carbon
- Sindya Power Generating Company Private Ltd
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Bahari Cakrawala Sebuku - Indonesia
- Port Waratah Coal Services - Australia
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- Directorate Of Revenue Intelligence - India
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- London Commodity Brokers - England
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- MS Steel International - UAE
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- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- PTC India Limited - India
- Electricity Generating Authority of Thailand
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