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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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Wednesday, 07 October 20
U.S. COAL PRODUCTION TO DECREASE BY 26 PERCENT IN 2020 COMPARED TO 2019 - EIA
EIA expects total U.S. coal production in 2020 to be 525 million short tons (MMst), compared with 705 MMst in 2019, a 26% decrease.
COVID-19 a ...
Wednesday, 07 October 20
MARKET INSIGHT - INTERMODAL
The challenges brought forward in 2020 proved to be very different from what we could have ever imagined. Together with placing a significant strai ...
Tuesday, 06 October 20
KOSPO TO IMPORT 80,000 MT OF 3,800 NCV COAL FOR 2H NOV
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 MT Min.3800 kcal/kg NCV coal 2H November, 2020 l ...
Friday, 02 October 20
THE INDONESIA COAL PRICE REFERENCE RISE AFTER HISTORIC CRASH TO US$ 49.42
COALspot.com: The Indonesia Coal Price Reference for the month of October Rise to US$ 51.00 after historic crash to US$ 49.42 in September 2020.
...
Friday, 02 October 20
SRI LANKA MUST LEARN LESSONS FROM AROUND ASIA TO AVOID FURTHER ELECTRICITY CRISES - IEEFA
Overcommitment to fossil-fuelled power generation is leading to excess capacity and rising capacity payments, subsidies, and tariffs around the con ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- ICICI Bank Limited - India
- Australian Coal Association
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Independent Power Producers Association of India
- Sical Logistics Limited - India
- Sinarmas Energy and Mining - Indonesia
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indika Energy - Indonesia
- Edison Trading Spa - Italy
- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Marubeni Corporation - India
- Petron Corporation, Philippines
- VISA Power Limited - India
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bhushan Steel Limited - India
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- Mercator Lines Limited - India
- Planning Commission, India
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Chettinad Cement Corporation Ltd - India
- Simpson Spence & Young - Indonesia
- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Krishnapatnam Port Company Ltd. - India
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- Leighton Contractors Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Siam City Cement PLC, Thailand
- Manunggal Multi Energi - Indonesia
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Grasim Industreis Ltd - India
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- Deloitte Consulting - India
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- Posco Energy - South Korea
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Indian Oil Corporation Limited
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