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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, 28 September 20
NEW LNG PROJECTS - ALL DRESSED UP AND NO PLACE TO GO - WOOD MACKENZIE
It was meant to be another boom year. After a record 70 mmtpa of new LNG capacity was sanctioned in 2019, at least as much capacity was lined up fo ...
Thursday, 24 September 20
SUPRAMAX: INDO TO INDIA FIXING AROUND US$13,000 - FEARNLEYS
Cape
Over the last week the iron ore segment from Brazil to China has picked up, and we see freight rates up USD 2 (12%) week on week Fearnleys ...
Thursday, 24 September 20
KOREA MIDLAND POWER TO BUY 1.92 MILLION TONS OF 4,300-4,700 NCV COAL FOR THREE YEARS
COALspot.com: Korea Midland Power Co. Ltd, has issued an International tender for 640,000 MT 4,300-4,700 kcal/kg NCV coal per year.
...
Wednesday, 23 September 20
VIETNAM'S NEW POWER DEVELOPMENT PLAN MUST OPTIMIZE RENEWABLES AND AVOID FOSSIL FUEL LOCK-IN: IEEFA
EVN’s financial constraints leaves the utility with little room for error
Implementing Vietnam’s soon-to-be-launched next Power De ...
Wednesday, 23 September 20
MARKET INSIGHT - INTERMODAL
Undoubtedly, this year (ongoing) will never be forgotten because in a matter of months it has managed to severely affect and shape our day to day p ...
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- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Bulk Trading Sa - Switzerland
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- The University of Queensland
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Pendopo Energi Batubara - Indonesia
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Chamber of Mines of South Africa
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- Parliament of New Zealand
- London Commodity Brokers - England
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Orica Australia Pty. Ltd.
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Interocean Group of Companies - India
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- Global Business Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- Ind-Barath Power Infra Limited - India
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- Eastern Coal Council - USA
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- Sojitz Corporation - Japan
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- TeaM Sual Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Barasentosa Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- PNOC Exploration Corporation - Philippines
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Australian Coal Association
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
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