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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, 04 September 20
IN A DEEPENING DEBT HOLE OF $34 BILLION, INDONESIA’S PLN MUST STOP DIGGING - IEEFA
The utility has added IDR100 trillion in debt annually for the last five years
Utilities globally started changing the way they do business ye ...
Friday, 04 September 20
KOMIPO INVITED BIDS FOR AUSTRALIAN MIN 5,700 NCV COAL FOR NOVEMBER
COALspot.com: Korea Midland Power Co. Ltd, has issued an International tender for 260,000 MT Min.5,700 kcal/kg NCV coal November, 2020 loading. Acc ...
Thursday, 03 September 20
BRINGING SERVICES OF FTCCI CLOSER TO THE EXPORTERS AT GMR AIR CARGO COMPLEX AT SHAMSHABAD
Press Release: “FTCCI Trade Facilitation Services at your doorstep now” says J.S. Chandrashekar, IRS., Principal Commissioner of Custom ...
Thursday, 03 September 20
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Wednesday, 02 September 20
COAL PRODUCTION FALLS 7% IN APR-AUG; OFF TAKE DIPS 13.4% - FINANCIAL EXPRESS
In the month of August coal off take also increased 9.3% y-o-y to 44.34 MT as compared with 40.57 MT in the same period last year.
C ...
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- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- Madhucon Powers Ltd - India
- PTC India Limited - India
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Mercator Lines Limited - India
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- Commonwealth Bank - Australia
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Planning Commission, India
- Chamber of Mines of South Africa
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- The University of Queensland
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Iligan Light & Power Inc, Philippines
- Ambuja Cements Ltd - India
- Energy Development Corp, Philippines
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Sical Logistics Limited - India
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Ministry of Transport, Egypt
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Bahari Cakrawala Sebuku - Indonesia
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Tata Chemicals Ltd - India
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- Videocon Industries ltd - India
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
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