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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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- ASAPP Information Group - India
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Wilmar Investment Holdings
- Trasteel International SA, Italy
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Planning Commission, India
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- Kepco SPC Power Corporation, Philippines
- Xindia Steels Limited - India
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- New Zealand Coal & Carbon
- Gujarat Sidhee Cement - India
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- Parry Sugars Refinery, India
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Alfred C Toepfer International GmbH - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Coastal Gujarat Power Limited - India
- The University of Queensland
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Australian Coal Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- ICICI Bank Limited - India
- Toyota Tsusho Corporation, Japan
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Standard Chartered Bank - UAE
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Intertek Mineral Services - Indonesia
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Medco Energi Mining Internasional
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Bhatia International Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Ambuja Cements Ltd - India
- PTC India Limited - India
- McConnell Dowell - Australia
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Tata Chemicals Ltd - India
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
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