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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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Saturday, 29 August 20
COAL INDIA'S FUEL SUPPLY TO POWER SECTOR DROPS ABOUT 20% IN APR-JUL: PTI
State-owned Coal India”s fuel supply to the power sector registered a decline of 19.5 per cent to 126.30 million tonnes (MT) in the April-Jul ...
Saturday, 29 August 20
SOUTH KOREAN BROKERAGE FIRM KOREA INVESTMENT & SECURITIES TO STOP ALL COAL BUSINESS - KOREA HERALD
South Korean brokerage firm Korea Investment & Securities has decided to stop its investments in coal, in line with the Moon Jae-in administrat ...
Thursday, 27 August 20
KOREAN GENCOS INVITED BIDS FOR TOTAL 985,000 TONS OF BITUMINOUS COAL FOR NOVEMBER 2020 LOADING
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) on behalf of EWP, KOSPO, KOSEP and KOWEPO has issued an international tender for total 985,000 ...
Thursday, 27 August 20
SOUTHEAST ASIAN NATIONS SET REGION-WIDE RENEWABLE ENERGY GOAL OF 23 PERCENT BY 2025 - ASEAN POST
The Association of Southeast Asian Nations (ASEAN) has set an ambitious target of securing 23 percent of its primary energy from renewable so ...
Thursday, 27 August 20
BANGLADESH POWER MINISTRY SEEKING AUTHORITY TO CANCEL 13,000 MW OF PROPOSED COAL-FIRED CAPACITY - BUSINESS STANDARD
In a bid to move away from dirty energy, the Ministry of Power, Energy and Mineral Resources is seeking the prime minister’s approval to conv ...
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- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
- The University of Queensland
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- Australian Coal Association
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- Port Waratah Coal Services - Australia
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- Metalloyd Limited - United Kingdom
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- Dalmia Cement Bharat India
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- MS Steel International - UAE
- Tata Chemicals Ltd - India
- Karaikal Port Pvt Ltd - India
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Global Coal Blending Company Limited - Australia
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Marubeni Corporation - India
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Meralco Power Generation, Philippines
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Commonwealth Bank - Australia
- Thiess Contractors Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Globalindo Alam Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
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