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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, 26 August 20
ASIAN COAL PRICES LIKELY TO REMAIN DEPRESSED SAY TRADERS, ANALYSTS - REUTERS
Asian coal prices, which have fallen around 25% this year as power demand slumped due to the coronavirus outbreak, are unlikely to move higher befo ...
Wednesday, 26 August 20
WORLD COAL EXPORTS: INDONESIAN THERMAL COAL EXPORTS HAVE COME UNDER PRESSURE AS THERMAL COAL PRICES WEAKEN - REPORT
Indonesia’s exports to decline sharply from record highs
Indonesia is the world’s largest thermal coal exporter, sellin ...
Wednesday, 26 August 20
JAPAN'S COAL IMPORTS ARE BEING AFFECTED BY COMPETING INFLUENCES - REPORT
Japan is the world’s third largest thermal coal importer, importing an estimated 135 million tonnes of thermal coal in 2019. The country&rsqu ...
Wednesday, 26 August 20
PENDING SOUTH KOREA LEGISLATION COULD FORCE HALT TO COUNTRY’S COAL PLANT EXPORT DEALS - KOREA ECONOMIC DAILY
South Korea’s parliament looks set to pass new legislation to ban financing on foreign coal power projects, putting all overseas coal-fired p ...
Tuesday, 25 August 20
INDIA'S IMPORTS FALL AS LOCKDOWNS IMPACT THE POWER AND INDUSTRIAL SECTORS - REPORT
India is the world’s second largest thermal coal consumer and importer, importing an estimated 211 million tonnes of thermal coal in 2019.&nb ...
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- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Ind-Barath Power Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- The University of Queensland
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- PowerSource Philippines DevCo
- Barasentosa Lestari - Indonesia
- PTC India Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- Cement Manufacturers Association - India
- Merrill Lynch Commodities Europe
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Wood Mackenzie - Singapore
- Parliament of New Zealand
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Power Finance Corporation Ltd., India
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Australian Coal Association
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- Asmin Koalindo Tuhup - Indonesia
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- McConnell Dowell - Australia
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Jindal Steel & Power Ltd - India
- Thiess Contractors Indonesia
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Sarangani Energy Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
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