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