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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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Thursday, 20 August 20
MINER BHP CONFIRMS PLANS TO EXIT THERMAL COAL SECTOR - THE SYDNEY MORNING HERALD
The head of mining giant BHP has laid out plans for a reshaping of its global operations by seeking to quit thermal coal mining, offload some cokin ...
Thursday, 20 August 20
LONDON RETAINS ARBITER CROWN - BALTIC EXCHANGE | HFW
Fears that the UK’s decision to leave the European Union would dent the reputation of the nation’s capital as the leader in maritime ar ...
Wednesday, 19 August 20
U.S. COAL STOCKPILES STEADILY INCREASE AFTER REACHING LOWEST LEVEL IN A DECADE IN 2019 - EIA
After reaching their lowest level in more than a decade in March 2019, U.S. coal stockpiles steadily increased to 152 million tons in April 2020, r ...
Wednesday, 19 August 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.26 PCT - XINHUA
China Taiyuan coal transaction price index stood at 124.92 points Monday, down 0.26 percent week on week.
The index, released by Chi ...
Wednesday, 19 August 20
COAL INDIA TRADE UNIONS DEFER DAY-LONG STRIKE: PTI
The unions had decided to go on strike against the commercial mining and the proposed divestment or buyback of shares of Coal India Ltd (CIL).
...
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- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Australian Coal Association
- Australian Commodity Traders Exchange
- Orica Mining Services - Indonesia
- Thai Mozambique Logistica
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Gujarat Mineral Development Corp Ltd - India
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- International Coal Ventures Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Renaissance Capital - South Africa
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- TeaM Sual Corporation - Philippines
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- MS Steel International - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- Africa Commodities Group - South Africa
- White Energy Company Limited
- Billiton Holdings Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Planning Commission, India
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Leighton Contractors Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Gujarat Sidhee Cement - India
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
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