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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, 14 August 20
EIA: COAL PLANTS UNECONOMICAL IN MOST REGIONS - IEEFA
U.S. coal power generation plunged by 30 percent in the first half of 2020 off an already-depressed base, shoved out by natural gas and renewables ...
Thursday, 13 August 20
INDIA SHOULD RECORD A SLIGHT DECREASE IN THERMAL COAL IMPORTS, REACHING A VOLUME OF 167 MILLION TONS BY THE END OF 2020 - ASSOCARBONI
Regarding 2020 thermal coal imports forecasts, Vietnam’s coal imports showed a very strong growth in the first half of 2020 and it is believe ...
Thursday, 13 August 20
INDONESIA REMAINS THE LARGEST EXPORTER OF COAL IN THE WORLD - ASSOCARBONI
According to the last Assocarboni data for 2019, Indonesia remains the largest exporter in the world. Thermal coal exports have in fact reached 456 ...
Wednesday, 12 August 20
VIETNAM WAS THE PROTAGONIST OF A SIGNIFICANT INCREASE IN COAL IMPORTS IN 2019 - ASSOCARBONI
The latest Assocarboni data for 2019 also provide a detailed picture on the trend of the global coal import.
According to Assocarbon ...
Wednesday, 12 August 20
THE COAL MARKET IN ITALY - ASSOCARBONI
Italy, which in 2019 reported a decrease in thermal coal imports, with a volume of 7,5 million tons (-32% compared to 11 million tons in 2018), whi ...
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- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Singapore Mercantile Exchange
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Bhatia International Limited - India
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- Jaiprakash Power Ventures ltd
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Borneo Indobara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Iligan Light & Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- Planning Commission, India
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- Merrill Lynch Commodities Europe
- Kalimantan Lumbung Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- CNBM International Corporation - China
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- Oldendorff Carriers - Singapore
- Commonwealth Bank - Australia
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Trasteel International SA, Italy
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
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