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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, 29 July 20
2019 U.S. COAL PRODUCTION FALLS TO ITS LOWEST LEVEL SINCE 1978 - EIA
In 2019, U.S. coal production totaled 706 million short tons (MMst), a 7% decrease from the 756 MMst mined in 2018. Last year’s production wa ...
Wednesday, 29 July 20
MARKET INSIGHT - INTERMODAL
The dry bulk sector is beginning to recover from reduced SnP activity recorded in the first quarter of 2020. The table below illustrates that appro ...
Tuesday, 28 July 20
DEUTSCHE BANK TO END GLOBAL BUSINESS ACTIVITIES IN COAL MINING BY 2025 - REUTERS
Deutsche Bank, in a revamp of its policies for fossil fuels, said on Monday that it would end business activities worldwide related to coal mining ...
Monday, 27 July 20
IEEFA ENERGY FINANCE CONFERENCE 2020: COAL, LNG, PETROCHEMICAL SECTORS FACE POOR OUTLOOK AND UPHILL BATTLE FOR INVESTORS
Fossil fuel industries were becoming less financially attractive even before the global coronavirus pandemic
Three major fossil fuel ...
Friday, 24 July 20
IPA: THERMAL COAL IMPORTS AT MAJOR PORTS DECLINE 35 PC TO 17.71 MT IN APR TO JUNE - ECONOMIC TIMES
These ports had handled 27.13 MT of thermal coal and 14.95 MT of coking coal in the April-June period of the previous financial year
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- Malabar Cements Ltd - India
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- Eastern Coal Council - USA
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- SMC Global Power, Philippines
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Vedanta Resources Plc - India
- Bhatia International Limited - India
- Iligan Light & Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Parry Sugars Refinery, India
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Singapore Mercantile Exchange
- Miang Besar Coal Terminal - Indonesia
- Planning Commission, India
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- ICICI Bank Limited - India
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Kepco SPC Power Corporation, Philippines
- Minerals Council of Australia
- Indian Energy Exchange, India
- Central Java Power - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
- Australian Coal Association
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Posco Energy - South Korea
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Parliament of New Zealand
- Mercuria Energy - Indonesia
- Tamil Nadu electricity Board
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- Merrill Lynch Commodities Europe
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- Goldman Sachs - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- McConnell Dowell - Australia
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