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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, 23 July 20
KOREAN GENCOS INVITED BIDS FOR TOTAL 1.36 MILLION TONS OF BITUMINOUS COAL FOR OCTOBER 2020 LOADING
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) on behalf of EWP, KOSPO, KOSEP and KOWEPO has issued an international tender for total 1,360,00 ...
Wednesday, 22 July 20
CIL'S COAL SUPPLY TO POWER SECTOR DROPS OVER 21% TO 93.5 MT IN APR-JUN QUARTER - PTI
The supply of coal by state-owned Coal India Ltd to the power sector fell 21.7 percent to 93.5 million tonnes (MT) in the first quarter of the ongo ...
Monday, 20 July 20
KOREA MIDLAND POWER INVITED BIDS FOR TOTAL 2.520 MILLION MT OF BITUMINOUS COAL FOR THREE YEARS
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO), has issued an international tender for total 840,000 of Bituminous Coal to be used at Bo ...
Monday, 20 July 20
CHINA'S JUNE COAL OUTPUT FALLS 1.2% YEAR-ON-YEAR OVER ILLEGAL MINING CHECKS - REUTERS
China’s coal output dropped 1.2% in June on the year to 330 million tonnes, official data showed, as major coal mining areas cracked down on ...
Monday, 20 July 20
COAL INDIA LAUNCHES SPECIAL CATEGORY OF E-AUCTION FOR COAL IMPORTERS - BUSINESS STANDARD
Coal India (CIL) on Friday launched a special category of e-auction for importers of coal. This is in line with the government’s declaration ...
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- SN Aboitiz Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Anglo American - United Kingdom
- Sakthi Sugars Limited - India
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- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Trasteel International SA, Italy
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Cement Manufacturers Association - India
- Economic Council, Georgia
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- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
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- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- VISA Power Limited - India
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
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- Directorate Of Revenue Intelligence - India
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- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- Coal and Oil Company - UAE
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
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- Global Coal Blending Company Limited - Australia
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
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- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Wilmar Investment Holdings
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- Altura Mining Limited, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The Treasury - Australian Government
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Agrawal Coal Company - India
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- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
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- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Dalmia Cement Bharat India
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Semirara Mining and Power Corporation, Philippines
- Vedanta Resources Plc - India
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Siam City Cement PLC, Thailand
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
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- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Tamil Nadu electricity Board
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- Parry Sugars Refinery, India
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- Semirara Mining Corp, Philippines
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