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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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Saturday, 06 June 20
KOREA SOUTH-EAST POWER CO INVITED COAL BIDS FOR MIN 5600 NCV COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 270,000 Tons (MT) min. 5600 NCV co ...
Friday, 05 June 20
COAL INDIA ESTIMATES PRODUCTION GROWTH BY OVERBURDEN REMOVAL - FINANCIAL EXPRESS
PSU miner Coal India (CIL) has now limited mining only to Overburden Removal (OBR) with falling demand of coal. The mining behemoth is now keeping ...
Friday, 05 June 20
U.S. SANCTIONS COMPLIANCE GUIDANCE RELEASED FOR THE GLOBAL MARITIME, ENERGY AND METALS SECTORS - AKIN GUMP
Key Points
On May 14, 2020, OFAC, the Department of State and the U.S. Coast Guard jointly released guidance for persons involved in the ma ...
Friday, 05 June 20
IN THE FIRST 5 MONTHS OF 2020 AUSTRALIA SHIPPED 6.8 MLN TONNES TO VIETNAM - BANCHERO COSTA
In the first 5 months of 2020, global seaborne coal trade declined by as much as -8% year-on-year, according to vessel tracking data from Ref ...
Thursday, 04 June 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
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- Bayan Resources Tbk. - Indonesia
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- Lanco Infratech Ltd - India
- VISA Power Limited - India
- White Energy Company Limited
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Siam City Cement PLC, Thailand
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- Parliament of New Zealand
- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- LBH Netherlands Bv - Netherlands
- Bulk Trading Sa - Switzerland
- Essar Steel Hazira Ltd - India
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Planning Commission, India
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- McConnell Dowell - Australia
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- PTC India Limited - India
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Chettinad Cement Corporation Ltd - India
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Iligan Light & Power Inc, Philippines
- The University of Queensland
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Binh Thuan Hamico - Vietnam
- Sinarmas Energy and Mining - Indonesia
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Goldman Sachs - Singapore
- London Commodity Brokers - England
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