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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, 04 June 20
DON'T FORGET THE REAL PURPOSE OF RISK ASSESSMENTS - GARD
KNOWLEDGE TO ELEVATE
When doing a risk assessment, we often overcomplicate it and forget its real purpose.
Rather than ensuring that crew ...
Wednesday, 03 June 20
MARKET INSIGHT - INTERMODAL
Once again shipping is about to venture into uncharted waters and before the challenges of the past decade are forgotten, shipowners will have to o ...
Tuesday, 02 June 20
KOSPO LOOKING FOR 80000 MT OF 4200 NCV COAL FOR JULY
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 Metric Tons (MT) 4200 NCV coal for 12 - 21, July ...
Tuesday, 02 June 20
INDONESIAN COAL MINER BUMI RESOURCES Q1 OUTPUT UP 5% - REUTERS
Indonesia’s largest coal miner Bumi Resources posted a 5% increase in first-quarter output at 20.8 million tonnes, the company said in a stat ...
Tuesday, 02 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.86 PCT - XINHUA
China Taiyuan coal transaction price index stood at 123.95 points Monday, down 0.86 percent week on week.
The index, released by Chi ...
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- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- PTC India Limited - India
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Maheswari Brothers Coal Limited - India
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- ICICI Bank Limited - India
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Goldman Sachs - Singapore
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Africa Commodities Group - South Africa
- Economic Council, Georgia
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- MS Steel International - UAE
- White Energy Company Limited
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Timah Investasi Mineral - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Wilmar Investment Holdings
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- Banpu Public Company Limited - Thailand
- Indian Energy Exchange, India
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Tata Chemicals Ltd - India
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Xindia Steels Limited - India
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- Mercator Lines Limited - India
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Thai Mozambique Logistica
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kepco SPC Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Singapore Mercantile Exchange
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
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