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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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Monday, 04 May 20
U.S. ESTIMATED COAL PRODUCTION FALL 39.4% YEAR ON YEAR IN THE WEEK ENDED APRIL 25 - EIA
Estimated U.S. coal production totaled about 8.6 million short tons (MMst) For the week ended April 25, 2020, says EIA in its latest report.
E ...
Saturday, 02 May 20
SUPRAMAX: ASIA, STRONGER NUMBERS - A 55.000-DWT WAS FIXED FROM INDONESIA TO CHINA IN THE MID $6,000S - BALTIC BRIEFING
Capesize
A tepid week for the big ships, as macro concerns continued to weigh heavily on the index. All of the major voyage routes lost value, ...
Friday, 01 May 20
KOSPO INVITED OFFER FOR 5600 NCV COAL FOR Q3 2020 LOADING
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 260,000 Metric Tons (MT) steam coal for Boryeong Power ...
Friday, 01 May 20
GLOBAL COAL DEMAND TO FALL BY ABOUT 8% IN 2020,THE LARGEST DROP SINCE WORLD WAR II - IEA
We expect global coal demand to fall by about 8% in 2020, the largest drop since World War II, with coal use declining in virtually every sector of ...
Friday, 01 May 20
GLOBAL COAL DEMAND TO FALL BY 8% IN Q1 2020 RELATIVE TO Q1 2019 - IEA
We expect global coal demand to fall by 8% in Q1 2020 relative to Q1 2019. This significant drop was driven by lower demand in the electricity sect ...
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- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Wilmar Investment Holdings
- Uttam Galva Steels Limited - India
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- The University of Queensland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Bhoruka Overseas - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Meenaskhi Energy Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- PTC India Limited - India
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Parliament of New Zealand
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- White Energy Company Limited
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- The Treasury - Australian Government
- Banpu Public Company Limited - Thailand
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- Eastern Coal Council - USA
- Sojitz Corporation - Japan
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- Planning Commission, India
- CNBM International Corporation - China
- Xindia Steels Limited - India
- MS Steel International - UAE
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
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