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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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Friday, 02 August 24
COAL MARKET DEVELOPMENTS: FALLING PRICES AMID RECORD-HIGH OUTPUT - WORLD BANK
Coal prices inched up in May (m/m) following an 8 percent decline in 2024Q1. The Australian and South African benchmarks have plummeted more ...
Friday, 26 July 24
FUELEU MARITME IS COMING. IS YOUR CHARTERPARTY READY? - GARD
With less than six months to implementation of FuelEU Maritime in EU and EEA trades, there has been little published advice regarding how to alloca ...
Thursday, 04 July 24
INDIA'S COAL PRODUCTION RISES 14% IN JUNE - PTI
The country’s coal production rose by 14.49% to 84.63 million tonne (MT) in June. The country’s coal output was 73.92 MT in June last f ...
Tuesday, 02 July 24
NTPC CAPTIVE COAL OUTPUT GROWS 15% IN Q1; DESPATCH RISES 17%
State-owned NTPC on Monday reported a 15 per cent year-on-year increase in the production of coal from captives mines to 9.862 metric million tonne ...
Friday, 28 June 24
KOSPO INVITED BIDS FOR 400,000 MT OF MINIMUM 4000 NCV COAL FOR FIVE YEARS
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for total 400,000 MT of Low Calorific Value Coal for 5 years starting from July 2024 until ...
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- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Sical Logistics Limited - India
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- Krishnapatnam Port Company Ltd. - India
- San Jose City I Power Corp, Philippines
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- PTC India Limited - India
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The University of Queensland
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Singapore Mercantile Exchange
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
- Siam City Cement PLC, Thailand
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Planning Commission, India
- Tata Chemicals Ltd - India
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
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