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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, 24 June 24
PHILIPPINES COAL SUPPLY ENOUGH UNTIL 2030 - PHILSTAR GLOBAL
The country’s existing coal-fired power plants are sufficient to ensure enough base load capacity in the next six years, Energy Secretary Rap ...
Friday, 14 June 24
NEXTDECADE, SAUDI ARAMCO SIGN 20-YEAR LNG SUPPLY DEAL - REUTERS
U.S. liquefied natural gas (LNG) provider NextDecade has signed a non-binding agreement with Saudi Aramco 2222.SE to supply 1.2 million tonnes per ...
Friday, 14 June 24
NEWBUILDING PRICES CLIMB 3% TO HIGHEST LEVEL IN 16 YEARS - NIELS RASMUSSEN
“Since the start of the year, newbuilding prices have risen 3% to their highest level since 2008. Compared to their most recent low in late 2 ...
Friday, 14 June 24
INDIA TARGETS HIGHER DOMESTIC COAL PRODUCTION, REDUCED IMPORTS: GOVT - REUTERS
India wants to reduce coal imports and increase domestic production, federal coal minister G. Kishan Reddy said on Thursday.
The cou ...
Thursday, 13 June 24
US LNG TO ASIA FOR POWER GENERATION EXPECTED TO CUT EMISSIONS VERSUS COAL - RYSTAD ENERGY
The value-chain emissions of liquified natural gas (LNG) are lower on average than for coal-fired power generation, even when the fuel is shipp ...
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- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Jaiprakash Power Ventures ltd
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Medco Energi Mining Internasional
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
- Therma Luzon, Inc, Philippines
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Baramulti Group, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Mercator Lines Limited - India
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
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- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
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- White Energy Company Limited
- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
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- Siam City Cement - Thailand
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Indian Oil Corporation Limited
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- Indonesian Coal Mining Association
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- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- VISA Power Limited - India
- Price Waterhouse Coopers - Russia
- Central Electricity Authority - India
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
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- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
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- London Commodity Brokers - England
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
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- Parry Sugars Refinery, India
- Latin American Coal - Colombia
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- Kumho Petrochemical, South Korea
- Mjunction Services Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
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- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
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- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
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- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- Renaissance Capital - South Africa
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Tamil Nadu electricity Board
- Marubeni Corporation - India
- The University of Queensland
- Larsen & Toubro Limited - India
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
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