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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, 22 March 24
INDONESIA APPROVES 922.14 MLN T COAL PRODUCTION QUOTA FOR 2024, ABOVE TARGET - REUTERS
Indonesia has approved coal production quotas totalling 922.14 million metric tons for 2024, Bambang Suswantono, a senior official at the mining mi ...
Friday, 22 March 24
CHINA COAL INDUSTRY GROUP EXPECTS OUTPUT GROWTH TO SLOW IN 2024 - REUTERS
China’s coal output is expected to increase 36 million metric tons, or 0.8%, to about 4.7 billion tonnes in 2024, a Chinese coal industry gro ...
Monday, 18 March 24
THREE KEY TAKEAWAYS FROM OUR EUROPE GAS MARKETS SHORT-TERM OUTLOOK Q1 2024 - WOOD MACKENZIE
European gas prices are currently back to pre-crisis levels, but with a complex series of factors affecting future supply and demand, are they set ...
Wednesday, 06 March 24
INDONESIA AIMS TO FINISH MINING OUTPUT QUOTAS APPROVAL BY END-MARCH, OFFICIAL SAYS - REUTERS
Indonesia’s has approved the mining production quotarequests from more than 120mineral companies and aims to complete the approval process th ...
Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
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Showing 26 to 30 news of total 6871 |
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- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Parry Sugars Refinery, India
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Samtan Co., Ltd - South Korea
- Krishnapatnam Port Company Ltd. - India
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Parliament of New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Therma Luzon, Inc, Philippines
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- Essar Steel Hazira Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- White Energy Company Limited
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Directorate General of MIneral and Coal - Indonesia
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Singapore Mercantile Exchange
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- Electricity Generating Authority of Thailand
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- South Luzon Thermal Energy Corporation
- Independent Power Producers Association of India
- Orica Mining Services - Indonesia
- Star Paper Mills Limited - India
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- MS Steel International - UAE
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- Indogreen Group - Indonesia
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- The State Trading Corporation of India Ltd
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- Aditya Birla Group - India
- Planning Commission, India
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- Wood Mackenzie - Singapore
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
- GMR Energy Limited - India
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