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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, 23 February 24
STRONG OUTLOOK FOR THE TANKER MARKET IN 2024 AND BEYOND - DNV
Several factors have aligned over the past two years to create a robust and profitable market for tanker owners, which is expected to drive newbuil ...
Friday, 23 February 24
AUSTRALIAN COAL FLOWS TO ASIA HOVER ABOVE LAST YEAR’S VOLUME TONNES - SIGNAL GROUP
In the final days of February, the dry bulk freight market appeared to maintain a relatively stable momentum, particularly evident in the large ves ...
Friday, 23 February 24
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Thursday, 22 February 24
BIMCO PUBLISHES SHIP FINANCING FORMS TO ENSURE UNINTERRUPTED USE OF SHIPS
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Monday, 19 February 24
METALS INVESTMENT: THE DARKEST HOUR IS JUST BEFORE THE DAWN - WOOD MACKENZIE
Things often seem at their worst just before they get better. In terms of meeting our net zero 2050 scenario, we’ve reached a watershed momen ...
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Showing 31 to 35 news of total 6871 |
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- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- Dalmia Cement Bharat India
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- GMR Energy Limited - India
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- White Energy Company Limited
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- Mintek Dendrill Indonesia
- ASAPP Information Group - India
- Interocean Group of Companies - India
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- MS Steel International - UAE
- Miang Besar Coal Terminal - Indonesia
- Attock Cement Pakistan Limited
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Altura Mining Limited, Indonesia
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- Sical Logistics Limited - India
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- Therma Luzon, Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Barasentosa Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- The University of Queensland
- Posco Energy - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Eastern Coal Council - USA
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Lanco Infratech Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Madhucon Powers Ltd - India
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- The State Trading Corporation of India Ltd
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
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