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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 February 24
DRY BULK MARKET: THE DOWNWARD REVISION IN THE GROWTH OF CAPESIZE TONNE DAYS IN JANUARY WITH THE BCI DROPPING - MARIA BERTZELETOU
In the last week of January, the dry freight market sustained weakness in the Capesize segment, while the number of ballasters in the Southeast (SE ...
Friday, 02 February 24
COAL INDIA ACHIEVES NEARLY 80% OF ITS FY24 PRODUCTION TARGET IN TEN MONTHS - CNBCTV18
For the month of January, the company’s production grew by 9.1% from the same period last year to 78.4 Million Tonnes (MT), from 71.9 MT last ...
Thursday, 01 February 24
CHINA'S WIND, SOLAR CAPACITY TO OVERTAKE COAL IN 2024 - INDUSTRY BODY, REUTERS REPORTED
China’s installed wind and solar capacity is expected to overtake coal for the first time this year, according to industry forecasts.
&nb ...
Thursday, 01 February 24
ANTI-DEDUCTION CLAUSES: CAN A CHARTERER WITHHOLD HIRE WITHOUT AN OWNER'S CONSENT? - SKULD
KNOWLEDGE TO ELEVATE
Summary
In The Anna Dorothea, the Court found that where a charterparty provides that no deduction from hire may be m ...
Thursday, 01 February 24
INDIA REBUILDS COAL STOCKS TO ENSURE ELECTRIC RELIABILITY - REUTERS
India’s electricity supply is much more comfortable at the start of 2024 than in either 2023 or 2022 as coal production has ramped up and the ...
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- Toyota Tsusho Corporation, Japan
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Ceylon Electricity Board - Sri Lanka
- New Zealand Coal & Carbon
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Metalloyd Limited - United Kingdom
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Indika Energy - Indonesia
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- Kumho Petrochemical, South Korea
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- Australian Coal Association
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Merrill Lynch Commodities Europe
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Kaltim Prima Coal - Indonesia
- Dalmia Cement Bharat India
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- Aditya Birla Group - India
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Meenaskhi Energy Private Limited - India
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Bharathi Cement Corporation - India
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- Parliament of New Zealand
- Planning Commission, India
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Indian Energy Exchange, India
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- Romanian Commodities Exchange
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