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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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- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Orica Mining Services - Indonesia
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Port Waratah Coal Services - Australia
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Australian Coal Association
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Marubeni Corporation - India
- GMR Energy Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- PTC India Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- Therma Luzon, Inc, Philippines
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sree Jayajothi Cements Limited - India
- Goldman Sachs - Singapore
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Electricity Authority, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Kobexindo Tractors - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- SN Aboitiz Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- White Energy Company Limited
- London Commodity Brokers - England
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- San Jose City I Power Corp, Philippines
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Parliament of New Zealand
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
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