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Monday, 28 September 20
NEW LNG PROJECTS - ALL DRESSED UP AND NO PLACE TO GO - WOOD MACKENZIE
 It was meant to be another boom year. After a record 70 mmtpa of new LNG capacity was sanctioned in 2019, at least as much capacity was lined up for final approval this year and next. Instead of a feast of new projects, there’s a famine.
Developers, cash-strapped by the collapse in oil and gas prices, have pushed back on capital-intensive pre-FID LNG projects. Massimo Di-Odoardo, Global Head of Gas Analysis, identifies three other factors.
First, the outlook for LNG demand. We are bullish, anticipating LNG demand doubles over the next 20 years, driven by Asia’s economic growth and increasing penetration – particularly where policy supports gas over coal. Our view isn’t dissimilar to Shell’s that the LNG market grows at four times the rate of oil demand in that period.
Our base case forecasts global LNG demand grows by over 50% from 370 mmtpa in 2020 to 550 mmtpa by 2030. Allowing for projects already under development, there’s a supply gap of 102 mmtpa to be met by pre-FID projects which need to be onstream by the end of this decade.
But there are risks to our demand view. Gas demand has held up relatively well through the Covid-19 downturn, certainly compared with oil. The pace and shape of economic recovery though is far from clear and so, too, LNG demand growth in the next few years. Longer term, intensifying interest from policy makers and investors in new technologies, including green hydrogen and CCUS, casts doubt on the sustainability of demand growth.
Second, the rising influence of spot LNG prices on project economics. The traditional oil price-linked contracts and firm offtake agreements that have supported the financing of new projects are fading into history. Many projects today rely on equity lifting, with joint venture partners taking the LNG into their own portfolios. The attraction is flexible volumes that can be sold to any buyer and capture the best price.
But it also means rising exposure to spot LNG prices. Japan spot LNG prices have ranged from over US$11/mmbtu in 2018 to as low as US$2.10/mmbtu early this year, underlining the volatility and risk in running an open spot gas position.
Third, scrutiny of carbon intensity. ESG has leapt to the top of the agenda for LNG producers and buyers alike. LNG’s track record on emissions isn’t good. Inert gases including CO2 must be removed before liquefaction and typically are vented into the atmosphere. Liquefaction itself is energy intense, usually fuelled by produced gas.
In future, carbon footprint will be one factor determining how attractive an LNG project is to developers and buyers, and will influence the price it can command. New projects will have to be squeaky clean: developers will seek to electrify the liquefaction process (renewables where possible) and capture waste gases. Project economics will also be affected by carbon price assumptions.
Which pre-FID projects will fill the 102-mmtpa supply gap in 2030? First up are the mega-trains of Qatar’s low unit cost North Field East, which should be sanctioned in the coming months. This project on its own will absorb 32 mmtpa, negating the need for new supply from other sources until the late 2020s and pushing out FIDs for projects elsewhere by two to three years. Qatar believes it has another 16 mmtpa up its sleeve at North Field South that it could also develop.
So contestable demand for the rest is 70 mmtpa at best in 2030. A dozen or more projects from PNG, Australia, Mozambique, West Africa, Russia and North America, with combined capacity of more than 150 mmtpa, will be vying for their share.
The costs of integrated projects are discounted at 12%. Segmented projects – at 10% discount rate for LNG plant, 15% discount rate for upstream. Taxes are included. US Upstream assumption = 115% X Henry Hub (US$3.29/mmbtu – equivalent to average of long term H1 2020 Henry Hub forecast between 2026 and 2035) *The reference prices indicated by company logos indicate the long term prices used by companies for the purposes of valuing their assets. Assumed to be in Real terms (2020) from 2023.
How can prospective developers gain a better understanding to help support their big decisions? Wood Mackenzie’s new Global Gas Model Next Generation allows investors to analyse global gas market fundamentals and price formation; how LNG cash cost economics, coal-to-gas switching and shipping costs shape price differentials between the US, Europe and Asia markets; and how the cost stack for pre-FID projects evolves over time to meet any particular demand scenario. The model provides a framework to understand a project’s profitability under current market uncertainties.
We’ll be discussing LNG market dynamics, the investment outlook and lifecycle emissions for LNG projects at our Energy Summit (6 to 8 October 2020).
Source: Wood Mackenzie
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Thursday, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
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- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Georgia Ports Authority, United States
- Trasteel International SA, Italy
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- ASAPP Information Group - India
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- Standard Chartered Bank - UAE
- Bangladesh Power Developement Board
- Mjunction Services Limited - India
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Directorate Of Revenue Intelligence - India
- VISA Power Limited - India
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Economic Council, Georgia
- Ind-Barath Power Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Parry Sugars Refinery, India
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- PowerSource Philippines DevCo
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Larsen & Toubro Limited - India
- Ceylon Electricity Board - Sri Lanka
- Energy Link Ltd, New Zealand
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Cement Manufacturers Association - India
- SN Aboitiz Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- Gujarat Mineral Development Corp Ltd - India
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- Antam Resourcindo - Indonesia
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Interocean Group of Companies - India
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- The Treasury - Australian Government
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- Central Java Power - Indonesia
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- Sojitz Corporation - Japan
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Anglo American - United Kingdom
- Simpson Spence & Young - Indonesia
- White Energy Company Limited
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- MS Steel International - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- GMR Energy Limited - India
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- McConnell Dowell - Australia
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
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