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