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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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Friday, 05 January 24
BANGLADESH’S 2023 COAL-FIRED POWER OUTPUT TRIPLED, EASING SHORTAGES - REUTERS
Bangladesh nearly tripled its coal-fired power output in 2023, a Reuters analysis of government data showed, helping it tide over the worst power s ...
Tuesday, 02 January 24
COAL TRADE CONTINUES TO HEAD EAST - BALTIC EXCHANGE
The global coal trade, once concentrated in the Pacific and Atlantic basins, is undergoing a significant transformation, as highlighted in the Inte ...
Tuesday, 02 January 24
COAL CARGOES: AVOIDING EXPLOSION AND SELF-HEATING - GARD
KNOWLEDGE TO ELEVATE
Despite its contribution to greenhouse gas emissions, global coal consumption climbed to an all-time high in 2022 and is ...
Tuesday, 02 January 24
SINOPEC FORECASTS CHINA’S COAL CONSUMPTION TO PEAK AROUND 2025 - REUTERS
China Petrochemical Corp, or Sinopec, expects coal consumption to peak around 2025 at 4.37 billion metric tons, the state energy group said in an o ...
Thursday, 07 December 23
CHINA TO SET UP COAL PRODUCTION RESERVE TO STABILISE PRICES - REUTERS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
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- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- ICICI Bank Limited - India
- MS Steel International - UAE
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Borneo Indobara - Indonesia
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Global Business Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Medco Energi Mining Internasional
- Minerals Council of Australia
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Australian Commodity Traders Exchange
- Attock Cement Pakistan Limited
- Eastern Energy - Thailand
- Energy Link Ltd, New Zealand
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Holcim Trading Pte Ltd - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Power Finance Corporation Ltd., India
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- Kartika Selabumi Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- ASAPP Information Group - India
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- White Energy Company Limited
- Star Paper Mills Limited - India
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- European Bulk Services B.V. - Netherlands
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- Simpson Spence & Young - Indonesia
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- SMG Consultants - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
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