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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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Saturday, 16 January 21
SEABORNE TRADE IN STEAM COAL DECREASED BY 11.6% FROM 937 MILLION TONNES IN 2019 TO 828 MILLION TONNES IN 2020 - COAL IMPORTERS ASSOCIATION, GERMANY
According to preliminary calculations by the German Coal Importers Association (Verein der Kohlenimporteure e. V.), global hard coal production dec ...
Friday, 15 January 21
OVER US$50 BILLION IN GAS POWER PROJECTS AND LNG IMPORT FACILITIES AT RISK OF CANCELLATION IN BANGLADESH, PAKISTAN AND VIETNAM - IEEFA
Pakistan and Bangladesh have already cancelled tenders for LNG imports
Emerging markets such as Vietnam, Pakistan and Bangladesh tha ...
Friday, 15 January 21
VIETNAM'S EXTRAORDINARY ROOFTOP SOLAR SUCCESS DEALS ANOTHER BLOW TO THE REMAINING COAL PIPELINE - IEEFA
9.3 gigawatts peak of solar capacity, equal to 6 coal power plants, installed in less than a year
Vietnam’s solar power indust ...
Friday, 15 January 21
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 14 January 21
KOREA MIDLAND POWER INVITED BIDS FOR AUSTRALIAN COAL FOR THREE YEARS SUPPLY
COALspot.com: Korea Midland Power Co. Ltd, issued an International tender for total 1,560,000 MT of Min.5,700 kcal/kg NCV coal of Australian Origin ...
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- Eastern Coal Council - USA
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Jindal Steel & Power Ltd - India
- The Treasury - Australian Government
- Alfred C Toepfer International GmbH - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- South Luzon Thermal Energy Corporation
- Kalimantan Lumbung Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- Parliament of New Zealand
- Ministry of Mines - Canada
- ASAPP Information Group - India
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Madhucon Powers Ltd - India
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- Oldendorff Carriers - Singapore
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Parry Sugars Refinery, India
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Makarim & Taira - Indonesia
- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- GVK Power & Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bhoruka Overseas - Indonesia
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- SN Aboitiz Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Kumho Petrochemical, South Korea
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- Kartika Selabumi Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- The University of Queensland
- Bhushan Steel Limited - India
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- White Energy Company Limited
- London Commodity Brokers - England
- Romanian Commodities Exchange
- GN Power Mariveles Coal Plant, Philippines
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Mjunction Services Limited - India
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
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