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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, 07 January 21
FITCH FORECASTS DOUBLING IN ASIAN WIND, SOLAR CAPACITY BY 2029, TOPPING 1,500GW
Despite some near-term delays due to the Covid-19 pandemic, solar power and offshore wind will drive steep growth in non-hydro renewables in Asia, ...
Wednesday, 06 January 21
INDONESIA EXCEEDS COAL PRODUCTION TARGET IN 2020
Indonesian coal production reached 557.54 Million Tons in 2020 1.37% higher than of last year’s total target of 550.00 Million Tons, accordin ...
Wednesday, 06 January 21
CHINESE CITIES REPORTEDLY GO DARK AS COUNTRY FACES SHORTAGE OF COAL, A MAJOR AUSTRALIAN EXPORT - CNBC
Several major Chinese cities have reportedly gone dark as authorities limit power usage, citing a shortage of coal.
Analysts said pr ...
Tuesday, 05 January 21
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP - XINHUA
China Taiyuan coal transaction price index stood at 136 points Monday, up 0.91 percent week on week.
The index, released by China Ta ...
Tuesday, 05 January 21
THE INDONESIA COAL PRICE REFERENCE SOARS TO HIGHEST ONE-MONTH INCREASE SINCE DECEMBER 2016
COALspot.com: The Indonesia coal price reference for January 2021 settles above $75 for the first time since July 2019 and to highest one-month inc ...
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- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- SN Aboitiz Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- Australian Coal Association
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- White Energy Company Limited
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- PetroVietnam Power Coal Import and Supply Company
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- VISA Power Limited - India
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Semirara Mining and Power Corporation, Philippines
- Star Paper Mills Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- Minerals Council of Australia
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- Bayan Resources Tbk. - Indonesia
- The University of Queensland
- Ministry of Transport, Egypt
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- Tamil Nadu electricity Board
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Indian Oil Corporation Limited
- CNBM International Corporation - China
- GAC Shipping (India) Pvt Ltd
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Sakthi Sugars Limited - India
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- Global Green Power PLC Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
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