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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, 17 December 20
CHINA'S BAN IS LESS OF A THREAT TO AUSTRALIA'S COAL INDUSTRY THAN INTERNATIONAL CLIMATE AMBITION - IEEFA
Australian coal exporters will survive this near-term political fight but there are longterm structural headwinds
The decision by Ch ...
Thursday, 17 December 20
BUMA SIGNED US$1.0 BILLION WORTH OF EXTENSION CONTRACT WITH BERAU COAL
PT Bukit Makmur Mandiri Utama, subsidiary of PT Delta Dunia Makmur Tbk., has extended its mining services contracts with PT Berau Coal, in relation ...
Wednesday, 16 December 20
INDONESIA 2020 COAL CONSUMPTION ESTIMATED AT 140-145 MLN TONNES - OFFICIAL, REUTERS REPORTED
Indonesia’s domestic coal consumption is estimated at 140-145 million tonnes this year, Dodik Ariyanto, an official at the energy ministry, t ...
Wednesday, 16 December 20
RUSSIA REVISES DOWN EXPORT EXPECTATION - FITCH
The Ministry of Economy of Russia, the world’s third largest thermal coal exporting country, released its annual forecasts ...
Wednesday, 16 December 20
INDIAN COAL IMPORTS TO REMAIN SUBDUED - FITCH RATINGS
Fitch Rating commented on Indian Coal Imports, Fitch said, coal imports by Indian utilities fell by about 24% yoy to 44 million tonnes (mt) i ...
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- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- Chettinad Cement Corporation Ltd - India
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- Bharathi Cement Corporation - India
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Savvy Resources Ltd - HongKong
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Marubeni Corporation - India
- Price Waterhouse Coopers - Russia
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Goldman Sachs - Singapore
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- Anglo American - United Kingdom
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Essar Steel Hazira Ltd - India
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Simpson Spence & Young - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- McConnell Dowell - Australia
- The University of Queensland
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- PTC India Limited - India
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Maharashtra Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Kartika Selabumi Mining - Indonesia
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Indian Energy Exchange, India
- GAC Shipping (India) Pvt Ltd
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