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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$3.29/mmbtu – equivalent to average of long term H1 2020 Henry Hub forecast between 2026 and 2035) *The reference prices indicated by company logos indicate the long term prices used by companies for the purposes of valuing their assets. Assumed to be in Real terms (2020) from 2023.
How can prospective developers gain a better understanding to help support their big decisions? Wood Mackenzie’s new Global Gas Model Next Generation allows investors to analyse global gas market fundamentals and price formation; how LNG cash cost economics, coal-to-gas switching and shipping costs shape price differentials between the US, Europe and Asia markets; and how the cost stack for pre-FID projects evolves over time to meet any particular demand scenario. The model provides a framework to understand a project’s profitability under current market uncertainties.
We’ll be discussing LNG market dynamics, the investment outlook and lifecycle emissions for LNG projects at our Energy Summit (6 to 8 October 2020).
Source: Wood Mackenzie
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Wednesday, 07 October 20
U.S. COAL PRODUCTION TO DECREASE BY 26 PERCENT IN 2020 COMPARED TO 2019 - EIA
EIA expects total U.S. coal production in 2020 to be 525 million short tons (MMst), compared with 705 MMst in 2019, a 26% decrease.
COVID-19 a ...
Wednesday, 07 October 20
MARKET INSIGHT - INTERMODAL
The challenges brought forward in 2020 proved to be very different from what we could have ever imagined. Together with placing a significant strai ...
Tuesday, 06 October 20
KOSPO TO IMPORT 80,000 MT OF 3,800 NCV COAL FOR 2H NOV
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 MT Min.3800 kcal/kg NCV coal 2H November, 2020 l ...
Friday, 02 October 20
THE INDONESIA COAL PRICE REFERENCE RISE AFTER HISTORIC CRASH TO US$ 49.42
COALspot.com: The Indonesia Coal Price Reference for the month of October Rise to US$ 51.00 after historic crash to US$ 49.42 in September 2020.
...
Friday, 02 October 20
SRI LANKA MUST LEARN LESSONS FROM AROUND ASIA TO AVOID FURTHER ELECTRICITY CRISES - IEEFA
Overcommitment to fossil-fuelled power generation is leading to excess capacity and rising capacity payments, subsidies, and tariffs around the con ...
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- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- VISA Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Larsen & Toubro Limited - India
- Thai Mozambique Logistica
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Aditya Birla Group - India
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Cement Manufacturers Association - India
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Meralco Power Generation, Philippines
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- PowerSource Philippines DevCo
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- IHS Mccloskey Coal Group - USA
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- PTC India Limited - India
- Economic Council, Georgia
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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