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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, 24 September 20
SUPRAMAX: INDO TO INDIA FIXING AROUND US$13,000 - FEARNLEYS
Cape
Over the last week the iron ore segment from Brazil to China has picked up, and we see freight rates up USD 2 (12%) week on week Fearnleys ...
Thursday, 24 September 20
KOREA MIDLAND POWER TO BUY 1.92 MILLION TONS OF 4,300-4,700 NCV COAL FOR THREE YEARS
COALspot.com: Korea Midland Power Co. Ltd, has issued an International tender for 640,000 MT 4,300-4,700 kcal/kg NCV coal per year.
...
Wednesday, 23 September 20
VIETNAM'S NEW POWER DEVELOPMENT PLAN MUST OPTIMIZE RENEWABLES AND AVOID FOSSIL FUEL LOCK-IN: IEEFA
EVN’s financial constraints leaves the utility with little room for error
Implementing Vietnam’s soon-to-be-launched next Power De ...
Wednesday, 23 September 20
MARKET INSIGHT - INTERMODAL
Undoubtedly, this year (ongoing) will never be forgotten because in a matter of months it has managed to severely affect and shape our day to day p ...
Friday, 18 September 20
INDIA'S COAL-FIRED POWER OUTPUT PICKS UP AS INDUSTRIAL USE RISES - REUTERS
India’s coal-fired electricity generation rose 9.4% in the first half of September, provisional government data showed, as demand from indust ...
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- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Pendopo Energi Batubara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Bulk Trading Sa - Switzerland
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- LBH Netherlands Bv - Netherlands
- Electricity Authority, New Zealand
- PTC India Limited - India
- Semirara Mining Corp, Philippines
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Minerals Council of Australia
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Indogreen Group - Indonesia
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Grasim Industreis Ltd - India
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- Jindal Steel & Power Ltd - India
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- Energy Development Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Trasteel International SA, Italy
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Siam City Cement PLC, Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Marubeni Corporation - India
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
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