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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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Friday, 28 June 24
INDIAN POWER STATIONS STOCKED WITH BUMPER COAL SUPPLY AS TRANSPORT WOES EASE - BUSINESS STANDARD
Even as power demand has touched a historic high of 250 gigawatts (Gw) amid sweltering heat this June, India’s power stations are stocked wit ...
Friday, 28 June 24
INDIA'S CY23 COAL USE LARGER THAN NORTH AMERICA, EUROPE COMBINED - THE HINDU
For the first time, India’s coal consumption surpassed that of North America and Europe combined in the calendar year 2023, said Energy Insti ...
Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Althoug ...
Monday, 24 June 24
INDIA'S COAL-BASED POWER DEMAND AT ALL-TIME HIGH, GOVERNMENT SAYS - REUTERS
India’s demand for coal-based power has risen by 7.3% this fiscal year to an all-time high, the government said in a statement on Wednesday.
...
Monday, 24 June 24
CHINA'S COAL INDUSTRY TURNS GREENER THROUGH INNOVATIVE APPROACHES - PEOPLE'S DAILY
At an opencast mine operated by Inner Mongolia Pingzhuang Coal Group Co. Ltd., a subsidiary of CHN Energy Investment Group (CHN Energy), a 14-meter ...
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- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Barasentosa Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Port Waratah Coal Services - Australia
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- Planning Commission, India
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Thai Mozambique Logistica
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- Australian Coal Association
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- Alfred C Toepfer International GmbH - Germany
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- GVK Power & Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- GAC Shipping (India) Pvt Ltd
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Central Electricity Authority - India
- Bukit Asam (Persero) Tbk - Indonesia
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Malabar Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Jindal Steel & Power Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- GMR Energy Limited - India
- Antam Resourcindo - Indonesia
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- McConnell Dowell - Australia
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Romanian Commodities Exchange
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- India Bulls Power Limited - India
- MS Steel International - UAE
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
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