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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, 22 March 24
INDONESIA APPROVES 922.14 MLN T COAL PRODUCTION QUOTA FOR 2024, ABOVE TARGET - REUTERS
Indonesia has approved coal production quotas totalling 922.14 million metric tons for 2024, Bambang Suswantono, a senior official at the mining mi ...
Friday, 22 March 24
CHINA COAL INDUSTRY GROUP EXPECTS OUTPUT GROWTH TO SLOW IN 2024 - REUTERS
China’s coal output is expected to increase 36 million metric tons, or 0.8%, to about 4.7 billion tonnes in 2024, a Chinese coal industry gro ...
Monday, 18 March 24
THREE KEY TAKEAWAYS FROM OUR EUROPE GAS MARKETS SHORT-TERM OUTLOOK Q1 2024 - WOOD MACKENZIE
European gas prices are currently back to pre-crisis levels, but with a complex series of factors affecting future supply and demand, are they set ...
Wednesday, 06 March 24
INDONESIA AIMS TO FINISH MINING OUTPUT QUOTAS APPROVAL BY END-MARCH, OFFICIAL SAYS - REUTERS
Indonesia’s has approved the mining production quotarequests from more than 120mineral companies and aims to complete the approval process th ...
Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
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- Sical Logistics Limited - India
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Pendopo Energi Batubara - Indonesia
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Uttam Galva Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- GMR Energy Limited - India
- Deloitte Consulting - India
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- Dalmia Cement Bharat India
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Wilmar Investment Holdings
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Star Paper Mills Limited - India
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Coalindo Energy - Indonesia
- Energy Development Corp, Philippines
- Georgia Ports Authority, United States
- Bahari Cakrawala Sebuku - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Minerals Council of Australia
- Port Waratah Coal Services - Australia
- Eastern Coal Council - USA
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Borneo Indobara - Indonesia
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- Interocean Group of Companies - India
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Australian Coal Association
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Economic Council, Georgia
- London Commodity Brokers - England
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- PTC India Limited - India
- Lanco Infratech Ltd - India
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Mercator Lines Limited - India
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
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