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Tuesday, 01 September 20
COVID-19 PUSHES US LNG INTO A TIGHT SPOT - DREWRY
The pandemic-led weak projections for economic growth will derail US LNG exports in full-year 2020 with the country also losing ground in the long term due to major delays in liquefaction projects.
US LNG exports were strong between 2017 and 2019, driven by the shale gas boom, rising demand for natural gas in Asia and higher global LNG prices. The US exported 3.9 million tonnes of LNG in 2016 which increased at a whopping 114% CAGR to 38.2 million tonnes in 2019.
The US is currently the third-largest global LNG exporter with six operational LNG export terminals aggregating 62 mtpa of liquefaction capacity and another 41 mtpa capacity under construction. Brownfiled projects such as Sabine Pass, Corpus Christi, Cameron LNG and Elba Island will reach their full capacities between 2020 and 2027 and greenfield projects such as Golden Pass LNG and Calcasieu Pass will become operational during the same period.
Existing LNG production capacity in the US has been impacted by the pandemic with over 110 LNG cargoes being cancelled by Asian and European customers during June-August due to the low LNG spot price which narrowed the US-Asia and US-Europe price arbitrage. Moreover, major US LNG importers – Japan, South Korea and Taiwan – have seen their LNG demand dwindling, while US-China LNG trade has not been able to pick up as some would have hoped. With projections for LNG spot prices below $5 per MMBtu over the next few years, we expect more cancellations to occur in the coming years making the US a ‘swing LNG producer.’
The ‘second wave’ of LNG liquefaction including mega-LNG projects (such as Driftwood LNG, Port Arthur LNG, Golden Pass, Calcasieu LNG, Plaquemines LNG, Magnolia LNG, Jordan Cove LNG and Rio Grande LNG) constitute over 160 mtpa of planned liquefaction capacity. These projects were initially expected to be operational by 2025, but are currently facing major trouble in securing funding and long-term supply deals required for reaching an FID. Only two projects (Golden Pass and Calcasieu Pass LNG) have attained the FID and have started construction, while over 10 major LNG liquefaction projects which were expected to reach the FID in 2020 have been delayed due to low LNG prices and weak economic growth projections.
The future for these projects looks uncertain as most of them had fixed the all-inclusive selling price for LNG at $8 per MMBtu for Asia ($2 for Henry Hub, $3 for liquefaction, $2-3 transportation) which is highly uncompetitive in the current market. Only a marginal recovery in LNG prices is projected for the next few years which further increases the woes for promoters of the planned projects in securing funding and supply deals. Meanwhile, a major competitor for US LNG, Qatar enjoys a break-even price below $2 per MMBtu as well as proximity to the Asian market. Qatar’s North Field Expansion (NFE) project’s Phase-1 (33 mtpa) and Phase-2 (16 mtpa) are also backed by the government, increasing the probability of their completion and in the process creating more trouble for the planned US projects.
The pandemic has already created severe financial woes for some US projects. For instance, a deal between Driftwood’s promoter Tellurian and India’s Petronet LNG fell through, raising doubts over the proposed 27.6 mtpa project. Although negotiations are still underway, Tellurian faces high competition from Russian and African projects. Shell has also exited the Lake Charles LNG project, increasing the uncertainty of the project for the other participants, while Magnolia LNG’s promoter LNG Ltd has been taken over by another entity after it went bankrupt, delaying the project further.
Some projects like Lake Charles and Rio Grande have gone back to the drawing board and plan to reduce trains to decrease the capex cost while others are cutting workforce and raising loans to keep their projects afloat. Most project developers are hopingfor an easing of US-China tensions and the prospect of securinga share of the rising LNG demand in China, which is projected to grow at over 10% CAGR between 2020 and 2025. However, China’s LNG importers may not be too keen on long-term supply deals with US companies given the current low prices and the uncertainty over US-China trade relations. Ties between China and Qatar are also strengthening with the latter reserving 16 LNG carrier newbuild berths at a Chinese shipyard.
Overall, project delays are expected to hurt the US deeply in the long term while other LNG producers – Qatar, Russia and Mozambique – gain from the narrowing supply-demand gap from 2023 onwards. Qatar has already reserved LNG carrier newbuilding berths at shipyards and has selected a technology partner for the NFE project while Russia’s Arctic LNG-2 is on schedule with added investments made for Arc-7 LNG carriers and large FSUs to keep the Northern Sea Route (NSR) active most of the year.
US LNG woes have had a cascading effect on the LNG shipping market, depressing charter rates. The fall in US-Asia LNG trade has negatively affected shipping demand which, along with cancellations, has increased vessel availability in the market. At present, the fall in charter rates is arrested by a rise in floating storage, but this situation is not sustainable in the long term with LNG prices remaining depressed and over 120 LNG carriers scheduled to be delivered during 2020-21.
An estimated 140 new orders for LNG carriers during 2020-23 would be left hanging if the planned US LNG projects fail to progress. The loss of orders will impact LNG shipyards which have already begun to reel under low orders (only eight vessels were ordered in 1H20). While project-linked ordering from Qatar, Russia and Mozambique will bring some respite the drying up of speculative orders will most certainly be a huge loss for the LNG shipping market as a whole.
To conclude US LNG exports will grow at a slower pace in the coming years as long-term supply deals have already been signed for the under-construction projects. However, stiff competition from other producers amid low LNG prices will impact their share in the Asian market. The fall in US-Asia trade will negatively impact shipping demand and further reduce the number of vessels required for LNG trade. Overall, we expect US LNG exports to be seasonal in the long run with Europe playing a much larger role in the future.
Source: Drewry
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Saturday, 16 January 21
SEABORNE TRADE IN STEAM COAL DECREASED BY 11.6% FROM 937 MILLION TONNES IN 2019 TO 828 MILLION TONNES IN 2020 - COAL IMPORTERS ASSOCIATION, GERMANY
According to preliminary calculations by the German Coal Importers Association (Verein der Kohlenimporteure e. V.), global hard coal production dec ...
Friday, 15 January 21
OVER US$50 BILLION IN GAS POWER PROJECTS AND LNG IMPORT FACILITIES AT RISK OF CANCELLATION IN BANGLADESH, PAKISTAN AND VIETNAM - IEEFA
Pakistan and Bangladesh have already cancelled tenders for LNG imports
Emerging markets such as Vietnam, Pakistan and Bangladesh tha ...
Friday, 15 January 21
VIETNAM'S EXTRAORDINARY ROOFTOP SOLAR SUCCESS DEALS ANOTHER BLOW TO THE REMAINING COAL PIPELINE - IEEFA
9.3 gigawatts peak of solar capacity, equal to 6 coal power plants, installed in less than a year
Vietnam’s solar power indust ...
Friday, 15 January 21
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 14 January 21
KOREA MIDLAND POWER INVITED BIDS FOR AUSTRALIAN COAL FOR THREE YEARS SUPPLY
COALspot.com: Korea Midland Power Co. Ltd, issued an International tender for total 1,560,000 MT of Min.5,700 kcal/kg NCV coal of Australian Origin ...
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- Merrill Lynch Commodities Europe
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- MS Steel International - UAE
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Holcim Trading Pte Ltd - Singapore
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- Australian Coal Association
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Bharathi Cement Corporation - India
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Mercator Lines Limited - India
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Bangladesh Power Developement Board
- Planning Commission, India
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Manunggal Multi Energi - Indonesia
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Economic Council, Georgia
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- PTC India Limited - India
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Kepco SPC Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Orica Australia Pty. Ltd.
- Kalimantan Lumbung Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Eastern Energy - Thailand
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Singapore Mercantile Exchange
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- The University of Queensland
- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- Salva Resources Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Vedanta Resources Plc - India
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