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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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Wednesday, 13 January 21
CHINA THERMAL GENCO PROFITS FACE PRESSURE AMID POWER SHORTAGES - FITHCH WIRE
High coal and gas prices will put near-term pressure on margins for thermal power generators in China, says Fitch Ratings. However, the power short ...
Wednesday, 13 January 21
COAL TO BE BIGGEST CONTRIBUTOR TO INDIA'S $5 TRILLION ECONOMY: AMIT SHAH - BUSINESS STANDARD
The Centre on Monday awarded the letter of allocation to successful bidders of coal mines under the commercial auction held during October-November ...
Monday, 11 January 21
MUTED COAL RECOVERY IN 2021 - BALTIC EXCHANGE
Coal demand is expected to rebound in 2021
Medium-term outlook is less favourable although demand declines are expected to be subtle ...
Sunday, 10 January 21
KOREAN GENCOS INVITED BIDS FOR TOTAL 880,000 TONS OF COAL FOR MARCH 2021 LOADING
COALspot.com: Korea South-East Power Co., Ltd. (KOEN), on behalf of EWP, KOSPO, KOSEP and KOWEPO issued an international tender for total 880 ...
Friday, 08 January 21
INDIA COULD COMPETE AGAINST CHINA IN SOLAR MODULE PRODUCTION WITH THE RIGHT GOVERNMENT SUPPORT - IEEFA
The focus should be on helping manufacturers become globally competitive
Although one of the top 10 solar module producers in the world, India ...
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- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bayan Resources Tbk. - Indonesia
- Sindya Power Generating Company Private Ltd
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Marubeni Corporation - India
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Madhucon Powers Ltd - India
- Anglo American - United Kingdom
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- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Planning Commission, India
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Manunggal Multi Energi - Indonesia
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The University of Queensland
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- LBH Netherlands Bv - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Deloitte Consulting - India
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Vizag Seaport Private Limited - India
- Australian Coal Association
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Bangladesh Power Developement Board
- White Energy Company Limited
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indogreen Group - Indonesia
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Independent Power Producers Association of India
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Kohat Cement Company Ltd. - Pakistan
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