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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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Thursday, 07 January 21
FITCH FORECASTS DOUBLING IN ASIAN WIND, SOLAR CAPACITY BY 2029, TOPPING 1,500GW
Despite some near-term delays due to the Covid-19 pandemic, solar power and offshore wind will drive steep growth in non-hydro renewables in Asia, ...
Wednesday, 06 January 21
INDONESIA EXCEEDS COAL PRODUCTION TARGET IN 2020
Indonesian coal production reached 557.54 Million Tons in 2020 1.37% higher than of last year’s total target of 550.00 Million Tons, accordin ...
Wednesday, 06 January 21
CHINESE CITIES REPORTEDLY GO DARK AS COUNTRY FACES SHORTAGE OF COAL, A MAJOR AUSTRALIAN EXPORT - CNBC
Several major Chinese cities have reportedly gone dark as authorities limit power usage, citing a shortage of coal.
Analysts said pr ...
Tuesday, 05 January 21
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP - XINHUA
China Taiyuan coal transaction price index stood at 136 points Monday, up 0.91 percent week on week.
The index, released by China Ta ...
Tuesday, 05 January 21
THE INDONESIA COAL PRICE REFERENCE SOARS TO HIGHEST ONE-MONTH INCREASE SINCE DECEMBER 2016
COALspot.com: The Indonesia coal price reference for January 2021 settles above $75 for the first time since July 2019 and to highest one-month inc ...
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- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Kartika Selabumi Mining - Indonesia
- Jaiprakash Power Ventures ltd
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- PTC India Limited - India
- Electricity Authority, New Zealand
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Siam City Cement PLC, Thailand
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- White Energy Company Limited
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- LBH Netherlands Bv - Netherlands
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Sree Jayajothi Cements Limited - India
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Coalindo Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- South Luzon Thermal Energy Corporation
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- Goldman Sachs - Singapore
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Port Waratah Coal Services - Australia
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Jindal Steel & Power Ltd - India
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Planning Commission, India
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
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