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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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Monday, 04 January 21
U.S. RENEWABLE ENERGY CONSUMPTION SURPASSES COAL FOR THE FIRST TIME IN OVER 130 YEARS - EIA
In 2019, U.S. annual energy consumption from renewable sources exceeded coal consumption for the first time since before 1885, according to the U.S ...
Monday, 04 January 21
BLISS FOR SHIPOWNERS! DAMAGES MAY BE CLAIMED IN ADDITION TO DEMURRAGE FOR VOYAGE CHARTERPARTY DELAY - WFW
KNOWLEDGE TO ELEVATE
In a significant decision for the maritime sector, The Eternal Bliss[1], the English Commercial Court has resol ...
Sunday, 03 January 21
INDIA: COMMERCE MINISTRY LAUNCHES COAL IMPORT MONITORING SYSTEM - PTI
CIMS shall require importers to submit advance information in an online system for imports of items and obtain an automatic registration number by ...
Wednesday, 30 December 20
A LOOK BACK INTO 2020: THE HEADWINDS, THE TAILWINDS AND EVERYTHING IN BETWEEN - SIGNAL
There is no doubt that 2020 has been a turbulent year for commercial shipping. The coronavirus pandemic has shaken the global maritime transport. T ...
Tuesday, 29 December 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.66 PCT - XINHUA
China Taiyuan coal transaction price index stood at 134.78 points Monday, up 0.66 percent week on week.
The index, released by China ...
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- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Altura Mining Limited, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Trasteel International SA, Italy
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Marubeni Corporation - India
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- The University of Queensland
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- SMG Consultants - Indonesia
- Australian Coal Association
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- MS Steel International - UAE
- Central Java Power - Indonesia
- Madhucon Powers Ltd - India
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Semirara Mining Corp, Philippines
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Ind-Barath Power Infra Limited - India
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Indika Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- Economic Council, Georgia
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Neyveli Lignite Corporation Ltd, - India
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- SN Aboitiz Power Inc, Philippines
- London Commodity Brokers - England
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