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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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Friday, 01 December 23
COAL MINERS GROUP EXPECTS INDONESIA’S 2023 COAL OUTPUT TO SURPASS TARGET - REUTERS
The Indonesian Coal Mining Association (ICMA) expects the country’s 2023 coal output to surpass the official target of 695 million metric ton ...
Friday, 24 November 23
COAL IMPORTS TO INDIA IN OCTOBER 2023 REACHED HIGHEST LEVELS IN NEARLY A YEAR AND A HALF - VESSELSVALUE, VESON NAUTICAL
In October, coal imports to India reached 13.8 mt in October 2023, according to Oceanbolt, a Veson Nautical solution, the highest level since May 2 ...
Friday, 24 November 23
COAL SHIPMENTS TO ADVANCED ECONOMIES DOWN 17% SO FAR IN 2023 - BIMCO
In the first ten months of 2023, coal shipments to advanced economies fell by 17% y/y, as demand for electricity declined and the share of electric ...
Friday, 24 November 23
INTELLIGENT COAL MINES CONTRIBUTE TO IMPROVING SAFETY STANDARDS - CHINA DAILY
Mechanization, automation and intelligent upgrades have contributed to improved safety in coal mines, though the level of development of intelligen ...
Friday, 24 November 23
WHY AUSTRALIA'S COAL MINES ARE GETTING BIGGER - IEEFA
Australia’s largest coal mines are getting larger. Mines in New South Wales (NSW) are ramping up production following the state’s recov ...
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- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- New Zealand Coal & Carbon
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- Independent Power Producers Association of India
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- Banpu Public Company Limited - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Economic Council, Georgia
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Mercator Lines Limited - India
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- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
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- Indian Energy Exchange, India
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- Coal and Oil Company - UAE
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- Latin American Coal - Colombia
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- Chamber of Mines of South Africa
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- Australian Coal Association
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- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- PTC India Limited - India
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
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- Bayan Resources Tbk. - Indonesia
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
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- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- The Treasury - Australian Government
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- Lanco Infratech Ltd - India
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- Timah Investasi Mineral - Indoneisa
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- Energy Development Corp, Philippines
- McConnell Dowell - Australia
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- Star Paper Mills Limited - India
- Posco Energy - South Korea
- India Bulls Power Limited - India
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- Bhushan Steel Limited - India
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- Renaissance Capital - South Africa
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- Indonesian Coal Mining Association
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- Central Electricity Authority - India
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- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- The State Trading Corporation of India Ltd
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- The University of Queensland
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Semirara Mining Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Madhucon Powers Ltd - India
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