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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, 16 December 20
CHINA TO BOOST DOMESTIC SUPPLY - FITCH
China’s benchmark Qinhuangdao 5,500kcal/kg coal price rose above the government’s upper yellow interval of CNY600/tonne in early Octobe ...
Wednesday, 16 December 20
INDONESIAN COAL RECOVERING - FITCH
Commenting on Indonesian coal, Fitch Ratings, the Indonesian 4,200 kcal index has begun to recover, improving to over USD 29 in November compared t ...
Tuesday, 15 December 20
NEWCASTLE PRICES RECOVER - FITCH
Prices for the benchmark Newcastle 6,000 kcal/kg grade coal have rebounded to over USD 70/tonne since late November as major Asian economies ease l ...
Tuesday, 15 December 20
APAC COAL PRICES REBOUND ON IMPROVED DEMAND AND SUPPLY CUTS - FITCH RATINGS
Prices for the benchmark Newcastle 6,000kcal/kg grade coal have rebounded to over USD70/tonne since late November as major Asian economies ease loc ...
Tuesday, 15 December 20
CHINA EXTENDS FULL OPEN GESTURE TO IMPORTED COAL EXCEPT FOR AUSTRALIA - GLOBAL TIMES
Domestic, overseas suppliers will take up share with easier clearance
China's top economic planner on Saturday gave approval to ...
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Showing 706 to 710 news of total 6871 |
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- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Interocean Group of Companies - India
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- Thai Mozambique Logistica
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Economic Council, Georgia
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Intertek Mineral Services - Indonesia
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- Parliament of New Zealand
- Lanco Infratech Ltd - India
- The University of Queensland
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Planning Commission, India
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Marubeni Corporation - India
- Savvy Resources Ltd - HongKong
- Latin American Coal - Colombia
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- Madhucon Powers Ltd - India
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- MS Steel International - UAE
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Billiton Holdings Pty Ltd - Australia
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kohat Cement Company Ltd. - Pakistan
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
- Sarangani Energy Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Essar Steel Hazira Ltd - India
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- PTC India Limited - India
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Singapore Mercantile Exchange
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- Aditya Birla Group - India
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