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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, 25 November 20
DRY BULK SHIPPING: CHINA REMAINS THE DRIVING FACTOR, BUT COAL POLICY IS DISRUPTING THE MARKET - PETER SAND, BIMCO
The second half of the year has provided some cheer for the dry bulk market, with all ships in the spot market averaging earnings above the break-e ...
Wednesday, 25 November 20
CHINA KICKS AN OWN GOAL WITH AUSTRALIAN COAL - FORBES
China’s annoyance at Australia’s hardline stance on political interference and demands for an independent inquiry into the root cause o ...
Wednesday, 25 November 20
MINISTER - INDONESIA JAN-OCT COAL OUTPUT AT 459 MILLION TONNES - REUTERS
Indonesia coal output in the January to October period was 459 million tonnes, the country’s energy minister told parliament on Monday.
& ...
Wednesday, 25 November 20
INDIA: MORE STEPS NEEDED TO MAKE COMMERCIAL COAL MINING ATTRACTIVE TO GLOBAL PLAYERS - LIVEMINT
India concluded its first commercial coal mine auctions earlier this month. A total of 19 coal mines spread across Madhya Pradesh, Jharkhand, Odish ...
Wednesday, 25 November 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.38 PCT - XINHUA
China Taiyuan coal transaction price index stood at 129.21 points Monday, up 0.38 percent week on week.
The index, released by China ...
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- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Central Java Power - Indonesia
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Energy Link Ltd, New Zealand
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Economic Council, Georgia
- Indika Energy - Indonesia
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Attock Cement Pakistan Limited
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- MS Steel International - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dalmia Cement Bharat India
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Agrawal Coal Company - India
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- Planning Commission, India
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- White Energy Company Limited
- PTC India Limited - India
- Deloitte Consulting - India
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
- Baramulti Group, Indonesia
- Malabar Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Eastern Energy - Thailand
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- International Coal Ventures Pvt Ltd - India
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