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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, 21 October 20
INDIA: THE COMMERCIALISATION OF COAL BLOCKS WILL BENEFIT THE ECONOMY - HINDU BUSINESS LINE
As the government of India receives 76 bids for 23 coal mines against the 38 up on auction, what does this commercialisation of coal block allocati ...
Wednesday, 21 October 20
MARKET INSIGHT - INTERMODAL
The second wave of COVID-19 is now a reality; offices are closing again, and stricter rules and regulations are being implemented in public spaces. ...
Tuesday, 20 October 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.82 PCT - XINHUA
China Taiyuan coal transaction price index stood at 127.49 points Monday, up 0.82 percent week on week.
The index, released by China ...
Tuesday, 20 October 20
BIMCO 'SHIPLEASE' TERM SHEET - WATSON FARLEY & WILLIAMS
KNOWLEDGE TO ELEVATE
The ever-growing importance of sale and leaseback transactions as an alternative to financing ships by way of loan, makes ...
Friday, 16 October 20
KOMIPO ON BEHALF OF K GENCO'S INVITED BIDS FOR TOTAL 715,000 MT MIN. 5,700 NAR COAL FOR DECEMBER
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) on behalf of EWP, KOSPO, KOSEP and KOWEPO has issued an international tender for total 715,000& ...
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- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- MS Steel International - UAE
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- McConnell Dowell - Australia
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Star Paper Mills Limited - India
- PTC India Limited - India
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Borneo Indobara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Heidelberg Cement - Germany
- Goldman Sachs - Singapore
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Rio Tinto Coal - Australia
- Sakthi Sugars Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Makarim & Taira - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- GMR Energy Limited - India
- Interocean Group of Companies - India
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- The University of Queensland
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Directorate Of Revenue Intelligence - India
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Kalimantan Lumbung Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- Mintek Dendrill Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
- Vizag Seaport Private Limited - India
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Siam City Cement - Thailand
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