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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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- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Parliament of New Zealand
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- Planning Commission, India
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- Binh Thuan Hamico - Vietnam
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- PowerSource Philippines DevCo
- Kideco Jaya Agung - Indonesia
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- PTC India Limited - India
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Maharashtra Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Sojitz Corporation - Japan
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- Orica Mining Services - Indonesia
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Commonwealth Bank - Australia
- White Energy Company Limited
- Central Electricity Authority - India
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Videocon Industries ltd - India
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Jorong Barutama Greston.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- Standard Chartered Bank - UAE
- VISA Power Limited - India
- Indonesian Coal Mining Association
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