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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, 07 October 20
U.S. COAL PRODUCTION TO DECREASE BY 26 PERCENT IN 2020 COMPARED TO 2019 - EIA
EIA expects total U.S. coal production in 2020 to be 525 million short tons (MMst), compared with 705 MMst in 2019, a 26% decrease.
COVID-19 a ...
Wednesday, 07 October 20
MARKET INSIGHT - INTERMODAL
The challenges brought forward in 2020 proved to be very different from what we could have ever imagined. Together with placing a significant strai ...
Tuesday, 06 October 20
KOSPO TO IMPORT 80,000 MT OF 3,800 NCV COAL FOR 2H NOV
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 MT Min.3800 kcal/kg NCV coal 2H November, 2020 l ...
Friday, 02 October 20
THE INDONESIA COAL PRICE REFERENCE RISE AFTER HISTORIC CRASH TO US$ 49.42
COALspot.com: The Indonesia Coal Price Reference for the month of October Rise to US$ 51.00 after historic crash to US$ 49.42 in September 2020.
...
Friday, 02 October 20
SRI LANKA MUST LEARN LESSONS FROM AROUND ASIA TO AVOID FURTHER ELECTRICITY CRISES - IEEFA
Overcommitment to fossil-fuelled power generation is leading to excess capacity and rising capacity payments, subsidies, and tariffs around the con ...
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- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Posco Energy - South Korea
- India Bulls Power Limited - India
- The University of Queensland
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Therma Luzon, Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- Gujarat Mineral Development Corp Ltd - India
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
- Malabar Cements Ltd - India
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
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- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
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- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Ambuja Cements Ltd - India
- Planning Commission, India
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Kepco SPC Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Toyota Tsusho Corporation, Japan
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- MS Steel International - UAE
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Marubeni Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Oldendorff Carriers - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Karaikal Port Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Coalindo Energy - Indonesia
- Australian Coal Association
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
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