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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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Monday, 28 September 20
NEW LNG PROJECTS - ALL DRESSED UP AND NO PLACE TO GO - WOOD MACKENZIE
It was meant to be another boom year. After a record 70 mmtpa of new LNG capacity was sanctioned in 2019, at least as much capacity was lined up fo ...
Thursday, 24 September 20
SUPRAMAX: INDO TO INDIA FIXING AROUND US$13,000 - FEARNLEYS
Cape
Over the last week the iron ore segment from Brazil to China has picked up, and we see freight rates up USD 2 (12%) week on week Fearnleys ...
Thursday, 24 September 20
KOREA MIDLAND POWER TO BUY 1.92 MILLION TONS OF 4,300-4,700 NCV COAL FOR THREE YEARS
COALspot.com: Korea Midland Power Co. Ltd, has issued an International tender for 640,000 MT 4,300-4,700 kcal/kg NCV coal per year.
...
Wednesday, 23 September 20
VIETNAM'S NEW POWER DEVELOPMENT PLAN MUST OPTIMIZE RENEWABLES AND AVOID FOSSIL FUEL LOCK-IN: IEEFA
EVN’s financial constraints leaves the utility with little room for error
Implementing Vietnam’s soon-to-be-launched next Power De ...
Wednesday, 23 September 20
MARKET INSIGHT - INTERMODAL
Undoubtedly, this year (ongoing) will never be forgotten because in a matter of months it has managed to severely affect and shape our day to day p ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- MS Steel International - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Larsen & Toubro Limited - India
- SMG Consultants - Indonesia
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- Therma Luzon, Inc, Philippines
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Energy Link Ltd, New Zealand
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Petron Corporation, Philippines
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- The University of Queensland
- Parliament of New Zealand
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Planning Commission, India
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- Rio Tinto Coal - Australia
- Rashtriya Ispat Nigam Limited - India
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- PowerSource Philippines DevCo
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Bukit Makmur.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- Siam City Cement - Thailand
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Orica Australia Pty. Ltd.
- Aditya Birla Group - India
- Indika Energy - Indonesia
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