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