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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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Tuesday, 14 November 23
CHINA'S BELT AND ROAD INITIATIVE TURNS AWAY FROM COAL - WOOD MACKENZIE
Ambitious, contentious and big spending, China’s Belt and Road Initiative (BRI) is 10 years old. In that time, China has splashed more than U ...
Friday, 10 November 23
THE COMMODITIES FEED: OIL UNDER PRESSURE - ING
Energy – Brent plummets
The oil market came under significant pressure yesterday. ICE Brent settled 4.19% lower on the day and ...
Friday, 10 November 23
COAL USE AT U.S. POWER PLANTS CONTINUES DOWNWARD SPIRAL; FULL IMPACT ON MINES TO BE FELT IN 2024 - IEEFA
This year, the use of coal by the U.S.’s power producers has been so anemic that the fuel has not achieved a 20% market share in any month so ...
Friday, 10 November 23
INDIA: NATIONAL COAL INDEX RISES 3.83 POINTS IN SEPTEMBER AMID HIGHER DEMAND - LIVEMINT
The National Coal Index (NCI) rose 3.83 points to 143.91 in September amid growing demand for coal.
The union coal ministry on Tuesd ...
Thursday, 09 November 23
WE'RE PRODUCING TOO MUCH COAL, OIL AND GAS, REPORT SAYS - WSJ
World leaders pledged in 2015 to reduce emissions in a combined effort to limit climate change.
Now they are stepping up production ...
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- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- Oldendorff Carriers - Singapore
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- Bhatia International Limited - India
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
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- GMR Energy Limited - India
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- IEA Clean Coal Centre - UK
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Jaiprakash Power Ventures ltd
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- SMC Global Power, Philippines
- Marubeni Corporation - India
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Altura Mining Limited, Indonesia
- Bhushan Steel Limited - India
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Indonesian Coal Mining Association
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Videocon Industries ltd - India
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Tata Chemicals Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Thai Mozambique Logistica
- White Energy Company Limited
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Toyota Tsusho Corporation, Japan
- Kobexindo Tractors - Indoneisa
- Energy Development Corp, Philippines
- Goldman Sachs - Singapore
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Orica Mining Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bangladesh Power Developement Board
- Meralco Power Generation, Philippines
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- GAC Shipping (India) Pvt Ltd
- Banpu Public Company Limited - Thailand
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Wood Mackenzie - Singapore
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
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