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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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Friday, 04 September 20
IN A DEEPENING DEBT HOLE OF $34 BILLION, INDONESIA’S PLN MUST STOP DIGGING - IEEFA
The utility has added IDR100 trillion in debt annually for the last five years
Utilities globally started changing the way they do business ye ...
Friday, 04 September 20
KOMIPO INVITED BIDS FOR AUSTRALIAN MIN 5,700 NCV COAL FOR NOVEMBER
COALspot.com: Korea Midland Power Co. Ltd, has issued an International tender for 260,000 MT Min.5,700 kcal/kg NCV coal November, 2020 loading. Acc ...
Thursday, 03 September 20
BRINGING SERVICES OF FTCCI CLOSER TO THE EXPORTERS AT GMR AIR CARGO COMPLEX AT SHAMSHABAD
Press Release: “FTCCI Trade Facilitation Services at your doorstep now” says J.S. Chandrashekar, IRS., Principal Commissioner of Custom ...
Thursday, 03 September 20
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Wednesday, 02 September 20
COAL PRODUCTION FALLS 7% IN APR-AUG; OFF TAKE DIPS 13.4% - FINANCIAL EXPRESS
In the month of August coal off take also increased 9.3% y-o-y to 44.34 MT as compared with 40.57 MT in the same period last year.
C ...
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- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Edison Trading Spa - Italy
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Goldman Sachs - Singapore
- Economic Council, Georgia
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Kohat Cement Company Ltd. - Pakistan
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Deloitte Consulting - India
- Uttam Galva Steels Limited - India
- Indonesian Coal Mining Association
- Africa Commodities Group - South Africa
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- Xindia Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Bangladesh Power Developement Board
- Australian Coal Association
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- CIMB Investment Bank - Malaysia
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Marubeni Corporation - India
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- Planning Commission, India
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Grasim Industreis Ltd - India
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Romanian Commodities Exchange
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Indogreen Group - Indonesia
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- The University of Queensland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- McConnell Dowell - Australia
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