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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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Saturday, 29 August 20
COAL INDIA'S FUEL SUPPLY TO POWER SECTOR DROPS ABOUT 20% IN APR-JUL: PTI
State-owned Coal India”s fuel supply to the power sector registered a decline of 19.5 per cent to 126.30 million tonnes (MT) in the April-Jul ...
Saturday, 29 August 20
SOUTH KOREAN BROKERAGE FIRM KOREA INVESTMENT & SECURITIES TO STOP ALL COAL BUSINESS - KOREA HERALD
South Korean brokerage firm Korea Investment & Securities has decided to stop its investments in coal, in line with the Moon Jae-in administrat ...
Thursday, 27 August 20
KOREAN GENCOS INVITED BIDS FOR TOTAL 985,000 TONS OF BITUMINOUS COAL FOR NOVEMBER 2020 LOADING
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) on behalf of EWP, KOSPO, KOSEP and KOWEPO has issued an international tender for total 985,000 ...
Thursday, 27 August 20
SOUTHEAST ASIAN NATIONS SET REGION-WIDE RENEWABLE ENERGY GOAL OF 23 PERCENT BY 2025 - ASEAN POST
The Association of Southeast Asian Nations (ASEAN) has set an ambitious target of securing 23 percent of its primary energy from renewable so ...
Thursday, 27 August 20
BANGLADESH POWER MINISTRY SEEKING AUTHORITY TO CANCEL 13,000 MW OF PROPOSED COAL-FIRED CAPACITY - BUSINESS STANDARD
In a bid to move away from dirty energy, the Ministry of Power, Energy and Mineral Resources is seeking the prime minister’s approval to conv ...
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- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- Interocean Group of Companies - India
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Eastern Energy - Thailand
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Ambuja Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- Bukit Asam (Persero) Tbk - Indonesia
- Star Paper Mills Limited - India
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- Planning Commission, India
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- PTC India Limited - India
- VISA Power Limited - India
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Rio Tinto Coal - Australia
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Malabar Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maheswari Brothers Coal Limited - India
- Makarim & Taira - Indonesia
- New Zealand Coal & Carbon
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Mercator Lines Limited - India
- Indika Energy - Indonesia
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