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