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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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Wednesday, 26 August 20
ASIAN COAL PRICES LIKELY TO REMAIN DEPRESSED SAY TRADERS, ANALYSTS - REUTERS
Asian coal prices, which have fallen around 25% this year as power demand slumped due to the coronavirus outbreak, are unlikely to move higher befo ...
Wednesday, 26 August 20
WORLD COAL EXPORTS: INDONESIAN THERMAL COAL EXPORTS HAVE COME UNDER PRESSURE AS THERMAL COAL PRICES WEAKEN - REPORT
Indonesia’s exports to decline sharply from record highs
Indonesia is the world’s largest thermal coal exporter, sellin ...
Wednesday, 26 August 20
JAPAN'S COAL IMPORTS ARE BEING AFFECTED BY COMPETING INFLUENCES - REPORT
Japan is the world’s third largest thermal coal importer, importing an estimated 135 million tonnes of thermal coal in 2019. The country&rsqu ...
Wednesday, 26 August 20
PENDING SOUTH KOREA LEGISLATION COULD FORCE HALT TO COUNTRY’S COAL PLANT EXPORT DEALS - KOREA ECONOMIC DAILY
South Korea’s parliament looks set to pass new legislation to ban financing on foreign coal power projects, putting all overseas coal-fired p ...
Tuesday, 25 August 20
INDIA'S IMPORTS FALL AS LOCKDOWNS IMPACT THE POWER AND INDUSTRIAL SECTORS - REPORT
India is the world’s second largest thermal coal consumer and importer, importing an estimated 211 million tonnes of thermal coal in 2019.&nb ...
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- Marubeni Corporation - India
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- Tata Chemicals Ltd - India
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- CNBM International Corporation - China
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Economic Council, Georgia
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Attock Cement Pakistan Limited
- Eastern Coal Council - USA
- Global Coal Blending Company Limited - Australia
- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Commonwealth Bank - Australia
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Power Finance Corporation Ltd., India
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Central Java Power - Indonesia
- White Energy Company Limited
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Sidhee Cement - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Leighton Contractors Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- Krishnapatnam Port Company Ltd. - India
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
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