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