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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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Thursday, 20 August 20
MINER BHP CONFIRMS PLANS TO EXIT THERMAL COAL SECTOR - THE SYDNEY MORNING HERALD
The head of mining giant BHP has laid out plans for a reshaping of its global operations by seeking to quit thermal coal mining, offload some cokin ...
Thursday, 20 August 20
LONDON RETAINS ARBITER CROWN - BALTIC EXCHANGE | HFW
Fears that the UK’s decision to leave the European Union would dent the reputation of the nation’s capital as the leader in maritime ar ...
Wednesday, 19 August 20
U.S. COAL STOCKPILES STEADILY INCREASE AFTER REACHING LOWEST LEVEL IN A DECADE IN 2019 - EIA
After reaching their lowest level in more than a decade in March 2019, U.S. coal stockpiles steadily increased to 152 million tons in April 2020, r ...
Wednesday, 19 August 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.26 PCT - XINHUA
China Taiyuan coal transaction price index stood at 124.92 points Monday, down 0.26 percent week on week.
The index, released by Chi ...
Wednesday, 19 August 20
COAL INDIA TRADE UNIONS DEFER DAY-LONG STRIKE: PTI
The unions had decided to go on strike against the commercial mining and the proposed divestment or buyback of shares of Coal India Ltd (CIL).
...
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- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Grasim Industreis Ltd - India
- SMC Global Power, Philippines
- MS Steel International - UAE
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Cement Manufacturers Association - India
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Antam Resourcindo - Indonesia
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Ind-Barath Power Infra Limited - India
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- Indian Oil Corporation Limited
- VISA Power Limited - India
- Central Java Power - Indonesia
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Goldman Sachs - Singapore
- Bhoruka Overseas - Indonesia
- Planning Commission, India
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- PowerSource Philippines DevCo
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Iligan Light & Power Inc, Philippines
- Makarim & Taira - Indonesia
- Indika Energy - Indonesia
- Chamber of Mines of South Africa
- The Treasury - Australian Government
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- White Energy Company Limited
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Sinarmas Energy and Mining - Indonesia
- Tamil Nadu electricity Board
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
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