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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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Friday, 14 August 20
EIA: COAL PLANTS UNECONOMICAL IN MOST REGIONS - IEEFA
U.S. coal power generation plunged by 30 percent in the first half of 2020 off an already-depressed base, shoved out by natural gas and renewables ...
Thursday, 13 August 20
INDIA SHOULD RECORD A SLIGHT DECREASE IN THERMAL COAL IMPORTS, REACHING A VOLUME OF 167 MILLION TONS BY THE END OF 2020 - ASSOCARBONI
Regarding 2020 thermal coal imports forecasts, Vietnam’s coal imports showed a very strong growth in the first half of 2020 and it is believe ...
Thursday, 13 August 20
INDONESIA REMAINS THE LARGEST EXPORTER OF COAL IN THE WORLD - ASSOCARBONI
According to the last Assocarboni data for 2019, Indonesia remains the largest exporter in the world. Thermal coal exports have in fact reached 456 ...
Wednesday, 12 August 20
VIETNAM WAS THE PROTAGONIST OF A SIGNIFICANT INCREASE IN COAL IMPORTS IN 2019 - ASSOCARBONI
The latest Assocarboni data for 2019 also provide a detailed picture on the trend of the global coal import.
According to Assocarbon ...
Wednesday, 12 August 20
THE COAL MARKET IN ITALY - ASSOCARBONI
Italy, which in 2019 reported a decrease in thermal coal imports, with a volume of 7,5 million tons (-32% compared to 11 million tons in 2018), whi ...
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- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- Ministry of Finance - Indonesia
- ICICI Bank Limited - India
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- PowerSource Philippines DevCo
- Globalindo Alam Lestari - Indonesia
- Vedanta Resources Plc - India
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Electricity Authority, New Zealand
- Antam Resourcindo - Indonesia
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Timah Investasi Mineral - Indoneisa
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- London Commodity Brokers - England
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- The University of Queensland
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- The State Trading Corporation of India Ltd
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Baramulti Group, Indonesia
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- Interocean Group of Companies - India
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- TeaM Sual Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- Samtan Co., Ltd - South Korea
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- New Zealand Coal & Carbon
- Africa Commodities Group - South Africa
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- Makarim & Taira - Indonesia
- Bharathi Cement Corporation - India
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Planning Commission, India
- Parliament of New Zealand
- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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