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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, 12 August 20
U.S. COAL PRODUCTION IN 2020 WILL DECREASE BY 29% FROM 2019 LEVELS TO 502 MMST - EIA
U.S. coal consumption, which dropped to its lowest point since April, totaled 95 MMst in the second quarter of 2020.
EIA expec ...
Tuesday, 11 August 20
BHP COAL ASSETS WORTH A BILLION LESS THAN JUST TWO YEARS AGO - IEEFA
Another global investor, the UK’s biggest public pension fund NEST, has withdrawn funds from BHP this week because the company is profiting & ...
Monday, 10 August 20
COAL IMPORT DROPS 43% IN JULY OWING TO HIGH STOCKPILE AT PITHEADS, PLANTS - PTI
“The market participants seem to have adopted a wait and watch approach and are currently looking for a direction. We do not expect to see an ...
Saturday, 08 August 20
GLOBAL COAL POWER PUZZLE - BALTIC EXCHANGE
Global Energy Monitor’s latest Global Coal Plant Tracker has put another nail in the coffin for the coal-carrying fleet with its finding that ...
Friday, 07 August 20
PEABODY'S $1.42 BILLION WRITE-DOWN CONCEDES COAL MINES HAVE LITTLE VALUE AND DIM FUTURE - IEEFA
Trouble at biggest mine in Powder River Basin speaks volumes about state of industry
Peabody Energy, the world’s largest priva ...
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- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Jindal Steel & Power Ltd - India
- The University of Queensland
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- Independent Power Producers Association of India
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Bangladesh Power Developement Board
- Petrochimia International Co. Ltd.- Taiwan
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- Carbofer General Trading SA - India
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Australian Coal Association
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- VISA Power Limited - India
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- MS Steel International - UAE
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Wilmar Investment Holdings
- Parliament of New Zealand
- IEA Clean Coal Centre - UK
- The Treasury - Australian Government
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- Parry Sugars Refinery, India
- Orica Australia Pty. Ltd.
- Timah Investasi Mineral - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Deloitte Consulting - India
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Posco Energy - South Korea
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- Economic Council, Georgia
- Binh Thuan Hamico - Vietnam
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