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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, 06 August 20
SUPRAMAX MARKET CONTINUED SIDEWAYS TREND, AND LITTLE INSPIRING NEWS APPEAR - FEARNLEYS
Capesize
There is presently a small correction in rates, but overall levels are up from previous week mainly due to increased demand in the Eas ...
Thursday, 06 August 20
KOREA SOUTH-EAST POWER INVITING BIDS FOR MIN 3,600-MAX 3,800 NCV COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) inviting bids for 80,000 Tons (MT) Min 3,600~Max 3,800 kcal/kg NCV coal f ...
Wednesday, 05 August 20
NO NEW MINING LICENSES - A REMINDER TO GOVERNORS IN INDONESIA - SSEK
Indonesia’s acting Director General of Mining and Coal (“DGMC”) has issued a letter to the country’s provincial Governors t ...
Wednesday, 05 August 20
AUGUST 2020 HBA HITTING ITS LOWEST LEVELS IN HISTORY
COALspot.com: The Indonesia Coal Price Reference for the month of August plunged 30.73% YoY, hitting its lowest levels in history and highlighting ...
Wednesday, 05 August 20
SLUMP IN OIL REVENUE CHALLENGES MIDDLE EAST OIL EXPORTERS - INTERMODAL
The Covid-19 pandemic has had far-reaching consequences on the global capital markets. Despite the US government’s efforts for a quick and de ...
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- OPG Power Generation Pvt Ltd - India
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Parliament of New Zealand
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Holcim Trading Pte Ltd - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- Madhucon Powers Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Ministry of Transport, Egypt
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Uttam Galva Steels Limited - India
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Indian Oil Corporation Limited
- PNOC Exploration Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- Rio Tinto Coal - Australia
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Africa Commodities Group - South Africa
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Marubeni Corporation - India
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Aboitiz Power Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Commonwealth Bank - Australia
- Anglo American - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Siam City Cement PLC, Thailand
- SMC Global Power, Philippines
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
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