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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, 23 July 20
KOREAN GENCOS INVITED BIDS FOR TOTAL 1.36 MILLION TONS OF BITUMINOUS COAL FOR OCTOBER 2020 LOADING
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) on behalf of EWP, KOSPO, KOSEP and KOWEPO has issued an international tender for total 1,360,00 ...
Wednesday, 22 July 20
CIL'S COAL SUPPLY TO POWER SECTOR DROPS OVER 21% TO 93.5 MT IN APR-JUN QUARTER - PTI
The supply of coal by state-owned Coal India Ltd to the power sector fell 21.7 percent to 93.5 million tonnes (MT) in the first quarter of the ongo ...
Monday, 20 July 20
KOREA MIDLAND POWER INVITED BIDS FOR TOTAL 2.520 MILLION MT OF BITUMINOUS COAL FOR THREE YEARS
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO), has issued an international tender for total 840,000 of Bituminous Coal to be used at Bo ...
Monday, 20 July 20
CHINA'S JUNE COAL OUTPUT FALLS 1.2% YEAR-ON-YEAR OVER ILLEGAL MINING CHECKS - REUTERS
China’s coal output dropped 1.2% in June on the year to 330 million tonnes, official data showed, as major coal mining areas cracked down on ...
Monday, 20 July 20
COAL INDIA LAUNCHES SPECIAL CATEGORY OF E-AUCTION FOR COAL IMPORTERS - BUSINESS STANDARD
Coal India (CIL) on Friday launched a special category of e-auction for importers of coal. This is in line with the government’s declaration ...
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- GVK Power & Infra Limited - India
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Planning Commission, India
- Parliament of New Zealand
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Sojitz Corporation - Japan
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Alfred C Toepfer International GmbH - Germany
- New Zealand Coal & Carbon
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- Bhoruka Overseas - Indonesia
- Renaissance Capital - South Africa
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Sindya Power Generating Company Private Ltd
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Bayan Resources Tbk. - Indonesia
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Economic Council, Georgia
- Semirara Mining Corp, Philippines
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Holcim Trading Pte Ltd - Singapore
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- Attock Cement Pakistan Limited
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bangladesh Power Developement Board
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Finance - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Jorong Barutama Greston.PT - Indonesia
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