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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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Tuesday, 23 June 20
COVID-19 COULD CAUSE A BOOM IN COAL POWER - RYSTAD ENERGY | OILPRICE
COVID-19 has not only impacted the energy industry’s revenues but also its infrastructure development.
The delay of new natural gas ...
Tuesday, 23 June 20
CHINA'S COAL OUTPUT UP 0.9 PCT IN JANUARY-MAY: XINHUA
Output of raw coal in China rose 0.9 percent year on year to 1.47 billion tonnes in the first five months of this year, official data showed.
& ...
Monday, 22 June 20
KAMSARMAX TYPES REGULARLY HIT THE $9,000 PER DAY LEVEL FOR INDONESIAN COAL RUN TO CHINA, BALTIC BRIEFING SAYS
Capesize
The Capesize market trajectory this week has been one of the steepest rallies the sector has experienced. Opening at $12,410, the sect ...
Saturday, 20 June 20
WORLD OIL DEMAND IS PROJECTED TO DECREASE BY 9.1 MB/D IN 2020 - OPEC
Crude Oil Price Movements
Spot crude oil prices rebounded in May from low levels registered a month earlier, as physical market fundamentals im ...
Saturday, 20 June 20
NO ESCAPING GLOBAL TRADE SLUMP - BALTIC EXCHANGE
Those hoping for a decent recovery in trade in the second half of the year should prepare for disappointment.
New data from the Unit ...
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- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- Minerals Council of Australia
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Riau Bara Harum - Indonesia
- Port Waratah Coal Services - Australia
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
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- Latin American Coal - Colombia
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Xindia Steels Limited - India
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Deloitte Consulting - India
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
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- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- MS Steel International - UAE
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Kepco SPC Power Corporation, Philippines
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Wilmar Investment Holdings
- International Coal Ventures Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Ind-Barath Power Infra Limited - India
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- The University of Queensland
- Jaiprakash Power Ventures ltd
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Maheswari Brothers Coal Limited - India
- Gujarat Electricity Regulatory Commission - India
- White Energy Company Limited
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
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