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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, 19 June 20
INDIA'S COAL CONSUMPTION GROWTH IN 2019 SLOWEST SINCE 2001: BP STATS REVIEW - HINDU BUSINESS LINE
Growth in global energy markets slowed in 2019 in line with weaker economic growth, according to the bp Statistical Review of World Energy 2020. Th ...
Friday, 19 June 20
KOWEPO TO IMPORT 1,050,000 MT OF MIN 5300 NCV COAL FOR THREE YEARS
COALspot.com: Korera Western Power Co., Ltd. (KOWEPO) has issued an International tender for Total 1,050k MT Min.5,300 kcal/kg NCV coal for t ...
Thursday, 18 June 20
INDIA: GOVT'S PLAN TO CUT COAL IMPORT GOES FOR A TOSS AS FY20 BREAKS LOGISTICS CHAIN; LOCAL OUTPUT STAGNANT - FINANCIAL EXPRESS
Weak logistics support and disrupted supply chain towards the end of the last financial year 2019-20 hit the government’s plan to cut coal im ...
Thursday, 18 June 20
INDIA: THERMAL PLANTS TO OPERATE BELOW 53% CAPACITY IN FY21 AS POWER DEMAND DIPS - BUSINESS STANDARD
The Plant Load Factor (PLF) of thermal power stations across the country is projected to dip below 53 per cent in this fiscal. Muted power demand f ...
Wednesday, 17 June 20
MARKET INSIGHT - INTERMODAL
After experiencing record earnings during the first half of the year, the focus of headlines concerning the tanker market has shifted from the deve ...
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- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- Renaissance Capital - South Africa
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wilmar Investment Holdings
- TNB Fuel Sdn Bhd - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Globalindo Alam Lestari - Indonesia
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- White Energy Company Limited
- India Bulls Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- Anglo American - United Kingdom
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Goldman Sachs - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Semirara Mining and Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Videocon Industries ltd - India
- Jaiprakash Power Ventures ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- Australian Coal Association
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Indonesian Coal Mining Association
- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- CNBM International Corporation - China
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Aditya Birla Group - India
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Bangladesh Power Developement Board
- Sakthi Sugars Limited - India
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- MS Steel International - UAE
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- Lanco Infratech Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Borneo Indobara - Indonesia
- Rio Tinto Coal - Australia
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Orica Mining Services - Indonesia
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
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