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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, 17 June 20
KOREA SOUTHERN POWER CO INVITED 80000 MT OF LOW CALORIFIC VALUE COAL FOR AUGUST 1H, 2020 LOADING
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 Metric Tons (MT) Min 4,200 kcal/kg - Max. ...
Tuesday, 16 June 20
A GLOBAL ECONOMIC SLUMP: WHAT WILL IT MEAN FOR METALS AND MINING? - WOOD MACKENZIE
Back before coronavirus knocked “normal” out cold, the key issues for miners were sub-investment prices, rising requirements for ESG an ...
Tuesday, 16 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.58 PCT - XINHUA
China Taiyuan coal transaction price index stood at 124.43 points Monday, up 0.58 percent week on week.
The index, released by China ...
Tuesday, 16 June 20
HIGHER IRON ORE PRICES OFFSET CORONAVIRUS-DRIVEN PRODUCTION RISK - FITCH RATINGS
Lower iron ore production in Brazil, resulting from rising coronavirus infections, should only marginally affect the cash flow of Vale and other gl ...
Tuesday, 16 June 20
SHALE SHOCKED - WOOD MACKENZIE
Capturing shut-ins in real time
Oil markets are searching for balance as the world reflects on the impact of the COVID-19 pandemic. ...
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- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
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- Bayan Resources Tbk. - Indonesia
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- Vedanta Resources Plc - India
- Global Business Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Parliament of New Zealand
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
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- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Planning Commission, India
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- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Intertek Mineral Services - Indonesia
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- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- Altura Mining Limited, Indonesia
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- PTC India Limited - India
- Africa Commodities Group - South Africa
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- GVK Power & Infra Limited - India
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- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Directorate General of MIneral and Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Economic Council, Georgia
- Xindia Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- New Zealand Coal & Carbon
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- Siam City Cement PLC, Thailand
- Karbindo Abesyapradhi - Indoneisa
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- SMC Global Power, Philippines
- Marubeni Corporation - India
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Asmin Koalindo Tuhup - Indonesia
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Deloitte Consulting - India
- MS Steel International - UAE
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- Gujarat Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- Price Waterhouse Coopers - Russia
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- The University of Queensland
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- IEA Clean Coal Centre - UK
- Tamil Nadu electricity Board
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
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