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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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Sunday, 14 June 20
INDONESIAN COAL WAS STILL IN DEMAND; A 52,000-DWT SUPRAMAX FIXING DELIVERY CJK FOR A ROUND VOYAGE VIA INDONESIA AT $6,250 - BALTIC BRIEFING
Capesize
The Capesize market made new highs for the year this week after strong iron ore demand to the far east continued to develop in the mar ...
Friday, 12 June 20
CHINA CURBS COAL IMPORTS AFTER 5 MONTHS OF RECORD INFLOWS - SOURCES: REUTERS
China has stepped up customs checks for coal imports, leading to lengthy processing delays at ports, four sources familiar with the matter said, as ...
Friday, 12 June 20
COAL INDIA LIMITED SET FOR MARKETING DRIVE TO CREATE DEMAND - FINANCIAL EXPRESS
State-run miner Coal India (CIL), which is primarily focused on supplying coal to the power sector, is now reorienting its marketing to create dema ...
Friday, 12 June 20
MOODY'S REVISES BRENT OIL PRICE OUTLOOK TO $35/BARREL IN 2020 - TASS
Low oil prices are likely to exert the highest pressure on Iraq, Oman and Kuwait due to the limited space for the fiscal policy pursuit and higher ...
Thursday, 11 June 20
JAN-MAY, INDONESIA SHIPPED 175.15 MILLION TONS OF COAL TO ITS OVERSEAS BUYERS
Indonesia's coal production for the first 5 months of this year have reached 228 million tons. January – May 2020, Indonesia shipped US$ ...
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Showing 911 to 915 news of total 6871 |
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- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Posco Energy - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- MS Steel International - UAE
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
- Iligan Light & Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Australian Coal Association
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- Bangladesh Power Developement Board
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
- PTC India Limited - India
- Wilmar Investment Holdings
- Anglo American - United Kingdom
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Meenaskhi Energy Private Limited - India
- Thiess Contractors Indonesia
- Baramulti Group, Indonesia
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- Toyota Tsusho Corporation, Japan
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Bukit Baiduri Energy - Indonesia
- Tamil Nadu electricity Board
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