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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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Saturday, 06 June 20
KOREA SOUTH-EAST POWER CO INVITED COAL BIDS FOR MIN 5600 NCV COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 270,000 Tons (MT) min. 5600 NCV co ...
Friday, 05 June 20
COAL INDIA ESTIMATES PRODUCTION GROWTH BY OVERBURDEN REMOVAL - FINANCIAL EXPRESS
PSU miner Coal India (CIL) has now limited mining only to Overburden Removal (OBR) with falling demand of coal. The mining behemoth is now keeping ...
Friday, 05 June 20
U.S. SANCTIONS COMPLIANCE GUIDANCE RELEASED FOR THE GLOBAL MARITIME, ENERGY AND METALS SECTORS - AKIN GUMP
Key Points
On May 14, 2020, OFAC, the Department of State and the U.S. Coast Guard jointly released guidance for persons involved in the ma ...
Friday, 05 June 20
IN THE FIRST 5 MONTHS OF 2020 AUSTRALIA SHIPPED 6.8 MLN TONNES TO VIETNAM - BANCHERO COSTA
In the first 5 months of 2020, global seaborne coal trade declined by as much as -8% year-on-year, according to vessel tracking data from Ref ...
Thursday, 04 June 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
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- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Planning Commission, India
- Ministry of Finance - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Renaissance Capital - South Africa
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Makarim & Taira - Indonesia
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Tamil Nadu electricity Board
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Ind-Barath Power Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Sical Logistics Limited - India
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Simpson Spence & Young - Indonesia
- GVK Power & Infra Limited - India
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- Africa Commodities Group - South Africa
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Parliament of New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Kalimantan Lumbung Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Coastal Gujarat Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Rio Tinto Coal - Australia
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Latin American Coal - Colombia
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
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