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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, 25 April 20
KOREA SOUTH-EAST POWER CO. INVITED BIDS FOR 780K - 900K MT OF 5600 NCV COAL FOR JULY TO OCTOBER 2020 LOADING
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 780,000~900,000 Metric Tons (MT) s ...
Saturday, 25 April 20
SEAFARER MENTAL WELLBEING DURING THE COVID-19 PANDEMIC - STANDARD CLUB
KNOWLEDGE TO ELEVATE
COVID-19 has forced many parts of the world to enforce a lockdown in a bid to flatten the curve in terms of transmissions ...
Friday, 24 April 20
KOMIPO INVITED BIDS FOR 5700 NAR COAL FOR JUNE & JULY LOADING
COALspot.com: South Korea’s Korea Midland Power Co. Ltd. (KOMIPO) Has Issued An International Tender For 260,000 Metric Tons (MT) Steam Coal ...
Friday, 24 April 20
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Friday, 24 April 20
COAL INDIA TO PRODUCE 710 MT COAL - MINISTER OF COAL AND MINES
Coal India Limited (CIL) will produce 710 million tonnes (MT) of coal and company’s coal off take target will also remain at710 MT for this f ...
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- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Maheswari Brothers Coal Limited - India
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Planning Commission, India
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
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- Bukit Asam (Persero) Tbk - Indonesia
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- Independent Power Producers Association of India
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- Ministry of Transport, Egypt
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
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- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Star Paper Mills Limited - India
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- Latin American Coal - Colombia
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- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- Singapore Mercantile Exchange
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- Minerals Council of Australia
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
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- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
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- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Sojitz Corporation - Japan
- Sical Logistics Limited - India
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- PowerSource Philippines DevCo
- CNBM International Corporation - China
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Kartika Selabumi Mining - Indonesia
- London Commodity Brokers - England
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
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