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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, 24 April 20
CHINA COAL PRODUCER YANZHOU COAL POSTS 9.6 PCT RISE IN 2019 NET PROFIT - XINHUA
China’s major coal producer Yanzhou Coal Mining Co., Ltd. said Thursday that its net profit saw a 9.6 percent rise in 2019.
Th ...
Tuesday, 21 April 20
INDONESIA ACCOUNTS FOR 19% OF JAPAN'S TOTAL COAL IMPORTS - BANCHERO COSTA
Coal trade in Asia is proving remarkably resilient this year, despite the global economic impact from COVID-19.
We have seen China&r ...
Tuesday, 21 April 20
COVID-19: CHARTERPARTY MATTERS FOR SHIPOWNERS - SKULD
KNOWLEDGE TO ELEVATE
Whilst the plight of cruise ships, stranded off shore with sick passengers and crew, may be dominating media headlines, t ...
Monday, 20 April 20
SUPRAMAX: A 52,000DWT SHIP FIXING AN INDONESIA COAL RUN TO CHINA AT $4400 - BALTIC BRIEFING
Capesize
This week was the strongest period seen for the Capesize market in several months. All routes globally succumbed to improved sentiment ...
Friday, 17 April 20
PANDEMIC TO BRING ASIA'S 2020 GROWTH TO HALT FOR 1ST TIME IN 60 YEARS - IMF: REUTERS
Asia’s economic growth this year will grind to a halt for the first time in 60 years, as the coronavirus crisis takes an “unprecedented ...
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- Alfred C Toepfer International GmbH - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Samtan Co., Ltd - South Korea
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- Energy Development Corp, Philippines
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- Bharathi Cement Corporation - India
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- The University of Queensland
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Australian Coal Association
- Independent Power Producers Association of India
- VISA Power Limited - India
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- White Energy Company Limited
- Salva Resources Pvt Ltd - India
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Coalindo Energy - Indonesia
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- Bhoruka Overseas - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Energy Link Ltd, New Zealand
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- OPG Power Generation Pvt Ltd - India
- Central Java Power - Indonesia
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- CNBM International Corporation - China
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