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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 March 23
COAL INDIA HAS STRONG CASE TO INCREASE PRICES, TALKS ON: CMD AGRAWAL - BUSINESS STANDARD
Coal India (CIL) Chairman and Managing Director Pramod Agrawal said on Monday there is a “strong case” for increasing coal prices, and ...
Saturday, 25 March 23
ASIAN CRUDE PALM OIL WATCH 1Q23 - FITCH RATINGS
Malaysian benchmark crude palm oil (CPO) spot prices have averaged around USD915 per tonne (t) so far in 1Q23, sharply lower than the average of ar ...
Saturday, 25 March 23
INDONESIA’S COAL EXPORT INCREASED BY 21.0% YOY TO 388.4 MLN T IN 2022 - BANCHERO COSTA
After a slow start in the first quarter, global coal trade has really picked up pace last year, and is now fully back to pre-Covid levels. In the f ...
Saturday, 25 March 23
GLOBAL LNG-ASIA SPOT PRICES SLIP AS WEAK NORTHERN DEMAND REMAINS - REUTERS
Asian spot prices of liquefied natural gas (LNG) declined this week, falling to a 21-month low, as weak demand in the northeast Asia region continu ...
Wednesday, 22 March 23
OIL PRICE FALL SPECULATIVE, TO HIT $140 BY YEAR-END -ANDURAND: REUTERS
The recent fall in oil prices due to banking jitters is speculative and oil will hit $140 a barrel by the end of the year, hedge fund manager Pierr ...
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- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- Bhatia International Limited - India
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Ambuja Cements Ltd - India
- Port Waratah Coal Services - Australia
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- White Energy Company Limited
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- PTC India Limited - India
- Planning Commission, India
- Tamil Nadu electricity Board
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Krishnapatnam Port Company Ltd. - India
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- Parliament of New Zealand
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- VISA Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- Eastern Energy - Thailand
- Trasteel International SA, Italy
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Savvy Resources Ltd - HongKong
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Gujarat Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- GMR Energy Limited - India
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
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