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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, 28 June 24
INDIAN POWER STATIONS STOCKED WITH BUMPER COAL SUPPLY AS TRANSPORT WOES EASE - BUSINESS STANDARD
Even as power demand has touched a historic high of 250 gigawatts (Gw) amid sweltering heat this June, India’s power stations are stocked wit ...
Friday, 28 June 24
INDIA'S CY23 COAL USE LARGER THAN NORTH AMERICA, EUROPE COMBINED - THE HINDU
For the first time, India’s coal consumption surpassed that of North America and Europe combined in the calendar year 2023, said Energy Insti ...
Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Althoug ...
Monday, 24 June 24
INDIA'S COAL-BASED POWER DEMAND AT ALL-TIME HIGH, GOVERNMENT SAYS - REUTERS
India’s demand for coal-based power has risen by 7.3% this fiscal year to an all-time high, the government said in a statement on Wednesday.
...
Monday, 24 June 24
CHINA'S COAL INDUSTRY TURNS GREENER THROUGH INNOVATIVE APPROACHES - PEOPLE'S DAILY
At an opencast mine operated by Inner Mongolia Pingzhuang Coal Group Co. Ltd., a subsidiary of CHN Energy Investment Group (CHN Energy), a 14-meter ...
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Showing 11 to 15 news of total 6871 |
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- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Globalindo Alam Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Sarangani Energy Corporation, Philippines
- Edison Trading Spa - Italy
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- Vedanta Resources Plc - India
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- White Energy Company Limited
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- Coal and Oil Company - UAE
- Bangladesh Power Developement Board
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- ICICI Bank Limited - India
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Price Waterhouse Coopers - Russia
- Chettinad Cement Corporation Ltd - India
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Minerals Council of Australia
- Attock Cement Pakistan Limited
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
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