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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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Tuesday, 17 January 23
CHINA'S SHANXI TARGETS 2023 COAL PRODUCTION OF NEARLY 1.37B TONS - XINHUA
China’s coal-rich province of Shanxi has set a coal production target of nearly 1.37 billion metric tons for 2023, according to a government ...
Tuesday, 17 January 23
MARKET INSIGHT - INTERMODAL
Rumor has it that the New Year has come, to set the pace in, for Russia to continue hostilities against Ukraine. Ten months on the go, into Russia& ...
Tuesday, 17 January 23
INDONESIA IS ACCOUNTING FOR 32.3% OF THE GLOBAL SEABORNE COAL MARKET IN 2022 - BENCHERO 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, Benchero ...
Tuesday, 10 January 23
INDONESIAN HBA IS SEEING A SPIKE IN JANUARY 2023 INSTEAD OF A SIGNIFICANT FALL IN DECEMBER 2022
COALspot.com: Indonesian Coal Price Reference up 8.43% in January 2023.
HBA is seeing a dramatic spike in January 2023 i ...
Sunday, 08 January 23
INDIAN COAL POWER PLANTS SHOULD BE COMPENSATED FOR 2022 FORCED GENERATION – REGULATOR : REUTERS
Indian power plants that rely on imported coal should be fully compensated when forced to supply electricity, the country’s power regulator s ...
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- Ministry of Finance - Indonesia
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Attock Cement Pakistan Limited
- Jindal Steel & Power Ltd - India
- Siam City Cement - Thailand
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- Marubeni Corporation - India
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- LBH Netherlands Bv - Netherlands
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Kartika Selabumi Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
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- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
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- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
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- PTC India Limited - India
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- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- Energy Development Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
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