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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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Thursday, 06 October 22
COAL INDIA ASKED TO ENHANCE SUPPLY TO THERMAL POWER PLANTS - IANS
With the festival season round the corner, Coal India Ltd. has been directed by the government to scale up dispatch to thermal power plants.
&n ...
Wednesday, 05 October 22
BUNKER PRICES DOWN AGAIN; IS THERE MORE TO COME? - INTEGR8 FUELS
It’s the economy…..”
VLSFO prices are now back to levels at the start of this year. After all the extremes of thi ...
Wednesday, 05 October 22
MARKET INSIGHT - INTERMODAL
Amid the looming western sanctions on Russia, the country is challenged to pivot its energy markets away from Europe and toward the East. Yet, Russ ...
Tuesday, 04 October 22
A REMARKABLE SHIFT IN FORTUNES HAS BEEN NOTED IN THE CRUDE OIL TANKER MARKETS - ALLIED SHIPPING
A remarkable shift in fortunes has been noted in the crude oil tanker markets over the past month, yet despite these shifts being seemingly in thei ...
Tuesday, 04 October 22
OIL PRICES COULD SOON RETURN TO $100 AS OPEC+ CONSIDERS ‘HISTORIC’ CUT, ANALYSTS SAY - CNBC
An influential alliance of some of the world’s most powerful oil producers is reportedly considering their largest output cut since the start ...
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- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- Australian Coal Association
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Central Java Power - Indonesia
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- Energy Development Corp, Philippines
- PTC India Limited - India
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- Coalindo Energy - Indonesia
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- ICICI Bank Limited - India
- Minerals Council of Australia
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- Deloitte Consulting - India
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Dalmia Cement Bharat India
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- South Luzon Thermal Energy Corporation
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Leighton Contractors Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- Orica Mining Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Meenaskhi Energy Private Limited - India
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- Sical Logistics Limited - India
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- VISA Power Limited - India
- Georgia Ports Authority, United States
- Parry Sugars Refinery, India
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Formosa Plastics Group - Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Vedanta Resources Plc - India
- Planning Commission, India
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- MS Steel International - UAE
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- White Energy Company Limited
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Aboitiz Power Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- The University of Queensland
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
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