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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, 19 July 22
SEEING RED? - WOOD MACKENZIE
What a Republican mid-term victory could mean for US energy and climate policy
According to current polling the Republican Party has ...
Thursday, 14 July 22
INDIA'S COAL IMPORTS HIT RECORD HIGH IN JUNE - REUTERS
India's coal imports hit a record high in June despite high global prices, data from three trade sources and Refinitiv ship tracking showed, as ...
Thursday, 14 July 22
CHINA'S JUNE COAL IMPORTS SLUMP AS TRADERS SHUN EXPENSIVE OVERSEAS CARGOES - REUTERS
China’s coal imports fell 33% in June from a year ago, with traders turning down expensive overseas cargoes in favor of domestic ones with ca ...
Wednesday, 13 July 22
KOWEPO TO IMPORT 2.79 MILLION TONS OF LOW TO MEDIUM COAL
COALspot.com: Korea Western Power Co., Ltd. (KOWEPO) has issued an International tender for Total 1360k MT of Min.4400 kcal/kg NCV coal and Total 1 ...
Wednesday, 13 July 22
HAVE MINERS MISSED THE BOAT TO INVEST AND GET AHEAD OF THE ENERGY TRANSITION? - WOOD MACKENZIE
Miners are in rude health, benefiting from economic stimuli, the post-pandemic recovery and associated supply constraints. Initially the Ukraine wa ...
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- Bukit Asam (Persero) Tbk - Indonesia
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Pipit Mutiara Jaya. PT, Indonesia
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- Anglo American - United Kingdom
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Binh Thuan Hamico - Vietnam
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
- Xindia Steels Limited - India
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- Cement Manufacturers Association - India
- Sakthi Sugars Limited - India
- Thai Mozambique Logistica
- Carbofer General Trading SA - India
- LBH Netherlands Bv - Netherlands
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Indo Tambangraya Megah - Indonesia
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Baramulti Group, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- IEA Clean Coal Centre - UK
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- The State Trading Corporation of India Ltd
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- McConnell Dowell - Australia
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- Commonwealth Bank - Australia
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Romanian Commodities Exchange
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
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