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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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Monday, 04 July 22
INDONESIAN COAL PRICE REFERENCE SLIGHTLY DOWN IN JULY
COALspot.com: Indonesian Coal Price Reference for July delivery drops 1.52 per cent month on month.
The Indonesian Coal Price Refere ...
Sunday, 03 July 22
CHINESE VICE PREMIER STRESSES CLEAN, EFFICIENT USE OF COAL - XINHUA
Chinese Vice Premier Han Zheng has stressed efforts to promote the clean and efficient use of coal, and pursue green, low-carbon and high-quality d ...
Sunday, 03 July 22
SOVEREIGN SECTOR OUTLOOK REVISED TO NEUTRAL ON UKRAINE WAR IMPACT - FITCH RATINGS
The deterioration in global sovereign credit conditions this year relative to our expectations at end-2021 has caused Fitch Ratings to change its g ...
Saturday, 02 July 22
GLOBAL SEABORNE COAL EXPORTS IN 2021 INCREASED BY 4.4% Y-O-Y TO 1147 MLN TONNES - BANCHERO COSTA
In the full 12 months of 2021, global seaborne coal exports increased by +4.4% y-o-y to 1147 mln tonnes, from 1099 mln tonnes in 2020, according to ...
Friday, 01 July 22
INDIA'S TOP CEMENT MAKER PAYING FOR RUSSIAN COAL IN CHINESE YUAN - REUTERS
India’s biggest cement producer, UltraTech Cement ULTC.NS, is importing a cargo of Russian coal and paying using Chinese yuan, according to a ...
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- Tamil Nadu electricity Board
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Petron Corporation, Philippines
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Planning Commission, India
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- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
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- Mercuria Energy - Indonesia
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
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- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- The State Trading Corporation of India Ltd
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- Metalloyd Limited - United Kingdom
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- Global Green Power PLC Corporation, Philippines
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- McConnell Dowell - Australia
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
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- Kepco SPC Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- The University of Queensland
- Rio Tinto Coal - Australia
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Kaltim Prima Coal - Indonesia
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Neyveli Lignite Corporation Ltd, - India
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- Latin American Coal - Colombia
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- PTC India Limited - India
- MS Steel International - UAE
- White Energy Company Limited
- Australian Coal Association
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Coal and Oil Company - UAE
- Economic Council, Georgia
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- GMR Energy Limited - India
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- SMC Global Power, Philippines
- Central Java Power - Indonesia
- Merrill Lynch Commodities Europe
- GN Power Mariveles Coal Plant, Philippines
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
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