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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, 18 April 22
DEMAND FOR THERMAL COAL TO RISE DUE TO INCREASE IN ELECTRICITY DEMAND: INDIAN COAL MINISTRY - PTI
Coal block allocatees have a golden opportunity to augment production as the demand for thermal coal will rise due to an increase in electricity de ...
Tuesday, 05 April 22
INDONESIAN COAL PRICE REFERENCE HITS RECORD ABOVE $288
COALspot.com: Indonesian Coal Price Reference for April in a steep climb from March 2022.
As expected, Russia – Ukraine war dr ...
Thursday, 31 March 22
CHINA STATE PLANNER ASKS COAL INDEX PROVIDERS TO RECTIFY IRREGULARITIES - REUTERS
China’s state planner has asked some major coal price index providers to rectify “severe irregularities” it had identified in the ...
Thursday, 31 March 22
IMPORTED COAL PRICES TO JUMP 55% IN APR-JUN, IMPACT INDIAN FIRMS: ICRA - LIVEMINT
Supply disruption owing to the Russia-Ukraine conflict could push the price of imported coal by 45-55% in Q1FY23 compared to the previous quarter, ...
Thursday, 31 March 22
CHINA'S COAL OUTPUT SET FOR MODERATE GROWTH IN 2022 - INDUSTRY BODY - REUTERS
China is expected to see its coal output to grow further in 2022 after hitting a record last year, an industry body forecast on Wednesday, as the c ...
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- PNOC Exploration Corporation - Philippines
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- European Bulk Services B.V. - Netherlands
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Coastal Gujarat Power Limited - India
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- Port Waratah Coal Services - Australia
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- Economic Council, Georgia
- Kaltim Prima Coal - Indonesia
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- Planning Commission, India
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Development Corp, Philippines
- Gujarat Sidhee Cement - India
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Interocean Group of Companies - India
- Minerals Council of Australia
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- CNBM International Corporation - China
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- Neyveli Lignite Corporation Ltd, - India
- Salva Resources Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Karaikal Port Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- Electricity Authority, New Zealand
- Riau Bara Harum - Indonesia
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Petrochimia International Co. Ltd.- Taiwan
- Mercator Lines Limited - India
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- Parliament of New Zealand
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- GMR Energy Limited - India
- Central Electricity Authority - India
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
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