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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, 10 February 22
EIA ANALYSIS CONSIDERS DIFFERENT OUTCOMES FOR COAL MARKETS IN INDIA AND SOUTHEAST ASIA
In our International Energy Outlook 2021 (IEO2021) Issues in Focus: Uncertainty in Coal Trade in India and Greater Southeast Asia, we analyze three ...
Wednesday, 09 February 22
OIL PRICES: "IT'S GOING TO BE VERY EASY" TO GET TO $100/BARREL, ANALYST SAYS - YAHOO FINANCE
Energy and oil prices have been on fire over the last six months — and expect them to go higher, says one analyst.
“For ...
Wednesday, 09 February 22
MARKET INSIGHT - INTERMODAL
Iron ore prices have jumped significantly in the week prior to the Chinese New Year with traders and producers stocking up on raw materials. China& ...
Wednesday, 09 February 22
FEBRUARY HBA HITS RECORD HIGH IN 2022 ON INDONESIA’S EXPORT BAN IN JANUARY, WORSEN SUPPLY, UKRAINE TENSIONS
COALspot.com: Indonesian Coal Price Reference for February in a steep climb from January 2022.
As expected in January the Indonesia ...
Wednesday, 09 February 22
CHINESE COAL MARKS BEST DAY IN 4 MONTHS ON TIGHT SUPPLY, HIGH DEMAND - REUTERS
China’s coal futures on Tuesday recorded their best session since Bejing’s mid-October intervention to cool runaway prices, aided by co ...
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- Africa Commodities Group - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- The University of Queensland
- Wilmar Investment Holdings
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Planning Commission, India
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- Carbofer General Trading SA - India
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Australian Commodity Traders Exchange
- GMR Energy Limited - India
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Petrochimia International Co. Ltd.- Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Siam City Cement PLC, Thailand
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Renaissance Capital - South Africa
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Latin American Coal - Colombia
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- PetroVietnam Power Coal Import and Supply Company
- Singapore Mercantile Exchange
- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- Parry Sugars Refinery, India
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Mercator Lines Limited - India
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- Binh Thuan Hamico - Vietnam
- Bhatia International Limited - India
- Jaiprakash Power Ventures ltd
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