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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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Wednesday, 05 January 22
CHINA COAL FUTURES SURGE ON SUPPLY WORRIES AMID INDONESIA EXPORT BAN - REUTERS
China’s thermal coal futures surged by as much as 7.8per cent to kick off 2022 on concerns of supply disruptions after Indonesia, its biggest ...
Wednesday, 05 January 22
INDONESIA WARNS COAL SUPPLY CRUNCH NOT OVER AS CHINA PRICES RALLY - REUTERS
Indonesia has warned that its coal supply situation remains critical, ahead of Wednesday’s (Jan 5) review of its export ban, unnerving global ...
Tuesday, 28 December 21
INDIA'S ADANI NEARS FIRST COAL SHIPMENT FROM SHUNNED AUSTRALIAN MINE - REUTERS
India’s Adani Group ADEL.NS is preparing to ship the first coal cargo from Australia’s most controversial mine, after battling a seven- ...
Thursday, 23 December 21
COAL TO STAY AS MAJOR SOURCE OF ENERGY IN FORESEEABLE FUTURE: JOSHI - BUSINESS STANDARD
Coal will stay as a major source of energy in the foreseeable future as it is an affordable source of energy with substantial reserve, Parliament w ...
Thursday, 23 December 21
ANNUAL U.S. COAL-FIRED ELECTRICITY GENERATION WILL INCREASE FOR THE FIRST TIME SINCE 2014 - EIA
From December 20 through December 30, Today in Energy will feature some of our favorite articles from 2021. Today’s article was originally pu ...
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- Formosa Plastics Group - Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Straits Asia Resources Limited - Singapore
- Dalmia Cement Bharat India
- Australian Coal Association
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Kartika Selabumi Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Parliament of New Zealand
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- Uttam Galva Steels Limited - India
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Mining Services - Indonesia
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Salva Resources Pvt Ltd - India
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- The Treasury - Australian Government
- Central Java Power - Indonesia
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Energy Link Ltd, New Zealand
- Miang Besar Coal Terminal - Indonesia
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Edison Trading Spa - Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Larsen & Toubro Limited - India
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- Minerals Council of Australia
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Aditya Birla Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Meralco Power Generation, Philippines
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- PowerSource Philippines DevCo
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- Grasim Industreis Ltd - India
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
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