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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, 01 November 21
COAL PRICES HAVE FURTHER ROOM TO DROP: TOP ECONOMIC PLANNER - GLOBAL TIMES
China’s top economic planner said coal prices have further room to drop on Friday, as the most traded coal futures dropped to below 1,000 yua ...
Saturday, 30 October 21
CHINA'S COAL PRICES SEE BIGGEST WEEKLY FALL IN MORE THAN 5 YEARS - REUTERS
China’s coal futures prices saw their biggest fall in more than five years after the powerful state planner said there is still room to adjus ...
Saturday, 30 October 21
G-20 LEADERS PREPARE STATEMENT TO STOP FUNDING FOREIGN COAL PLANTS - BLOOMBERG
Leaders of the Group of 20 wealthy economies are preparing to pledge to stop funding foreign coal-fired plants, but are still wrangling over climat ...
Friday, 29 October 21
APAC THERMAL COAL SUPPLY TO REMAIN TIGHT AS WINTER LOOMS - FITCH RATINGS
APAC thermal coal prices have surged, hitting historically high levels. The benchmark Newcastle 6,000kcal/kg grade coal reached USD228/tonne in mid ...
Thursday, 28 October 21
CANADA BAN ON SHIPPING COAL WOULD EQUAL SCRAPPING AS MANY AS 3 MILLION CARS - IEEFA
Canada ban on shipping coal would equal scrapping as many as 3 million cars
Change in Canadian policy could have major implications ...
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- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Makarim & Taira - Indonesia
- Indo Tambangraya Megah - Indonesia
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Pendopo Energi Batubara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Edison Trading Spa - Italy
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Australian Coal Association
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- White Energy Company Limited
- Orica Australia Pty. Ltd.
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- The University of Queensland
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- LBH Netherlands Bv - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Aditya Birla Group - India
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Kepco SPC Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Formosa Plastics Group - Taiwan
- Deloitte Consulting - India
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