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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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Friday, 02 February 24
DRY BULK MARKET: THE DOWNWARD REVISION IN THE GROWTH OF CAPESIZE TONNE DAYS IN JANUARY WITH THE BCI DROPPING - MARIA BERTZELETOU
In the last week of January, the dry freight market sustained weakness in the Capesize segment, while the number of ballasters in the Southeast (SE ...
Friday, 02 February 24
COAL INDIA ACHIEVES NEARLY 80% OF ITS FY24 PRODUCTION TARGET IN TEN MONTHS - CNBCTV18
For the month of January, the company’s production grew by 9.1% from the same period last year to 78.4 Million Tonnes (MT), from 71.9 MT last ...
Thursday, 01 February 24
CHINA'S WIND, SOLAR CAPACITY TO OVERTAKE COAL IN 2024 - INDUSTRY BODY, REUTERS REPORTED
China’s installed wind and solar capacity is expected to overtake coal for the first time this year, according to industry forecasts.
&nb ...
Thursday, 01 February 24
ANTI-DEDUCTION CLAUSES: CAN A CHARTERER WITHHOLD HIRE WITHOUT AN OWNER'S CONSENT? - SKULD
KNOWLEDGE TO ELEVATE
Summary
In The Anna Dorothea, the Court found that where a charterparty provides that no deduction from hire may be m ...
Thursday, 01 February 24
INDIA REBUILDS COAL STOCKS TO ENSURE ELECTRIC RELIABILITY - REUTERS
India’s electricity supply is much more comfortable at the start of 2024 than in either 2023 or 2022 as coal production has ramped up and the ...
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Merrill Lynch Commodities Europe
- Africa Commodities Group - South Africa
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Bhoruka Overseas - Indonesia
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- OPG Power Generation Pvt Ltd - India
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Singapore Mercantile Exchange
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- The University of Queensland
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Tata Chemicals Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Makarim & Taira - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Interocean Group of Companies - India
- Kideco Jaya Agung - Indonesia
- Madhucon Powers Ltd - India
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Gujarat Sidhee Cement - India
- The Treasury - Australian Government
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Independent Power Producers Association of India
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Bhatia International Limited - India
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Petrochimia International Co. Ltd.- Taiwan
- Directorate Of Revenue Intelligence - India
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Mines - Canada
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- MS Steel International - UAE
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- Siam City Cement PLC, Thailand
- Cigading International Bulk Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Sical Logistics Limited - India
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
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