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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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Saturday, 11 September 21
CIL STEPS UP SUPPLY COAL TO POWER SECTOR; PER-DAY AVERAGE 20 PC HIGHER THAN LAST YEAR - PTI
State-owned CIL on Friday said it has stepped up the supply of coal to the power sector in the first eight days of the current month, with an avera ...
Saturday, 11 September 21
RECORD CHINESE COAL FUTURES SIGNAL NEED TO BOOST OUTPUT - REUTERS
China’s coal prices have climbed to a record high, signaling the need for more production in the short term, even as the government tries to ...
Saturday, 11 September 21
IN 2022, EIA EXPECTS U.S. COAL PRODUCTION TO INCREASE BY 47 MMST TO 648 MMST
U.S. Coal production accordng to EIA's forecast, totals 601 million short tons (MMst) in 2021, 66 MMst more than in 2020, EIA's Short-Term ...
Wednesday, 08 September 21
FITCH RATINGS RAISES THERMAL COAL PRICE ASSUMPTIONS ON TIGHT SUPPLY
Fitch Ratings has increased all its Qinhuangdao 5,500kcal/kg price assumptions and short- and medium-term Newcastle 6,000kcal/kg price assumptions ...
Wednesday, 08 September 21
COAL IS STILL KING; INDONESIAN COAL PRICE REFERENCE ABOVE $150 FOR FIRST TIME IN HISTORY
COALspot.com: The Indonesian Coal Price Reference rose dramatically from US$ 127.05 in February 2011, to a peak of US$ 150.03 in September 2021, be ...
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- Siam City Cement - Thailand
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Kideco Jaya Agung - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Commonwealth Bank - Australia
- Asmin Koalindo Tuhup - Indonesia
- Toyota Tsusho Corporation, Japan
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Singapore Mercantile Exchange
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Minerals Council of Australia
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- The Treasury - Australian Government
- White Energy Company Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- TeaM Sual Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Madhucon Powers Ltd - India
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Kartika Selabumi Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Edison Trading Spa - Italy
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- MS Steel International - UAE
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- ASAPP Information Group - India
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
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