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Monday, 28 September 20
NEW LNG PROJECTS - ALL DRESSED UP AND NO PLACE TO GO - WOOD MACKENZIE
 It was meant to be another boom year. After a record 70 mmtpa of new LNG capacity was sanctioned in 2019, at least as much capacity was lined up for final approval this year and next. Instead of a feast of new projects, there’s a famine.
Developers, cash-strapped by the collapse in oil and gas prices, have pushed back on capital-intensive pre-FID LNG projects. Massimo Di-Odoardo, Global Head of Gas Analysis, identifies three other factors.
First, the outlook for LNG demand. We are bullish, anticipating LNG demand doubles over the next 20 years, driven by Asia’s economic growth and increasing penetration – particularly where policy supports gas over coal. Our view isn’t dissimilar to Shell’s that the LNG market grows at four times the rate of oil demand in that period.
Our base case forecasts global LNG demand grows by over 50% from 370 mmtpa in 2020 to 550 mmtpa by 2030. Allowing for projects already under development, there’s a supply gap of 102 mmtpa to be met by pre-FID projects which need to be onstream by the end of this decade.
But there are risks to our demand view. Gas demand has held up relatively well through the Covid-19 downturn, certainly compared with oil. The pace and shape of economic recovery though is far from clear and so, too, LNG demand growth in the next few years. Longer term, intensifying interest from policy makers and investors in new technologies, including green hydrogen and CCUS, casts doubt on the sustainability of demand growth.
Second, the rising influence of spot LNG prices on project economics. The traditional oil price-linked contracts and firm offtake agreements that have supported the financing of new projects are fading into history. Many projects today rely on equity lifting, with joint venture partners taking the LNG into their own portfolios. The attraction is flexible volumes that can be sold to any buyer and capture the best price.
But it also means rising exposure to spot LNG prices. Japan spot LNG prices have ranged from over US$11/mmbtu in 2018 to as low as US$2.10/mmbtu early this year, underlining the volatility and risk in running an open spot gas position.
Third, scrutiny of carbon intensity. ESG has leapt to the top of the agenda for LNG producers and buyers alike. LNG’s track record on emissions isn’t good. Inert gases including CO2 must be removed before liquefaction and typically are vented into the atmosphere. Liquefaction itself is energy intense, usually fuelled by produced gas.
In future, carbon footprint will be one factor determining how attractive an LNG project is to developers and buyers, and will influence the price it can command. New projects will have to be squeaky clean: developers will seek to electrify the liquefaction process (renewables where possible) and capture waste gases. Project economics will also be affected by carbon price assumptions.
Which pre-FID projects will fill the 102-mmtpa supply gap in 2030? First up are the mega-trains of Qatar’s low unit cost North Field East, which should be sanctioned in the coming months. This project on its own will absorb 32 mmtpa, negating the need for new supply from other sources until the late 2020s and pushing out FIDs for projects elsewhere by two to three years. Qatar believes it has another 16 mmtpa up its sleeve at North Field South that it could also develop.
So contestable demand for the rest is 70 mmtpa at best in 2030. A dozen or more projects from PNG, Australia, Mozambique, West Africa, Russia and North America, with combined capacity of more than 150 mmtpa, will be vying for their share.
The costs of integrated projects are discounted at 12%. Segmented projects – at 10% discount rate for LNG plant, 15% discount rate for upstream. Taxes are included. US Upstream assumption = 115% X Henry Hub (US$3.29/mmbtu – equivalent to average of long term H1 2020 Henry Hub forecast between 2026 and 2035) *The reference prices indicated by company logos indicate the long term prices used by companies for the purposes of valuing their assets. Assumed to be in Real terms (2020) from 2023.
How can prospective developers gain a better understanding to help support their big decisions? Wood Mackenzie’s new Global Gas Model Next Generation allows investors to analyse global gas market fundamentals and price formation; how LNG cash cost economics, coal-to-gas switching and shipping costs shape price differentials between the US, Europe and Asia markets; and how the cost stack for pre-FID projects evolves over time to meet any particular demand scenario. The model provides a framework to understand a project’s profitability under current market uncertainties.
We’ll be discussing LNG market dynamics, the investment outlook and lifecycle emissions for LNG projects at our Energy Summit (6 to 8 October 2020).
Source: Wood Mackenzie
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Saturday, 17 July 21
COAL PRICES TRADE AT DECADE HIGH OF $140 PER TONNE, HERE ARE SOME FACTORS AT PLAY: CNBC-TV18
Coal prices are trading at $140 per tonne. In the last one week, coal has seen more than 8 percent gains; the last one month has seen 24 percent ju ...
Thursday, 15 July 21
U.S. FOSSIL FUEL CONSUMPTION FELL BY 9% IN 2020, THE LOWEST LEVEL IN NEARLY 30 YEARS - EIA
U.S. fossil fuel consumption fell by 9% in 2020, the lowest level in nearly 30 years
In 2020, total consumption of fossil fuels in t ...
Thursday, 15 July 21
IN 2020, U.S. COAL PRODUCTION FELL TO ITS LOWEST LEVEL SINCE 1965 - EIA
U.S. coal production totaled 535 million short tons (MMst) in 2020, a 24% decrease from the 706 MMst mined in 2019 and the lowest level of coal pro ...
Wednesday, 14 July 21
MARKET INSIGHT - INTERMODAL
In its latest Global Economic Prospects report, the world bank recorded the strongest post-recession global growth in 80 years, but emerging and de ...
Tuesday, 13 July 21
JAPAN STILL SEEKING TO EXPLOIT COAL POWER LOOPHOLES - IEEFA
JBIC wants to continue burdening developing nations with its expensive coal-fired power technology
Japan is continuing to push its expensive c ...
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- Baramulti Group, Indonesia
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Economic Council, Georgia
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Kalimantan Lumbung Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- Star Paper Mills Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Deloitte Consulting - India
- Independent Power Producers Association of India
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- McConnell Dowell - Australia
- Wood Mackenzie - Singapore
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Rio Tinto Coal - Australia
- PNOC Exploration Corporation - Philippines
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Kideco Jaya Agung - Indonesia
- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Vedanta Resources Plc - India
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- European Bulk Services B.V. - Netherlands
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
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