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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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Wednesday, 07 April 21
KOMIPO ISSUED A TENDER FOR TOTAL 1,560,000 METRIC TONS OF BITUMINOUS COAL
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a tender for total 1,560,000 Metric Tons of Bituminous coal for i ...
Wednesday, 07 April 21
MARKET INSIGHT - INTERMODAL
Following the end of the catholic easter, during which the majority of shipping market participants were on holidays, it is interesting to note a f ...
Wednesday, 07 April 21
COAL USED TO GENERATE ELECTRIC POWER IN U.S. WILL INCREASE BY 13 PERCENT TO 495 MMST IN 2021 - EIA
EIA expects U.S. coal production to total 585 MMst in 2021, 46 MMst (9%) more than in 2020. In 2022, EIA expects coal production to grow by an addi ...
Wednesday, 31 March 21
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.12 PCT - XINHUA
China Taiyuan coal transaction price index stood at 139.03 points Monday, up 0.12 percent week on week.
The index, released by China ...
Wednesday, 31 March 21
MARKET INSIGHT - INTERMODAL
Over the past week, the biggest story has been the blockage of the Suez Canal, as a result of the grounding of the container ship Ever Given. At th ...
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- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Posco Energy - South Korea
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- Renaissance Capital - South Africa
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Indonesian Coal Mining Association
- Sinarmas Energy and Mining - Indonesia
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Kapuas Tunggal Persada - Indonesia
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- MS Steel International - UAE
- Parry Sugars Refinery, India
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- The University of Queensland
- Parliament of New Zealand
- Altura Mining Limited, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- PTC India Limited - India
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Indogreen Group - Indonesia
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- GN Power Mariveles Coal Plant, Philippines
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- SMG Consultants - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- Tata Chemicals Ltd - India
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- The Treasury - Australian Government
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- Karaikal Port Pvt Ltd - India
- Independent Power Producers Association of India
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- Central Electricity Authority - India
- GMR Energy Limited - India
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- CNBM International Corporation - China
- White Energy Company Limited
- Electricity Authority, New Zealand
- Thai Mozambique Logistica
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