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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, 16 January 21
SEABORNE TRADE IN STEAM COAL DECREASED BY 11.6% FROM 937 MILLION TONNES IN 2019 TO 828 MILLION TONNES IN 2020 - COAL IMPORTERS ASSOCIATION, GERMANY
According to preliminary calculations by the German Coal Importers Association (Verein der Kohlenimporteure e. V.), global hard coal production dec ...
Friday, 15 January 21
OVER US$50 BILLION IN GAS POWER PROJECTS AND LNG IMPORT FACILITIES AT RISK OF CANCELLATION IN BANGLADESH, PAKISTAN AND VIETNAM - IEEFA
Pakistan and Bangladesh have already cancelled tenders for LNG imports
Emerging markets such as Vietnam, Pakistan and Bangladesh tha ...
Friday, 15 January 21
VIETNAM'S EXTRAORDINARY ROOFTOP SOLAR SUCCESS DEALS ANOTHER BLOW TO THE REMAINING COAL PIPELINE - IEEFA
9.3 gigawatts peak of solar capacity, equal to 6 coal power plants, installed in less than a year
Vietnam’s solar power indust ...
Friday, 15 January 21
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 14 January 21
KOREA MIDLAND POWER INVITED BIDS FOR AUSTRALIAN COAL FOR THREE YEARS SUPPLY
COALspot.com: Korea Midland Power Co. Ltd, issued an International tender for total 1,560,000 MT of Min.5,700 kcal/kg NCV coal of Australian Origin ...
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- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Ambuja Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- Savvy Resources Ltd - HongKong
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Grasim Industreis Ltd - India
- Essar Steel Hazira Ltd - India
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- Minerals Council of Australia
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- Eastern Coal Council - USA
- Parliament of New Zealand
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- The State Trading Corporation of India Ltd
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Mintek Dendrill Indonesia
- Carbofer General Trading SA - India
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Medco Energi Mining Internasional
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- CNBM International Corporation - China
- Thai Mozambique Logistica
- Videocon Industries ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
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