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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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Thursday, 07 January 21
FITCH FORECASTS DOUBLING IN ASIAN WIND, SOLAR CAPACITY BY 2029, TOPPING 1,500GW
Despite some near-term delays due to the Covid-19 pandemic, solar power and offshore wind will drive steep growth in non-hydro renewables in Asia, ...
Wednesday, 06 January 21
INDONESIA EXCEEDS COAL PRODUCTION TARGET IN 2020
Indonesian coal production reached 557.54 Million Tons in 2020 1.37% higher than of last year’s total target of 550.00 Million Tons, accordin ...
Wednesday, 06 January 21
CHINESE CITIES REPORTEDLY GO DARK AS COUNTRY FACES SHORTAGE OF COAL, A MAJOR AUSTRALIAN EXPORT - CNBC
Several major Chinese cities have reportedly gone dark as authorities limit power usage, citing a shortage of coal.
Analysts said pr ...
Tuesday, 05 January 21
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP - XINHUA
China Taiyuan coal transaction price index stood at 136 points Monday, up 0.91 percent week on week.
The index, released by China Ta ...
Tuesday, 05 January 21
THE INDONESIA COAL PRICE REFERENCE SOARS TO HIGHEST ONE-MONTH INCREASE SINCE DECEMBER 2016
COALspot.com: The Indonesia coal price reference for January 2021 settles above $75 for the first time since July 2019 and to highest one-month inc ...
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- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
- SMG Consultants - Indonesia
- Aditya Birla Group - India
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PTC India Limited - India
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- Ind-Barath Power Infra Limited - India
- Kumho Petrochemical, South Korea
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Kaltim Prima Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Tata Chemicals Ltd - India
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- The University of Queensland
- Petron Corporation, Philippines
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- Sakthi Sugars Limited - India
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Chamber of Mines of South Africa
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Orica Mining Services - Indonesia
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- Pendopo Energi Batubara - Indonesia
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- Power Finance Corporation Ltd., India
- Trasteel International SA, Italy
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- The Treasury - Australian Government
- ASAPP Information Group - India
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
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