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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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- Star Paper Mills Limited - India
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- Siam City Cement PLC, Thailand
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Romanian Commodities Exchange
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Indogreen Group - Indonesia
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Heidelberg Cement - Germany
- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- IHS Mccloskey Coal Group - USA
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- Meralco Power Generation, Philippines
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
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