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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, 17 December 20
CHINA'S BAN IS LESS OF A THREAT TO AUSTRALIA'S COAL INDUSTRY THAN INTERNATIONAL CLIMATE AMBITION - IEEFA
Australian coal exporters will survive this near-term political fight but there are longterm structural headwinds
The decision by Ch ...
Thursday, 17 December 20
BUMA SIGNED US$1.0 BILLION WORTH OF EXTENSION CONTRACT WITH BERAU COAL
PT Bukit Makmur Mandiri Utama, subsidiary of PT Delta Dunia Makmur Tbk., has extended its mining services contracts with PT Berau Coal, in relation ...
Wednesday, 16 December 20
INDONESIA 2020 COAL CONSUMPTION ESTIMATED AT 140-145 MLN TONNES - OFFICIAL, REUTERS REPORTED
Indonesia’s domestic coal consumption is estimated at 140-145 million tonnes this year, Dodik Ariyanto, an official at the energy ministry, t ...
Wednesday, 16 December 20
RUSSIA REVISES DOWN EXPORT EXPECTATION - FITCH
The Ministry of Economy of Russia, the world’s third largest thermal coal exporting country, released its annual forecasts ...
Wednesday, 16 December 20
INDIAN COAL IMPORTS TO REMAIN SUBDUED - FITCH RATINGS
Fitch Rating commented on Indian Coal Imports, Fitch said, coal imports by Indian utilities fell by about 24% yoy to 44 million tonnes (mt) i ...
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- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Price Waterhouse Coopers - Russia
- White Energy Company Limited
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Indo Tambangraya Megah - Indonesia
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Mercuria Energy - Indonesia
- Intertek Mineral Services - Indonesia
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- GAC Shipping (India) Pvt Ltd
- Gujarat Mineral Development Corp Ltd - India
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Cement Manufacturers Association - India
- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Essar Steel Hazira Ltd - India
- Attock Cement Pakistan Limited
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- GMR Energy Limited - India
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- Eastern Energy - Thailand
- Minerals Council of Australia
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Uttam Galva Steels Limited - India
- Posco Energy - South Korea
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Chamber of Mines of South Africa
- The University of Queensland
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Manunggal Multi Energi - Indonesia
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- Antam Resourcindo - Indonesia
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Parliament of New Zealand
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
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