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