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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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Wednesday, 21 October 20
INDIA: THE COMMERCIALISATION OF COAL BLOCKS WILL BENEFIT THE ECONOMY - HINDU BUSINESS LINE
As the government of India receives 76 bids for 23 coal mines against the 38 up on auction, what does this commercialisation of coal block allocati ...
Wednesday, 21 October 20
MARKET INSIGHT - INTERMODAL
The second wave of COVID-19 is now a reality; offices are closing again, and stricter rules and regulations are being implemented in public spaces. ...
Tuesday, 20 October 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.82 PCT - XINHUA
China Taiyuan coal transaction price index stood at 127.49 points Monday, up 0.82 percent week on week.
The index, released by China ...
Tuesday, 20 October 20
BIMCO 'SHIPLEASE' TERM SHEET - WATSON FARLEY & WILLIAMS
KNOWLEDGE TO ELEVATE
The ever-growing importance of sale and leaseback transactions as an alternative to financing ships by way of loan, makes ...
Friday, 16 October 20
KOMIPO ON BEHALF OF K GENCO'S INVITED BIDS FOR TOTAL 715,000 MT MIN. 5,700 NAR COAL FOR DECEMBER
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) on behalf of EWP, KOSPO, KOSEP and KOWEPO has issued an international tender for total 715,000& ...
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- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- Sindya Power Generating Company Private Ltd
- Singapore Mercantile Exchange
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Siam City Cement - Thailand
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Larsen & Toubro Limited - India
- Formosa Plastics Group - Taiwan
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- Romanian Commodities Exchange
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Electricity Authority, New Zealand
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Latin American Coal - Colombia
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- The University of Queensland
- Krishnapatnam Port Company Ltd. - India
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- Planning Commission, India
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- McConnell Dowell - Australia
- Ceylon Electricity Board - Sri Lanka
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Parliament of New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- Tamil Nadu electricity Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Aboitiz Power Corporation - Philippines
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Xindia Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Jaiprakash Power Ventures ltd
- MS Steel International - UAE
- Central Java Power - Indonesia
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
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