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