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