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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$3.29/mmbtu – equivalent to average of long term H1 2020 Henry Hub forecast between 2026 and 2035) *The reference prices indicated by company logos indicate the long term prices used by companies for the purposes of valuing their assets. Assumed to be in Real terms (2020) from 2023.
How can prospective developers gain a better understanding to help support their big decisions? Wood Mackenzie’s new Global Gas Model Next Generation allows investors to analyse global gas market fundamentals and price formation; how LNG cash cost economics, coal-to-gas switching and shipping costs shape price differentials between the US, Europe and Asia markets; and how the cost stack for pre-FID projects evolves over time to meet any particular demand scenario. The model provides a framework to understand a project’s profitability under current market uncertainties.
We’ll be discussing LNG market dynamics, the investment outlook and lifecycle emissions for LNG projects at our Energy Summit (6 to 8 October 2020).
Source: Wood Mackenzie
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Wednesday, 07 October 20
U.S. COAL PRODUCTION TO DECREASE BY 26 PERCENT IN 2020 COMPARED TO 2019 - EIA
EIA expects total U.S. coal production in 2020 to be 525 million short tons (MMst), compared with 705 MMst in 2019, a 26% decrease.
COVID-19 a ...
Wednesday, 07 October 20
MARKET INSIGHT - INTERMODAL
The challenges brought forward in 2020 proved to be very different from what we could have ever imagined. Together with placing a significant strai ...
Tuesday, 06 October 20
KOSPO TO IMPORT 80,000 MT OF 3,800 NCV COAL FOR 2H NOV
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 MT Min.3800 kcal/kg NCV coal 2H November, 2020 l ...
Friday, 02 October 20
THE INDONESIA COAL PRICE REFERENCE RISE AFTER HISTORIC CRASH TO US$ 49.42
COALspot.com: The Indonesia Coal Price Reference for the month of October Rise to US$ 51.00 after historic crash to US$ 49.42 in September 2020.
...
Friday, 02 October 20
SRI LANKA MUST LEARN LESSONS FROM AROUND ASIA TO AVOID FURTHER ELECTRICITY CRISES - IEEFA
Overcommitment to fossil-fuelled power generation is leading to excess capacity and rising capacity payments, subsidies, and tariffs around the con ...
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- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Wood Mackenzie - Singapore
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Baramulti Group, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercuria Energy - Indonesia
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Jindal Steel & Power Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- Minerals Council of Australia
- Savvy Resources Ltd - HongKong
- Central Electricity Authority - India
- Indo Tambangraya Megah - Indonesia
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- Essar Steel Hazira Ltd - India
- Gujarat Sidhee Cement - India
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- ASAPP Information Group - India
- Ambuja Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- LBH Netherlands Bv - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Sarangani Energy Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Indika Energy - Indonesia
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- Uttam Galva Steels Limited - India
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Kapuas Tunggal Persada - Indonesia
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- Planning Commission, India
- Power Finance Corporation Ltd., India
- New Zealand Coal & Carbon
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Simpson Spence & Young - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- Port Waratah Coal Services - Australia
- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Authority, New Zealand
- Riau Bara Harum - Indonesia
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Eastern Coal Council - USA
- Petron Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
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