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