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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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Thursday, 06 August 20
SUPRAMAX MARKET CONTINUED SIDEWAYS TREND, AND LITTLE INSPIRING NEWS APPEAR - FEARNLEYS
Capesize
There is presently a small correction in rates, but overall levels are up from previous week mainly due to increased demand in the Eas ...
Thursday, 06 August 20
KOREA SOUTH-EAST POWER INVITING BIDS FOR MIN 3,600-MAX 3,800 NCV COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) inviting bids for 80,000 Tons (MT) Min 3,600~Max 3,800 kcal/kg NCV coal f ...
Wednesday, 05 August 20
NO NEW MINING LICENSES - A REMINDER TO GOVERNORS IN INDONESIA - SSEK
Indonesia’s acting Director General of Mining and Coal (“DGMC”) has issued a letter to the country’s provincial Governors t ...
Wednesday, 05 August 20
AUGUST 2020 HBA HITTING ITS LOWEST LEVELS IN HISTORY
COALspot.com: The Indonesia Coal Price Reference for the month of August plunged 30.73% YoY, hitting its lowest levels in history and highlighting ...
Wednesday, 05 August 20
SLUMP IN OIL REVENUE CHALLENGES MIDDLE EAST OIL EXPORTERS - INTERMODAL
The Covid-19 pandemic has had far-reaching consequences on the global capital markets. Despite the US government’s efforts for a quick and de ...
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- Bhatia International Limited - India
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Straits Asia Resources Limited - Singapore
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- India Bulls Power Limited - India
- Wood Mackenzie - Singapore
- Bhoruka Overseas - Indonesia
- Bangladesh Power Developement Board
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- The University of Queensland
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Australian Coal Association
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Xindia Steels Limited - India
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- Planning Commission, India
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Manunggal Multi Energi - Indonesia
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- Trasteel International SA, Italy
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- Sinarmas Energy and Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement PLC, Thailand
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Sakthi Sugars Limited - India
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- Timah Investasi Mineral - Indoneisa
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
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