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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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Tuesday, 04 August 20
KOEN INVITED BIDS FOR TOTAL 900K MT OF MIN 5600 NCV COAL FOR 3 YEARS
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 260,000 to 300,000 Tons (MT) min. ...
Tuesday, 04 August 20
THE WORLD’S FLEET OF COAL-FIRED POWER STATIONS HAS GOT SMALLER FOR THE FIRST TIME ON RECORD, WITH MORE CAPACITY RETIRED IN THE FIRST HALF OF 2020 THAN THE AMOUNT OPENED - IEA
This is according to the latest Global Coal Plant Tracker (GCPT) results by Global Energy Monitor (GEM), which we completed last month and report f ...
Monday, 03 August 20
U.S. COAL CONSUMPTION, WHICH HAS DECLINED SINCE ITS 2007 PEAK, FELL TO ITS LOWEST POINT IN APRIL 2020 - EIA
According to the U.S. Energy Information Administration’s (EIA) most recent Monthly Energy Review, the United States consumed 6.5 quadrillion ...
Monday, 03 August 20
LOW OIL PRICE AND CORONA VIRUS HIT SUB-SAHARAN AFRICA OIL PRODUCERS - FITCH RATINGS
The collapse in oil prices and the coronavirus shock is worsening the fiscal and external balances of sub-Saharan African oil producers, Fitch Rati ...
Saturday, 01 August 20
SHIP SHAPE - OUCH: FIS
Thursday afternoon saw a report that US GDP in Q2 shrank by 32.9%. Now this may have beaten expectations, but it’s a bit like saying that you ...
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- Kaltim Prima Coal - Indonesia
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
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- CNBM International Corporation - China
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- The University of Queensland
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- Mercuria Energy - Indonesia
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- Goldman Sachs - Singapore
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- Orica Australia Pty. Ltd.
- Planning Commission, India
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Economic Council, Georgia
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
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- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
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- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- SMC Global Power, Philippines
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Bhatia International Limited - India
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- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Latin American Coal - Colombia
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- Carbofer General Trading SA - India
- LBH Netherlands Bv - Netherlands
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
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- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Madhucon Powers Ltd - India
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- Trasteel International SA, Italy
- New Zealand Coal & Carbon
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- Lanco Infratech Ltd - India
- Global Business Power Corporation, Philippines
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- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Baramulti Group, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Parliament of New Zealand
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- Central Electricity Authority - India
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- ASAPP Information Group - India
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- Sree Jayajothi Cements Limited - India
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
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