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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, 23 July 20
KOREAN GENCOS INVITED BIDS FOR TOTAL 1.36 MILLION TONS OF BITUMINOUS COAL FOR OCTOBER 2020 LOADING
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) on behalf of EWP, KOSPO, KOSEP and KOWEPO has issued an international tender for total 1,360,00 ...
Wednesday, 22 July 20
CIL'S COAL SUPPLY TO POWER SECTOR DROPS OVER 21% TO 93.5 MT IN APR-JUN QUARTER - PTI
The supply of coal by state-owned Coal India Ltd to the power sector fell 21.7 percent to 93.5 million tonnes (MT) in the first quarter of the ongo ...
Monday, 20 July 20
KOREA MIDLAND POWER INVITED BIDS FOR TOTAL 2.520 MILLION MT OF BITUMINOUS COAL FOR THREE YEARS
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO), has issued an international tender for total 840,000 of Bituminous Coal to be used at Bo ...
Monday, 20 July 20
CHINA'S JUNE COAL OUTPUT FALLS 1.2% YEAR-ON-YEAR OVER ILLEGAL MINING CHECKS - REUTERS
China’s coal output dropped 1.2% in June on the year to 330 million tonnes, official data showed, as major coal mining areas cracked down on ...
Monday, 20 July 20
COAL INDIA LAUNCHES SPECIAL CATEGORY OF E-AUCTION FOR COAL IMPORTERS - BUSINESS STANDARD
Coal India (CIL) on Friday launched a special category of e-auction for importers of coal. This is in line with the government’s declaration ...
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- Independent Power Producers Association of India
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Madhucon Powers Ltd - India
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Merrill Lynch Commodities Europe
- CIMB Investment Bank - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Bukit Baiduri Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- Bharathi Cement Corporation - India
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Altura Mining Limited, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- GAC Shipping (India) Pvt Ltd
- Salva Resources Pvt Ltd - India
- Australian Coal Association
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- Siam City Cement - Thailand
- Semirara Mining Corp, Philippines
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- Sical Logistics Limited - India
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- Kaltim Prima Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- Romanian Commodities Exchange
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Vedanta Resources Plc - India
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Edison Trading Spa - Italy
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Lanco Infratech Ltd - India
- Goldman Sachs - Singapore
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