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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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Friday, 22 March 24
INDONESIA APPROVES 922.14 MLN T COAL PRODUCTION QUOTA FOR 2024, ABOVE TARGET - REUTERS
Indonesia has approved coal production quotas totalling 922.14 million metric tons for 2024, Bambang Suswantono, a senior official at the mining mi ...
Friday, 22 March 24
CHINA COAL INDUSTRY GROUP EXPECTS OUTPUT GROWTH TO SLOW IN 2024 - REUTERS
China’s coal output is expected to increase 36 million metric tons, or 0.8%, to about 4.7 billion tonnes in 2024, a Chinese coal industry gro ...
Monday, 18 March 24
THREE KEY TAKEAWAYS FROM OUR EUROPE GAS MARKETS SHORT-TERM OUTLOOK Q1 2024 - WOOD MACKENZIE
European gas prices are currently back to pre-crisis levels, but with a complex series of factors affecting future supply and demand, are they set ...
Wednesday, 06 March 24
INDONESIA AIMS TO FINISH MINING OUTPUT QUOTAS APPROVAL BY END-MARCH, OFFICIAL SAYS - REUTERS
Indonesia’s has approved the mining production quotarequests from more than 120mineral companies and aims to complete the approval process th ...
Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
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- Ministry of Finance - Indonesia
- Wilmar Investment Holdings
- South Luzon Thermal Energy Corporation
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- LBH Netherlands Bv - Netherlands
- Banpu Public Company Limited - Thailand
- Price Waterhouse Coopers - Russia
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- Minerals Council of Australia
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- ASAPP Information Group - India
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- The University of Queensland
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Siam City Cement PLC, Thailand
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Singapore Mercantile Exchange
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- Parliament of New Zealand
- Electricity Authority, New Zealand
- GMR Energy Limited - India
- Antam Resourcindo - Indonesia
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- Coastal Gujarat Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- VISA Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Bhatia International Limited - India
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