A tripling of LNG output likely to hit the shipping market

A predicted tripling of sanctions for global LNG projects in 2019 threatens to disrupt future shipping logistics as demand for the gas enters a more volatile phase because of a rapid increase in supply.

This is the result of a likely record year for final investment decisions (FIDs) that will ultimately deliver more than 60M tonnes of LNG per year (mta), nearly three times the 21 mta sanctioned in 2018, as the research director for Wood Mackenzie Giles Farrer forecasts. Inevitably, increased availability of LNG will influence where tankers deliver their loads.

But Wood Mackenzie also predicts shorter-term volatility in the vagaries of the weather that could affect shipping movements – “a mild end to [the 2019] winter could send more LNG into Europe and drive prices down further,” he said.

The energy consultant’s predictions come at a time of concern over the availability of LNG tankers to handle the huge extra output, particularly in the spot market because most of the fleet are locked into exclusive long-term charters. In a mid-2018 study, the International Energy Agency highlighted a possible shortfall in vessels as a threat to the security of supply, particularly in more remote regions.

The dearth of available LNG carriers is reflected in rocketing spot charter rates. In November, they shot to US$190,000 a day, five times higher than in early May.

Overall though, it appears the tanker fleet will have to adjust to changes in demand in the medium-term future. “Asian LNG demand growth will not keep pace with LNG supply and Europe – northwest Europe in particular – will have to absorb the surplus, especially during the summer,” he predicted in a release this week. “But Europe needs additional imports and flexibility, given its increased reliance on maxed-out Russian and Norwegian imports.”

It is therefore likely, he added, “there would be more LNG imports than required. And that in turn would provide competition to pipe imports and put pressure on prices,” he said. However Mr Farrer does not see the level of oversupply in 2019 that others fear.

A record number of LNG projects, as measured by volume, are due to get the green light. Wood Mackenzie sees the frontrunners in the race to hit FID in 2019 as the giant US$27Bn Arctic LNG-2 project in Russia, at least one project in Mozambique and three in America. Of the latter, Wood Mackenzie identifies three major operations as top picks – Golden Pass, Calcasieu Pass and Sabine Pass Train 6.

But that is not all. There are other projects in the pipeline in America as well as in Qatar, Papua New Guinea, Australia and Nigeria, all aiming for FID in 2019.

Wood Mackenzie sees other global influences that would inevitably determine the course of the growing LNG shipping network. “A recession would bring gas/LNG demand and oil prices down, delay FIDs and push the global LNG market back a few years,” said Mr Farrer. “But there could be a worse scenario for the gas market: a major economic downturn happening in 2020 or 2021, just after 60-100 mta of LNG has taken FID. That would wipe out our forecast price recovery post-2020 and make our forecast that prices soften a little around 2025 look a lot worse.”

Chinese demand is also less certain than it was in 2018, particularly if Beijing rethinks its headlong switch from coal to gas. In the last two years demand for LNG hovered between 40-45% growth, but that could fall to about 20%. However, as Wood Mackenzie pointed out, even if that happened China would remain by far the largest customer for LNG in the global market.

14.02.2019 kl 12:09 3678

Om den stenger under 11,15 skal jeg være enig med deg. Ellers kan dette være et pust i bakken.
14.02.2019 kl 14:11 3608

GasLog posts record profit on high spot earnings

Monaco-based LNG shipper GasLog reported record annual profit with spot earnings in a tight LNG shipping market boosting the figures.

The company reported a profit for the year 2018 of $47.7 million, which compares to $15.5 million recorded in 2017.

Speaking of the results, GasLog’s CEO Paul Wogan said that the earnings were driven in large part by “very strong earnings from our spot vessels against a backdrop of extreme tightness in the LNG shipping market.”

These spot earnings, combined with GasLog’s fleet growth during the year, and the company’s strong operational performance and strict cost control, delivered record annual result, Wogan said.

“While spot rates have recently moderated from fourth quarter peaks, in line with historical seasonal trends, we expect tightness in LNG shipping markets to return given forecast LNG supply growth through 2020 and relatively few uncommitted newbuild vessels delivering in that period,” he said.

Looking beyond 2020, GasLog expects additional shipping capacity will be required if consensus LNG demand and supply forecasts are realized.

However, whilst the company does now believe that the LNG shipping market is heading towards a balanced state early next decade, the long-term secular growth of LNG supply and demand mean that, over the medium and long-term it will be a dynamic and growing industry.

The shipper did note that newbuilding order activity in 2019 needs to slow relative to 2018 levels in order to reduce the risk of vessel oversupply.

14.02.2019 kl 21:21 3483

Sakset fra Gaslogs Q4 rapport.

LNG Market Update and Outlook

LNG demand, as estimated by Wood Mackenzie, is expected to have increased by 9%, from 288 million tonnes per annum (“mtpa”) in 2017 to 313 mtpa in 2018. According to China’s General Administration of Customs, China’s LNG imports increased by approximately 16 mtpa, or 41%, to 54 mtpa in 2018, driven mainly by continued coal-to-gas switching in the industrial, commercial and residential sectors. South Korea, Pakistan, Thailand and Mexico also experienced strong growth in LNG imports during 2018. The outlook remains robust, with Wood Mackenzie forecasting compound annual growth in global LNG demand of 6% between 2018 and 2025. This growth is expected to be broad-based, with Wood Mackenzie forecasting that South East Asia and Europe will account for approximately 70% of the 148 mtpa net increase in demand between 2018 and 2025.

According to Wood Mackenzie, global LNG supply in 2018 totaled 326 million tonnes (“mt”), or a 9% increase on 2017. Several new LNG supply projects and the ramp-up of existing facilities contributed to the increase in LNG production in 2018. During the year, new production started in the United States (Cove Point, Corpus Christi Train 1 and Sabine Pass Train 5), Australia (Wheatstone Train 2, Ichthys), Russia (Yamal Trains 2 & 3) and Cameroon Floating LNG. Supply from existing liquefaction facilities in Egypt, Trinidad and Tobago and Oman also increased following successful efforts to raise domestic gas production. Downtime at existing facilities in Malaysia and Russia partially offset these gains.

Based on Wood Mackenzie’s current forecasts, 2019 is anticipated to be the strongest year ever for supply growth in the LNG market, with supply expected to increase by 40 mtpa to 366 mtpa, a 12% increase on 2018. This includes new LNG production from Elba Island, Cameron, Freeport and Corpus Christi Train 2 in the United States, the Prelude floating LNG project offshore Australia, further increases in Russia’s output and the continued ramp-up of projects which were brought onstream in 2018.

During 2018, three new LNG liquefaction projects reached Final Investment Decision (“FID”), underpinning further LNG supply growth during the next decade. LNG Canada (14 mtpa) in western Canada, Corpus Christi Train 3 (4.5 mtpa) in the United States and the Greater Tortue Ahmeyim project offshore Mauritania and Senegal (2.5 mtpa) were all approved during the year. In February 2019, the Golden Pass (16 mtpa) project in the United States also reached FID. According to Wood Mackenzie, proposed projects (including Golden Pass) in the United States with a combined capacity of approximately 35 mtpa are expected to gain investment approval in 2019. Outside the United States, Qatar is aiming to take FID on an expansion of existing facilities from 77 to 110 mtpa. New projects offshore Mozambique (28 mtpa) and the Arctic LNG-2 project (20 mtpa) in Russia are also expected by Wood Mackenzie to be approved in 2019.

In parallel with the progress on new supply FIDs, in 2018 there was a significant increase in the number of announced long-term LNG off-take contracts. According to Wood Mackenzie and company disclosures, 95 mtpa of long-term (defined as greater than 5 years’ duration) off-take commitments have been agreed since the beginning of 2018, compared to 25 mtpa in 2017. The nature of the LNG marketplace also continued to evolve. According to the Financial Times, the top three independent commodity traders increased their delivered LNG volumes by almost 40% to 31 mt in 2018, taking market share from traditional participants such as national oil companies and major integrated oil and gas companies.

In the LNG shipping spot market, tri-fuel diesel electric (“TFDE”) headline rates, as reported by Clarksons, averaged $89,000 per day in 2018, a 93% increase on 2017 levels. Headline TFDE rates rose significantly in the fourth quarter of 2018 and reached all-time highs of $190,000 per day in November 2018 following a marked decrease in spot ship availability. Average headline TFDE rates in the fourth quarter of 2018 were $150,000 per day. Headline rates for steam propulsion (“Steam”) vessels also reached multi-year highs of $98,000 per day in late 2018. In recent weeks however, relatively mild winter weather and ample inventory levels in key Asian markets have resulted in falling Asian LNG prices, reducing the incentive to move LNG cargoes from the Atlantic to the Pacific Basin and resulting in a seasonal rise in prompt vessel availability and falling spot rates. Headline TFDE spot rates are currently assessed at $60,000 per day. Notwithstanding this recent fall and the likelihood of continued seasonality in the spring shoulder months, we continue to believe that the medium-term outlook for spot rates through 2019 and 2020 is positive given supportive LNG commodity fundamentals and LNG shipping supply and demand. However, spot rates may be prone to further periods of seasonality and volatility similar to that seen in 2018.

During 2018 there was a significant increase in term chartering activity. Based on Poten data, charters between 181 days to seven years duration increased to 19% of total fixtures in 2018, from 5% in 2017. Our expectation of structural tightness in the LNG carrier market, combined with increasing spot vessel availability, could result in this trend continuing in 2019 and beyond.

According to Poten, there were 61 orders for dedicated LNG carrier newbuilds in 2018, an all-time high. The orderbook now totals 105 dedicated LNG carriers (>100,000 cbm), of which 63% are backed by long-term contracts. The positive outlook for LNG commodity and LNG shipping markets, as well as historically low newbuild prices, resulted in both existing LNG carrier owners and new entrants ordering new vessels. Based on 2018 newbuilding orders and current forecasts of LNG supply growth, we now believe that the LNG shipping market is heading towards a balanced state early next decade. As such, the requirement for additional shipping capacity in this period has now been largely addressed. This implies that newbuilding order activity in 2019 needs to slow relative to 2018 levels in order to reduce the risk of vessel oversupply.
15.02.2019 kl 10:17 3316

Hvis man tror på teknisk analyse,ser man helt klart en omvendt hode skulder med halslinje 11,10 og potensial opp mot 12,60
15.02.2019 kl 12:47 3259

Hadde forventet nedgang i dag, så må si utviklingen i dag kom som en positiv overraskelse.
Er per nå en ny bullish harami i daily chartet og ser tendenser til at det snur i weekly. Det er første gang siden den begynte å falle i Oktober.

Vet det er kaldere i Kina nå, men er ventet å være forbipasserende. Ellers har jeg lest at årets El-nino ikke er like ille som tidligere år.
Spennende å se om ratene skulle snu etter Kinesisk nyttår. Var interessant å lese at til tross for El-nino, så satte de ny rekord på import av LNG.
Hva vil det si for ratenivået i sept når etterspørselen vil være mye høyere..?

Stenger FLNG over 11.40 i dag så er jeg happy. 11.35 ok.
15.02.2019 kl 12:53 3254

Rater fra Fearnley uke 7:

SPOT MARKET (usd/day) This week Last week Low2019 High 2019
East of Suez 155-165'cbm 49 000 52 500 49 000 100 000
West of Suez 155-165'cbm 53 000 58 000 53 000 100 000
1 yr TC 155-165'cbm 79 000 84 000 79 000 92 500
15.02.2019 kl 21:38 3167

Tenkte meg dette kom til å bli tema. Er godt skipene Flex skal ha er booket til lave priser. For vår del kan denne fusjonen bare komme.

As storm brews over merger with HHI, DSME wins LNGC order

Shipowners should also be concerned about the merger, said Mr Park, because the deal would create “obvious cartels for raising newbuilding prices. As the merger deal will be the monopolistic and oligopolistic behaviour harming fair competition, it seems that shipowners claim this violation to the international anti-trust authorities.”


Det er nesten merkelig hvor svake LNG-aksjene er for tiden. I USA er GasLog og Golar i nærheten av laveste nivå på 12-måneder. Det må trolig være stor usikkerhet om fremtidige rater som gjør disse aksjene blytunge.

Faktisk virker det som det er tiden er mer positivitet innenfor LPG-frakt til tross for at ratene der er i nærheten av all time low. Hvem ville trodd det for noen få måneder siden?
15.02.2019 kl 22:53 3114

Som med bulk og tank osv. Shipping er lavt priset
15.02.2019 kl 23:45 3075

Er kanskje mange som er redd det er der man merker handelskrigen først om det skulle skeie helt ut.
Det som er med LNG er at kineserne lar ikke innbyggerne sine få en ny gas shortage selv om de ikke handler med USA. De vil bare importere fra AUS, Qatar eller noen andre. Kortere distanser, men forstatt penger i kassa på spotmarkedet.
16.02.2019 kl 09:00 2965

Man bør vel ikke klage på LNG-aksjer i dag når vi igår erfarte en kursoppgang på over 4% for FLNG. Nå går det tydeligvis rette veien, dvs OPP.

Flex vil neppe stige mye dersom ingen andre LNG-selskap begynner å bevege på seg. Hele sentimentet virker for tiden svakt.
16.02.2019 kl 12:26 2835

Tror du de som kjøpte Flex på 15 når markedet var sterkt gjorde en bra deal? (På kort sikt) De ligger i minus.
Når markedet er sterkt, er det for sent vil jeg tro.
16.02.2019 kl 15:37 2710

Flex er helt klart et av selskapene med størst potensial på Oslo Børs.
Med vridning bort fra Kullkraft, vil etterspørsel overgå kapasitet på frakt av LNG i løpet av neste halvår.


Hei allesammen. Er det noen som har eksakte tall på OPEX pr dag for skipene til Flex? Da tenker jeg på lønninger, forsikring, administrasjon, reprasjoner, div. gebyrer ,og drivstoff kostnader. Avskrivninger og nedskrivninger skal ikke være med i regnestykket(ettersom det gir lite mening). Vet dette har vært oppe til diskusjon før, og da var det noen som mente 40000 $ per dag per skip. Sjølv synes jeg det høres litt mye ut fordi at lønninger og drivstoff kostnader (etter det jeg har skjønt) er omtrent det dyreste og de 2 beløpene blir vel neppe mer enn 10 000 $ per dag per skip. Selv tenker jeg at det er omkring 20 000 $ dagen per dag per skip. Har prøvd å lete litt i presentasjoner og rapporter osv, men har ikke funnet så mye i Flex. For dynagas Ltd. mener jeg at de hadde omkring 10 000$ dagen for Steam, noe som virker veldig lavt. Mulig jeg husker feil. I Q1 presentajsonen til Gaslog sto det OPEX på ca. 17 000$ dagen per skip. De har jo relavtivt mange moderne skip(ikke så mye MEGI, men TFDE) Da er vel Opex på flex sine skip noe rundt der også? Antakeligvis helt feil, men derfor jeg spør dere. Opex har tross alt mye å si for inntjening i dårlige tider.

Har tenkt til å regne litt på fremtidig inntjening. Da er det fordel å vite kostnader, spesielt ved dårlige rater. Selv syns jeg at flex virker ganske greit priset på dagens nivåer, mtp NAV og forward EV/EBITDA(selv med dårlige rater og 40000$ dagen OPEX). Men greit å vite kostnader før man eventuelt begynner å estimere snittrater og inntjening.

Takker for alle svar.

EDIT: Ok, nå fant jeg det. I Q4 2017 presentasjonen står det OPEX 13 000 $ dagen per skip! Men... Samlet "Cash break even per day" er 41 000$ ( OPEX + Debt service expenses). "Debt service costs per day per vessel" er det da kun renter eller renter + nedbetaling? Hvis dette er renter + nedbetaling så vil vel denne utgiftsposten forsvinne etterhvert, hvis jeg ikke tar feil? Og hvis nedbetaling er medregnet så burde ikke dette regnes som en ren utgift ettersom det vil øke egenkapitalandelen. Noen som vet?
Redigert 16.02.2019 kl 18:16 Du må logge inn for å svare

Bra det. Løsning på handelskrigen mellom Kina og USA kommer til å bli den viktigste kursdriveren fremover + bedre rater, men definivt bra at EU ønsker mere lng fra US -EU.
16.02.2019 kl 18:24 2534

Med Kina i førersetet så bygges nye kullkraftverk i stor stil. Det finnes enorme ressurser på kull som de ønsker å benytte
Det latterlige er dog at nasjoner som Kina er fritatt for CO2 reduksjon frem til 2030 iht Paris avtalen.
Så vil være ekstra forsiktig med å ha alt for stor tro på av Kina, India m/fl kommer til å erstatte kullkraft med LNG, og/eller LPG
Om man googler på kullkraft så er det vel flere artikler om dette siste år.
Kina tror jeg foreløpig overser problemer med forurensing i litt for stor grad, selv hjemme, og de skal uansett bli vanskelige å få til noe klima forhandlingsbord videre også.
Det eneste på kort sikt måtte vel bli at de forplikter seg til å importere LPG fra US i en ny handelsavtale
17.02.2019 kl 11:46 7744

Har en følelse av at det vil bli tatt grep fremover mtp. luftkvaliteten i India. Hvor mange av de mest forurensede byene ligger i India? De fleste..

12.5% of Indian deaths due to polluted air: study
New Delhi increasing looks to cleaner liquefied natural gas


Dette i kombinasjon med at kullkraftverkene sliter med lønnsomheten

Fører til:
IEEFA update: India coal plant cancellations are coming faster than expected
Global Coal Plant Tracker shows project pipeline shrinking by 25%

Men kull blir ikke skrinlagt med det første desverre.
17.02.2019 kl 13:06 7678

Det er grader av alt. Oppgangen i LNG forbruket hat vært drevet av Kina og begrensningen for hvor fort det kan går ligger i infrastrukturen. Derfor bygges det importterminaler i stor skala og min teori er at lagringskapasiteten økes også for å kunne være buffer mellom stabilt tilbud og svingende etterspørsel.

Årsaken til omleggingen fra kull til gass er redselen for opprør om forurensningsproblemer ikke tøyles.

Foreløpig er ikke virkningen all verden, men dette kommer sannsynligvis til å fortsette gjennom det neste tiåret og få stor betydning for livskvaliteten i China.

Parallelt jobbes det for mer permanente løsninger også, LNG/LPG er bare en overgangsfase.
18.02.2019 kl 12:36 7523

Indian Oil buys commissioning cargo of LNG for new Ennore terminal

SINGAPORE, Feb 18 (Reuters) - Indian Oil Corp (IOC) bought a commissioning cargo of liquefied natural gas (LNG) for its new Ennore terminal in south India, in a sign that India’s first terminal in the east coast is readying for start-up, three industry sources said on Monday.

State-owned IOC bought a partial LNG cargo for delivery on Feb. 25 from commodities trader Gunvor, the sources said.

It bought the cargo at about $9.50-9.90 per million British thermal units (mmBtu), one of the sources said.

The sources declined to comment as they were not authorised to speak with media due to the commercial sensitivity of the matter.

A Gunvor spokesman said the company does not comment on trading matters, while an IOC spokesman could not immediately be reached for comment.

The 5 million tonnes per annum (mtpa) import facility, sited at Kamarajar port in Thiruvallur district at the outskirts of Chennai, is owned by IndianOil LNG, a joint venture of IOC, private equity fund IDFC Alternatives and ICICI Bank, according to IndianOil LNG’s website.

The Ennore terminal, which will be India’s fifth, is expected to spur industrial growth in the area with the re-gasified LNG to be distributed to power generation plants, fertiliser plants and other industrial units, according to the website.

The gas will also be made available for city gas distribution, including the transport sector, commerce and for use in households, the website states.

Gas from the terminal is expected to be delivered to the Chennai area at the end of the first week of March, the first source said. IOC has yet to finalise a long-term contract to purchase LNG for the Ennore terminal, the source added.

18.02.2019 kl 19:25 7415

Kaifeng, Henan will increase the proportion of natural gas outside the project
2019-02-18 15:21:27 Source: China Power News Network

Recently, the Kaifeng Municipal Government of Henan Province issued a notice on the Kaifeng City Work Plan for Promoting the Transformation and Development of the Energy Industry (2018~2020), clearly clarifying that the proportion of natural gas outside the project will be increased, and the clean energy utilization will be continuously improved, and the West will be realized in 2019. The Pingtai Line of the Second Line of the Gas-East Transmission Line is directly connected to the Kaifeng Natural Gas Outlet Channel.

According to the plan, Kaifeng will continuously improve the gasification level of counties and key towns and villages, encourage natural gas to go to the countryside, and flexibly adopt pipelines and CNG (compressed natural gas) and LNG (liquefied natural gas) gas supply stations to supply natural gas in Kaifeng City. The proportion of the energy structure will be introduced to the specific implementation plan. By 2020, the pipeline natural gas will cover all industrial clusters and more than 60% of townships.
18.02.2019 kl 22:27 7310

LNG carrier newbuilding prices are expected to rise on the back of the merger of Hyundai Heavy Industries (HHI) and Daewoo Shipbuilding & Marine Engineering (DSME), according to GasLog ceo Paul Wogan.

Wogan is anticipating that the combined entity of HHI and DSME may face pressure to increase LNG carrier newbuild prices, as yard capacity is filling up with LNG orders and stretching newbuild completion to 2.5-3 years.

“I think actually certainly having two major players rather than three is probably going to put some pressure on pricing over time,” Wogan said.

“As you see more of this capacity taken, that pushes out when the yards are able to build the ship, and also makes the yards more comfortable. So as they move to three years plus in terms of that order backlog, that again gives them more confidence to push on the pricing,” Wogan explained.

“So I think we'll continue to see that as a factor. And I think you'll continue to see the shipyards pushing the pricing up, albeit probably more incremental than a huge step change at this point,” he added.

Read more: Labour unions plan strike to block HHI-DSME merger

He noted that the rise in LNG carrier newbuild prices is already happening in the market, though they are not as pronounced as GasLog had expected.

“I think part of that reason is that you need other shipping areas to also be ordering at the same time (…) and we haven't seen the big orders from container vessels, et cetera, which we may well have expected. But nevertheless, we've seen a slow increase in the values,” he observed.

Looking beyond 2020, additional shipping capacity will be required if consensus LNG demand and supply forecasts are realised.
Korean yards merger expected to push up LNG newbuild prices: GasLog

Wood Mackenzie has estimated compound annual growth in LNG demand of 6% between 2018 and 2025, and 2019 is anticipated to be the strongest year ever for supply growth with an expected increase of 40 mtpa to 366 mtpa, a 12% increase on 2018.

“Whilst we now believe that the LNG shipping market is heading towards a balanced state early next decade, the long term secular growth of LNG supply and demand mean that, over the medium and long term, GasLog will continue to serve a dynamic and growing industry,” Wogan commented.

19.02.2019 kl 14:30 7139

Blir spennende å se q4 resultatet etter de skyhøye ratene som var i q 4 sesongen. Regner med at kursen snart begynner å bevege seg oppover til den 28 februar og at den skyter videre oppover etter fremleggelse.
20.02.2019 kl 15:22 7014

The LNG industry will see a sea change in the investment outlook in 2019. Projects that have been on the board for some time look likely to receive that all-important final investment decision (FID), unleashing a new wave of industry spending targeted at a growing supply deficit in the mid-2020s, driven primarily by Asian demand.

Confidence is building for good reason.

As covered in this edition of LNG Condensed, Chinese LNG demand is booming and forecast to remain strong through to the 2030s.

While certainly the most important country in the LNG universe in terms of growth, China is not the only shining star. India Oil Corpora tion’s HK Manchanda sees Indian regasification capacity jumping from 30mn mt/yr a year in 2018 to 61.5mn mt/yr by 2023. In Pakistan, the authorities forecast a 30mn mt/yr gas deficit by 2030 and the answer to this gap is – you guessed it – LNG.

These are huge markets which in per capita terms are in fact relatively light gas users. However, they all see gas as the fuel of the future. China and India are massive coal consumers and the quickest and cheapest way to counter air pollution and growing greenhouse gas emissions is to make the switch from coal to gas. In Pakistan, the aim is to switch out the use of fuel oil in power generation with cleaner, cheaper gas.

The potential gas demand in theory at least is as big as India and China’s coal industries, which are the two largest in the world.

In all three of these populous countries, gas transmission and distribution grids are being expanded and new import facilities built. In all three, even in China, domestic gas production cannot keep pace with demand, nor can pipe- line projects.

There are major projects on the table, but they take time, politics and finance to be built. In contrast, a floating storage and regasification unit can be in place in under two years.

Given this burgeoning demand scenario, LNG developers are beginning to rub their hands in anticipation. The supply gap in the early 2020s is widening at some pace, with many analysts now forecasting a global LNG supply deficit of about 65mn mt/yr by 2025.

The message is simple. If you want to be the company to fill it, you had better start building now.

20.02.2019 kl 20:44 6899

Meget interessante nyheter om kullproduksjon. Begynnelsen på slutten?

Glencore moves to cap global coal output after investor pressure on climate change

Australia's largest coal miner Glencore has succumbed to shareholder pressure to take action to address climate change, and announced it will cap its global coal output.
Key points:

Glencore will cap its global thermal and coking coal production at the current level of about 145 million tonnes
The move comes after much global investor pressure, including from major Australian super funds
The company will also review its membership of trade associations, including the Minerals Council of Australia

The Swiss-based resources giant said it would freeze coal production at current levels, and instead focus on commodities including copper, cobalt, nickel, vanadium and zinc, as part of its "global response to the increasing risks posed by climate change".

The company, headed by billionaire Ivan Glasenberg, acquired Rio Tinto's thermal coal business in 2017.

It said it would cap its global thermal and coking coal production at the current level of about 145 million tonnes after holding talks with the Climate Action 100+ initiative.

The group, whose global members collectively manage more than $US32 trillion in assets, includes a number of major Australian superannuation funds such as AMP Capital, AustralianSuper, Cbus, IFM Investors, QSuper and BT Financial Group.
Glencore to meet Paris Agreement targets

Glencore said it would implement recommendations that have been developed by the G20 Task Force on Climate-related Financial Disclosures (TCFD), which aim to help investors understand their financial exposure to climate risk and help companies better disclose this information.

The guidelines, released in June 2017, take into account the Paris Agreement's pledge to keep global warming to below 2 degrees Celsius.

"Glencore recognises the importance of disclosing to investors how the company ensures that material capital expenditure and investments are aligned with the Paris Goals," it said.

"Glencore will continue to disclose the metrics, targets and scenarios we use to assess and manage relevant climate-related risks and opportunities."

This included each material investment in the exploration, acquisition or development of fossil fuel, including thermal and coking coal production.
Glencore is also developing new, longer-term targets based on policy and technological developments that support the Paris goals, and intends to make these public in its 2020 annual report.
Minerals Council of Australia membership under review

Glencore also said it would examine its membership of trade associations to ensure those groups aligned with the Paris climate agreement and Paris goals. These associations include the Minerals Council of

Director of climate and environment at the Australasian Centre for Corporate Responsibility (ACCR), Dan Gocher, said the move by Glencore debunked mining industry lobby groups' claims about the future of coal.

"This announcement demonstrates that Resources Minister Matt Canavan and his fellow coal cheerleaders are wildly out of touch with the investment sector, and it should send shockwaves throughout the Australian coal industry," he said.

Glencore is the largest coal-producing member of the Minerals Council.

"This announcement should bring to an end to the MCA's single-minded coal growth advocacy," he said.
Climate change a major election issue

The Australia Institute said the announcement had major repercussions for Glencore's Australian operations. The miner has invested over $23 billion into Australia since 2008, including in a number of coal mines.

The Institute said coal accounted for 35 per cent of Glencore's total emissions in 2016, and its half-owned Hunter Valley operations produce 69 million tonnes of coal per annum.

"It is a major blow to fossil fuel interests in Australia to have a multinational like Glencore, that has been investing on average $6 million a day, every day for the past 10 years, to make this move," said the Australia Institute's climate and energy program director, Richie Merzian.
He said this week Japanese giant Itochu also announced it was pulling out of coal in the interest of climate change, selling its stake in the Rolleston thermal coal mine in Queensland.

"On both sides of the world, companies are divesting and Australia may be stuck holding lumps of worthless coal," he said. "Come May, climate change will, without doubt, feature heavily in the federal election."

Australian Bureau of Statistics (ABS) data shows coal last year overtook iron ore as the nation's biggest export earner. Australia exported a record $66.2 billion worth of coal last year.

But greater investor and community concern about its environmental impacts has meant new mines often face tougher regulatory hurdles.

The NSW Land and Environment Court earlier this month upheld a decision by the NSW government to block the development of Gloucester Coal's proposed Rocky Hill coking coal mine, because of such concerns.


GasLog og Golar falt videre i kveld. Det samme viser ukesrapporten fra Fearnley at ratene har gjort.

Det var spådd et stramt marked de neste to årene. Da er det selvsagt en stor strek i regningen at vi får mange månedef med rater under b/e. Det ser ut som optimismen/hypen rundt LNG- frakt er i ferd med slukne.
20.02.2019 kl 23:24 6785

TC 1 år for TFDE iht. Fearnley i dag USD 78k/dag er ikke så verst og gir vel forhåpninger om bra rateutvikling i snitt neste 12 mnd på tross av spot nå bare USD 49k/dag (Øst av Suez)/ USD 50k/dag (Vest av Suez). Prisen for nybygg holder seg stabil.

21.02.2019 kl 08:14 6686

Du mener land som Kina reverserer sine investeringer som følger av en varm vinter og går tilbake til kull?

Mener jeg det??

Hva jeg mener er vel forsåvidt irrelevant. Derimot viser aksjekursene, som er ned 20-30% i løpet av kort tid, at markedet har blitt mer skeptiske til LNG-frakt. Så gjenstår det å se om sesongmessige svingninger er den eneste forklaringen på det bratte fallet.

Det jeg imidlertid stiller meg undrende til, er at enkelte later til å tro at shippingratene automatisk vil korrelere med volum gass som blir fraktet. Det hjelper lite om Kina dobler sitt forbruk av gass dersom det allikevel finnes ledig tonnasje til å frakte den. For både LNG og LPG er fraktratene nå langt lavere enn for få år siden til tross for at fraktet volum aldri har vært høyere enn i år.

21.02.2019 kl 10:57 6572

South Korean shipbuilding giant Samsung Heavy Industries said Thursday it won a new order to build four liquefied natural gas (LNG) carriers.
The new LNG carriers are scheduled to be delivered from the shipyard by 30 September 2022.

Med andre ord: nybygg de neste 3,5 år er kjent og det ser da fortsatt ut som flere av de årene vil gi en skvis hva gjelder flåtekapasitet. Dog viktig at vi har en god utvikling når det gjelder FIDs for LNG-supply
21.02.2019 kl 11:05 6570

Fokus fra meg er satt mye på 2 aksjer FLNG og ELK . På Elkem er avkastningen bra allerede og antar at FLNG vil kunne følge på ,men horisonten her setter jeg litt lengre frem før tilsvarende avkastning som i Elkem
21.02.2019 kl 11:14 6553

Kursen faller med ratene. Ratene faller da det er flere selgere enn kjøpere i markedet for øyeblikket selv om volum er høyere. Markedet er i dag langt mer likvid enn tidligere.
Skal man tro projeksjonene så vil forbruk ta igjen og kanskje passere produksjons i kommende år. Dette er trenden,og er det som er understøttende for det fundamentale i FLNG caset. Som i alle aksjer så gjenstår det å se om dette matrealiserer seg og kursmålet kan nåes.

Setter forøvrig pris på dine motforestillinger da forumet ikke trenger flere tråder med kun ett synspunkt. Det er ikke sunt.

Takk for dine synspunkter og hyggelig tilbakemelding.

Jeg må tilstå at jeg ikke helt henger med på resonnementet ditt. Ditt hovedpoeng virker å være at etterspørselen etter gass skal overstige tilbudet. Dette er ikke spådd å skje før rundt 2025. De nærmeste årene er det forventet et stort overskudd av gass i markedet. Dette er imidlertid ikke hoveddriveren dersom man investerer i LNG-frakt. Spørsmålet er om det vil være over- eller underskudd på skip som kan frakte gassen. De neste par årene er det forventet lite ledig tonnasje, noe som forhåpentligvis vil drive ratene oppover. Faren er imidlertid, som blant annet flere av operatørene har meldt i sine kvartalsrapporter, at det nå bestilles for mange nye skip. Shipping-historien forteller at det alltid skjer når utsiktene ser lyse ut.

Forøvrig er jeg trolig mer positiv til LNG-frakt enn det markedet for tiden virker å være :-)
21.02.2019 kl 13:37 6429

Det jeg mener er at det er en vekst innen import og forbruk av LNG som er ventet å ta igjen produksjon av gass. Dette vil være negativt for shipping. Derfor er det viktig at det kommer flere FID' er da slike utbygginger tar tid å ferdigstille. Vi har plenty gass i dag takket være USA sin shale produksjon.
Når det gjelder importen så der den ned i flere asiatiske land y-o-y. Er vel kun Kina som importerer et høyere volum ettersom jeg har lest. Vi ser og at antall laster fra USA til asia er drastisk ned. Dette driver spotprisen ned som en sten fordi antall tonnmil blir mye lavere. I.E mer ledig kapasitet. Amerikansk gass har istedenfor gått en del til Europa. Ikke et sjokk at USA er motstander av NordStream 2 fra Russland og krisen med Ukraina. Er heller ikke bra for Norsk eksport forøvrig.
Gass til asia har primært gått fra Qatar og Australia. Noe av dette er vel solgt videre til europa pga. varm vinter og fulle lager.
Lagerkapasiteten jobbes det med å bygge ut. Vet ikke hvor lang tid dette tar, men vet det dreier seg om gamle oljelager som skulle bygges om? Om jeg ikke husker feil.. Dette vil bidra til å redusere volatiliteten i ratene fremover.
En annen ting som vil være negativt for LNG-shipping er antall nybygg som er bestillt. Heldigvis tar de lengre tid å bygge enn en VLCC f.eks. Skal nevnes at mange av nybyggene som er bestilt vil gå rett på lange kontrakter og ikke ut i spot markedet som Flex hovedsakelig opererer i.
Redigert 21.02.2019 kl 13:38 Du må logge inn for å svare
21.02.2019 kl 14:26 6389

Økningen i LNG demand er ventet større enn enn økning i LNG supply i 2019, og i tllegg vil mye av dette være USA til Asia, så tonnmil øker, så ratene bør bli bra i år.

Når det gjelder nykontraheringer, er det en ledetid på 2,5 år, så det tar litt tid å bygge i hjel markedet.