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Thursday, 15 January 15
LOW CASH COSTS, GOOD LIQUIDITY HELP ASIAN OIL COMPANIES IN PRICE ROUT - FITCH
 Fitch Ratings says that rated oil and gas production companies in Asia can comfortably operate under low oil prices for some time given their generally low cash production costs and strong liquidity. Fitch expects companies to further reduce capex if oil prices remain at current levels for a longer period.
Fitch further noted that, the fall of oil prices below USD50 per barrel is hurting cash generation and affecting investment decisions of companies in the sector. However, the impact on operating cash generation varies across Fitch-rated companies. South-east Asian companies, such as PTT Public Company Limited that produce more gas (60% or more of total production), will be less affected immediately compared with their north and south Asian counterparts that are more liquids-heavy. Liquids at companies like Petrochina, CNOOC, Sinopec, Oil India Ltd and MIE Holdings Corporation account for over 70% of total production in barrels of oil equivalent (boe) terms. Companies that hedged the prices of part of their oil production benefited from the protection in 2014, but they are likely to be exposed to market prices in 2015 because these types of hedges typically do not cover long periods.
Low cash production costs and the largely conventional upstream projects of the rated Asian oil companies provide them with additional flexibility in today's low oil price environment, said Fitch. While all-in costs (cash production costs plus depreciation, depletion and amortisation, or DD&A) are important in the long run, the relatively longer production lives of conventional oil and gas wells provide additional capex flexibility during periods of low hydrocarbon prices. Lifting costs in US dollars per boe are typically in the teens for the rated companies in Asia. Lower production tax requirements stemming from low realised prices, especially in China, also reduce the net impact of the oil price rout on operating cash generation. Companies are also looking to reduce opex, which can squeeze margins of oil field services companies.
Over the longer term though, with all-in costs exceeding USD35/boe for the rated Asian names, the economic viability of projects will be impaired if there is no meaningful increase in oil prices. At current prices, we expect certain high-cost projects to be delayed. These could include ventures in the Canadian oil sands and certain enhanced oil recovery projects on mature-depleting fields in Asia. Sponsor companies could also delay final investment decisions on some large projects with long lead times, such as some green field LNG projects, to preserve cash reserves.
Capex flexibility also varies across the rated companies. CNOOC and PTT have relatively low developed reserve lives of around four years, which gives them less flexibility to curtail development capex for a long period. The state-owned companies are unlikely to cut domestic capex drastically because they are mandated by states to raise production to supply their growing economies. In addition, PTT has lagged considerably behind its Asian peers in reserve replacement, with several large acquisitions not yet adding to proved reserves. For most of the other rated oil producers, though, reserve replacement has been robust (near 100% or above) in recent years, adding further to their flexibility. We also see the prospect of reserve write-downs for some companies if oil prices do not meaningfully improve by the time reserve reports are updated over the next few months.
Rated Asian oil companies, especially the state-owned ones, have very strong balance sheets, with low financial leverage and substantial cash balances. We expect these companies to have good financial flexibility arising from their good liquidity (large cash balances and strong access to capital). In India, we expect the government to reduce the substantial discounts (USD56/barrel) the two state-controlled upstream companies, Oil India and ONGC, have to provide to refiners, improving their cash margins under low oil prices. Malaysia's PETRONAS has a very strong balance sheet. However, the high dividends required by the Malaysian government remains a challenge, although the company is pushing to lower this burden.
According to Fitch, Fitch is also expect cash-rich companies to take advantage of attractive M&A opportunities, although their approach is likely to be measured to ensure their cash balances remain strong to deal with the uncertain oil price outlook. Asian companies are likely to focus on mid-sized assets that are producing or close to production that put less stress on their balance sheets.
Smaller companies like MIE of China have less financial flexibility. While MIE's lifting costs of around USD10/boe are low, it has relatively weaker access to funding than its larger peers, especially when oil prices are low. However, MIE's cash on hand at end-September 2014 (plus expected proceeds in 4Q14 from some asset disposals) and unutilised credit lines provide adequate short-term liquidity, while its major debt maturities are several years away.
Our approach with oil and gas companies is to rate through the cycle, Fitch says in its latest analysis report. While strong production, weak demand growth and high inventory levels put significant near-term pressure on oil prices, high global marginal production costs and capex cuts leading to reduced production should over time result in a more balanced market that supports higher prices for oil. While low oil prices and high capex requirements will dent the credit metrics of Asian oil producers, ratings of many of these companies, especially the state-owned companies whose ratings benefit from state linkages, remain resilient.
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Wednesday, 31 January 24
CHINA'S INNER MONGOLIA COAL OUTPUT HIT 1.21B TONS IN 2023 - XINHUA
North China’s Inner Mongolia autonomous region churned out 1.21 billion tons of coal in 2023 as it strives to guarantee the country’s e ...
Wednesday, 31 January 24
GAS EXPORTS COST U.S. CONSUMERS MORE THAN $100 BILLION OVER 16-MONTH PERIOD - IEEFA
Limited Demand Growth Could Dampen the Dry Bulk Market in the Coming Months BIMCOStarting in late 2021—before its invasion of Ukraine—R ...
Tuesday, 30 January 24
LIMITED DEMAND GROWTH COULD DAMPEN THE DRY BULK MARKET IN THE COMING MONTHS - BIMCO
Demand
In our base scenario, we expect cargo demand to grow by 0-1% in 2024 and 0.5-1.5% in 2025. This is a 0.5 percentage point reduction for ...
Friday, 26 January 24
RED SEA DIVERSIONS ADD NEARLY A MILLION DOLLARS PER VOYAGE TO SHIPPING COSTS WHILE DOUBLING TRANSIT TIME - LSEG
The incremental costs of diverting a tanker from Asia to NW Europe via the Cape of Good Hope is accounting for an extra $932,905 USD per voyage whi ...
Friday, 26 January 24
HARD COAL GUARDIAN ANGEL OF THE ENERGY SUPPLY - GERMANY COAL IMPORTERS ASSOCIATION
- No security of supply without hard coal
- The Substitute Power Plant Provision Act (EKBG) must be extended
- Higher grid fees due to the ...
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- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- Bangladesh Power Developement Board
- Latin American Coal - Colombia
- Aditya Birla Group - India
- Eastern Coal Council - USA
- Uttam Galva Steels Limited - India
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- White Energy Company Limited
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- Ceylon Electricity Board - Sri Lanka
- SN Aboitiz Power Inc, Philippines
- Orica Mining Services - Indonesia
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- GMR Energy Limited - India
- London Commodity Brokers - England
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Iligan Light & Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- The University of Queensland
- Central Java Power - Indonesia
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Australian Coal Association
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- PetroVietnam Power Coal Import and Supply Company
- CIMB Investment Bank - Malaysia
- McConnell Dowell - Australia
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
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