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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, 22 November 23
INDIA: GOVERNMENT PLANS 1.4 BILLION TONNE COAL OUTPUT BY 2027 - LIVEMINT
The Union coal ministry on Monday announced plans to increase India’s coal production to 1.404 billion tonne by 2027, with an eye to further ...
Wednesday, 22 November 23
OBLIGATION. INDONESIA AIMS TO START COLLECTING LEVIES FROM COAL MINERS IN JANUARY - REUTERS
Indonesia plans to start collecting levies from coal miners in January to be used to compensate miners who sell coal to the state utility at lower ...
Tuesday, 21 November 23
INDIAN COAL POWER PLANTS’ CAPACITY UTILISATION WILL IMPROVE TO 65% THIS FISCAL: - CRISIL
Coal-based thermal power units’ plant load factor (PLF) or capacity utilisation will improve to 65 percent in the current fiscal year despite ...
Tuesday, 14 November 23
CAPITAL PRODUCT PARTNERS L.P. ANNOUNCES TRANSFORMATIVE TRANSACTION INCLUDING THE ACQUISITION OF 11 NEWBUILD LNG CARRIERS FOR $3.1 BILLION
Capital Product Partners L.P. announced that it has entered into an umbrella agreement (the “Umbrella Agreement”) with Capital Maritime ...
Tuesday, 14 November 23
COAL INDIA BEATS Q2 PROFIT VIEW ON HIGH POWER DEMAND AMID WEAK MONSOON - REUTERS
Coal India on Friday reported better-than-expected second-quarter profit, helped by high power demand and boosted production amid a weak monsoon.
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- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Commonwealth Bank - Australia
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- The University of Queensland
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- Planning Commission, India
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- White Energy Company Limited
- Xindia Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
- Australian Coal Association
- Samtan Co., Ltd - South Korea
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- Electricity Authority, New Zealand
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Independent Power Producers Association of India
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Mercator Lines Limited - India
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Kideco Jaya Agung - Indonesia
- Ambuja Cements Ltd - India
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- Eastern Coal Council - USA
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Sakthi Sugars Limited - India
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- GAC Shipping (India) Pvt Ltd
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- Formosa Plastics Group - Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- McConnell Dowell - Australia
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Energy Link Ltd, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
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