We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
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.
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Friday, 02 August 24
COAL MARKET DEVELOPMENTS: FALLING PRICES AMID RECORD-HIGH OUTPUT - WORLD BANK
Coal prices inched up in May (m/m) following an 8 percent decline in 2024Q1. The Australian and South African benchmarks have plummeted more ...
Friday, 26 July 24
FUELEU MARITME IS COMING. IS YOUR CHARTERPARTY READY? - GARD
With less than six months to implementation of FuelEU Maritime in EU and EEA trades, there has been little published advice regarding how to alloca ...
Thursday, 04 July 24
INDIA'S COAL PRODUCTION RISES 14% IN JUNE - PTI
The country’s coal production rose by 14.49% to 84.63 million tonne (MT) in June. The country’s coal output was 73.92 MT in June last f ...
Tuesday, 02 July 24
NTPC CAPTIVE COAL OUTPUT GROWS 15% IN Q1; DESPATCH RISES 17%
State-owned NTPC on Monday reported a 15 per cent year-on-year increase in the production of coal from captives mines to 9.862 metric million tonne ...
Friday, 28 June 24
KOSPO INVITED BIDS FOR 400,000 MT OF MINIMUM 4000 NCV COAL FOR FIVE YEARS
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for total 400,000 MT of Low Calorific Value Coal for 5 years starting from July 2024 until ...
|
|
|
Showing 6 to 10 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Indogreen Group - Indonesia
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Goldman Sachs - Singapore
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Ind-Barath Power Infra Limited - India
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Bharathi Cement Corporation - India
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- Merrill Lynch Commodities Europe
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Savvy Resources Ltd - HongKong
- Videocon Industries ltd - India
- Bhatia International Limited - India
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Lanco Infratech Ltd - India
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- The University of Queensland
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- McConnell Dowell - Australia
- Alfred C Toepfer International GmbH - Germany
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- VISA Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- New Zealand Coal & Carbon
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- Toyota Tsusho Corporation, Japan
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- Australian Coal Association
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Bayan Resources Tbk. - Indonesia
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- Mercuria Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Jindal Steel & Power Ltd - India
- Formosa Plastics Group - Taiwan
- Baramulti Group, Indonesia
- Metalloyd Limited - United Kingdom
|
| |
| |
|
