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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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Tuesday, 23 May 23
INDIA: COAL OUTPUT UP 8.9%, SUPPLY RISES 11.7% IN APRIL - FINANCIAL EXPRESS
India’s coal production jumped 8.85% to 73.14 million tonne (MT) in April 2023 and the total coal despatch during the month went up 11.66% to ...
Tuesday, 23 May 23
CHINA COAL OUTPUT UP 4.5 PCT IN APRIL - XINHUA
China’s raw coal output posted stable expansion in April, official data showed.
The country produced 380 million tonnes of raw ...
Saturday, 20 May 23
NON-OPEC OIL SUPPLY DEVELOPMENT - OPEC
In 2022, non-OPEC supply is estimated to have increased by 1.9 mb/d y-o-y. Out of this, US liquids production increased by 1.2 mb/d, mainly on the ...
Saturday, 20 May 23
GLOBAL COAL TRADE HAS REALLY PICKED UP PACE IN RECENT MONTHS, NOW FULLY BACK TO PRE-COVID LEVELS - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels. In Jan-Apr 2023, total global seaborne coa ...
Saturday, 20 May 23
MARKET INSIGHT - INTERMODAL
India is one of the world's largest coal producers and one of the world's largest importers of coal. The country uses coal mainly for power ...
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Showing 101 to 105 news of total 6871 |
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- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Parliament of New Zealand
- Directorate Of Revenue Intelligence - India
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Kartika Selabumi Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Planning Commission, India
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Australian Commodity Traders Exchange
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Minerals Council of Australia
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Sidhee Cement - India
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Maharashtra Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Maheswari Brothers Coal Limited - India
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- IEA Clean Coal Centre - UK
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- White Energy Company Limited
- Chamber of Mines of South Africa
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- Goldman Sachs - Singapore
- Siam City Cement PLC, Thailand
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- Star Paper Mills Limited - India
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- Standard Chartered Bank - UAE
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- Economic Council, Georgia
- Anglo American - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
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