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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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Friday, 28 June 24
INDIAN POWER STATIONS STOCKED WITH BUMPER COAL SUPPLY AS TRANSPORT WOES EASE - BUSINESS STANDARD
Even as power demand has touched a historic high of 250 gigawatts (Gw) amid sweltering heat this June, India’s power stations are stocked wit ...
Friday, 28 June 24
INDIA'S CY23 COAL USE LARGER THAN NORTH AMERICA, EUROPE COMBINED - THE HINDU
For the first time, India’s coal consumption surpassed that of North America and Europe combined in the calendar year 2023, said Energy Insti ...
Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Althoug ...
Monday, 24 June 24
INDIA'S COAL-BASED POWER DEMAND AT ALL-TIME HIGH, GOVERNMENT SAYS - REUTERS
India’s demand for coal-based power has risen by 7.3% this fiscal year to an all-time high, the government said in a statement on Wednesday.
...
Monday, 24 June 24
CHINA'S COAL INDUSTRY TURNS GREENER THROUGH INNOVATIVE APPROACHES - PEOPLE'S DAILY
At an opencast mine operated by Inner Mongolia Pingzhuang Coal Group Co. Ltd., a subsidiary of CHN Energy Investment Group (CHN Energy), a 14-meter ...
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Showing 11 to 15 news of total 6871 |
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- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Gujarat Sidhee Cement - India
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Kaltim Prima Coal - Indonesia
- Marubeni Corporation - India
- ASAPP Information Group - India
- Jindal Steel & Power Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Independent Power Producers Association of India
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Price Waterhouse Coopers - Russia
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Planning Commission, India
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- Interocean Group of Companies - India
- Coastal Gujarat Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- MS Steel International - UAE
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Vedanta Resources Plc - India
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Georgia Ports Authority, United States
- Minerals Council of Australia
- Agrawal Coal Company - India
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- IHS Mccloskey Coal Group - USA
- Mercator Lines Limited - India
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
- Kohat Cement Company Ltd. - Pakistan
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
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