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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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Thursday, 26 January 23
AUSTRALIA'S CORONADO GLOBAL SEES COAL PRICES RISING ON RESUMING CHINA IMPORTS - REUTERS
Australia’s Coronado Global Resources said on Tuesday resuming metallurgical coal imports to China would likely push sea-borne coal prices hi ...
Monday, 23 January 23
CHINA'S MAJOR COAL-PRODUCING PROVINCE ACCELERATES DIGITAL TRANSFORMATION - XINHUA
At Chindata Group’s big-data industrial park in Lingqiu County of Datong City, hundreds of thousands of servers are running round-the-clock t ...
Monday, 23 January 23
CHINA'S COAL-RICH PROVINCE SEES COAL PRODUCTION INCREASE IN 2022 - XINHUA
North China’s coal-rich province of Shanxi saw its coal production hit 1.31 billion tonnes in 2022, up 8.7 percent year on year, local author ...
Wednesday, 18 January 23
MARKET INSIGHT - INTERMODAL
From Feb 5, another price cap will be introduced to Russian fuels and oil products, adding to the one for crude oil, already in place from Dec. 3. ...
Tuesday, 17 January 23
FRAUD IS THE BIGGEST THREAT TO CARGO LOSSES - TT CLUB
The almost exclusive use of online facilities to process business transactions allows a myriad of fraudulent pursuits to find opportunities within ...
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- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Larsen & Toubro Limited - India
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Central Electricity Authority - India
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- London Commodity Brokers - England
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Price Waterhouse Coopers - Russia
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- Planning Commission, India
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- Lanco Infratech Ltd - India
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Banpu Public Company Limited - Thailand
- PTC India Limited - India
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Posco Energy - South Korea
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- McConnell Dowell - Australia
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Tamil Nadu electricity Board
- White Energy Company Limited
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tata Chemicals Ltd - India
- Australian Coal Association
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- Goldman Sachs - Singapore
- Altura Mining Limited, Indonesia
- Bulk Trading Sa - Switzerland
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- The University of Queensland
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- Eastern Coal Council - USA
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- Vizag Seaport Private Limited - India
- The State Trading Corporation of India Ltd
- Maharashtra Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
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