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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, 22 December 22
RUSSIAN OIL EXPORTS CRATER BY 54% IN THE FIRST FULL WEEK OF THE EU'S EMBARGO AMID A SHORTAGE OF TANKERS WILLING TO CARRY CARGOES - BUSINESS INSIDER
Since the European Union imposed its seaborne crude sanctions, Russian oil exports have tumbled by more than half, according to data compiled by Bl ...
Thursday, 22 December 22
CHINA TIGHTENS VERIFICATION OF SHIPS’ ENERGY CONSUMPTION DATA - GARD
From 22 December 2022, ships trading to Chinese ports must record their energy consumption data in accordance with the requirements of their Ship E ...
Thursday, 22 December 22
AN OVERVIEW OF THE LNG MARKET - VESSELSVALUE
LNG values have continued to strengthen, spurred by skyrocketing earnings that have surpassed last year’s record breaking peaks. In November, ...
Thursday, 22 December 22
COKING COAL SLUMPS AS TALKS ON AUSTRALIA-CHINA TRADE RIFT LOOM - REUTERS
Chinese coking coal futures dropped more than 3 per cent on Tuesday (Dec 20), extending losses, as supply of the steelmaking input might increase i ...
Thursday, 22 December 22
COAL AND GAS PRICE CAPS MAY COMPOUND POLITICAL RISK FOR AUSTRALIAN CORPORATES - FITCH RATINGS
Australia’s introduction of temporary price caps on domestic sales of gas and coal used for electricity generation will probably have limited ...
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Showing 161 to 165 news of total 6871 |
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- PowerSource Philippines DevCo
- Global Green Power PLC Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Global Coal Blending Company Limited - Australia
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Madhucon Powers Ltd - India
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Bahari Cakrawala Sebuku - Indonesia
- Kideco Jaya Agung - Indonesia
- Deloitte Consulting - India
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Business Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Independent Power Producers Association of India
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement PLC, Thailand
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- Gujarat Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- Kepco SPC Power Corporation, Philippines
- Edison Trading Spa - Italy
- The University of Queensland
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Chamber of Mines of South Africa
- GVK Power & Infra Limited - India
- Trasteel International SA, Italy
- London Commodity Brokers - England
- Posco Energy - South Korea
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Merrill Lynch Commodities Europe
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- European Bulk Services B.V. - Netherlands
- Kumho Petrochemical, South Korea
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- Metalloyd Limited - United Kingdom
- Electricity Authority, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- VISA Power Limited - India
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Central Electricity Authority - India
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- Medco Energi Mining Internasional
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Dalmia Cement Bharat India
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Samtan Co., Ltd - South Korea
- Planning Commission, India
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