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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, 20 September 22
CHINA COAL OUTPUT UP 8.1 PCT IN AUGUST - XINHUA
China’s raw coal output posted stable expansion in August, official data showed.
The country produced 370 million tonnes of ra ...
Monday, 19 September 22
BUMA AUSTRALIA AWARDED A$400 MILLION CONTRACT EXTENSION BY BMA FOR GOONYELLA PROJECT
Press Release – PT Delta Dunia Makmur Tbk. (the "Company") announced that its subsidiary, PT Bukit Makmur Mandiri Utama ("BUMA ...
Saturday, 17 September 22
CHINA WARNS COAL COMPANIES AGAINST DUAL CONTRACTS, KEEP PRICES STABLE - REUTERS
China’s state economic planner warned coal companies operating at ports in the Bohai Bay region to comply with their long-term contracts to k ...
Saturday, 17 September 22
IS A GLOBAL RECESSION IMMINENT? - WORLD BANK
Since the beginning of the year, a rapid deterioration of growth prospects coupled with rising inflation and tightening financing conditions, has i ...
Saturday, 17 September 22
FITCH RATINGS REVISES GLOBAL METALS & MINING PRICE ASSUMPTIONS
Fitch Ratings has revised its metals and mining price assumptions reflecting evolving economic growth expectations and demand and supply dynamics.
...
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- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- Kumho Petrochemical, South Korea
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Tamil Nadu electricity Board
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Meenaskhi Energy Private Limited - India
- Jaiprakash Power Ventures ltd
- The University of Queensland
- TeaM Sual Corporation - Philippines
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- Electricity Authority, New Zealand
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Aditya Birla Group - India
- Bharathi Cement Corporation - India
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Electricity Generating Authority of Thailand
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
- Coalindo Energy - Indonesia
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- Siam City Cement - Thailand
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- Planning Commission, India
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Economic Council, Georgia
- Bukit Baiduri Energy - Indonesia
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- San Jose City I Power Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Bhatia International Limited - India
- OPG Power Generation Pvt Ltd - India
- Sical Logistics Limited - India
- Mercator Lines Limited - India
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