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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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Wednesday, 12 June 24
CHINA ACCOUNTS FOR 16.3% OF AUSTRALIA'S COAL EXPORTS, FOLLOWED BY INDIA 14.4% - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels says Banchero Costa in its latest report.
...
Wednesday, 12 June 24
LNG NEWBUILDING VALUES AT RECORD HIGH: 78 NEWBUILD ORDERS PLACED IN 2024, DOUBLING 2023 - VESON NAUTICAL
The number of LNG newbuilding orders have more than doubled from the same period last year where 34 orders were placed, compared to 78 in the first ...
Monday, 10 June 24
CHINA'S MAY COAL IMPORTS RISE 11% ON LOWER DOMESTIC OUTPUT - REUTERS
China’s imports of coal rose 11% in May from a year earlier, customs data and Reuters records showed on Friday, as lower domestic output this ...
Tuesday, 04 June 24
HOW DO WESTERN SANCTIONS ON RUSSIA IMPACT THE GLOBAL METALS, MINING AND COAL MARKETS - WOOD MACKENZIE
The geopolitical landscape for Russia, as a major supplier of various commodities, has undergone a dramatic transformation since the invasion of Uk ...
Friday, 22 March 24
CASE STUDY: DANGERS OF COAL CARGO - SKULD
Recently, a bulk cargo vessel carrying coal from South Africa to Singapore suffered a fatal accident, resulting in the deaths of three crew members ...
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Showing 21 to 25 news of total 6871 |
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- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- GAC Shipping (India) Pvt Ltd
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Alfred C Toepfer International GmbH - Germany
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Planning Commission, India
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Rashtriya Ispat Nigam Limited - India
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Coastal Gujarat Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Larsen & Toubro Limited - India
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Australian Coal Association
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Carbofer General Trading SA - India
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- Electricity Generating Authority of Thailand
- Global Business Power Corporation, Philippines
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- Indogreen Group - Indonesia
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Goldman Sachs - Singapore
- Ind-Barath Power Infra Limited - India
- Central Java Power - Indonesia
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Jaiprakash Power Ventures ltd
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
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