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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, 21 January 15
PANAMAX MARKET MOVED SIDEWAYS OVERALL LAST WEEK - INTERMODAL
COALspot.com: The positive sentiment in which the week prior ended carried on through-out last week as well, the end of which marked the first posi ...
Wednesday, 21 January 15
SHIFT IN INTERNATIONAL COAL TRADE TO THE PACIFIC BASIN WILL CONTINUE - IMF
COALspot.com: The shift in international coal trade to the Pacific Basin will continue, IMF said in its latest Medium-Term Coal Market Report.
...
Wednesday, 21 January 15
MARKET INSIGHT - VASSILIS LOGOTHETIS, INTERMODAL
The World Bank has lowered its forecast for global growth in 2015 to 3% down from its previous level of 3.4% amid rising concerns over the economic ...
Wednesday, 21 January 15
THERMAL COAL PRICE OUTLOOK DEPENDENT ON INDIAN IMPORT DEMAND - MATTHEW BOYLE, CRU
COALspot.com: Supply and demand side developments in India will be an important determinant of future market dynamics and prices for thermal coal a ...
Wednesday, 21 January 15
PORT OF NEWCASTLE COAL EXPORTS JUMP 16.19% ON MONTH TO 15.80 MIL MT IN DECEMBER' 14
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.136 billi ...
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- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
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- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- AsiaOL BioFuels Corp., Philippines
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- Indian Energy Exchange, India
- Trasteel International SA, Italy
- Indonesian Coal Mining Association
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
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- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Mjunction Services Limited - India
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Price Waterhouse Coopers - Russia
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Formosa Plastics Group - Taiwan
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- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Therma Luzon, Inc, Philippines
- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- Central Java Power - Indonesia
- Bhatia International Limited - India
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Australian Coal Association
- Cement Manufacturers Association - India
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Sidhee Cement - India
- Planning Commission, India
- New Zealand Coal & Carbon
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- London Commodity Brokers - England
- Wood Mackenzie - Singapore
- South Luzon Thermal Energy Corporation
- Sindya Power Generating Company Private Ltd
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- Videocon Industries ltd - India
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- SN Aboitiz Power Inc, Philippines
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Kapuas Tunggal Persada - Indonesia
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