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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 January 15
INDIA TO SURPASS THE UNITED STATES AND BECOME THE SECOND-LARGEST COAL CONSUMER IN THE WORLD BY 2019 - IMF
COALspot.com: In 2013, coal added more primary energy than any other fuel and was the fastest-growing fossil fuel, enhancing its position as the se ...
Tuesday, 20 January 15
INDONESIAN COAL OUTPUT SEEN RISING, DESPITE FALL IN ITS PRICE
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 declined month on month and week over week, but Indonesian Coal Output Seen Rising. T ...
Tuesday, 20 January 15
NEWCASTLE COAL SWAP FOR Q1' 2015 DELIVERY DECLINED 2.83% M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery declined US$ 1.45 per MT (-2.83%) month over month and US$ 0.50 (-0.99%) we ...
Monday, 19 January 15
HBA FALL TO FRESH LOWS; COAL OVERSUPPLY WILL CONTINUE TO PUSH PRICE DOWN
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 63.84. T ...
Monday, 19 January 15
CFR SOUTH CHINA COAL SWAPS REMAIN WEAK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 3.37 (-5.63%) per MT month over month and US$ 0.74 (-1.29%) ...
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- Bhushan Steel Limited - India
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Siam City Cement PLC, Thailand
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Australian Commodity Traders Exchange
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Australian Coal Association
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- GMR Energy Limited - India
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- PTC India Limited - India
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Lanco Infratech Ltd - India
- Planning Commission, India
- Indogreen Group - Indonesia
- Tamil Nadu electricity Board
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Minerals Council of Australia
- Ambuja Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- MS Steel International - UAE
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- Sarangani Energy Corporation, Philippines
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- Essar Steel Hazira Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Posco Energy - South Korea
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
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