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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, 14 January 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
In Oil we trust! The Barrel price has declined by almost a third in comparison to the 2014 January and has being on the downhill since early last s ...
Wednesday, 14 January 15
COMMODITIES AREN'T PRIMED FOR A REBOUND DURING 2015: SHIPPING COULD BENEFIT FROM LOWER PRICES - ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In the recent past, higher commodity prices were driven by an increase in demand from developing countries, which spelled good news for ship owners ...
Wednesday, 14 January 15
SUB-BIT FOB INDONESIA COAL SWAP FOR Q1 DELIVERY CLOSED AT US$ 46.97 PMT
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 declined month on month and week over week.
The Q1 swap has fell US$ 1.53 (-3.15 ...
Wednesday, 14 January 15
Q4' 15 FOB NEWCASTLE COAL SWAP CLOSED 4.51% LOWER COMPARED TO Q1' 15 PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.56 per MT (-3.0%) month over month and US$ 1.03 (-2.0%) week ove ...
Tuesday, 13 January 15
MORE PITFALLS FOR OWNERS LOOKING TO TERMINATE FOR UNPAID HIRE - INCE & CO
KNOWLEDGE TO ELEVATE
It is a debatable point whether or not the obligation to pay hire under a time charter is a condition of the contract or ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Madhucon Powers Ltd - India
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- Mercator Lines Limited - India
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Central Java Power - Indonesia
- Economic Council, Georgia
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Sindya Power Generating Company Private Ltd
- Posco Energy - South Korea
- Baramulti Group, Indonesia
- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- Australian Coal Association
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- Makarim & Taira - Indonesia
- Maheswari Brothers Coal Limited - India
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- The University of Queensland
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- White Energy Company Limited
- The Treasury - Australian Government
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- San Jose City I Power Corp, Philippines
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