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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, 13 January 15
Q2 CFR SOUTH CHINA COAL SWAP DECLINED 8.66% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined by US$ 3.48 (-5.73%) month over month and US$ 2.35 (-3.94%) week ...
Tuesday, 13 January 15
Q1' 2015 RICHARDS BAY COAL SWAP SLIGHTLY HIGHER THAN Q2 & Q4 2015 SWAPS
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 7.21 ...
Monday, 12 January 15
COAL: LOW PRICES ARE EXPECTED TO DRIVE A SUPPLY-DRIVEN RECOVERY IN THE MEDIUM TERM - SGX
COALspot.com: Thermal coal prices dropped to six-year lows in 2014 driven by persistent oversupply, SGX says in its “ Commodities 2014 - A ye ...
Monday, 12 January 15
FREIGHT MARKET: 2015 FLEET SUPPLY GROWTH IS EXPECTED TO REMAIN SLIGHTLY AHEAD OF CARGO GROWTH - SGX
COALspot.com: The dry bulk freight market was forced to digest a number of negatives in 2014 leading the Baltic Dry Index to fall 66% through the y ...
Monday, 12 January 15
SHIPPING - CHALLENGES AND RESOLUTIONS - EVA TZIMA
Last year has without a doubt been another challenging one both for both our industry and our country. As Greece is currently dominated by election ...
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- Trasteel International SA, Italy
- Samtan Co., Ltd - South Korea
- Rashtriya Ispat Nigam Limited - India
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Sindya Power Generating Company Private Ltd
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Oldendorff Carriers - Singapore
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- PTC India Limited - India
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Economic Council, Georgia
- Intertek Mineral Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Bangladesh Power Developement Board
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Interocean Group of Companies - India
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Sojitz Corporation - Japan
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Posco Energy - South Korea
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- Mercator Lines Limited - India
- Marubeni Corporation - India
- The University of Queensland
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- Asmin Koalindo Tuhup - Indonesia
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- South Luzon Thermal Energy Corporation
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Savvy Resources Ltd - HongKong
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
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