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Thursday, 22 December 22
COAL AND GAS PRICE CAPS MAY COMPOUND POLITICAL RISK FOR AUSTRALIAN CORPORATES - FITCH RATINGS
 Australia’s introduction of temporary price caps on domestic sales of gas and coal used for electricity generation will probably have limited direct near-term credit impact for energy-sector issuers rated by Fitch Ratings, according to the agency. However, the caps highlight that energy companies face mounting political risks that could influence investor perceptions of the sector and capex plans over the long term.
The caps have been proposed for 12 months, but even if they are extended, the direct impact should generally be limited if prices for coal and gas fall over the coming years, in line with Fitch’s base-case assumptions.
The near-term impact on Australian thermal coal miners’ financial profiles will be further mitigated, as typically around 80% of the thermal coal produced in the country is exported, and therefore is not subject to the cap.
The natural gas sector will be more exposed, as domestic demand accounts for a larger share of supply. Santos (BBB/Stable) and Woodside Energy Group (BBB+/Stable) are large suppliers of gas to the domestic market. Such sales account for more than 40% of Santos’s gas production, but we estimate that only around 15% of total production goes to the east coast markets that are exposed to the price cap.
Woodside’s domestic gas sales, including pipeline gas from the NWS Project, Pluto and Wheatstone, account for less than 6% of its gas production, with the rest exported as LNG. For both companies, most gas is already produced under long-term contracts, which will be unaffected by the caps, limiting the near-term impact. The proportion of output affected could nonetheless rise over time if the caps are extended beyond 12 months.
The prevalence of long-term supply contracts will also reduce the impact of the caps for most domestic electricity and gas retailers, including Origin Energy (BBB/Stable). If global energy prices remain high, it is possible that the caps could offer a competitive advantage to some retailers that rely more on short-term supply contracts. That said, the superior sourcing ability and flexibility in contracts should limit downside risks for large retailers. For electricity sales, the highest-cost power generator generally determines the wholesale energy market price, and we anticipate a neutral to marginally positive financial effect for entities like Origin that have flexibility in their generation portfolio.
The price caps will add to a perception that Australia’s mining sector faces mounting political risk, even though we do not believe they will have a major impact on Fitch-rated issuers in the near term. For example, the government has announced plans to implement a new system to protect sites important to Australia’s indigenous peoples. Firms in the sector, as in other parts of the world, also face political risks associated with official efforts to promote the transition to renewable energy sources.
Mounting political risk may influence investors’ perceptions of the sector, and therefore the terms on which companies are able to access finance. This could also have ramifications for M&A plans or long-term capex strategies. Nonetheless, it is likely to take time to assess the impact, which may also be offset by other market developments.
Australia’s parliament on 16 December passed legislation empowering the government to regulate gas prices, alongside an AUD1.5 billion relief package for firms and households. It remains unclear how the relief package will affect power and gas market dynamics, but we expect its impact to be temporary. The authorities plan to cap domestic gas prices at AUD12 per gigajoule. Domestic thermal coal sales prices in New South Wales and Queensland will also be capped at AUD125 per tonne.
Source: Fitch Ratings
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Wednesday, 30 November 22
INDONESIA’S BUMI RESOURCES TARGETS 2023 COAL OUTPUT OF 80 MLN TONNES - REUTERS
Indonesian coal miner PT Bumi Resources Tbk BUMI.JKis eyeing a 10% increase in output to 80 million tonnes next year amid expectations for more fav ...
Wednesday, 30 November 22
TANKERS: LONGER HAULS TO SUPPORT CONTINUED STRENGTH - BIMCO
Highlights
A rebound in the dirty tanker trade has led the Baltic Exchange Dirty Index (BDTI) to increase by 64% since our last report from mid ...
Wednesday, 30 November 22
MARKET INSIGHT - INTERMODAL
Shipping, although a conservative and innovation adverse industry, is currently in a transition period of digital transformation. According to a su ...
Tuesday, 29 November 22
INDIA TO RECEIVE FIRST LNG CARGO FROM INDONESIA’S TANGGUH LNG - REUTERS
India will receive its first cargo from Indonesia’s Tangguh liquefied natural gas (LNG) plant at the Dahej terminal on Monday, according to a ...
Tuesday, 29 November 22
SEABORNE COAL FLOWS IN 2022 - SIGNAL
This year is crucial for the energy mix in European countries, as the EU has imposed new sanctions on Russia. It is important to emphasize that the ...
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- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- Kideco Jaya Agung - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Trasteel International SA, Italy
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Australian Coal Association
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Borneo Indobara - Indonesia
- Commonwealth Bank - Australia
- IHS Mccloskey Coal Group - USA
- Indika Energy - Indonesia
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- Pendopo Energi Batubara - Indonesia
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Toyota Tsusho Corporation, Japan
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Videocon Industries ltd - India
- Uttam Galva Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Economic Council, Georgia
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
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