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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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Friday, 25 November 22
APAC THERMAL COAL PRICES CORRECT FROM RECORD HIGH - FITCH RATINGS
Prices of Newcastle 6,000kcal/kg coal have corrected following falling European gas and coal prices, and more supply from Australia could help miti ...
Thursday, 24 November 22
VIETNAM BOOSTS COAL USE PLAN FOR 2030 AS G7 CLIMATE OFFER STALLS - REUTERS
Vietnam has increased its coal power target for 2030 under a revised draft energy plan, government documents seen by Reuters show, while renewables ...
Tuesday, 22 November 22
THE GENCON 2022 CHARTERPARTY - GARD
KNOWLEDGE TO ELEVATE
BIMCO has published a revamped version of the popular GENCON charterparty. Our author, Helena Biggs, was a member of the ...
Tuesday, 22 November 22
INDIA POWER BINGES ON COAL, OUTPACES ASIA - REUTERS
India’s coal-fired power output has increased much faster than any other country in the Asia Pacific since Russia’s invasion of Ukraine ...
Friday, 18 November 22
REALITIES OF LOI LIABILITIES - BALTIC EXCHANGE
KNOWLEDGE TO ELEVATE
The cargo misdelivery claim in Trafigura Maritime Logistics Pte Ltd v. Clearlake Shipping Pte Ltd (Miracle Hope) [2022] E ...
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- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Formosa Plastics Group - Taiwan
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Mercuria Energy - Indonesia
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ambuja Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Parliament of New Zealand
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Ministry of Transport, Egypt
- Wilmar Investment Holdings
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- White Energy Company Limited
- Commonwealth Bank - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maheswari Brothers Coal Limited - India
- LBH Netherlands Bv - Netherlands
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- ASAPP Information Group - India
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Karaikal Port Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Goldman Sachs - Singapore
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Meralco Power Generation, Philippines
- SMC Global Power, Philippines
- Kumho Petrochemical, South Korea
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