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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, 19 October 22
MARKET INSIGHT - INTERMODAL
The LNG market remains extremely tight, and as a result adding further pressure on the vessel charter market, which is already stretched due to the ...
Sunday, 16 October 22
COULD A RETURN TO SHALE EXPLORATION BE PART OF THE SOLUTION TO EUROPE'S GAS SUPPLY PROBLEM? - WOOD MACKENZIE
The European gas market is in turmoil. Russia’s invasion of Ukraine has shaken things up, triggering a complete rethink of European energy st ...
Thursday, 13 October 22
THERMAL COAL PRICES RETREAT AS WINTER SUPPLY FEARS EASE - REUTERS
The prices of key thermal seaborne coal grades are retreating amid signs that supplies will be sufficient to meet winter demand in both Europe and ...
Thursday, 13 October 22
SPOT COAL BIDDING: CHINESE FIRM WANTS REVISED MECHANISM - BUSINESS RECORDER
Chinese company M/s Huaneng Shandong Ruyi (Pakistan) Energy Limited (HSR) has cautioned National Electric Power Regulatory Authority (Nepra) that i ...
Thursday, 13 October 22
OPEC DOWNGRADES CRUDE OIL DEMAND, AS WORLD ECONOMY ENTERS SLOWDOWN
Crude Oil Price Movements
The OPEC Reference Basket (ORB) declined m-o-m by $6.58 in September, or 6.5%, to average $95.32/b. Pressure from equ ...
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- Global Business Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- Medco Energi Mining Internasional
- Eastern Energy - Thailand
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- PNOC Exploration Corporation - Philippines
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- Australian Coal Association
- Tamil Nadu electricity Board
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Sindya Power Generating Company Private Ltd
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Indo Tambangraya Megah - Indonesia
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Eastern Coal Council - USA
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Sojitz Corporation - Japan
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Electricity Authority, New Zealand
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- Indian Oil Corporation Limited
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Wood Mackenzie - Singapore
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- The University of Queensland
- MS Steel International - UAE
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- CNBM International Corporation - China
- Aditya Birla Group - India
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- Toyota Tsusho Corporation, Japan
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Singapore Mercantile Exchange
- London Commodity Brokers - England
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Mintek Dendrill Indonesia
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
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