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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, 02 September 22
ABM INVESTAMA BUYS 30% GEMS SHARES FOR US$ 420 MILLION
PT ABM Investama Tbk through its indirect subsidiary, bought a 30% stake in the PT Golden Energy Mines Tbk for US$ 420 million or around Rp 6.2 tri ...
Wednesday, 31 August 22
MARKET INSIGHT - INTERMODAL
Scorching temperatures and extremely dry conditions during the Northern hemisphere summer have been drying crops. Yield prospects have subsided in ...
Tuesday, 23 August 22
HIGH COAL PRICES COULD BOOST INDONESIA'S ENERGY TRANSITION - IEEFA
Global coal prices have reached an all-time high as countries stop purchasing Russian coal amidst the Russia-Ukraine conflict. Indonesian coal comp ...
Tuesday, 23 August 22
A COMBINED US$6.8-BILLION CASH BALANCE OF INDONESIAN COAL COMPANIES COULD PROVIDE FOR TIMELY INVESTMENTS IN GREEN TRANSITION - IEEFA
A combined US$6.8-billion cash balance of Indonesian coal companies could provide for timely investments in green transition
The opp ...
Tuesday, 23 August 22
SHIPPING INDUSTRY TO REMOVE THE INDIAN OCEAN HIGH RISK AREA - BIMCO
After more than a decade of effective threat-reducing counter-piracy operations the shipping industry has removed the ‘Indian Ocean High Risk ...
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- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- The University of Queensland
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Rio Tinto Coal - Australia
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- Central Electricity Authority - India
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Energy - Thailand
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- Deloitte Consulting - India
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- Posco Energy - South Korea
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Interocean Group of Companies - India
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- PowerSource Philippines DevCo
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Minerals Council of Australia
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
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