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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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Tuesday, 23 August 22
SHIPPING: GLOBAL TAX REFORM - WATSON FARLEY & WILLIAMS
OECD rules designed to implement a global minimum corporate tax rate for very large multinational groups have now been published and are expected t ...
Tuesday, 23 August 22
PARTIES CONCLUDE JOINT R&D AGREEMENT FOR WORLD’S FIRST AMMONIA FLOATING STORAGE AND REGASIFICATION BARGE CONTRIBUTING TO PROMOTING THE EARLY INTRODUCTION OF AMMONIA FUEL - NYK
NYK Line, Nihon Shipyard Co., Ltd. (NSY), ClassNK, and IHI Corporation (IHI) signed a joint research and development agreement for the commercializ ...
Monday, 22 August 22
INDONESIAN GOVERNMENT IMPOSED ON NEW PROGRESSIVE ROYALTIES FOR COAL
Indonesian President Joko Widodo has signed a Government Regulation (Number 26 of 2022) on 15 August 2022 related to the progressive royalty rates ...
Monday, 22 August 22
CHINA'S JULY RUSSIAN COAL IMPORTS HIT 5-YR HIGH AS WEST SHUNS MOSCOW - REUTERS
China’s coal imports from Russia jumped 14% in July from a year earlier to their highest in at least five years, as China bought discounted c ...
Sunday, 21 August 22
COAL-RICH POLAND FACES WINTER OF ENERGY DISCONTENT - DW
Poland uses 10 million tons of coal a year to heat households — a whopping 87% of all coal consumed in EU homes in 2019, according to the War ...
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- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Australian Commodity Traders Exchange
- Australian Coal Association
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- Alfred C Toepfer International GmbH - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Kapuas Tunggal Persada - Indonesia
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- Global Coal Blending Company Limited - Australia
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- Bharathi Cement Corporation - India
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- SN Aboitiz Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Africa Commodities Group - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Bhoruka Overseas - Indonesia
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Merrill Lynch Commodities Europe
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Mercator Lines Limited - India
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Energy Link Ltd, New Zealand
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- Timah Investasi Mineral - Indoneisa
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- Economic Council, Georgia
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Meralco Power Generation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Singapore Mercantile Exchange
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- Straits Asia Resources Limited - Singapore
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