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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, 29 July 22
GLOBAL COAL DEMAND IS SET TO RETURN TO ITS ALL-TIME HIGH IN 2022 - IEA
The world’s consumption of coal is set to rise slightly in 2022, taking it back to the record level it reached nearly a decade ago, according ...
Thursday, 28 July 22
CREW FAMILIARISATION IS CRITICAL WHEN TAKING OVER A VESSEL - WEST P&I CLUB
Knowledge to Elevate
When a vessel changes ownership and/or manager, it can take some considerable time before the new crew and mana ...
Thursday, 28 July 22
RETURN OF COAL A THREAT TO EUROPEAN COMPANIES' ESG RATINGS - REUTERS
European companies turning to coal as an alternative to Russian gas face a hit to their environmental, social and governance ratings, leaving them ...
Wednesday, 27 July 22
MARKET INSIGHT - INTERMODAL
Amid the upcoming ban on Russian coal from the EU, which will be in full effect on August 10th, EU nations have been accelerating their coal import ...
Tuesday, 26 July 22
CAP RUSSIA'S OIL PRICE NOW - PROJECT SYNDICATE
Though the price of oil has declined in recent weeks, it is still through the roof, filtering through to gasoline prices, and causing economic and ...
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- Coastal Gujarat Power Limited - India
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Malabar Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Australian Coal Association
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- Heidelberg Cement - Germany
- MS Steel International - UAE
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- European Bulk Services B.V. - Netherlands
- PTC India Limited - India
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Ind-Barath Power Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- Chamber of Mines of South Africa
- Kaltim Prima Coal - Indonesia
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- Central Java Power - Indonesia
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- The Treasury - Australian Government
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- The State Trading Corporation of India Ltd
- Kapuas Tunggal Persada - Indonesia
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- Larsen & Toubro Limited - India
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- Attock Cement Pakistan Limited
- Goldman Sachs - Singapore
- VISA Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- San Jose City I Power Corp, Philippines
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