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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, 26 July 22
WILL SOUTH AMERICA’S WINTER DEMAND DRAW LNG CARGOES AWAY FROM EUROPE? - ICIS
South America is now in the middle of its winter demand season. Last year the region increased its share of global LNG imports in winter, with Braz ...
Monday, 25 July 22
GLOBAL 2021 COAL-FIRED ELECTRICITY GENERATION SURGES TO RECORD HIGH - REUTERS
By contrast, mine output was still fractionally below the record set between 2012 and 2014 because older and less efficient coal generators have be ...
Saturday, 23 July 22
THE EU HAS BEEN REDUCING IMPORTS OF RUSSIAN REFINED OIL PRODUCTS SINCE MARCH - BANCHERO COSTA
The European Union could now ban the import and transit of fuel oil from Russia around six months ahead of the planned deadline, an EU official and ...
Saturday, 23 July 22
INDONESIA CONSIDERING SCRAPPING DOMESTIC SALES RULE FOR PALM OIL EXPORTS - REUTERS
Indonesia is considering removing a domestic sales requirement for palm oil exports because high inventories of the vegetable oil have been holding ...
Saturday, 23 July 22
STABILITY OF RUSSIAN GAS FLOWS REMAIN UNCERTAIN, DESPITE THE REOPENING OF NORD STREAM - WOOD MACKENZIE
Gazprom confirmed today that regular annual maintenance of Nord Stream is officially over and gas flows restarted at 63 million cubic metres per da ...
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- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Parry Sugars Refinery, India
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Africa Commodities Group - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Energy Development Corp, Philippines
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Ceylon Electricity Board - Sri Lanka
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- Australian Coal Association
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- MS Steel International - UAE
- Heidelberg Cement - Germany
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- Price Waterhouse Coopers - Russia
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- San Jose City I Power Corp, Philippines
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Videocon Industries ltd - India
- Malabar Cements Ltd - India
- Power Finance Corporation Ltd., India
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- Bhoruka Overseas - Indonesia
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
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