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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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Monday, 21 March 22
A FORCE MAJEURE TO BE RECKONED WITH - BALTIC EXCHANGE
Sanctions cause payment confusion
This dispute in MUR Shipping BV v. RTI Ltd [2022] EWHC 467 (Comm) related to an owner’s purported exercis ...
Monday, 21 March 22
CHINA'S COAL OUTPUT UP 10.3 PCT IN FIRST TWO MONTHS - XINHUA
China’s raw coal output posted fast growth in the first two months of 2022, while coal imports continued to shrink, official data showed.
...
Tuesday, 15 March 22
INDUSTRY VETERANS & ORGANIZATIONS HONOURED WITH THE PRESTIGIOUS SHIPTEK INTERNATIONAL AWARDS 2022
Press Release: The 15th edition of the prestigious ShipTek International Conference & Awards 2022 concluded successfully from March 7th - 8th 2 ...
Tuesday, 15 March 22
CHINA'S COAL OUTPUT GROWS TO STABILIZE MARKET SUPPLY - XINHUA
China’s coal market has seen growth in output since late February amid the country’s efforts to stabilize production and ensure supply, ...
Tuesday, 08 March 22
RUSSIA-UKRAINE CONFLICT ADDS IMPETUS TO ASIA'S ENERGY TRANSITION - IEEFA
Clean energy alternatives are a crucial hedge against future disruptions in global commodity markets
Russia’s invasion of Ukra ...
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- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Formosa Plastics Group - Taiwan
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- Energy Development Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Madhucon Powers Ltd - India
- Straits Asia Resources Limited - Singapore
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Parry Sugars Refinery, India
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Central Java Power - Indonesia
- AsiaOL BioFuels Corp., Philippines
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- VISA Power Limited - India
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Makarim & Taira - Indonesia
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- Mercuria Energy - Indonesia
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Planning Commission, India
- Ministry of Transport, Egypt
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- Thai Mozambique Logistica
- Kohat Cement Company Ltd. - Pakistan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Wilmar Investment Holdings
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Economic Council, Georgia
- ICICI Bank Limited - India
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
- Indo Tambangraya Megah - Indonesia
- Riau Bara Harum - Indonesia
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
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