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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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Wednesday, 02 February 22
MARKET INSIGHT - INTERMODAL
Oil prices have rallied to the highest level since October 2014 breaking above $90/bbl recently. November 2014 was the point when OPEC unleashed pr ...
Monday, 31 January 22
HOW INDONESIA'S COAL EXPORT BAN COULD IMPACT INDIA - IEEFA
What does it mean for power generation and energy security?
Not long ago, India faced coal shortages due to a decline in domestic co ...
Sunday, 30 January 22
AIR PRODUCTS' COAL GASIFICATION PROPOSAL TRIGGERS LOOMING POLICY DISPUTES IN INDONESIA - IEEFA
Plan to substitute Indonesia’s LPG imports with dimethyl ether may be hard to realize due to conflicting business interests
In ...
Sunday, 30 January 22
ENDGAME FOR NEW COAL POWER PROJECTS? - IEEFA INDIA
Retired coal units must be replaced only by assets that can provide grid flexibility
Reportedly, an expert committee appointed by th ...
Thursday, 27 January 22
2022 - A YEAR OF REBALANCING FOR METALS AND MINING - WOOD MACKENZIE
If 2021 was the year of rebound for metals and mining (M&M) commodities, then 2022 is shaping as the year of rebalance, says Wood Mackenzie, a ...
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- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thai Mozambique Logistica
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Deloitte Consulting - India
- Central Electricity Authority - India
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Ministry of Transport, Egypt
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- PTC India Limited - India
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Karaikal Port Pvt Ltd - India
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Marubeni Corporation - India
- Indian Energy Exchange, India
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Riau Bara Harum - Indonesia
- Barasentosa Lestari - Indonesia
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sarangani Energy Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- ASAPP Information Group - India
- Jindal Steel & Power Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Eastern Energy - Thailand
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- Formosa Plastics Group - Taiwan
- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- IHS Mccloskey Coal Group - USA
- Australian Coal Association
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Essar Steel Hazira Ltd - India
- Coastal Gujarat Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
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