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Tuesday, 22 July 14
INDONESIAN ELECTION RESULT ENCOURAGING FOR FOREIGN INVESTMENT IN ENERGY AND MINING SECTORS - WOOD MACKENZIE
 Joko Widodo-Jusuf Kalla has been announced as the official winner of Indonesia's presidential election. Joko Widodo, or Jokowi, is viewed as a more progressive and pragmatic choice for President than his opponent, Prawbowo Subianto.
Wood Mackenzie says that Jokowi's victory will generate short-term positivity for foreign companies looking to invest in Indonesia's energy and mining sectors. However, the new government's ability to implement reforms remains uncertain. A lack of a majority in the senate will weaken the government's ability to push through all reforms required to reinvigorate the investment environment and contribute to a revived Indonesian economy. The significance of this political development for the mining, upstream oil and gas, and fuel sectors are noted below.
Mining
Jokowi could shift the regulatory environment towards being more accommodating of foreign investment and mining in general. Wood Mackenzie's Senior Coal Analyst Rory Simington explains, "Mining-friendly regulatory change is possible, however it is likely to be incremental rather than exponential." Implications for the mining sector are:
- Current official policies are unlikely to be reversed. These include the ban on mineral exports, requirements for divesture of foreign ownership, and Coal Contracts of Work renegotiation.
- The previous DPI-P led government of Megawati Sukarnoputri from 2001 to 2004 showed a willingness to appoint people from industry instead of politicians to prominent positions in key ministries. If the Widodo led DPI-P coalition government appoints a competent administrator with industry experience to head the Department of Energy and Mineral Resources, this could result in mining friendly changes to the regulatory environment.
- Based on discussions with industry contacts in Indonesia, we believe that changes could include easing of foreign investment divesture requirements, and reducing minimum levels of purity that must be achieved for metals refining before export is allowed. Any changes are likely to be incremental rather than exponential.
Upstream oil and gas
Wood Mackenzie believes the wider implications of the election result will be felt more in the oil and gas sector. Wood Mackenzie's Senior Upstream Analyst, Andrew Harwood says, "At a time of growing domestic energy demand, declining indigenous production, and after several years of regulatory instability, the government's ability to implement Jokowi's proposed reforms will be key." Implications for the upstream sector are:
- Indonesia's crude output has fallen from over 1 million barrels per day in 2005 to currently just over 800,000. The domestic fuel subsidy bill is approaching US$21 billion (bn) in 2014, and regulatory uncertainty has stalled several major investment projects, such as Chevron's Indonesia Deepwater development, Inpex's Abadi FLNG and BP's Tangguh expansion.
- Jokowi has outlined plans to reduce Indonesia's reliance on oil imports by developing new gas infrastructure and accelerating the switch to gas. He aims to boost oil and gas output by providing enhanced fiscal terms for mature fields and exploration, and removing red-tape, which would also apply to the mining sector.
- A revision of the 2001 Oil and Gas Law and formalisation of the upstream regulator's role is a longer term objective that would enhance the investment environment by removing regulatory uncertainty. The sanction of Chevron's Indonesia Deepwater development, Inpex's Abadi FLNG and BP's Tangguh expansion could generate over US$30bn of new investment in Indonesia's oil and gas sector.
- While we would expect PERTAMINA to play a greater role in Indonesia's upstream sector under Jokowi, the new president also recognises the benefits of working with international investors to secure technological know-how as well as investment.
- Overall, Jokowi's victory will generate short-term positivity in the energy sector. However, the new government's ability to implement the proposed reforms remains uncertain.
Fuels market
Sushant Gupta, Head of Asia Pacific Downstream Research, says, "Subsidies are a huge burden to the government because around 60% of the total oil demand is subsidised. During the period of 2014-2020, we estimate the total fuel subsidy bill to be around US$120bn, assuming current domestic prices in Indonesia. This accounts for around three-percent of GDP and is therefore unsustainable." As a result, Wood Mackenzie expects Jokowi's government to make changes:
- The government is expected to push through further price reforms, which will impact near-term demand. However, the income-effect prevails in the medium term and will drive demand growth.
- If subsidies are sharply reduced, we could see a demand drop of around 60-70 thousand barrels per day (kb/d) in gasoline and 45-50 kb/d in diesel.
- The current market size of unsubsidised retail fuels (gasoline and diesel) is very small; however, there is a huge upside potential if the government fully deregulates the market. This would provide a good market opportunity to foreign players operating in the unsubsidised retail fuels market or new players looking to invest in refining and retail sectors in Indonesia.
Editor’s notes:
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insights they need to make better strategic decisions. For more information visit: www.woodmac.com
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Monday, 04 August 14
Q1' 15 API 8 CFR SOUTH CHINA COAL SWAP CLOSED AT US$ 69.37 ON 1 AUGUST 2014; A $ 1.10 HIGHER COMPARED TO Q4' 2014 CLOSING
COALspot.com: Coal swap prices are showing a positive move upward this past week. API 8 CFR South China Coal swap for Q4, Q1 and Q2 2015 show ...
Sunday, 03 August 14
LACK OF COAL SHIPMENTS FROM FAR EAST/SE ASIA, THE PRESSURE ON CHARTER RATES CONTINUED THIS WEEK
COALspot.com: This week, the freight rates were almost flat as charter rates were also almost steady from last week.
The BDI was up by 2.59 pc ...
Friday, 01 August 14
UNCERTAINTY IN ASIAN COAL MARKETS WHERE INDEX-LINKED PRICING DOMINATES - SGX
COALspot.com: In the past 3 years, seaborne thermal coal markets have been in a state of constant oversupply.
Reuters expects this oversupply ...
Friday, 01 August 14
U.S PRODUCED 19.4 MMST OF COAL IN A WEEK, SAYS EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 19.40 million short tons (mmst) of coal in ...
Thursday, 31 July 14
CAPESIZE: CARGO VOLUMES, COAL IN PARTICULAR, PRESENTLY NOT SUFFICIENT TO EMPLOY A GROWING FLEET - FERNLEYS
Handy
Both the Atlantic and Pacific has improved in the supramax segment over the last week, said Fernleys in Its latest weekly report . There we ...
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- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Australian Coal Association
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Kumho Petrochemical, South Korea
- Goldman Sachs - Singapore
- PTC India Limited - India
- Metalloyd Limited - United Kingdom
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Kideco Jaya Agung - Indonesia
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Planning Commission, India
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- Makarim & Taira - Indonesia
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- Simpson Spence & Young - Indonesia
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Wood Mackenzie - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Romanian Commodities Exchange
- SMC Global Power, Philippines
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Rio Tinto Coal - Australia
- Ambuja Cements Ltd - India
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Minerals Council of Australia
- Vijayanagar Sugar Pvt Ltd - India
- Mjunction Services Limited - India
- Indian Energy Exchange, India
- London Commodity Brokers - England
- European Bulk Services B.V. - Netherlands
- White Energy Company Limited
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TeaM Sual Corporation - Philippines
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- Economic Council, Georgia
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Wilmar Investment Holdings
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Jaiprakash Power Ventures ltd
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
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- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
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