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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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Sunday, 13 July 14
PANAMAX INDEX GAINS SLIGHTLY THIS WEEK; CAPE INDEX FALLS ALMOST 21.40%
COALspot.com: This week the freight market fell again after gaining last week. The cape index was down almost 21.40 pct and closed at 1465 points.
...
Friday, 11 July 14
EUROPE HAS A SUBSTANTIAL SURPLUS IN COAL SUPPLIES; RENEWABLE ENERGIES ARE REDUCING THE FULL-LOAD OPERATING HOURS OF HARD COAL-FIRED POWER PLANTS - VDKI
COALspot.com: General conditions for coal-fired power plants must be improved if the energy turnaround is to be a success, said German coal importe ...
Friday, 11 July 14
DR.CIESLIK RE-ELECTED AS CEO OF GERMAN COAL IMPORTER ASSOCIATION (VDKI)
Press Release : Dr Cieslik re-elected as CEO of German Coal Importer Association (VDKi) for the period 2014 – 2018. The German Coal Importer ...
Friday, 11 July 14
PORT OF NEWCASTLE SHIPPED $ 1.031 BILLION WORTH OF 11.744 MILLION TONS OF COAL IN JUNE 2014
COALspot.com: Port of Newcastle has shipped 11,744,396 tons of coal for the month ended 30 June 2014. According to Port’s monthly report, YTD ...
Friday, 11 July 14
UNITED STATE'S MONTHLY COAL OUTPUT FALLS 5.53% IN JUNE
COALspot.com – United States the world's second largest coal producer, produced approximately 18.1 million short tons (mmst) of coal in a ...
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- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- South Luzon Thermal Energy Corporation
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Singapore Mercantile Exchange
- Planning Commission, India
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Kepco SPC Power Corporation, Philippines
- Minerals Council of Australia
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- Madhucon Powers Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Parry Sugars Refinery, India
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- The University of Queensland
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Medco Energi Mining Internasional
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- McConnell Dowell - Australia
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- Mjunction Services Limited - India
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- Trasteel International SA, Italy
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Eastern Coal Council - USA
- VISA Power Limited - India
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- Toyota Tsusho Corporation, Japan
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- MS Steel International - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- Economic Council, Georgia
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- International Coal Ventures Pvt Ltd - India
- Siam City Cement PLC, Thailand
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