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Thursday, 15 January 15
LOW CASH COSTS, GOOD LIQUIDITY HELP ASIAN OIL COMPANIES IN PRICE ROUT - FITCH
 Fitch Ratings says that rated oil and gas production companies in Asia can comfortably operate under low oil prices for some time given their generally low cash production costs and strong liquidity. Fitch expects companies to further reduce capex if oil prices remain at current levels for a longer period.
Fitch further noted that, the fall of oil prices below USD50 per barrel is hurting cash generation and affecting investment decisions of companies in the sector. However, the impact on operating cash generation varies across Fitch-rated companies. South-east Asian companies, such as PTT Public Company Limited that produce more gas (60% or more of total production), will be less affected immediately compared with their north and south Asian counterparts that are more liquids-heavy. Liquids at companies like Petrochina, CNOOC, Sinopec, Oil India Ltd and MIE Holdings Corporation account for over 70% of total production in barrels of oil equivalent (boe) terms. Companies that hedged the prices of part of their oil production benefited from the protection in 2014, but they are likely to be exposed to market prices in 2015 because these types of hedges typically do not cover long periods.
Low cash production costs and the largely conventional upstream projects of the rated Asian oil companies provide them with additional flexibility in today's low oil price environment, said Fitch. While all-in costs (cash production costs plus depreciation, depletion and amortisation, or DD&A) are important in the long run, the relatively longer production lives of conventional oil and gas wells provide additional capex flexibility during periods of low hydrocarbon prices. Lifting costs in US dollars per boe are typically in the teens for the rated companies in Asia. Lower production tax requirements stemming from low realised prices, especially in China, also reduce the net impact of the oil price rout on operating cash generation. Companies are also looking to reduce opex, which can squeeze margins of oil field services companies.
Over the longer term though, with all-in costs exceeding USD35/boe for the rated Asian names, the economic viability of projects will be impaired if there is no meaningful increase in oil prices. At current prices, we expect certain high-cost projects to be delayed. These could include ventures in the Canadian oil sands and certain enhanced oil recovery projects on mature-depleting fields in Asia. Sponsor companies could also delay final investment decisions on some large projects with long lead times, such as some green field LNG projects, to preserve cash reserves.
Capex flexibility also varies across the rated companies. CNOOC and PTT have relatively low developed reserve lives of around four years, which gives them less flexibility to curtail development capex for a long period. The state-owned companies are unlikely to cut domestic capex drastically because they are mandated by states to raise production to supply their growing economies. In addition, PTT has lagged considerably behind its Asian peers in reserve replacement, with several large acquisitions not yet adding to proved reserves. For most of the other rated oil producers, though, reserve replacement has been robust (near 100% or above) in recent years, adding further to their flexibility. We also see the prospect of reserve write-downs for some companies if oil prices do not meaningfully improve by the time reserve reports are updated over the next few months.
Rated Asian oil companies, especially the state-owned ones, have very strong balance sheets, with low financial leverage and substantial cash balances. We expect these companies to have good financial flexibility arising from their good liquidity (large cash balances and strong access to capital). In India, we expect the government to reduce the substantial discounts (USD56/barrel) the two state-controlled upstream companies, Oil India and ONGC, have to provide to refiners, improving their cash margins under low oil prices. Malaysia's PETRONAS has a very strong balance sheet. However, the high dividends required by the Malaysian government remains a challenge, although the company is pushing to lower this burden.
According to Fitch, Fitch is also expect cash-rich companies to take advantage of attractive M&A opportunities, although their approach is likely to be measured to ensure their cash balances remain strong to deal with the uncertain oil price outlook. Asian companies are likely to focus on mid-sized assets that are producing or close to production that put less stress on their balance sheets.
Smaller companies like MIE of China have less financial flexibility. While MIE's lifting costs of around USD10/boe are low, it has relatively weaker access to funding than its larger peers, especially when oil prices are low. However, MIE's cash on hand at end-September 2014 (plus expected proceeds in 4Q14 from some asset disposals) and unutilised credit lines provide adequate short-term liquidity, while its major debt maturities are several years away.
Our approach with oil and gas companies is to rate through the cycle, Fitch says in its latest analysis report. While strong production, weak demand growth and high inventory levels put significant near-term pressure on oil prices, high global marginal production costs and capex cuts leading to reduced production should over time result in a more balanced market that supports higher prices for oil. While low oil prices and high capex requirements will dent the credit metrics of Asian oil producers, ratings of many of these companies, especially the state-owned companies whose ratings benefit from state linkages, remain resilient.
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Monday, 08 January 24
KOSPO TO BUY 80000 MT OF INDONESIAN LOW CALORIFIC VALUE COAL FOR FEB 2024
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for the supply of Indonesian Low Calorific Value Coal from qualified suppliers for Korean ...
Monday, 08 January 24
SEABORNE TRADE REACHES 12.4BN TONNES - CLARKSONS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Monday, 08 January 24
CAPESIZES START THE NEW YEAR ON POSITIVE NOTE - BALTIC EXCHANGE
Capesize
This week the capsize market has been marked by a mix of activities and challenges. Despite a slow start following the Christmas and N ...
Friday, 05 January 24
MORGAN STANLEY SEES LOWER OIL PRICES IN 2024 ON OVERSUPPLY CONCERNS - REUTERS
Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it ex ...
Friday, 05 January 24
INDIA'S COAL OUTPUT RISES NEARLY 11 PC IN DEC TO 92.87 MT - PTI
India’s coal production increased by 10.75 per cent to 92.87 million tonne in December 2023 as compared to the year-ago period, an official s ...
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- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- Bayan Resources Tbk. - Indonesia
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- Mercator Lines Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Finance - Indonesia
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Therma Luzon, Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Timah Investasi Mineral - Indoneisa
- Riau Bara Harum - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Simpson Spence & Young - Indonesia
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Eastern Coal Council - USA
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Kobexindo Tractors - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Goldman Sachs - Singapore
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Planning Commission, India
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Bhushan Steel Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- The Treasury - Australian Government
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Agrawal Coal Company - India
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- SMC Global Power, Philippines
- Power Finance Corporation Ltd., India
- Australian Coal Association
- The University of Queensland
- Mintek Dendrill Indonesia
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- San Jose City I Power Corp, Philippines
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
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