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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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Friday, 06 September 24
REBOUND IN OIL DEMAND COULD LIFT MARKET IN LATTER HALF OF 2024 - BIMCO
Supply/demand
Based on a strong second half demand, the supply/balance is forecast to strengthen in 2024 but weaken slightly in 2025 as n ...
Friday, 06 September 24
GLOBAL SEABORNE LNG TRADE HAS CONTINUED TO INCREASE LAST YEAR - BANCHERO COSTA
Global seaborne LNG trade has continued to increase last year, helped also by the events in Ukraine which forced Europe to diversify away from Russ ...
Wednesday, 28 August 24
SEABORNE COAL IMPORTS INTO INDIA INCREASED BY +9.9% Y-O-Y TO 146.6 MLN T - BANCHERO COSTA
Global coal trade has really picked up pace over the past year, and is now fully back to pre-Covid levels said Banchero Costa Research in its lates ...
Tuesday, 06 August 24
EXERCISE CAUTION WITH AMMONIA SWITCH - BALTIC EXCHANGE
A new study from the Massachusetts Institute of Technology (MIT) has thrown a spanner into the plan to transition ships from diesel fuel to ammonia ...
Friday, 02 August 24
ENERGY MARKET DEVELOPMENTS: COAL AND NATURAL GAS PRICES REACH RECORD HIGHS - WORLD BANK
The recent surge in natural gas and coal prices has been so swift that the main benchmarks were roughly three times higher in 2022Q2 compared to a ...
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- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Maharashtra Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Sindya Power Generating Company Private Ltd
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Thiess Contractors Indonesia
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Vizag Seaport Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- White Energy Company Limited
- Agrawal Coal Company - India
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- Australian Coal Association
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Economic Council, Georgia
- Mercuria Energy - Indonesia
- Planning Commission, India
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Singapore Mercantile Exchange
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Vedanta Resources Plc - India
- Bharathi Cement Corporation - India
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Bhatia International Limited - India
- Larsen & Toubro Limited - India
- SMG Consultants - Indonesia
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- The University of Queensland
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Malabar Cements Ltd - India
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