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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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Tuesday, 11 April 23
OIL RISES ON CHINA STIMULUS EXPECTATIONS, WEAKER DOLLAR - REUTERS
Oil prices rose on Tuesday on expectations of potential economic stimulus by China, healthy demand in the rest of Asia and a drop in U.S. crude sto ...
Sunday, 09 April 23
CHINA’S BUSINESS INCOME REBOUND POINTS TO IMPROVING ECONOMY: OFFICIAL - XINHUA
Chinese businesses have posted a strong rebound in sales revenue since the beginning of this year in the latest signal of an improving economy.
...
Sunday, 09 April 23
COAL INDIA TO BOOST SUPPLIES TO INDUSTRIES AS UTILITIES’ INVENTORIES RISE - REUTERS
Coal India Ltd will increase supplies to industries, the world’s largest coal miner said on Wednesday as fuel inventories at utilities run by ...
Thursday, 06 April 23
MARKET INSIGHT - INTERMODAL
LNG Current Supply/Demand Dynamics
This year, LNG supply will likely exceed demand, so prices will need to decline to levels that will encourag ...
Sunday, 26 March 23
EUROPE’S RUSH TO LNG COULD TURN INTO 'WORLD’S MOST EXPENSIVE AND UNNECESSARY INSURANCE POLICY'- CNBC
Europe’s rapid buildout of liquefied natural gas infrastructure is on track to far exceed demand by the end of the decade, according to new r ...
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Sree Jayajothi Cements Limited - India
- Australian Coal Association
- Orica Mining Services - Indonesia
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Interocean Group of Companies - India
- Sarangani Energy Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Iligan Light & Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Minerals Council of Australia
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- White Energy Company Limited
- Georgia Ports Authority, United States
- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- GMR Energy Limited - India
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- The University of Queensland
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- Economic Council, Georgia
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Planning Commission, India
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Kepco SPC Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- Sojitz Corporation - Japan
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Aditya Birla Group - India
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- Tata Chemicals Ltd - India
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
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