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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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Wednesday, 22 March 23
MARKET INSIGHT - INTERMODAL
The crude tanker market continues to gather momentum as we head towards the end of 1Q2023, against a backdrop of strong U.S. exports paired with a ...
Wednesday, 22 March 23
WILL LOWER GAS PRICES SPARK SWITCHING IN EUROPE AND ASIA?
Record high prices devastated demand for gas and LNG across Asia and Europe last year. But with prices falling, companies are starting to re-evalua ...
Monday, 20 March 23
NTPC MULLS 5.4 MILLION TONNES COAL IMPORT IN FIRST HALF OF 2023-24: PTI
State-run power giant NTPC is planning to import around 5.4 million tonnes of coal to meet the supply shortage during the first half 2023-24 fiscal ...
Monday, 20 March 23
S. AFRICA’S EXXARO RESOURCES SAYS COAL PRICES COOLING OFF - REUTERS
South Africa’s Exxaro Resources on Thursday posted a 28% jump in 2022 profit after seeing average coal prices surge more than 150%, but warne ...
Saturday, 18 March 23
RUSSIAN LNG EXPORTS TO EUROPE REMAIN HIGH - VESSELS VALUE
Russian LNG exports to Europe remained at very high levels in February at 3.6 million CBM, following a 13 month high in January of 4.1 million CBM. ...
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- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Star Paper Mills Limited - India
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Tata Chemicals Ltd - India
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- Sree Jayajothi Cements Limited - India
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- Parliament of New Zealand
- Mercator Lines Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Link Ltd, New Zealand
- Bukit Baiduri Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Tamil Nadu electricity Board
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- Dalmia Cement Bharat India
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- Aditya Birla Group - India
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Bharathi Cement Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Planning Commission, India
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Thai Mozambique Logistica
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Riau Bara Harum - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- Gujarat Sidhee Cement - India
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- White Energy Company Limited
- Trasteel International SA, Italy
- Standard Chartered Bank - UAE
- Singapore Mercantile Exchange
- The University of Queensland
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- Sarangani Energy Corporation, Philippines
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