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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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- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Metalloyd Limited - United Kingdom
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Lanco Infratech Ltd - India
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- VISA Power Limited - India
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Marubeni Corporation - India
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- Standard Chartered Bank - UAE
- Posco Energy - South Korea
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- The University of Queensland
- Vijayanagar Sugar Pvt Ltd - India
- Mercator Lines Limited - India
- Indian Oil Corporation Limited
- Planning Commission, India
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- Bhatia International Limited - India
- Salva Resources Pvt Ltd - India
- Eastern Energy - Thailand
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Bhushan Steel Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- MS Steel International - UAE
- Coal and Oil Company - UAE
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Australian Coal Association
- Antam Resourcindo - Indonesia
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- South Luzon Thermal Energy Corporation
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- Siam City Cement PLC, Thailand
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bulk Trading Sa - Switzerland
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement - Thailand
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- Pendopo Energi Batubara - Indonesia
- SMC Global Power, Philippines
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