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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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Saturday, 18 March 23
HEDGE TO OFFSET LNG VOLATILITY, TRADERS TOLD - BALTIC EXCHANGE
A shift in imports from Asia to Europe led to significant volatility in liquefied natural gas shipping last year, prompting industry experts to urg ...
Friday, 17 March 23
INDONESIAN COAL PRICE REFERENCE UP AROUND 2.17% IN MARCH 2023
COALspot.com: Indonesian Coal Price Reference up around 2.17% in March 2023.
According to the new HBA regulation No. 41.K/MB.0 ...
Saturday, 11 March 23
MARKET INSIGHT - INTERMODAL
Uncertainty over the recovery of Chinese demand, demand destruction in Europe, as well as weather conditions will pivot the LNG market this summer. ...
Wednesday, 08 March 23
INDONESIAN COAL REFERENCE PRICE FORMULA HAS OFFICIALLY CHANGED
Indonesian Minister of Energy and Mineral Resources has officially changed the guideline for determining the benchmark price for the sale of coal c ...
Thursday, 02 March 23
INDIA'S SEABORNE CRUDE OIL IMPORTS IN 2022 INCREASED BY 11.5% YOY - BANCHERO COSTA
2022 has turned out to be a very positive year for crude oil trade, despite the surging oil prices and risks of economic recession, Banchero Costa ...
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- Economic Council, Georgia
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- Globalindo Alam Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- White Energy Company Limited
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- Therma Luzon, Inc, Philippines
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- PTC India Limited - India
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Latin American Coal - Colombia
- Pipit Mutiara Jaya. PT, Indonesia
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Interocean Group of Companies - India
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- Ministry of Transport, Egypt
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Parliament of New Zealand
- Eastern Coal Council - USA
- Port Waratah Coal Services - Australia
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Leighton Contractors Pty Ltd - Australia
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Medco Energi Mining Internasional
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Anglo American - United Kingdom
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- CNBM International Corporation - China
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Agrawal Coal Company - India
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
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