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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 February 23
PAKISTAN PLANS TO QUADRUPLE DOMESTIC COAL-FIRED POWER, MOVE AWAY FROM GAS - REUTERS
Pakistan plans to quadruple its domestic coal-fired capacity to reduce power generation costs and will not build new gas-fired plants in the coming ...
Saturday, 18 February 23
2023 MARINE FUEL MARKET PREDICTIONS - JOHN BERGMAN, AURAMARINE
The drive for decarbonisation we witnessed in 2022 has continued into 2023, demonstrating the shipping’s industry positive strides in the fas ...
Saturday, 28 January 23
COAL GROWTH BLIP NOT TO BE REPEATED - BALTIC EXCHANGE
As 2022 drew to a close, global coal demand looked set to end the year just 1.2% up on the previous year. But that small increase was enough to pus ...
Thursday, 26 January 23
CHINA'S COAL OUTPUT INCREASES IN DECEMBER 2022 - XINHUA
China’s raw coal output posted stable expansion in December 2022, official data showed.
The country produced 400 million tonne ...
Thursday, 26 January 23
COKING COAL NARROWS THE GAP ON THERMAL AS CHINA REOPENS - REUTERS
The premium of high-grade thermal coal over coking coal in Asia is shrinking as China’s re-opening and ending of a ban on imports from Austra ...
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- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Latin American Coal - Colombia
- Electricity Generating Authority of Thailand
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- GMR Energy Limited - India
- SN Aboitiz Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- Dalmia Cement Bharat India
- CIMB Investment Bank - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Transport, Egypt
- Ind-Barath Power Infra Limited - India
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Chettinad Cement Corporation Ltd - India
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- San Jose City I Power Corp, Philippines
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Australian Coal Association
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- MS Steel International - UAE
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Parliament of New Zealand
- Neyveli Lignite Corporation Ltd, - India
- PTC India Limited - India
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Indika Energy - Indonesia
- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- White Energy Company Limited
- Central Java Power - Indonesia
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- The University of Queensland
- Ministry of Finance - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
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