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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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Thursday, 22 December 22
RUSSIAN OIL EXPORTS CRATER BY 54% IN THE FIRST FULL WEEK OF THE EU'S EMBARGO AMID A SHORTAGE OF TANKERS WILLING TO CARRY CARGOES - BUSINESS INSIDER
Since the European Union imposed its seaborne crude sanctions, Russian oil exports have tumbled by more than half, according to data compiled by Bl ...
Thursday, 22 December 22
CHINA TIGHTENS VERIFICATION OF SHIPS’ ENERGY CONSUMPTION DATA - GARD
From 22 December 2022, ships trading to Chinese ports must record their energy consumption data in accordance with the requirements of their Ship E ...
Thursday, 22 December 22
AN OVERVIEW OF THE LNG MARKET - VESSELSVALUE
LNG values have continued to strengthen, spurred by skyrocketing earnings that have surpassed last year’s record breaking peaks. In November, ...
Thursday, 22 December 22
COKING COAL SLUMPS AS TALKS ON AUSTRALIA-CHINA TRADE RIFT LOOM - REUTERS
Chinese coking coal futures dropped more than 3 per cent on Tuesday (Dec 20), extending losses, as supply of the steelmaking input might increase i ...
Monday, 19 December 22
ENERGY CRISIS FUELS COAL COMEBACK IN GERMANY - REUTERS
Coal has made a comeback in Germany this year, as Europe’s largest economy turns to the dirty fuel to power it through an energy crisis.
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- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- Barasentosa Lestari - Indonesia
- GMR Energy Limited - India
- PTC India Limited - India
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Bharathi Cement Corporation - India
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- International Coal Ventures Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Planning Commission, India
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Bukit Makmur.PT - Indonesia
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
- Minerals Council of Australia
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- The University of Queensland
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Mercator Lines Limited - India
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- VISA Power Limited - India
- Trasteel International SA, Italy
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
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