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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, 30 November 22
INDONESIA’S BUMI RESOURCES TARGETS 2023 COAL OUTPUT OF 80 MLN TONNES - REUTERS
Indonesian coal miner PT Bumi Resources Tbk BUMI.JKis eyeing a 10% increase in output to 80 million tonnes next year amid expectations for more fav ...
Wednesday, 30 November 22
TANKERS: LONGER HAULS TO SUPPORT CONTINUED STRENGTH - BIMCO
Highlights
A rebound in the dirty tanker trade has led the Baltic Exchange Dirty Index (BDTI) to increase by 64% since our last report from mid ...
Wednesday, 30 November 22
MARKET INSIGHT - INTERMODAL
Shipping, although a conservative and innovation adverse industry, is currently in a transition period of digital transformation. According to a su ...
Tuesday, 29 November 22
INDIA TO RECEIVE FIRST LNG CARGO FROM INDONESIA’S TANGGUH LNG - REUTERS
India will receive its first cargo from Indonesia’s Tangguh liquefied natural gas (LNG) plant at the Dahej terminal on Monday, according to a ...
Tuesday, 29 November 22
SEABORNE COAL FLOWS IN 2022 - SIGNAL
This year is crucial for the energy mix in European countries, as the EU has imposed new sanctions on Russia. It is important to emphasize that the ...
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- Independent Power Producers Association of India
- PTC India Limited - India
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Rio Tinto Coal - Australia
- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Parry Sugars Refinery, India
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Jindal Steel & Power Ltd - India
- Australian Commodity Traders Exchange
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sical Logistics Limited - India
- Vizag Seaport Private Limited - India
- Mercator Lines Limited - India
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- Kartika Selabumi Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Samtan Co., Ltd - South Korea
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Simpson Spence & Young - Indonesia
- Interocean Group of Companies - India
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- Antam Resourcindo - Indonesia
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Bhatia International Limited - India
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- Attock Cement Pakistan Limited
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- Sindya Power Generating Company Private Ltd
- Semirara Mining and Power Corporation, Philippines
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- European Bulk Services B.V. - Netherlands
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Ambuja Cements Ltd - India
- Deloitte Consulting - India
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
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