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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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Friday, 25 November 22
APAC THERMAL COAL PRICES CORRECT FROM RECORD HIGH - FITCH RATINGS
Prices of Newcastle 6,000kcal/kg coal have corrected following falling European gas and coal prices, and more supply from Australia could help miti ...
Thursday, 24 November 22
VIETNAM BOOSTS COAL USE PLAN FOR 2030 AS G7 CLIMATE OFFER STALLS - REUTERS
Vietnam has increased its coal power target for 2030 under a revised draft energy plan, government documents seen by Reuters show, while renewables ...
Tuesday, 22 November 22
THE GENCON 2022 CHARTERPARTY - GARD
KNOWLEDGE TO ELEVATE
BIMCO has published a revamped version of the popular GENCON charterparty. Our author, Helena Biggs, was a member of the ...
Tuesday, 22 November 22
INDIA POWER BINGES ON COAL, OUTPACES ASIA - REUTERS
India’s coal-fired power output has increased much faster than any other country in the Asia Pacific since Russia’s invasion of Ukraine ...
Friday, 18 November 22
REALITIES OF LOI LIABILITIES - BALTIC EXCHANGE
KNOWLEDGE TO ELEVATE
The cargo misdelivery claim in Trafigura Maritime Logistics Pte Ltd v. Clearlake Shipping Pte Ltd (Miracle Hope) [2022] E ...
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- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Economic Council, Georgia
- Trasteel International SA, Italy
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- Malabar Cements Ltd - India
- Dalmia Cement Bharat India
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Eastern Energy - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- Siam City Cement - Thailand
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indian Oil Corporation Limited
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- GMR Energy Limited - India
- Deloitte Consulting - India
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Interocean Group of Companies - India
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
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