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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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Monday, 31 October 22
CHINA COAL OUTPUT UP 12.3 PCT IN SEPTEMBER - XINHUA
China’s raw coal output posted stable expansion in September, official data showed.
The country produced 390 million tonnes of ...
Wednesday, 26 October 22
BIMCO PUBLISHES UPDATED GENCON CONTRACT
BIMCO has published a revised and updated version GENCON 2022 – one of its flagship contracts within its portfolio of standard contracts for ...
Monday, 24 October 22
KOSPO TO INVITE 400,000 MT OF COAL FOR 3 YEARS
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an international tender for 400,000 MT of 3,800 - 4,400kcal/kg NCV and Sulfur Max 0 ...
Wednesday, 19 October 22
ASIA COULD BE A BRIGHT SPOT AMID GLOBAL DOWNTURN NEXT YEAR, ECONOMISTS SAY - CNBC
Asia — especially Southeast Asia — remains a bright spot, even as the global economy looks set to head into recession next year, econom ...
Wednesday, 19 October 22
WHAT WILL THE GAS MARKET LOOK LIKE IN A NET ZERO WORLD? - WOOD MACKENZIE
The global gas and LNG market faces a number of ‘great unknowns’. With the market in turmoil uncertainty abounds – from the scale ...
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- Indika Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- White Energy Company Limited
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Meenaskhi Energy Private Limited - India
- Sical Logistics Limited - India
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- Energy Development Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- Leighton Contractors Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Tata Chemicals Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Baramulti Group, Indonesia
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- The State Trading Corporation of India Ltd
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Marubeni Corporation - India
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Goldman Sachs - Singapore
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- Independent Power Producers Association of India
- Thai Mozambique Logistica
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- VISA Power Limited - India
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Petron Corporation, Philippines
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
- Kalimantan Lumbung Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Mercuria Energy - Indonesia
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
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