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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, 19 October 22
MARKET INSIGHT - INTERMODAL
The LNG market remains extremely tight, and as a result adding further pressure on the vessel charter market, which is already stretched due to the ...
Sunday, 16 October 22
COULD A RETURN TO SHALE EXPLORATION BE PART OF THE SOLUTION TO EUROPE'S GAS SUPPLY PROBLEM? - WOOD MACKENZIE
The European gas market is in turmoil. Russia’s invasion of Ukraine has shaken things up, triggering a complete rethink of European energy st ...
Thursday, 13 October 22
THERMAL COAL PRICES RETREAT AS WINTER SUPPLY FEARS EASE - REUTERS
The prices of key thermal seaborne coal grades are retreating amid signs that supplies will be sufficient to meet winter demand in both Europe and ...
Thursday, 13 October 22
SPOT COAL BIDDING: CHINESE FIRM WANTS REVISED MECHANISM - BUSINESS RECORDER
Chinese company M/s Huaneng Shandong Ruyi (Pakistan) Energy Limited (HSR) has cautioned National Electric Power Regulatory Authority (Nepra) that i ...
Thursday, 13 October 22
OPEC DOWNGRADES CRUDE OIL DEMAND, AS WORLD ECONOMY ENTERS SLOWDOWN
Crude Oil Price Movements
The OPEC Reference Basket (ORB) declined m-o-m by $6.58 in September, or 6.5%, to average $95.32/b. Pressure from equ ...
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- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- SN Aboitiz Power Inc, Philippines
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Bharathi Cement Corporation - India
- Price Waterhouse Coopers - Russia
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Central Java Power - Indonesia
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- MS Steel International - UAE
- Heidelberg Cement - Germany
- Essar Steel Hazira Ltd - India
- PowerSource Philippines DevCo
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Planning Commission, India
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Bulk Trading Sa - Switzerland
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- PTC India Limited - India
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
- Goldman Sachs - Singapore
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Trasteel International SA, Italy
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Grasim Industreis Ltd - India
- Indian Energy Exchange, India
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- European Bulk Services B.V. - Netherlands
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
- The University of Queensland
- Orica Australia Pty. Ltd.
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- SMG Consultants - Indonesia
- Mercator Lines Limited - India
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Kartika Selabumi Mining - Indonesia
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- LBH Netherlands Bv - Netherlands
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