Fitch: Low reserves, high capex test SEA oil issuers
KUALA LUMPUR: Oil and gas companies in Southeast Asia rated by Fitch Ratings face limited improvement in their financial profiles in 2017 despite moderate volume growth as upstream economics.
The rating agency in a report said oil and especially natural gas remained weak, assuming oil price at US$ 45 per barrel in 2017.
Fitch expects low standalone rating headroom for the three national oil companies it rates – PT Pertamina ( Persero) ( BBB/Stable); Petronas (A-/Stable); and PTT Public Company Ltd ( BBB+/ Stable).
Still, their state linkages would buffer their ratings, it added.
Fitch said companies especially PTT Public Company and Petronas would face challenges managing sustainable production growth due to weak reserve replacement from maturing fields and limited exploration success. The rating agency believes these difficulties with modest price recovery will drive capital expenditure (capex), investment, as well as merger and acquisition in 2017.
It said Pertamina, however, should see production growth and will also benefit from strong downstream margins, assuming oil price at US$ 45 per barrel.
Fitch said production at PTT Public Company was likely to stabilise in 2017 before starting to decline from 2018, adding the company also faced uncertainties in relation to the renewal of some substantial resource blocks. — Bernama