Fitch Affirmed the Ratings of "Gazprom oil" at "BBB-"
OREANDA-NEWS Fitch international rating Agency confirmed Gazprom's long-term Issuer default rating (IDR) in foreign and national currency at the level of BBB -, the forecast is positive, the Agency said.
Short-term IDRs of foreign currency affirmed at 'F3'. "We believe that Gazprom will remain the largest gas supplier to Europe, which is its key market, and that it will be able to maintain its market share, given the low production costs," the report said.
It is noted that the level of the company's IDR corresponds to the rating of its controlling shareholder — the Russian Federation, whose rating is now at the level of "BBB-" with a positive forecast. Gazprom's independent rating is located in the a-rating category, taking into account the company's strong operational and financial performance, as well as country-specific risks and corporate governance risks. "Probably, we will raise the RDE of Gazprom to the level of "BBB" if we raise the corresponding rating of the sovereign, " the Agency notes.
Fitch predicts that gas exports to Europe (including Turkey) will reach a record 200 billion cubic meters in 2018, aided by the company's increased flexibility in pricing and increased demand for gas.
"The wave of new LNG projects around the world, mainly in the US and Australia, did not significantly affect the change in the balance of power in the European gas market, as demand for LNG at the same time increased in Asia and Latin America," the Agency's analysts note. Fitch expects the average effect of launching new LNG projects in the US, "not as acute" as the Agency predicted earlier. "In addition, the global LNG market may go into deficit in 2020-2022... which will be an additional factor in the growth of gas sales for Gazprom"- adds Fitch.
The Agency positively assesses the diversification of the company's activities and its promotion in China.
Fitch also believes that the Nord stream 2 gas pipeline project will eventually be implemented, despite Denmark's opposition and the threat of us sanctions. Fitch analysts also predict that the conflict between Gazprom and Ukrainian Naftogaz will eventually be resolved, and the Russian company will continue to supply some volumes of gas to Europe through Ukraine in the future.