Fitch Ratings: Capex to Offset Asia-Pacific Oil and Gas Earnings Recovery in 2021

(The following statement was released by the rating agency)
Fitch Ratings-Mumbai/Hong Kong/Singapore-23 November 2020: Fitch Ratings
expects the credit metrics of most Asia-Pacific oil and gas issuers to improve
marginally or remain flat in 2021, with a recovery in the crude oil (Brent)
price to USD45/barrel offset by higher capex. We have a negative outlook on
the sector, with the majority of Negative Outlooks on Indian and Malaysian
Fitch-rated issuers driven by the Negative Outlooks on their respective
sovereigns due to strong state linkages or because they are key subsidiaries
of national oil companies (NOC). Recovering product demand in China should
expand downstream margins in 2021. We expect this, along with higher oil
prices, to modestly improve the credit metrics of most Chinese NOCs, except
for China National Petroleum Corporation (CNPC, A+/Stable). We think the
financial metrics of Chinese NOCs will remain strong for their respective
Standalone Credit Profiles (SCP), except for CNPC, which has moderate SCP
headroom. We expect only a gradual demand recovery in India during 2021.
Stronger gross refining margins from 2020's near historical lows and healthy
marketing margins should keep the credit metrics of state-owned Indian oil
marketing companies in line with their SCPs, though with limited headroom
given continued high capex. The credit metrics of all south-east Asian oil and
gas companies, except for Vietnam Oil and Gas Group (BB/Stable), should
improve in 2021, with higher earnings from rising oil and gas prices and a
gradual demand recovery. Financial profiles should remain adequate for the
companies' ratings and SCPs. Declining domestic production amid maturing
oilfields is a challenge for most Asia-Pacific nations; we expect this to
drive high capex at NOCs to maintain domestic production levels while
expanding overseas investments. The full report, "Fitch Ratings 2021 Outlook:
Asia-Pacific Oil and Gas", is available at www.fitchratings.com or by clicking
the link in this media release. Contact: Muralidharan Ramakrishnan Senior
Director +65 6796 7236 Fitch Ratings Singapore Pte Ltd. One Raffles Quay South
Tower #22-11 Singapore 048583 Tony Wu Associate Director +852 2263 9639 Mohit
Soni Associate Director +91 22 4035 6163 Shahim Zubair Director +65 6796 7243

Media Relations: Peter Hoflich, Singapore, Tel: +65 6796 7229, Email:
peter.hoflich@thefitchgroup.com
Alanis Ko, Hong Kong, Tel: +852 2263 9953, Email: alanis.ko@thefitchgroup.com
Bindu Menon, Mumbai, Tel: +91 22 4000 1727, Email:
bindu.menon@fitchratings.com
Leslie Tan, Singapore, Tel: +65 6796 7234, Email: leslie.tan@thefitchgroup.com
Wai Lun Wan, Hong Kong, Tel: +852 2263 9935, Email:
wailun.wan@thefitchgroup.com

Additional information is available on www.fitchratings.com


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