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Asia-Pacific O&G Firms To Overcome Fluctuating Crude Prices, Says S&P
KUALA LUMPUR, July 20 (Bernama) -- Oil and gas (O&G) firms in Asia-Pacific are expected to successfully overcome the fluctuating crude oil prices, potential global economic slowdown, heavy investments and liquidity pressures, said Standards & Poor's Rating Services (S&P).
In an industry report, 'Strong demand will enable Asia-Pacific oil and gas companies to overcome price, investment and liquidity pressures', S&P said it expected the performance of the regional companies it rated to remain broadly stable reflecting the strong regional demand for energy.
It said crude oil prices were likely to remain volatile in the next nine to 12 months with some potentials for weakening.
S&P said demand could also slowed down given the uncertainty surrounding the pace of global economic growth.
"This uncertainty is largely attributable to the European sovereign debt crisis, weaker economic data from US, moderating economic growth in China and inflation and rising interest rates throughout the Asia-Pacific," it said.
Nevertheless, S&P believed that most companies would effectively manage their liquidity through sufficient cash balances, strong operating cash flows, or solid access to external financing attributable to their strong business position or government linkage.
"Overall, O&G companies in Asia-Pacific should benefit from the increasing demand for oil while supply remains tight," it said.
S&P credit analyst, Andrew Wong, said although exploration and production (E&P) companies had gained from improved prices this year compared with last year, the credit outlook for 18 per cent of the E&P companies was negative, largely due to the scope, scale and funding for investment projects.
He said all the refining and marketing companies had stable outlooks.
"Their profitability, however, varies depending on the regulatory environment in which they operate, the stage at which they are in investment cycle, and the complexity of their refining assets," he said.
In an industry report, 'Strong demand will enable Asia-Pacific oil and gas companies to overcome price, investment and liquidity pressures', S&P said it expected the performance of the regional companies it rated to remain broadly stable reflecting the strong regional demand for energy.
It said crude oil prices were likely to remain volatile in the next nine to 12 months with some potentials for weakening.
S&P said demand could also slowed down given the uncertainty surrounding the pace of global economic growth.
"This uncertainty is largely attributable to the European sovereign debt crisis, weaker economic data from US, moderating economic growth in China and inflation and rising interest rates throughout the Asia-Pacific," it said.
Nevertheless, S&P believed that most companies would effectively manage their liquidity through sufficient cash balances, strong operating cash flows, or solid access to external financing attributable to their strong business position or government linkage.
"Overall, O&G companies in Asia-Pacific should benefit from the increasing demand for oil while supply remains tight," it said.
S&P credit analyst, Andrew Wong, said although exploration and production (E&P) companies had gained from improved prices this year compared with last year, the credit outlook for 18 per cent of the E&P companies was negative, largely due to the scope, scale and funding for investment projects.
He said all the refining and marketing companies had stable outlooks.
"Their profitability, however, varies depending on the regulatory environment in which they operate, the stage at which they are in investment cycle, and the complexity of their refining assets," he said.
Source: Bernama
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