Fitch Ratings affirms National Company KazMunaiGaz at 'BBB' on Stake Increase in Kashagan
16.01.08 10:23
/Fitch Ratings, London/Moscow, January 15, 08/ - Fitch Ratings has today
affirmed National Company KazMunaiGaz's (NC KMG) Long-term foreign
and local currency Issuer Default ratings (IDR) at 'BBB' and Short-term
foreign currency IDR at 'F3'. The Outlooks for the Long-term foreign and
local currency IDRs are Negative.
The affirmation follows yesterday's announcement that the company plans
to increase its stake in the Kashagan oilfield to 16.81% from 8.33%,
equalising its participation with that of the international members of the
consortium of which NC KMG is part. The stake increase will cost
USD1.78bn; it is to be paid in three equal instalments, starting from the
commencement of commercial production at the Kashagan field. The
payments are expected to be financed by cash flows from the project;
however, alternatives are being considered.
Much of the government's interest in increasing NC KMG's participation in
the Kashagan field, which is operated primarily by international oil
companies, can be explained by the importance of the field for oil output
growth in Kazakhstan. Fitch notes that the oil and gas industry is crucial to
the country's economy, contributing 16% of its GDP. Furthermore, the
current oil price environment is favourable, underpinning the economics of
investments in the Kashagan field.
Fitch believes that this transaction will have a limited impact on NC KMG's
financial profile as it is expected to be funded by cash flows from the
Kashagan field. NC KMG had an ample cash position of USD5.2bn at the
end of 9M07 and modest net leverage of 0.5x at FYE06. However, Fitch will
monitor the execution of this deal as well as the potential for higher
investments by NC KMG in the Kashagan field following its increased role in
the project.
Kashagan is the fifth-largest oilfield in the world with reserves of about 7
billion-9 billion barrels of oil equivalent. It is managed by a consortium of Eni
Spa ('AA-' (AA minus)/Stable), ExxonMobil Corporation ('AAA'/Stable), Royal
Dutch Shell plc ('AA+'/Stable), Total SA ('AA'/Positive), ConocoPhillips
('A'/Stable), Inpex and NC KMG. In addition to NC KMG's stake increase,
the consortium agreed to pay about USD2.95bn-5.4bn, depending on the oil
price, to Kazakhstan ('BBB'/Negative) for project delays and cost overruns.
NC KMG is a national oil and gas holding company in Kazakhstan. It is a
wholly state-owned enterprise with operations in upstream oil and gas
exploration and production, oil refining and oil and gas transportation and
distribution.
Contacts:
Angelina Valavina, London, Tel: +44 (0)20 7682 7383;
Valentina Goryunova, Moscow, Tel: +7 (495) 956 7096
Media Relations:
Alla Izmailova, Moscow, Tel: +7 495 956 9901/9903,
alla.izmailova@fitchratings.com;
Peter Fitzpatrick, London, Tel: +44 (0)20 7417 4364
[2008-01-16]