ASTANA, Kazakhstan, December 28. Standard & Poor's has confirmed the ratings of the Kazakh national oil and gas company KazMunayGas JSC (KMG) at the level of "BB+" with a stable outlook, Trend reports.
Standard & Poor's expects that in the current oil pricing environment, KazMunayGas will continue to post solid results, with funds from operations (FFO) to debt close to 60 percent in 2023–2025.
The rating agency has upgraded KMG's standalone credit profile to 'bb' from 'bb-' to reflect the credit metrics headroom the business has established against the rating-commensurate 45 percent FFO-to-debt on a multiyear average basis.
Standard & Poor's believes that unprecedented state backing for KMG is still extremely likely.
The Caspian Pipeline Consortium's event risks remain prominent in the midst of the Russia-Ukraine crisis. According to Standard & Poor's, at least 65 percent of KMG's EBITDA (including dividends from joint ventures) in 2023 is linked to oil exports through CPC, and more than 80 percent to exports through Russia, including the Atyrau-Samara pipeline, which also transports Kazakhstani oil to the port of Novorossiysk via Transneft's oil pipeline.
A number of incidents led to brief closures of the pipeline in 2022, while more recent attacks on the Novorossiysk port in Russia highlight the security risks around the Black Sea, therefore, Standard & Poor's thinks that the current ample cash balances and solid metrics make risks related to short-term disruptions to the pipeline manageable.
At this point, the rating agency does not incorporate any lengthy disruptions to CPC in our base-case scenario, but shutdowns exceeding three-to-five days would start affecting KMG's oil production and key assets, resulting in weaker cash flows and credit metrics.
