Baku, Azerbaijan, Jan. 6
By Azad Hasanli - Trend:
World's oil and gas companies will cut capital investments by 20-25 percent against the background of lower oil prices, the international ratings agency Moody's forecasts.
Oil and gas sector expects an increase in the number of defaults in 2016, the agency said in a report Jan. 6.
The excess supply of oil will continue to put pressure on the world oil market, according to analysts of the agency.
Moody's noted that the oil-producing countries, including the non-OPEC states, won't limit the volume of production due to the struggle for market share.
"The possible lifting of sanctions against Iran will lead to an increase in the supply of oil to the market, which will compensate for the expected decline in production in the US", said the message.
The agency expects that the Brent crude oil will cost an average of $43 per barrel in 2016, and then the price will rise to $48 and $53 per barrel in 2017 and 2018, respectively.
"Low commodity prices have affected the cash flow and liquidity of oil and gas companies, which worsened their already limited financial flexibility. It also greatly weakened the companies involved in drilling and provision of services in the oil and gas sector ", read the message.
Moody's also noted that even the large diversified companies will face a weakening of financial flexibility and increase in financial leverage.
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