Azerbaijan, Baku, July 18 / Trend A. Badalova /
Fitch Ratings has upgraded Kazakh Tengizchevroil Finance Company SARL's (TCO Finance) series A senior secured notes to 'BBB' from 'BBB-', the agency reported on Wednsday. The outlook is stable.
According to the report, the upgrade reflects an improvement in the project's risk profile for the period leading up to the maturity of the notes in November 2014, together with the stable operating performance and strong financial performance of the operating company, Tengizchevroil LLP (TCO).
"TCO is exposed to production volume risk and to volatile commodity prices, Fitch says. However, it continues to benefit from favourable oil market conditions achieving an average crude oil selling price of $113 in the first half of 2012 and $111 in 2011.
The agency noted that TCO's operating performance remains stable with crude production at the level of 560,000 barrels of oil per day (bopd) in 2011 and 548,700 bopd in the first half of 2012.
In addition, according to the report, positive rating considerations are TCO's continued ability to offset the oil export duty against royalties; the clearing of the 'mining allotment' charges; reduced risk of oil transportation constraints; and a shorter than previously anticipated overlap between the remaining maturity of the notes and new capex funding requirements.
"TCO continues to ship about 40 percent of its oil exports by rail while the rest is shipped via the CPC Pipeline. Following the progress on the CPC Pipeline expansion project, TCO expects to increase shipments by CPC in 2013/2014. The risk of new production capacity causing transportation bottlenecks has also decreased," Fitch noted.