Fitch Ratings affirms SOCAR at "BB+' with "stable" outlook

Oil&Gas Materials 20 November 2021 14:54 (UTC +04:00)

BAKU, Azerbaijan, Nov. 20

By Sadraddin Aghjayev - Trend:

Fitch agency has affirmed rating of the State Oil Company of the Azerbaijan Republic's (SOCAR) to the sovereign rating of the country at "BB+'/Stable", Trend reports on Nov. 20 citing the agency.

According to the agency, the rating is underpinned by state support provided to the company in the form of financial guarantees, cash contributions and equity injections, as well as SOCAR’s social functions and its importance as a state vehicle for the development of oil and gas projects.

Fitch assesses SOCAR’s Standalone Credit Profile (SCP) at ‘b+’.

The agency said that the leverage [ratio of the company's loan capital (debt) to the value of its ordinary shares (equity)] is high but under control.

“SOCAR’s 2020 performance was fairly strong despite weak international oil prices. We expect SOCAR’s earnings to rebound in 2021 on stronger international oil prices and increased regulated fuel prices,” the agency noted.

Besides, according to the agency, the upstream segment is SOCAR’s key profit driver.

“Most oil and gas projects in Azerbaijan operate under production-sharing agreements, in which SOCAR has a minority stake and where it also represents the state and is involved in marketing the latter’s share of crude oil and gas (profit oil),” the agency experts said, adding that the company has stakes in some other major energy projects promoted by the state, such as the Southern Gas Corridor (SGC).


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