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S&P revises up Azerbaijani SOCAR's stand-alone credit profile

Oil&Gas Materials 1 March 2023 16:30 (UTC +04:00)
S&P revises up Azerbaijani SOCAR's stand-alone credit profile
Kamran Gasimov
Kamran Gasimov
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BAKU, Azerbaijan, March 1. Standard & Poor’s (S&P) Global Ratings agency affirmed the long-term issuer credit and issue ratings on SOCAR (State Oil Company of Azerbaijan) and its senior secured debt at 'BB-', and revised up the stand-alone credit profile (SACP) from 'b-' to 'b', Trend reports from the agency.

According to the agency, the stable outlook reflects its views that SOCAR maintains manageable liquidity commitments, and its operational performance remains solid, with unchanged state support considerations.

“It also reflects our anticipation there will be no major delays, cost overruns, or operating issues at the company's capex projects and core operations, and no major changes in SOCAR's very strong link with the government,” the agency said.

Besides, according to S&P, SOCAR is benefiting from currently elevated prices for commodities, which will boost its earnings and cash flow in 2022-2024 and improve indicators.

“After a relatively weak 2020 with depressed prices for O&G [oil and gas], the company's earnings materially improved on the back of a much more supportive market environment,” the agency further said.

S&P noted demonstration of a significant growth in earnings and cash flows by SOCAR, and forecasted record consolidated EBITDA [earnings before interest, taxes, depreciation and amortization] of about 10 billion manat ($5.88 billion) for 2022, compared with 7.8 billion manat ($4.59 billion) in 2021 and just 4.3 billion manat ($2.5 billion) in 2020.

The agency also noted that the rating upgrade may take place as a result of the sovereign rating upgrade.

SOCAR is engaged in exploration of oil and gas fields, the production, processing and transportation of oil, gas and gas condensate, the sale of oil and petrochemicals in the domestic and international markets, the supply of natural gas to industrial enterprises and the population of Azerbaijan, as well as Europe.

The company conducts various activities in countries such as Türkiye, Georgia, Romania, Switzerland, Germany and Ukraine, including trading activities mainly in Switzerland, Singapore and Nigeria.

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