ASTANA, Kazakhstan, June 14. Moody's Ratings Agency has affirmed the Baa2 rating with a stable outlook for $2.25 billion of backed senior secured bonds issued by Kazakhstan's Tengizchevroil Finance Company International Ltd. (TCO) due in 2025, 2026, and 2030, Trend reports.
According to Moody's, the ratings' affirmation reflects continued strong operational and financial performance by TCO.
“Moody's expects announced budget and schedule overruns for the Wellhead Pressure Management Project (WPMP) and the Future Growth Project (FGP), together the Expansion Project, to be comfortably accommodated by excess project cashflows,” the agency said.
The costs for both projects are expected to go up by 3-5 percent from the previous estimate of $46.7 billion. The first oil from the Future Growth Project (FGP) is now expected in the first half of 2025, instead of the first half of 2024 as originally planned. It was also noted that operations on the WPMP started at the end of April 2024.
Overall, the Baa2 rating reflects the following strengths:
-TCO has a long-term agreement with the Government of Kazakhstan (also rated Baa2, positive) that gives it exclusive rights to develop hydrocarbons at the Tengiz and Korolev fields until 2033;
-TCO has a strong track record of high facility availability and oil production;
-TCO is an important cash generator for its shareholders, especially Chevron Corporation (rated Aa2, stable) and the Kazakh government;
-There is a cash call mechanism between TCO and its shareholders that helps manage risks until the first oil production from the Expansion Project. However, Moody's does not expect this mechanism to be needed since the project is 99.6 percent complete;
However, these strengths are partly offset by revenues being affected by fluctuating oil prices, the risk of disruptions in transportation through the Caspian Pipeline Consortium (CPC) pipeline, weaker protections for creditors compared to many other rated projects, and large budget payments due in 2025, 2026, and 2030.