ASTANA, Kazakhstan, June 24. Fitch Ratings has affirmed KazMunayGas' (KMG, Kazakhstan's national oil and gas company) Long-Term Issuer Default Rating (IDR) at 'BBB' with a stable outlook, Trend reports.
At the same time, KMG's short-term IDR is affirmed at 'F2'. As Fitch noted, KMG's rating is equal to that of its ultimate shareholder, Kazakhstan (BBB/Stable).
Fitch views KMG's 'decision-making and oversight' as'strong', due to control by the government and the company's role in implementing the government's energy policies.
At the same time, Fitch assesses KMG's 'preservation of government policy role' as 'Strong', based on its important role in the government's energy strategy, its participation in most of Kazakhstan's large oil projects, and its control over the oil distribution infrastructure. However, the company's role as a public service provider is limited as it is export-oriented.
In Fitch's view, KMG's 'bb' Standalone Credit Profile is constrained by its high reliance on oil export routes via Russia and its focus on a single country. Its upstream unit operating costs are low, though its cash flow generation is affected by high industry taxes and low domestic prices.
In addition, Fitch expects KMG's production to remain broadly stable in the next four years, supported by an adequate proved reserve life of 16 years (including joint ventures).
As Fitch noted, in 2023, almost all Kazakh oil exports were through Russia, as Kazakhstan is a landlocked country. Kazakhstan can export limited volumes through the Kazakhstan-China pipeline, via sea transportation through Azerbaijan, Georgia, and Türkiye, or by railway. Those options, however, are significantly more expensive and could require further investments in infrastructure.
The rating agency assumes that Kazakhstan will continue to be able to export oil through Russia, and its forecast incorporates no sizeable politically-motivated interruptions to export flows.
Meanwhile, the volume of oil and gas condensate production by KazMunayGas amounted to 23.5 million tons (486,000 barrels per day) in 2023. The volume of oil and gas condensate production has grown by 6.5 percent since 2022.
At the same time, natural and related gas output climbed by 14.8 percent over the reporting period, reaching 9.45 billion cubic meters.