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Standard & Poor's downgrades Asia-Pacific energy firms as oil prices tumble

Published 26/01/2016, 08:19 pm
© Reuters.  Standard & Poor's downgrades Asia-Pacific energy firms as oil prices tumble
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* Downgrades focus on Chinese, Australian companies

* Southeast Asian national energy firms remain unchanged

By Henning Gloystein

SINGAPORE, Jan 25 (Reuters) - Rating agency Standard and Poor's (S&P) on Tuesday downgraded several oil and gas companies in the Asia-Pacific region as a lower oil price forecast undermines the sector's revenue and credit outlook.

In one of history's steepest price falls, crude LCOc1 has tumbled more than 70 percent since mid-2014 to under $30 a barrel, pulling down the share prices of energy firms, as producers pump 1 million to 2 million barrels of oil each day in excess of demand, in a war of discounts for market share.

S&P said that it had taken various rating actions on oil and gas companies in the Asia-Pacific region, including China and Australia, after it cut its Brent crude oil price assumptions for this year and 2017 to $40 and $45 per barrel, respectively.

"We don't believe China's national oil companies will be able to stabilize their cash flow adequacy amid the current price environment, despite their efforts to cut capital expenditure and costs," the agency said.

The company said it had therefore lowered its credit profile for companies, including China Petroleum & Chemical Corp 600028.SS and China National Offshore Oil Corp. (CNOOC) 0883.HK in China and for Woodside Petroleum WPL.AX and Santos STO.AX in Australia.

However, S&P said the revised oil price outlook had no impact on the ratings and outlooks on national oil companies in South and Southeast Asia, such as Indonesia's PT Pertamina, Malaysia's Petroliam Nasional (Petronas), Thailand's PTT Public or India's Oil and Natural Gas Corp. (ONGC).

"The companies all have an important policy role as major energy suppliers and providers in their respective countries... Therefore, the ratings and outlook on these four companies remain the same as those on their respective sovereigns."

The Standard & Poor's reviews come days after competing rating agency Moody's put 175 commodity firms, including in Asia, on review over a bleak outlook.

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