DOHA: Fitch Ratings has affirmed RasGas’s senior secured bonds at ‘A+’ with Stable Outlook.
The affirmations reflect the close operational and strategic ties that link RasGas’s debt ratings to the state of Qatar (AA/Stable), as assessed by Fitch’s Parent and Subsidiary Rating Linkage criteria.
Qatar’s strong dependence on the revenue from its hydrocarbon sector, of which RasGas is a vital component, puts the project in an exceptionally strong position in terms of criticality of support. The Stable Outlook reflects the Outlook on Qatar’s rating as well as sound operating and financial performance of RasGas.
The standalone rating of RasGas’s bonds remains ‘A+’ due to the project’s high financial flexibility to withstand stresses on oil and gas prices as observed in the current operating environment.
The strong strategic ties derive from RasGas’s 40 percent contribution to Qatar’s LNG output. Hydrocarbons are the cornerstone of Qatar’s economy, contributing about 80 percent of budget revenues over the past five years. The moderate operational ties are reflected in high management control through the board composition of RasGas.
The support to RasGas from the state of Qatar is expected to be forthcoming in case of need. However, Fitch acknowledges that the support may not be equivalent to servicing of the entity’s debt due to the absence of explicit guarantees, and that support may be routed through Qatar Petroleum rather than coming directly from the government. These risks are reflected in the ‘A+’ rating being two notches down from the sovereign rating.
Fitch considers that RasGas’s standalone credit quality remains consistent with the ‘A+’ rating due to its high financial flexibility and strong competitive position within the global LNG industry to withstand major market downturns as is currently taking place. RasGas’s technical performance continues to be positive, as demonstrated by high utilisation and reliability factors and stable production levels.
RasGas’s 2015 revenues were 38 percent lower than in 2014 due to lower oil and LNG selling prices, but still very strong at $17.4bn. Revenues from condensates and other oil products (about 25 percent of total) reflected the full decline of oil prices while the decline in revenues from LNG sales was moderated by the contractual pricing formulas in the long-term agreements. Average achieved Brent price from the sale of condensates and other oil products was $52.5/bbl while average achieved LNG selling price was $8.94/Mmbtu. Fitch notes a higher share of LNG sold on a spot basis (22 percent) in 2015, which was mainly due to lower volumes taken by Petronet prior to a pricing formula re-negotiation at the end of 2015. Despite the decline in 2015 revenues, debt metrics remained solid and debt service coverage ratio (DSCR) was 12.7x, above Fitch’s base case expectation.
Fitch expects debt metrics to remain solid, helped by the implementation of some operating cost savings. Under the conservative Fitch rating case, which now assumes long-term stress case oil price of USD40/bbl as well as output and cost stresses, the average DSCR over the remaining debt life until 2027 is 5.9x.
“We estimated in our January 2016 report that RasGas’s break-even prices for servicing its senior debt are around USD 20/bbl for oil and USD2/Mmbtu for LNG over 2016-2018, rising to USD28/bbl and USD2.8/Mmbtu in 2019 when bullet debt repayment is due”, Fitch said. The Peninsula
DOHA: Fitch Ratings has affirmed RasGas’s senior secured bonds at ‘A+’ with Stable Outlook.
The affirmations reflect the close operational and strategic ties that link RasGas’s debt ratings to the state of Qatar (AA/Stable), as assessed by Fitch’s Parent and Subsidiary Rating Linkage criteria.
Qatar’s strong dependence on the revenue from its hydrocarbon sector, of which RasGas is a vital component, puts the project in an exceptionally strong position in terms of criticality of support. The Stable Outlook reflects the Outlook on Qatar’s rating as well as sound operating and financial performance of RasGas.
The standalone rating of RasGas’s bonds remains ‘A+’ due to the project’s high financial flexibility to withstand stresses on oil and gas prices as observed in the current operating environment.
The strong strategic ties derive from RasGas’s 40 percent contribution to Qatar’s LNG output. Hydrocarbons are the cornerstone of Qatar’s economy, contributing about 80 percent of budget revenues over the past five years. The moderate operational ties are reflected in high management control through the board composition of RasGas.
The support to RasGas from the state of Qatar is expected to be forthcoming in case of need. However, Fitch acknowledges that the support may not be equivalent to servicing of the entity’s debt due to the absence of explicit guarantees, and that support may be routed through Qatar Petroleum rather than coming directly from the government. These risks are reflected in the ‘A+’ rating being two notches down from the sovereign rating.
Fitch considers that RasGas’s standalone credit quality remains consistent with the ‘A+’ rating due to its high financial flexibility and strong competitive position within the global LNG industry to withstand major market downturns as is currently taking place. RasGas’s technical performance continues to be positive, as demonstrated by high utilisation and reliability factors and stable production levels.
RasGas’s 2015 revenues were 38 percent lower than in 2014 due to lower oil and LNG selling prices, but still very strong at $17.4bn. Revenues from condensates and other oil products (about 25 percent of total) reflected the full decline of oil prices while the decline in revenues from LNG sales was moderated by the contractual pricing formulas in the long-term agreements. Average achieved Brent price from the sale of condensates and other oil products was $52.5/bbl while average achieved LNG selling price was $8.94/Mmbtu. Fitch notes a higher share of LNG sold on a spot basis (22 percent) in 2015, which was mainly due to lower volumes taken by Petronet prior to a pricing formula re-negotiation at the end of 2015. Despite the decline in 2015 revenues, debt metrics remained solid and debt service coverage ratio (DSCR) was 12.7x, above Fitch’s base case expectation.
Fitch expects debt metrics to remain solid, helped by the implementation of some operating cost savings. Under the conservative Fitch rating case, which now assumes long-term stress case oil price of USD40/bbl as well as output and cost stresses, the average DSCR over the remaining debt life until 2027 is 5.9x.
“We estimated in our January 2016 report that RasGas’s break-even prices for servicing its senior debt are around USD 20/bbl for oil and USD2/Mmbtu for LNG over 2016-2018, rising to USD28/bbl and USD2.8/Mmbtu in 2019 when bullet debt repayment is due”, Fitch said. The Peninsula
