S&P: ENAP unaffected

Standard & Poor's said Empresa Nacional de Petroleo (foreign currency, A/stable) announced the implementation of a price stabilization mechanism for gasoline and kerosene, which is expected to operate from Sept. 12 until the implementation of a crude oil stabilization fund (Fondo de Estabilización del Petróleo) expected to take place on Oct. 3.

The decision intends to limit the price paid by domestic consumers for some crude oil derivatives in the event that both West Texas Intermediate and refining margins exceed some reference target, the agency said.

Although this mechanism would negatively affect ENAP's cash flow generation in the short term, S&P said it expects the Chilean Government to provide compensation to the company for the lost revenues.

Due to the limited duration of the mechanism and high reference price targets, the agency said it does not consider ENAP's credit quality to be jeopardized at this point.

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