Fitch: Russian oil and gas view positive

Fitch Ratings said in a report that the outlook for the Russian oil and gas sector for 2006 is positive, driven by growing demand in the Far East.

"There is a growing appetite for energy resources in the Far East and Russia is expected to play an important role in satisfying that demand," said Jeffery Woodruff, director with Fitch's energy team in Moscow.

With energy needs increasing, Fitch said it views a continually improving credit environment for integrated oil companies, especially as investments are made in the value-added downstream sector.

Additionally, natural gas consumption is also expected to grow over the course of 2006 and beyond, which will benefit not only Gazprom (BB+/stable), the country's gas monopoly, but also TNK-BP (BB+/positive/B) once that company completes its local gasification project, which it expects to begin constructing in 2006, Fitch added.

Fitch also noted that one of President Vladimir Putin's goals before leaving office in 2008 is to create a Russian energy industry with companies capable of competing with ExxonMobil Corp. (AAA/stable/F1+) or Royal Dutch Shell plc (AA+/stable/F1+).

"This is an admirable goal, but one that may come up short without the infrastructure to support it," said Woodruff.

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