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Fitch: Chinese oil and gas sector view positive
Fitch Ratings said in a report that the credit outlook for the Chinese oil and gas sector is positive for 2006, reflecting China's strong domestic demand and its low self-sufficiencies in crude oil, refined products and chemicals, which have forced the Chinese government to financially and politically support the development of the nation's oil and gas industry.
"Credit quality across the Chinese oil and gas companies is robust, supported by healthy hydrocarbon reserves, strong product demand, favorable operating and regulatory regimes, solid government support and impressive cash generation and financial flexibility," said Ma Shang, associate director in Fitch's Asia-Pacific Energy & Utilities team.
The report noted that Chinese government-owned entities, China national Petroleum Corp., China Petrochemical Corp. and China national Offshore Oil Corp., control all of China's oil and gas reserves and most of its refining and petrochemical capacities.
In addition, these entities have allocated most of their reserves and production assets to their overseas-listed flagship subsidiaries: PetroChina Co. Ltd. (foreign currency issuer default rating A/stable outlook), China Petroleum and Chemical Corp. and Cnooc Ltd., (foreign currency IDR BBB+/positive outlook), the agency said.
Fitch noted that China's oil and gas industry has grown rapidly over the past decade driven by sustainable strong economic growth and China is now the second-largest oil consuming country in the world.
The positive view on the sector is however counterbalanced by Chinese oil and gas companies' continuing acquisition of overseas petroleum assets to satisfy the surging domestic demand, the agency added.
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