Fitch Ratings expects a stable performance for most APAC oil & gas companies in 2023, driving our neutral sector outlook. Our crude oil (Brent) price assumption of USD85/barrel (bbl) (2022: USD100/bbl) should continue to support strong upstream cash flow. We expect downstream profitability to rise modestly with potential demand recovery in China, healthy regional refining margins, and a likely easing in pricing pressure for retail fuels across some countries.

Fitch expects the credit metrics of most integrated national oil companies (NOCs) – both across China and south-east Asia (SEA) – to remain largely stable, driven by robust operating cash flow, steady investment, and marginally lower shareholder returns. Credit metrics of state-owned Indian oil marketing companies (OMCs) should improve, given our expectations of recovery in marketing margins after losses in 2022. We expect small/ medium upstream oil & gas companies to continue to strengthen their balance sheets, aided by high oil prices. Credit profiles of liquefied natural gas (LNG) producers should remain robust; benefits from high spot gas prices are likely to remain limited, as most sales are under oil-linked long-term contracts.

Government-related entities (GREs), or subsidiaries of GREs, dominate the Fitch-rated oil & gas entities in APAC; ratings are directly or indirectly credit-linked to those of their respective state. Consequently, most entities are on a stable outlook and rated at investment-grade.
Source: Fitch Ratings