LNG, natural gas, and oil producers, oil and gas pipelines, and oil refiners will be pressured by low demand and falling oil prices in 2016, according to a new Fitch Ratings report. "In addition to demand and pricing issues, the LNG industry is also facing new liquefaction capacity coming on line," said Jelena Babajeva, Director. "Additionally, market dynamics may drive lower throughput across the value chain, including pipelines, LNG facilities and refineries, due to domestic oversupply of natural gas and tepid global demand for hydrocarbons."

Key factors affecting oil and gas include:

Oil and gas projects in the Middle East are exposed to market risk and have seen a reduction in cash flows but remain resilient due to low break-even prices.

Pricing pressures in Asia may intensify with the development of new trading hubs, with incumbent producers protecting market share.

U.S. projects should be insulated from the impact of lower oil pricing due to the contractual price risk transfer to corporate counterparties.
Source: Fitch Ratings