Fitch makes a negative forecast for oil and gas sector of Russia –Reuters

The forecast for the Russian oil and gas companies for 2016 is negative due to the expected low oil prices, tax growth, termination of oil extraction growth, as well as the growing negative effect from the western sanctions, Fitch reports.

The debts of the majority of companies are likely to stay affordable for their ratings but the rating forecast for the entire sector is also negative as the majority of ratings are restricted by the Russia’s sovereign rating “BBB-”, forecast negative.

According to our admissions, in 2016 oil price won’t recover. Moreover, we expect the gas price in Europe, the key market for Gazprom by its revenue, will stay low until the oil price starts to grow in 2017, Fitch reports.

The progressive taxation helped the companies to minimize the negative influence of prices, however, the Russian MET will be raised next year, while export duties don’t change. It will lead to the reduction of EBITDA by 5-10% at the Brent oil price of $55/barrel.