Fitch affirms Gazprom at 'BBB-' with negative outlook

Fitch Ratings on August 24, 2015, affirmed PJSC Gazprom's Long-term foreign currency Issuer Default Rating (IDR) at 'BBB-' with the Negative Outlook.

The IDR and Outlook are capped by that of Russia (BBB-/Negative), Fitch said in a statement.

Gazprom's ratings reflect the rating agency's expectations that it will remain a vital gas supplier to Europe over the medium term. European off-takers are still limited in their ability to diversify gas imports as Europe is coping with declining indigenous gas production. Gazprom's new projects, mainly the Eastern Gas Program to supply gas to China and, to a lesser extent, planned LNG expansion, should enhance its business profile in the long term but they could stretch leverage and free cash flow (FCF). Gazprom's access to international debt markets remains constrained due to geopolitical tensions over Ukraine, but its liquidity is strong. Fitch says it also believes the latest U.S. sanctions against the Yuzhno-Kirinskoye oil and gas field should not materially affect its operations.

Gazprom is Russia's largest state-owned energy company, engaged in natural gas production, transportation and distribution, as well as crude production and refining, heat and electricity generation. It is also the largest publicly listed oil and gas company in the world by hydrocarbon reserves and production. In 2014, Gazprom produced 445 billion cubic metres (bcm) of natural gas and generated RUB 2.096 trillion ($55 billion) EBITDA. Its end-2014 funds from operations (FFO) adjusted net leverage was 1.1x, one of the lowest levels of global oil and gas companies.