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Russian Oil Producers Credit to Remain High in 2017 Due to Currency, Tax Rates

© AFP 2021 / Emmanuel DunandA sign for Moody's rating agency is displayed at the company headquarters in New York
A sign for Moody's rating agency is displayed at the company headquarters in New York - Sputnik International
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A weak rouble, favourable domestic taxation system for oil exports and stable oil production supported by intensified drilling are among the factors that will support Russian integrated oil and gas companies' profitability during 2017, according to Moody’s Vice President Denis Perevezentsev.

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WASHINGTON (Sputnik) — Russian oil and gas companies’ credit quality will remain strong in 2017 due to a weak currency and advantageous tax conditions, Moody’s Investors Service said in a press release on Monday.

"A weak rouble, favourable domestic taxation system for oil exports and stable oil production supported by intensified drilling are among the factors that will support Russian integrated oil and gas companies' profitability this year," Moody’s Vice President Denis Perevezentsev said.

The rating agency said it expects Russian oil producers to increase crude oil exports due to the reduction of export duties.

"The rouble's weak exchange rate makes it a more attractive proposition than sending crude oil to domestic refineries," the release added.

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However, the agency noted that the Russian gas and oil company Gazprom may generate negative cash flow due to higher capital spending, meanwhile the Russian oil giant Rosneft may struggle with cash flow.

Generally, growth at new "greenfield" sites has helped offset declines in western Siberia oilfields and increased drilling at mature fields has supported overall oil and gas production.

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