According to a press release, the S & P Global Ratings Agency has upgraded the long-term rating of the KazMunayGas International oil company based in Romania from “B minus” to “B”, and the associated perspective being a stable one.

“Improvement reflects our expectations of strong performance in 2019-2020 and improving KazMunayGas International's liquidity profile” underlines S&P Global Ratings.    

After the solid results recorded by KazMunayGas International in the first half of the current year, the valuation agency expects an operational profit of $ 250-270 million in both 2018 and 2019 and one of $ 260-280 million in 2020. Also, S & P estimates, KazMunayGas International will generate a positive cash flow in 2019-2020, which will help further reduce the leverage of the company.

“The main risks to operational cash-flow estimates are: the result of the DIICOT investigation and the point when KazMunayGas International will acquire 26.7% stake in Rompetrol Rafinare for $ 200 million” S & P points out.

The stable outlook for KazMunayGas International reflects S & P's view of robust operational performance and debt reduction of the company as well as the potential outcome of the DIICOT investigation. Nevertheless, the constant position is based on the assumption that KMGI will remain an important subsidiary of mother Group KMG, which will be interested in helping the company avoid any financial issues.    

S & P Global Ratings warns that it could decide on a negative action on the KMGI rating if the outcome of the DIICOT investigation will be unfavorable for KazMunayGas International, leading to a fine above expectation. This could lead to higher leverage and weaken liquidity. S & P might also revise the KMGI rating if refining margins will drop sharply.   

Otherwise, S & P states that the probability of a new improvement in the KazMunayGas International rating over the next 12-18 months is low. Such a scenario would require greater clarity on the risks of KMGI's indebtedness, such as the DIICOT investigation and the financing of the acquisition of the 26.7% shares owned by the Romanian State at Rompetrol Rafinare for $ 200 million.

JSC NC KazMunayGas is Kazakhstan's national oil and gas company, carrying out exploration, production, refining and transportation activities, representing the interests of the state in the oil and gas industry, being a vertically integrated company in a complete cycle of upstream, transportation and processing, to the provision of specialized services in the core industry. KazMunayGas is the majority shareholder of KMG International.

KMG International NV owns and carries out major operations in refining, petrochemicals, retail and trading fields on several international markets. The retail network has over 1,100 fuel stations in Romania, Georgia, Bulgaria and Moldova. The Group carries out operations in upstream, industrial and well services.