Asian oil companies to see higher profits this year, Moody's says
Asian integrated and upstream oil companies should see their profits rise on the back of the accelerated recovery of their upstream earnings, Moody’s Investors Services says in a new report.
The improved oil-price environment, as well as cost rationalisation, will provide an upside to earnings according to an article in the latest edition of Moody’s “Asia Oil & Gas Quarterly”, a publication that examines the major credit trends in the oil and gas industry across Asia.
"We expect that upstream acquisitions will increase, based on the announced divestment plans of global oil and gas majors in Asia,” said Rachel Chua, a Moody's assistant vice president and analyst.
Moody's says oil prices should stay range-bound and volatile, registering US$40-$60 a barrel for Brent and West Texas Intermediate crude until at least next year.
Prices in the upper half of the band would support increases in crude-oil output, in particular, because of rising US shale-oil production, where production costs have fallen significantly.
As for the Singapore complex gross refinery margin, Moody's says margins will remain volatile this year, driven by continuing oversupply conditions in Asia, and the likely price volatility of the petroleum products' feedstock.
Specifically, Moody's expects a healthy refining margin of $5-US$5.50 a barrel over the next 12-18 months. Such levels are in line with long-term average prices.
