HONG KONG, April 1 (UPI) — Chinese oil and gas companies are among the government-related entities facing credit pressures over the next two years, Standard & Poor’s said Friday.
More than a dozen Chinese companies with close ties to the government, including oil and gas companies like China National Petroleum Corp. and CNOOC Ltd., China’s largest producer of offshore crude oil and natural gas, were reviewed by the ratings agency. Standard & Poor’s said it revised the outlook for those companies from stable to negative.
“These revisions reflect our view that China’s potentially weakening credit strength in the next 24 months might negatively affect the extent of its timely and sufficient extraordinary support to the Chinese government-related entities if needed,” the ratings agency said.
The Chinese National Bureau of Statistics reported the economy in 2015 grew 6.9 percent year-on-year for its slowest rate in a quarter of a century. In outlining its guidance for the year, CNOOC in January said spending of no more than $9.1 billion marked an 11 percent decline from last year.
Crude oil prices have waxed and waned in response to Chinese economic data as investors gauge demand against the glut of oil on the market. Global economies, from the United States to China, are slow to expand fast enough to pull energy markets to balance.
Last month, Christine Lagarde, the managing director of the International Monetary Fund, said from Beijing she was nevertheless impressed with efforts in Beijing to rebalance its economy toward qualitative growth.
Standard & Poor’s said it expected the outlook for companies tied to the Chinese government to move in parallel with outlooks for sovereign credit ratings.
“With all other factors being unchanged, a potential sovereign downgrade would cause the same rating action on these entities,” it said in its justifying statement.