Fitch expects that SOCAR will spend nearly USD5.8bn over 2013-2015 on capex.
The company has little flexibility to postpone / phase out capex as most funds are earmarked for its upstream to arrest brownfield production decline, to meet its obligations under the PSAs and to complete investment projects that are already underway. These include the construction of the 10m ton STAR refinery in Turkey scheduled to be completed in 2017.
Fitch experts believe that an aggressive investment programme and/or acquisitions resulting in a significant and sustained deterioration of credit metrics would be negative for the ratings.
SOCAR's ratings could be affected by a sovereign rating action. Evidence of weakening state support would be negative for the ratings. An increase in the level of state support through e.g., government guarantees for a large portion of the company's debt, coupled with a sovereign rating upgrade would be positive for the ratings.
Satisfactory Liquidity, Large Maturities SOCAR had AZN1,263m of cash at 31 December 2012, which was insufficient to cover its short-term debt maturities of AZN1,895m on that date. A large portion of SOCAR's cash including short-term deposits is held at the state-owned International Bank of Azerbaijan (IBA, 'BB'/Stable).
Fitch notes that SOCAR's short-term maturities at end-12 amounted to about 40% of its gross debt. In March 2013, SOCAR placed a 4.75% coupon USD1bn bond due in 2023, to refinance part of its existing debt and for its capital investment program.
78% of SOCAR's debt at 31 December 2012 was denominated in USD including the USD500m bond due in 2017, and about 60% of SOCAR's debt had floating rates.-0--
Economics
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SOCAR President Rovshan Najaf met with the Minister of State for Petroleum of Pakistan, Musadik Malik, on January 18. According to SOCAR, the discussions covered joint energy projects, achieved outcomes, and cooperation opportunities in various areas, including the trade of petroleum products.
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The State Statistics Committee of Azerbaijan reported that in 2024 investments in fixed assets reached 21,435.1 million manats, which is 0.7% less than in 2023. While overall figures edged lower, the sectoral breakdown reveals notable disparities between the oil and gas sphere and non-oil industries.
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Azerbaijan’s industrial enterprises and individual entrepreneurs reported a modest 1.1% year-on-year increase in industrial production during 2024, reaching an output valued at 64.1 billion manat. The State Statistics Committee attributed the overall growth to a 0.5% expansion in the oil and gas sector, while non-oil and gas industries surged by 7.3%.
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Global diesel prices and refining margins have spiked following the latest U.S. sanctions targeting Russian oil trade, as markets brace for reduced supply, analysts and LSEG data indicate.
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