Page 15 - MEOG Week 26 2021

MEOG NEWS IN BRIEF MEOG

provide in-country training on its technology tonnes per year (tpy). QP holds around 70% potential weakening in TAQA’s SCP to bbb,
and equipment, further enhancing skills. stakes in six of its LNG-producing joint for example, due to higher capex than Fitch
Medra’s field engineers in the local Dammam ventures. The joint ventures operate 14 LNG expects, which would result in funds from
area, allowing Adding value to the kingdom. trains with a gross production capacity of operations (FFO) net leverage exceeding 4.7x
Abdur Rahman Adil, general manager at 77mn tpy. for a sustained period is unlikely to affect
Medra Arabia, commented, “Through this BNE TAQA’s support-driven IDR.
collaboration, our engineers will have the Fitch views the business risk of TAQA’s
opportunity to expand their upstream oil and Fitch affirms TAQA at ‘AA-’; regulated transmission and distribution
gas knowledge that will be invaluable to the networks, and the company’s local and
region, our business and customers, and is in outlook stable international contracted electricity
line with Saudi Vision 2030.“ generation and water desalination assets as
The association meets the current need Fitch Ratings has affirmed Abu Dhabi low (excluding Red Oak, which is subject to
for advanced drilling solutions due to the National Energy Company’s (TAQA) Long- merchant risk) since compensation is largely
high temperature and the deepest wells in Term Issuer Default Rating (IDR) and senior based on the availability of capacity rather
the region. Customers today are looking for a unsecured rating at AA-. The Outlook on the than the amount of power or water supplied.
solution that enables them to actively manage Long-Term IDR is Stable. Fitch estimates contracted EBITDA
mud and downhole temperatures to mitigate The affirmation is supported by Fitch’s at about 45% per year in 2020-2023. Its
risk, preserve tool life and avoid costly delays view of the strength of links, under its individual domestic power and water
due to thermal fracture. Government-Related Entities (GRE) Rating operating subsidiaries have strong project-
OSSO Criteria, between TAQA and its majority finance structures, which are supported
indirect shareholder Abu Dhabi (AA/Stable). by contractual features, such as off-take
Fitch assigns QP AA- first TAQA’s Standalone Credit Profile (SCP) of agreements and payment guarantees
bbb+ is more than four notches lower than
supporting opco-level debt service.
time long-term rating the Abu Dhabi sovereign rating, which leads Dhabi Power Corporation PJSC (AD Power)
TAQA has successfully completed the Abu
to a top-down minus one approach under the
Fitch, a ratings agency, assigned Qatar GRE Criteria. asset transfer, resulting in 95% of its EBITDA
Petroleum (QP) a first-time long-term issuer Supportive Parent Links: TAQA is being generated from regulated and quasi-
default rating of AA- with a stable outlook. rated one notch below its indirect majority regulated activities. Within that we expect
The ratings agency sees that QP stands a shareholder the Government of Abu Dhabi. EBITDA from regulated networks to increase
strong chance of receiving state support in Under the GRE Criteria, we assess status, to 58% by 2025 from 50%, improving cash
case of credit challenges, primarily because it ownership and control; and socio-political flow visibility. We have thus increased TAQA’s
is fully owned by the state and implications and financial implications of a default, as SCP debt capacity by 0.2x.
of default would affect Qatar’s oil-and-gas Strong, while we view the support track Fitch expects TAQA’s financial flexibility
value chain. Moreover, the company is a major record-and- expectations factor as Very to remain solid, supported by strong liquidity
contributor to government revenues since it is Strong. This assessment results in a score of and cash flow. Fitch forecasts annual free cash
responsible for generating 34% of GDP. QP’s 35, leading to a ‘top-down minus one’ rating flow (FCF or cash from operations (CFO)
output also powers domestic power and water approach. less capex and dividends) will average about
generation, serves as feedstock for domestic TAQA’s SCP is supported by a regulated AED800 million per year through 2021-
refining, chemicals and metals production. and quasi regulated business model, which 2023, which is also supported by recent debt
Furthermore, QP plans to increase LNG ensures profitability irrespective of actual refinancing.
production capacity in two stages through off-take, and insulation from volume risk. Fitch expects TAQA will continue using
the North Field East and the North Field Fitch estimates capex at about AED8 billion the majority of its operating cash flow (Fitch-
South projects, which will raise Qatar’s LNG per year for 2021-2023 with some investments defined CFO) after capex for shareholder
production capacity in 2027 by 64% to 126mn aimed at carbon- emission reduction. A returns. TAQA’s dividend policy covers

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