BAKU, Azerbaijan, July 18. Moody’s Ratings has
affirmed the Baa3 long-term issuer rating of Azerbaijan’s state oil
company SOCAR with a Stable Outlook.


“State Oil Company of the Azerbaijan Republic’s (SOCAR) ratings,
including its Baa3 long-term issuer rating, with a stable outlook
remain unchanged,” Moody’s said in its latest report.


The agency said that under its Government-Related Issuers
methodology, SOCAR’s rating incorporates the company’s Baseline
Credit Assessment (BCA) of ba2, the Baa3 foreign-currency rating of
the Government of Azerbaijan, which owns 100% of the company, the
very high default dependence between SOCAR and the government, and
the high probability of state support in the event of financial
distress.


“SOCAR’s rating incorporates the company’s Baseline Credit
Assessment (BCA) of ba2; the Baa3 foreign-currency rating of the
Government of Azerbaijan, which owns 100% of the company; the very
high default dependence between SOCAR and the government; and the
high probability of government support in the event of financial
distress,” the report said.


According to Moody’s, SOCAR’s BCA reflects the company’s key
role in Azerbaijan’s oil and gas sector and its importance to the
national economy, as well as its sound financial performance,
strong credit metrics and close links with the Azerbaijani
government, which has accumulated substantial reserves and is
expected to be in a position to provide financial support if
necessary.







At the same time, the agency noted that the BCA also takes into
account declining hydrocarbon production volumes, recently
increasing M&A activity, governance considerations related to
SOCAR’s complex organisational structure and limited transparency,
exposure to oil price volatility, and the company’s high
concentration in Azerbaijan.


“The BCA incorporates the company’s declining hydrocarbon
production volumes, recently increasing M&A activity,
governance considerations, exposure to volatility in oil prices,
and high concentration in Azerbaijan,” Moody’s said.


SOCAR is engaged in the exploration of oil and gas fields, the
production, processing and transportation of oil, gas and gas
condensate, the sale of oil and petrochemical products in domestic
and international markets, and the supply of natural gas to
industrial enterprises and households in Azerbaijan and Europe.