Further M&A activity in Asian oil and gas sector to come, says Fitch

Strong mergers and acquisitions (M&A) activity in the Asian oil and gas sector will continue into 2012, according to Fitch Ratings.

The agency’s latest reports on the sector reveal that a ‘stable’ rating has been maintained for the sector after it was ruled that credit profiles will not be unduly affected by this activity.

“Fitch expects M&A activity to remain high for the Asian oil and gas sector. Prospects for large M&A are especially strong for state-linked oil companies,” Fitch reports.

State connections, along with large cash reserves and “robust” balance sheets are predicted to provide sufficient flexibility for further M&A activity, even with capex expected to remain high.

Even though consumer inflation has eased in these markets, Fitch predicts that fuel price reforms remain a principle challenge for the sector.

Malaysian authorities have signaled an end to gas subsidies, although evidence of a strong commitment has yet to appear, and China may rethink its fuel pricing after incurring heavy losses on refining operations due to price controls, according to the rating agency.

To receive more relevant articles like this one, why not sign up to our briefings and breaking alerts by clicking here.