International rating agency Fitch maintained the B+ Issuer Default Rating (IDR) and the stable outlook on the Kazakh state-controlled oil group KMG International.

The company operates the largest refinery in Romania as well as the sole petrochemical unit in the country. It is also the sole producer of bitumen in Romania.

However, KMGI's Standalone Credit Profile (SCP) is only b- and it reflects "the small scale of its refinery capacity, volatile refining margins subject to cyclical raw material prices and limited business integration despite ongoing strategic investment in the retail segment as well as a high share of short-term debt in its capital structure."

Notably, Fitch sees no significant threats to KMGI's operations coming from possible interruptions of oil flows through Russia.

"In case of disruptions in transit of the oil through Russia, KMGI will explore alternative sources such as Azerbaijan and Africa. In this scenario, production volume is estimated to decrease to approximately 80% of capacity," the report reads.

Romania's low dependency on Russian gas is also seen as protecting KMGI's operations as well while the low motorisation rate in Romania is seen as an opportunity for growth.

Imported Russian gas accounts for 16% of total gas consumption in Romania, which is the second-largest EU producer of gas with sizeable untapped resources in the Black Sea and onshore.

"In the event of disrupted gas supply from Russia, we estimate little impact on KMGI's facility operations," according to Fitch.

(Photo: KMG International Facebook Page)

andrei@romania-insider.com