Fitch upgrades SOCAR's credit rating outlook

Fitch international ratings agency, following an upgrade of Azerbaijan's sovereign rating, has raised the long-term issuer default rating (IDR) and the senior unsecured rating of the State Oil Company of the Azerbaijan Republic (SOCAR) from "BB+" to "BBB-."

The IDR outlook is "stable", Caliber.Az reports citing the message posted on Fitch's website.

Fitch's assessment of SOCAR’s standalone credit profile is rated at "bb-," reflecting moderate oil and gas production, a strong financial profile, and limitations in corporate governance.

According to Fitch’s forecasts, SOCAR is expected to increase its production by 0.5 per cent annually from 2023 to 2025. SOCAR’s oil and gas production remained stable last year at 286,000 barrels of oil equivalent per day. This stability followed an eight per cent decrease in oil production in Azerbaijan and a three per cent increase in gas production. Fitch projects that SOCAR’s production will grow by 0.5 per cent each year during the forecast period, driven primarily by increased natural gas output.

SOCAR established in 1992 is involved in exploring and developing oil and gas fields in Azerbaijan. Major fields include the Azeri-Chirag-Gunashli (ACG) oil field and the Shah Deniz gas field. It operates several refineries, including the Heydar Aliyev Baku Oil Refinery. The company processes crude oil into various products, including gasoline, diesel, and jet fuel. SOCAR manages a network of pipelines and terminals for transporting oil and gas. Key export routes include the Baku-Tbilisi-Ceyhan (BTC) pipeline for oil and the South Caucasus Pipeline (SCP) for gas.

SOCAR has expanded its operations internationally, investing in and acquiring assets in Türkiye, Georgia, Switzerland, and other countries. Notable projects include the STAR Refinery in Türkiye and SOCAR Trading, headquartered in Switzerland. SOCAR is a major partner in the ACG oil field, one of the largest offshore oil fields in the Caspian Sea, operated by BP. SOCAR is a key player in the Shah Deniz gas field development, in partnership with BP, TPAO, Petronas, and others. The field is a significant source of natural gas for the Southern Gas Corridor, which supplies gas to Europe.