OAO Transneft, Russia's state-owned oil pipeline operator, was downgraded to ``negative'' from ``stable'' after yesterday's cut on the country's credit rating, Standard & Poor's Ratings Service said.
``The outlook revision reflects the Russian government's diminishing ability to provide extraordinary support to Transneft,'' S&P said in an e-mailed statement today. The company's BBB+ long-term credit rating was affirmed.
Transneft plans to spend 303 billion rubles ($11.2 billion) building a 2,757-kilometer (1,700-mile) pipeline across Siberia to Skovorodino, near the Chinese border, by the end of 2009. The pipeline will in the next phase be extended to the Pacific.
``Oil companies will look to cut costs wherever possible,'' said Kevin Dougherty, a portfolio manager at Pharos Financial Group. ``Transneft's transit fees will likely come under political pressure and the success of the ESPO pipeline is certainly less certain with $60 oil than it was at $100 oil.''
Transneft's preferred shares fell 22 percent to 6,050 rubles at 2:09 p.m. when trading on the Micex Stock Exchange was halted until Oct. 28.
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