Live updates: Follow the latest news on US-Iran war
QatarEnergy, which was forced to shut operations in response to Iranian attack, is resilient because of its vast gas reserves and healthy financials, Moody's Ratings has said.
The company's long-term issuer rating was set at Aa2 and its baseline credit assessment at aa2, the New York-based ratings agency said in a statement on Thursday.
Aa2 is a “prime” rating that is the third-highest on Moody's scale, and several notches above non-investment grade. Investment grade makes it easier to access capital markets and raise funding.
Iranian missile strikes on March 18 and 19 damaged two of QatarEnergy's 14 liquefied natural gas trains and one of its two gas-to-liquids (GTL) facilities, following an attack on March 2 that prompted QatarEnergy to declare force majeure.
The damaged assets were $26 billion to build and represent about 17 per cent of its LNG production capacity. The LNG trains may take three to five years to repair, while the GTL unit could be operational in a year.
The effective closure of the Strait of Hormuz, a key chokepoint for a fifth of the world's energy shipments, is also a challenge for Qatar as it has no alternative options to ships its products.
Despite these, QatarEnergy's business profile remains “robust”, underpinned by its proven gas reserves and large cash reserves, analysts at Moody's wrote.
“The low-cost nature of its operations as one of the world's lowest-cost gas producers, as well as strong operating efficiency” are also contributing to its resiliency, they added.
The company would be able to generate free cash flow before dividends of about $15 billion on an annual basis, should the conflict stop and no further material damage is inflicted on its infrastructure, they said.
The cash flow “should be sufficient to absorb operating losses and additional repair-related capital spending,” Moody's said.
Moody's also raised its estimates for QatarEnergy's 2026 debt to Ebitda (earnings before interest, taxes, depreciation and amortisation) ratio, a key metric for profitability, from 0.9x to 1.2x, with “credit metrics to remain strong”.
QatarEnergy is a key player both domestically and globally, being a significant contributor to Qatar's economy and among the top natural gas companies in the world. The suspension of its operations and its inability to ship out its products has resulted in a global gas shock.
Moody's cautioned, however, that a protracted conflict and any additional damage to the company's infrastructure may weaken its stand-alone credit strength.
“Under such a scenario, we would likely reassess the company's baseline credit assessment to incorporate sustained volume losses, elevated capital spending, and weaker cash flow generation,” Moody's analysts said.
QatarEnergy's interlink to Doha, however, provides support, as “Qatar's exceptionally large government financial assets provide an effective buffer for absorbing shocks and underpin our expectation of timely and sufficient support, if needed”, they added.
