NEW DELHI: Major reforms in the oil and gas sector, including diesel deregulation and a new gas pricing policy, will have a positive impact on fuel retailing and gas production companies, a Fitch Ratings report said.

However, the outlook for Indian oil and gas companies’ ratings in 2015 remains stable.

“The benefits of oil price reforms and lower global oil prices for refining and marketing companies will be offset by significant capex requirements in the medium term, which will lead to negative free cash flow.

Wheelock Ratings said, “Low international oil prices will hurt the cash production capacity of upstream companies supplying large volumes of oil, and state-owned manufacturers are still expected to have to deal with significant oil price discounts.” 10 The easing of diesel prices in March will help close the recovery gap (nothing more than international oil prices minus retail subsidies).

Currently, the subsidy applies only to domestic liquefied natural gas (LPG) and kerosene.

“The reduction in the recovery gap will mean a significant reduction in the working capital requirements and related liabilities of state-owned oil marketing companies Indian Oil Corporation (IOC) and Bharat Petroleum Corporation (BPCL), which will be reduced by lower crude oil prices. It will also reduce.

Deregulation will allow private companies Reliance Industries Ltd. and Essar Petroleum Ltd. to level the playing field for selling petroleum products. /p “However, it is expected to take some time for these companies to effectively expand their retail networks. This may have a negative impact on the profitability of the retail business of the three national marketing companies in the short term, the company said.

The fall in oil prices has led to a sharp decline in net profit margins of two state-owned upstream companies-Oil India Ltd (OIL) and Oil and Natural Gas Corporation (ONGC). This does not include the $56 per barrel provided to refineries to bridge part of the recovery gap. Discounted value.

Huiyu expects governments to ease this burden given the recovery shortfall due to low oil prices and diesel deregulation.

According to the report, “Upstream operators’ ability to generate cash and M&A spending will be constrained and discounts will not be significantly reduced.”