S&P said that political risks MOL faces, in the form of a European Union embargo on Russian oil and a windfall tax on refiners introduced by the Hungarian government, are mitigated by "robust" cash flow boosted by high commodity prices.
The ratings agency noted that the EU embargo does not apply to pipeline deliveries to Hungary, for the moment, but said the timeframe of the exemption would play "an important role" in MOL's ability to utilize its capacity and maintain cash flow. If MOL needed to replace its Russian crude, "significant" infrastructure and asset investments might be necessary, it added.
The windfall tax on refiners could add HUF 250 billion to MOL's tax payment in 2022, S&P said.
In spite of those factors, S&P said MOL's profits stemming from the big Urals-Brent spread, its "business resilience and diversity" and "prudent balance sheet management" will limit the overall effect on credit metrics.
S&P could lower MOL's rating if an unexpected change in crude sourcing was to materially cut refinery output parallel with a fall in prices.
Producing journalism that is worthy of the name is a costly business. For over 30 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
