HIGH OIL PRICES HELP ASIAN PRODUCERS BUT HURT REFINERS

KUALA LUMPUR, Feb 16 (Bernama) -- Brent crude oil prices, which is currently
trading above US$100 per barrel, will have positive credit implications on
upstream producers but will hurt downstream refiners.

Moody's Investors Service said the negative impact on refiners would depend on
their ability to fully past through their highest feedstock costs.

"State control of prices for refined oil products in Asian countries like China,
India and Indonesia will reduce the impact on end consumers," said Moody's Hong
Kong-based Vice President Renee Lam.

She also said sustained high crude prices would ultimately translate into higher
subsidy burden on the budgets of these governments.

Lam added continued high oil prices would likely intensify exploration and
production activities, leading to higher capital and operational expenses, which
would reduce the benefits that otherwise might have accrued on the output side.

"In refining and marketing, we expect rising crude-oil input costs
to increase refiners' requirement for working capital, thus adding pressure on their
cash flow from operations as well as financing requirement," she said in a report,
entitled "Impact of US$100/Barrel Oil on Asia-Pacific Energy Producers and
Refiners".

Meanwhile, Singapore-based Senior Vice President Philipp Lotter said higher oil
prices meant heftier price tag for acquisitions but for strategic reasons
related to national energy security in many resource-poor Asian countries,
acquisitions would continue regardless.

"However, the balance of buying, may skew more towards gaining access to
unconventional sources of energy that become increasingly economic to extract,"
she added.
-- BERNAMA