The recent gas price cut will not have a significant impact on Oil India’s standalone credit profile of ‘BBB-’, although the company's upstream gas operations will incur losses, says Fitch Ratings. “We expect that the price of $2.50 per MMBTU to be just sufficient to cover the costs of bringing the gas to the surface and that OIL will incur cash losses due to taxes and levies,” Fitch Ratings said. Fitch said a reduction in gas price by $0.5 per MMBTU will cause a Rs.2.5 billion fall in EBITDA over the next six months. Gas accounts for about 40 per cent of OIL’s oil and gas production.
