OREANDA-NEWS. Standard & Poor's Ratings Services said today it raised its long-term corporate credit and senior unsecured debt ratings on Russia-based gas company OAO Gazprom to 'BBB-' from 'BB+', reflecting Gazprom's strengthening operating performance in 2006.

"The upgrade of Gazprom reflects the increasingly favorable pricing environment for both domestic gas sales and for exports to the former Soviet Union and Europe," said Standard & Poor's credit analyst Elena Anankina. "Indeed, the pricing environment has improved to the extent that Gazprom should in 2006 see evidence of strong free cash flow for the first time."

Gazprom's export prices are expected to reach a record high in 2006 and 2007, because they lag international oil prices by about nine months and terms of supply to certain countries in Eastern Europe and the former Soviet Union were renegotiated upwards in 2006, with prices further increasing in 2007.

Rating upside is currently limited because of the company's ambitions for debt-financed acquisitions.