OREANDA-NEWS. Moody's Investors Service has today placed on review for downgrade the Ba2 CFR and the Ba2-PD PDR of Bashneft, which is a 74% subsidiary of Sistema.

Moody's Interfax Rating Agency - majority-owned by Moody's Investors Service - has today placed on review for downgrade the Aa2.ru national scale rating (NSR) of Bashneft.

The placement of Bashneft's ratings on review for downgrade reflects substantial uncertainty and limited transparency over how the company could be affected by the evolving situation regarding the investigation of the Bashneft privatisation by the Investigative Committee of the Russian Federation. The review will be focused on the assessment of any implications of the situation for each company's business and financial profile.

Upward pressure on Bashneft's ratings is unlikely at present, given the current review for downgrade. Moody's could confirm the ratings if implications of the investigation were to have no or limited impact on the companies' business and financial profiles.

Moody's could downgrade Bashneft's ratings were there to be material adverse developments in the company's financial, business and liquidity profile due to (1) uncertainty over the future corporate and shareholder structure; (2) shareholder distributions beyond Moody's current expectations; or (3) liquidity constraints arising from a potential change of control.

The principal methodology used in rating Bashneft was the Global Integrated Oil & Gas Industry published in April 2014.

Bashneft is an integrated oil company operating in Russia. Bashneft's reserves are primarily concentrated in Bashkortostan, in close proximity to the company's refining and petrochemical complex. The company also operates oil fields in the Tatarstan, Khanty-Mansi, Nenets and Orenburg regions and its total proved reserves amounted to 2.1 billion barrels of oil equivalent (boe) under the Petroleum Resources Management System (PRMS) classification as of January 2014. 

In the last 12 months ended 31 March 2014, Bashneft's revenue amounted to USD 13.7 billion (net of export duties), and EBITDA to USD 3.4 billion.