Fitch Ratings has today said that rated oil and gas companies in Asia Pacific have varied exposure to upstream operations in Iraq. While some upstream or integrated oil and gas companies are dependent on current or future production from Iraq more than others, overall, the reliance on Iraq for hydro-carbon production is not significant. However, the impact of unrest in Iraq can be higher for oilfield services companies that have a higher level of reliance on production activity in the country.

Of the rated oil and gas companies in Asia, Malaysia's Petroliam Nasional Berhad, China National Petroleum Corporation (CNPC; A+/Stable) and Anton Oilfield Services Group (Anton; BB/Stable) have the highest direct exposure to Iraq.

The on-going fighting in Iraq - mainly in the north-east and north-west of the country - has not affected much of oil production in Iraq to date. Violence spreading to oil-producing regions in the south, which accounts for broadly 80% of the country's current three millions barrels a day output, remains a risk for Asian companies with projects in Iraq. However, the net impact on cash flows of these companies will likely be offset by higher oil prices for those operators that have geographically diversified operations with limited exposure to Iraq. The uncertain environment, however, may result in companies cutting growth capex in Iraq until the situation stabilises.