Chinese oil and gas companies’ finances will be hurt in 2016 because oil prices are likely to remain low, says Fitch Ratings. The credit outlooks for rated oil and gas companies in 2016 are diverging, with state-owned ones still benefitting from strong government linkages despite deteriorating standalone profiles, while the independents would face more pressure, especially in relation to liquidity.

We now do not expect crude oil prices to recover in 2015, and expect refining margins to narrow from the 2015 level, but remain relatively healthy in 2016. We also expect some further capex rationalisations in 2016 and limited cost deflation for upstream companies.

Liquidity strains continue to be a challenge for the smaller exploration and production companies and independent oilfield services providers of China.