S&P upgrades Sibneft

Standard & Poor's said it raised its long-term corporate credit rating on Russia-based OAO Siberian Oil Co. (Sibneft) to BB from BB- following the upgrade of its 76% parent, OAO Gazprom, to BB+ from BB. The Russia national scale rating on Sibneft was raised to ruAA from ruAA-.

The outlook is positive.

S&P said the upgrade reflects Sibneft's status as Gazprom's strategic asset in the oil sector. It also reflects the fact that the company would likely be considered a material subsidiary under Gazprom's medium-term note terms and would be subject to cross default, thereby increasing Gazprom's economic incentive to support it.

The difference between the corporate credit rating on Sibneft and that on its parent reflects the fact that Gazprom's strategy regarding Sibneft has yet to be been finalized and that the integration process has not yet been completed, the agency said. Sibneft currently operates quite autonomously from other Gazprom assets, its debt is not guaranteed by the parent and it has substantial minority shareholders, including distressed Russian oil company Yukos.

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