KUALA LUMPUR, Aug 20 — Moody’s Investors Service has affirmed the A3 foreign and local currency issuer ratings of Petronas LNG Ltd (PLL) with a stable outlook.

“PLL’s A3 ratings are positioned two notches below the A1 ratings of its ultimate parent, Petroliam Nasional Bhd (Petronas).

“The top-down rating approach reflects PLL’s full ownership by, and strong operational and financial integration with, Petronas,” Moody’s Assistant Vice President and Analyst, Rachel Chua said in a statement.

Petronas is Malaysia’s national oil company and is in turn 100 per cent owned by the government of Malaysia.

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“Petronas has continued to demonstrate strong financial support to PLL through cash injections of almost US$400 million over the past three years.

“In addition, PLL has also not paid any dividends since 2015,” said Chua, who is also Moody’s lead analyst for PLL.

Moody’s said PLL also enjoys ongoing liquidity support from Petronas, as it can draw from Petronas’ umbrella credit facility for liquidity management.

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PLL markets and trades virtually all of Petronas’ liquefied natural gas (LNG) volumes. Most of these sales are under long-term contracts.

At the same time, PLL’s earnings and cash flows are subject to volatility, Moody’s said.

The company reported a net loss of US$251 million and US$174 million in 2015 and 2016 respectively owing to the subdued crude oil price environment and spot trades.

It also made a net loss of US$40 million in 2017.

Such volatility is also amplified by the relatively small scale of PLL’s trading book.

Moody’s said the rating outlook is stable, reflecting the stable outlook on PLL’s ratings and the rating agency’s expectation of continued strong support and linkages with its ultimate parent Petronas.

Moody’s will only consider an upgrade if Petronas’ rating is upgraded. — Bernama