ONGC, OIL earnings to decline, credit metrics weaken due to lower oil prices: Moody's

State-owned Oil and Natural Gas Corp (ONGC) and Oil India Ltd are likely to see earnings decline and credit metrics weaken due to fall in oil prices, Moody's Investors Service said on Thursday.

ONGC and OIL get rates equivalent to those prevalent in the international markets. Oil prices in the international markets last month slumped to a two-decade low of USD 18 per barrel before rebounding by some measure.

In addition to the decline in oil prices, ONGC and OIL also face a reduction in government-regulated prices for the natural gas they produce.

"We expect ONGC's earnings to decline and its credit metrics to weaken because of lower oil prices over the next 12-18 months," Moody's said in a report on Asian national oil and gas companies.

Although ONGC is an integrated oil and gas company, its downstream segment contributed only about 30 per cent of its consolidated EBITDA for the year ended March 31, 2019 (fiscal 2019).

Crude oil, which accounted for about half of its total ...