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Moscow β€” Standard & Poor's Thursday announced a number of downgrades to Russian oil and gas companies, following its downgrading of Russia's sovereign ratings to junk last week.

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S&P, which like Platts is a unit of McGraw Hill Financial, lowered ratings on gas giant Gazprom and its oil arm Gazprom Neft, as well as Rosneft, Transneft and Novatek.

In line with S&P's criteria, companies which have strong links to the government cannot be rated higher than the sovereign.

This is because it assumes that the government could use its power to intervene negatively, which could include burdening the company with additional taxes, dividends or other liabilities, S&P said.

Gazprom's foreign currency ratings fell to BB+/B from BBB-/A-3 and local currency ratings to BBB-/A-3, from BBB/A-2, with outlooks negative.

"For Gazprom and its subsidiary Gazprom Neft, this is largely because of likely negative intervention from the government, which these financially strong companies could be subject to if the sovereign runs into financial difficulty," S&P said.

Gazprom Neft's rating is capped by parent company Gazprom's rating. Alongside independent oil producer Novatek it saw its ratings fall from BBB- to BB+, with outlooks negative.

Novatek did not pass the stress test primarily because of its focus on the Russian market and lower amount of hard currency revenues.

S&P cited Novatek's current placement on the sanction list as an

obstacle to current and future access to capital for Yamal or other projects.

Rosneft's ratings have fallen to BB+ from BBB-, with outlook negative.

Rosneft was downgraded by one notch on the basis that the company's credit profile, which the company continues to assess at "BB," is weaker than those of Gazprom, Gazprom Neft and Novatek.

In contrast Russia's largest independent crude producer Lukoil saw its rating affirmed on the grounds that "even in a stress scenario, its stressed foreign currency denominated revenues could allow it to continue servicing their foreign currency debt," S&P said. Lukoil maintained its BBB- rating, with outlook negative.

"That said, we could change our approach if the company's hard currency liquidity resources declined while its hard currency short-term maturities increased," S&P said.

Transneft's foreign currency rating fell to BB+ from BBB-, and local currency rating BBB-, from BBB, with outlooks negative.

This was in line with the sovereign downgrade, S&P said.

Eurasia Drilling, Russia's largest onshore drilling services provider, saw its outlook fall from negative to stable, but maintained its BB+ rating.

S&P said this was entirely due to the sovereign downgrade.

The company recently announced an agreement with Schlumberger for a 45.65% stake in EDC, which has yet to be approved, but could be completed by the end of Q1.

The downgrades were largely expected given the close links between the Russian government and the companies affected, in the wake of last week's sovereign downgrade.

Following that, downgrade analysts warned that potential further ratings cuts by other agencies were a major risk, and may be viewed by foreign investors as a sign to exit Russia.

Economic forecasts in Russia have grown increasingly dire in recent months as sanctions restrict the flow of western capital into Russia, and a sharp decline in international oil prices has led to the ruble's value plunging against the dollar.

The Russian budget is heavily dependent on oil revenues, leading analysts to warn that a long-term low price environment could have serious economic consequences for the country.

--Rosemary Griffin,
--Edited by Jonathan Loades-Carter,