Empresa Nacional del Petroleo

We expect 2021 and 2022 performance and indicators to pick up notably from 2020 lows. This mainly stems from higher prices (we revised upward our Brent oil assumption to $60/bbl) but also as demand recovery boosts production to 185,000 bbl/day from an average of about 160,000 bbl/day in 2020. ENAP's actual performance in the first quarter of 2021 confirms the start of such recovery, mainly in the refining and marketing (R&M) division. The stable outlook on ENAP reflects that on the sovereign and our expectations of an unchanged stand-alone credit profile (SACP) and government support in the next 24 months. The stable outlook also incorporates our expectation that the company will continue to be very strongly linked to the government

...As a government-owned company that plays a material role in the domestic economy, we expect ongoing and extraordinary support from the government in case of financial distress. The ratings on Empresa Nacional del Petr=leo (ENAP) continue to reflect our opinion that there's a very high likelihood that its owner, Chile (foreign currency: A/Stable/A-1; local currency: A+/Stable/A-1), would provide timely and sufficient extraordinary support to the company in the event of financial distress. We base this on our view of ENAP's very important role as Chile's only domestic oil refiner, and its ability to supply about 60% of the domestic market's needs (the remainder is supplied by imports). The company also has a very strong link to the government, particularly regarding debt authorization, business plans, budget approvals, and tax payments. In addition, the company received a capital contribution of $400 million in 2018 from the government. We believe that this underscores our view that ENAP...

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