OGDC maintains AAA rating, amid solid liquidity

January 09, 2026 (MLN):  VIS Credit Rating Company Limited has reaffirmed the entity ratings for Oil & Gas Development Company Limited (PSX: OGDC), emphasizing the state-owned energy giant’s strong financial position, robust liquidity, and strategic importance to Pakistan’s economy.

The rating agency maintained OGDC’s long-term rating at AAA and its short-term rating at A1+, both of which indicate negligible credit risk and a very strong capacity to meet financial obligations.

The outlook on the ratings remains stable, VIS said, noting that the company’s risk profile is only marginally higher than that of Pakistan’s sovereign debt.

The previous rating review was conducted in December 2024.

OGDC, Pakistan’s largest exploration and production company, has played a central role in the country’s oil and gas sector for decades. Established in 1961 and converted into a public limited company in 1997, it was listed on the Pakistan Stock Exchange in 2003 and later on the London Stock Exchange through Global Depository Shares in 2006.

The Government of Pakistan remains the dominant shareholder, holding just over 85 percent of the company.

Despite production constraints and volatility in global crude oil prices during FY25, VIS noted that OGDC continued to demonstrate financial resilience. The company accounted for nearly half of Pakistan’s crude oil production, more than a quarter of natural gas output, and over one-third of LPG production during the year.

Liquidity conditions improved significantly following the government’s efforts to address circular debt in the energy sector. OGDC recovered Rs82 billion in June 2024, representing the principal amount invested in privately placed term finance certificates issued by Power Holding (Private) Limited.

In addition, accrued interest of Rs92.7bn is scheduled to be repaid in 12 equal monthly instalments starting July 2025. As a result, the buildup in receivables reversed over the year, strengthening the company’s cash flow position.

VIS also highlighted OGDC’s debt-free balance sheet and low leverage as key strengths supporting the rating.

The company remains a major contributor to the national exchequer through taxes, royalties, dividends, and other government levies, while also helping conserve foreign exchange by reducing reliance on imported energy.

Although OGDC remains exposed to inter-corporate circular debt, particularly involving state-owned gas entities, the rating agency assessed the associated credit risk as low. Strong cash balances and liquid assets continue to underpin the company’s solid liquidity profile.

Meanwhile, VIS noted steady progress on OGDC’s strategic investments, including its participation in the Reko Diq mining project and the Abu Dhabi Offshore Block 5, both of which are advancing in line with expectations.

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