Fitch sees oil price risk to EMEA firms' ratings

Total's discretionary expenditure — a combination of capital expenditure (capex) and shareholder returns — would need to fall by 36pc in 2018 compared with last year for the company to maintain its current credit rating, while Shell's would need to come down by 26pc, according to credit rating agency Fitch Ratings.

Fitch has made its assumptions based on oil prices of $45/bl this year, $50/bl next year and $55/bl in 2018. The agency also assumes Shell will sell $30bn of assets and Total $10bn.

"If disposals prove challenging, Shell would need to cut its discretionary expenditure deeply too — by 49pc with zero disposals — to maintain ratios in line with its current rating by 2018," Fitch said in an analysis of European, Middle Eastern and African (EMEA) oil companies.

For Total, no disposals would mean the need to cut discretionary expenditure by 44pc in 2018 compared with 2015, Fitch said.

The majors are unlikely to cut dividends even in the lower oil price environment, and further capex cuts are likely to be on the cards.

Fitch said lower oil prices in 2016 are unlikely to trigger negative rating action, but "a slow recovery in oil prices would mean several companies would have to take very significant steps if their credit profiles are to become appropriate for their current ratings by 2018".

BP and Hungary's Mol "have metrics in line for the current rating" in 2018 under Fitch's assumptions, although it said BP "does not meet the tougher threshold set for an upgrade".

Credit rating agency Moody's last week placed on review for downgrade the ratings of 36 integrated, upstream and oil services EMEA companies, including Shell, BP, Total, Norway's state-controlled Statoil, Italy's Eni and Russia's state-controlled Rosneft.