The global oil and gas industry will continue to be plagued by the weight of high debt levels next year despite the Opec offer to lower production from January, which has helped the industry rebound modestly from its 2016 trough, says a report.

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"Outlook is stable for integrated oil and gas companies as their Ebitda will rise by about 5%, buoyed by stabilizing capex and a substantial re-alignment of cost structures," Moody's said in a note issued from New York.

While free cash flow is expected to turn positive in 2017 if firms maintain scrip dividends, in the near-term, sustained dividends will create negative free cash flow which will need to be covered by debt and asset sales, it added.

Maintaining a stable outlook for the exploration and production companies for next year, it said this segment should fare better going forward.

"Oil and gas prices are improving from 2016's lows, and commodity price hedging is increasing. Combined with reduced drilling and service costs, we expect Ebitda to grow 20-30% for exploration and production firms in 2017," Moddy's said in a report.

It has a negative outlook for drilling and oilfield services companies as the players in the sector are facing continuing weak upstream spending limiting any meaningful recovery for drillers on one hand and on the other equipment excess continues to weigh on prices for offshore services.

Moody's expects the drilling and oilfield services sector to see Ebitda decline to very low levels through early 2017, before increasing by 4-6%.

The agency has a stable outlook for the midstream and master limited partnerships even though it notes that the low E&P spending in the recent years has extended into midstream as well, flattening Ebitda growth to under 5 % and making creeping debt levels difficult to address.

"Despite an uptick in M&As, the synergies and cost savings from such deals are unlikely to increase aggregate Ebitda as much as investments in growth capital spending, even as midstream capital growth is anticipated to drop another 20% from current levels," says the report.

However, it has a negative outlook for the refining and marketing sector.

"Gasoline and distillate inventories remain above their five-year averages, with uneven declines in refinery utilization in US. On the demand side, the US and China growth are expected to slow, while Europe is expected to decline. As a result, Ebitda will drop by 10-15% through the middle of 2017 in North America and Europe amid weak crack spreads," it said.

Despite having fastest growth in oil demand for the past many years and is likely to remain so, the report does not even name India.