Fitch Ratings has reported that oil and gas (O&G) producers in the Asia-Pacific (APAC) region are expected to maintain their capital expenditure (capex) for the upstream segment. This is primarily driven by the region's commitment to national energy security and the increasing need for energy transition. Despite these financial commitments, APAC O&G companies have gained more flexibility for capex in 2022 due to significant reductions in leverage. Furthermore, many of these companies have robust access to funding, thanks to their close affiliations with sovereign entities. The growing energy demand in the APAC region remains a significant factor motivating rated issuers to focus on preserving or expanding their reserves, particularly in natural gas, which serves as a critical transitional energy source. Integrated producers in the region are also gearing up for substantial downstream investments to strengthen their petrochemical capabilities. In the medium term, Fitch foresees a rapid increase in capex for rated issuers' energy transition initiatives, albeit starting from a relatively modest base. Despite the growing emphasis on decarbonisation targets, fossil fuels are expected to continue as the primary source of revenue for APAC O&G producers in the medium term. While many issuers have outlined long-term decarbonisation objectives, concrete plans to achieve these targets often lack implementation details. Environmental regulations are anticipated to become more stringent, driving the transition towards cleaner energy sources. However, this transition may be slower in the APAC region compared to Europe, where fossil fuels remain the primary energy source in major Asian economies. New fossil fuel projects may encounter increased regulatory challenges, especially in more developed APAC markets like Australia. Most of the APAC O&G producers rated by Fitch are national oil companies or their subsidiaries. Their credit ratings are closely linked to changes in the ratings of sovereigns or government-owned parent organisations, as their assessments are primarily conducted on a top-down basis.