MOSCOW, February 1 (RIA Novosti) - International ratings agency Fitch said the 2006 outlook for the Russian oil and gas sector was bright, but cautioned that the country faced challenges in meeting demand for energy - and energy security - from both west and east.

"There is a growing appetite for energy resources in the Far East and Russia is expected to play an important role in satisfying that demand," said Jeffery Woodruff, director of Fitch's Moscow energy department.

With energy needs increasing, Fitch pointed to "a continually improving credit environment for integrated oil companies, especially as investments are made in the value-added downstream sector."

"Additionally, natural gas consumption is also expected to grow over the course of 2006 and beyond, which will benefit not only Gazprom ('BB+'/Stable Outlook), the country's gas monopoly, but also TNK-BP ('BB+'/Positive Outlook/'B') once that company completes its local gasification project, which it expects to begin constructing in 2006," Fitch said in a press release.

"Russia may find a challenge in energy security issues that are becoming increasingly important to Europe and Asia," Fitch said.

According to Woodruff, "Russia, like the two-headed eagle that symbolizes the country, may again find itself caught between the two regions."