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BP profit hit by lower oil prices, Russian sanctions and rouble's weakness

BP profit hit by lower oil prices, Russian sanctions and rouble's weakness
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BP’s profits were down in the third-quarter because of lower oil prices.

It also suffered a sharp drop in income from Russia as Western sanctions led to a slump in earnings from its local partner, Kremlin-controlled Rosneft, and a fall in the rouble’s value.

BP, a major investor in Russia through a 19.75 percent stake in state oil major Rosneft, said the fall of the rouble against the dollar RUB= had a significant impact on results.

Underlying net income from Rosneft for the quarter was $110 million (86 million euros) compared with $808 million a year earlier.

The rouble has lost more than a fifth of its value since the start of the year as the Kremlin fights capital outflows and lower oil prices, while local businesses have been shut off from Western lending by sanctions.

BP’s profits – at $3 billion (2.35 billion euros) – were down nearly a fifth year-on-year.

Oil companies have seen billions wiped off their stock market values as crude prices dropped by 25 percent over the past four months on slowing global demand and ample supplies.

BP’s share rose modestly though as investors welcomed an increase in dividends.

Major energy companies have managed to sustain healthy dividends over the past quarters mainly on the back of asset sales and lower spending, thus generating strong cash flow despite lower oil prices.

with Reuters