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Rosneft almost triples net profit despite downstream impairments

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Rosneft almost triples net profit despite downstream impairments
FILE PHOTO: The Rosneft logo is pictured on a safety helmet in Vung Tau, Vietnam April 27, 2018. REUTERS/Maxim Shemetov/File Photo   -   Copyright  Maxim Shemetov(Reuters)
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By Vladimir Soldatkin

MOSCOW (Reuters) – Russia’s largest oil producer Rosneft <ROSN.MM> almost tripled third-quarter net profit to 142 billion roubles (1.64 billion pounds), citing higher crude output and prices, despite taking a heavy hit on downstream operations.

The company took a 133 billion rouble ($2 billion) impairment in refining and distribution, with domestic fuel prices lagging behind surging crude oil prices. Russian oil companies have also been forced by the authorities to cap politically sensitive retail fuel prices.

Despite the big profit jump from the same period last year, Ronseft fell just short of analyst expectations. The consensus forecast among analysts polled by Reuters was for the Kremlin-controlled company to post net income of 147 billion roubles.

Rosneft, with BP <BP.L> and Qatar among its shareholders, accounts for about 40 percent of Russia’s total oil production and is key to Moscow’s efforts to forge closer ties with the Organization of the Petroleum Exporting Countries (OPEC).

The company lifted daily oil production in the third quarter by 3.4 percent year on year.


Headed by Igor Sechin, a long-standing ally of President Vladimir Putin, Rosneft has been pursuing acquisitions at home and abroad, amassing huge debt.

In May it announced a plan to cut debt and trading liabilities by a minimum of 500 billion roubles this year, partly by selling non-core assets.

The company did not disclose its net debt in the latest report, but analysts at Moscow brokerage BCS put the figure at $71.7 billion, down about 8 percent from the previous quarter.

After the introduction of sanctions that shut down Western capital markets for the company, Rosneft switched to prepayment deals with international traders such as Trafigura.

The company said it was owed $3.1 billion by Venezuela as of Sept. 30, down from $3.6 billion on June 30. It also said it owed $26.8 billion to traders under prepayment deals for its oil as of Sept. 30, down from $29.3 billion at June 30.

(Reporting by Vladimir Soldatkin; Additional reporting by Olesya Astakhova and Oksana Kobzeva; Editing by David Goodman)

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