OAO Rosneft, Russia’s largest oil producer, more than doubled profit in the fourth quarter after oil prices recovered and output increased.
Net income rose to $1.67 billion from $775 million a year earlier, the Moscow-based company said today in an e-mailed statement. That is in line with the $1.7 billion median estimate of 10 analysts surveyed by Bloomberg.
Sales climbed 35 percent to $14.6 billion, Rosneft said. Output rose 2.9 percent to 2.18 million barrels of oil a day last year after the start of production at Rosneft’s Vankor field, the country’s largest oil development, in August. The price of Urals, Russia’s main export blend, rose 37 percent to average $74.26 a barrel from a year earlier, according to the company’s Web site.
“Year-on-year performance was much better,” Peter O’Brien, vice president for finance and investment, said in a phone interview today. “The main factor was crude and product prices but we also managed to grow volume and costs are substantially lower in dollars.”
Earnings before interest, taxes, depreciation and amortization rose to $4.01 billion in the fourth quarter from $32 million in the same period of 2008, Rosneft said.
Vankor Tax Breaks
The Russian government plans to hold a meeting within a month to decide on the future of export duty exemptions for Vankor and a group of other eastern Siberian deposits. The Finance Ministry, seeking to balance the benefit of oil output growth with Russia’s first deficit in a decade last year, has said the breaks eat into budget revenue.
State-run Rosneft is confident the Finance Ministry “will see that these investments make sense and should be provided certainty around profitability,” given the importance for the country’s economy and the company’s revenue, O’Brien said.
“They do not seem to have booked benefits on export duty breaks in the quarter after the technical glitch,” Artem Konchin, a Moscow-based oil and gas analyst at UniCredit SpA, said by telephone. Vankor’s oil turned out not to match specifications the government set for the exemptions, and is exported under a “temporary” break until March 1, Finance Minister Alexei Kudrin said last week.
“It may be interesting in the future if they do get a refund,” Konchin said.
Vankor, where output reached 220,000 barrels a day at the end of last month, depends on tax breaks to reach the profitability that Rosneft had earlier expected, O’Brien said.
With the addition of Vankor, Rosneft output growth is ahead of the industry average, Konchin said.
Rosneft reduced net debt by $2.79 billion to $18.5 billion and paid $622 million in dividends last year.
Rosneft has more cash “on hand” than the $4.5 billion in debt that it has coming due this year, O’Brien said. The company has the option of drawing the final $5 billion portion of a loan from China this year, O’Brien said.
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