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Rosneft reported a net profit attributable to shareholders of US$1.4 billion for the first half of 2017, down by 12.5 percent from the result for January-June 2016 because of the strengthening of the Russian currency thanks to higher oil prices.
These higher prices drove revenues higher, to US$50.1 billion, up by almost 50 percent on the year, Rosneft said. EBITDA were also up, to US$11 billion, or 2.9 percent higher than in first-half 2016.
Like other oil majors, Russia’s state-owned giant benefited from higher international oil prices and more sales in the reporting period.
Capex also increased in the period, by 32 percent, driving free cash flow lower, Rosneft said, which at end-June 2017 stood at US$2.1 billion. Like other Russian oil companies, Rosneft is taking advantage of tax incentives aimed at stimulating new field exploration in eastern Siberia, to replace depleting fields in the Western part of Russia’s oil fatherland.
Rosneft made headlines earlier this year when reports emerged about a possible debt default by Venezuela’s PDVSA. Rosneft could take control of 49.9 percent of Citgo – the troubled U.S. business of Venezuela’s state-owned oil company, media warned in March.
PDVSA used the stake as collateral for a $1.5-billion loan provided by Rosneft last year, and the Russian company immediately filed a lien with the Delaware Department of State asserting its right to ownership in case PDVSA defaults on debt payments.
Earlier this week, Reuters reported that PDVSA has started diverting crude oil deliveries from Citgo to Rosneft as it has been falling seriously behind on its in-kind payments for the loan. Venezuela has been finding it hard to maintain sufficient crude oil production since 2012, but, Reuters notes, the decline in production accelerated this year amid lower crude oil prices, chronic lack of investments, and payment delays.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.