Rosneft reported a 79-percent drop in 2020 net profits to $2.2 billion (147 billion rubles), with its fourth-quarter result hitting a record high after a loss in the third quarter.
The company said its free cash flow had remained positive for the ninth year in a row in 2020 despite the challenging demand situation on global oil markets. It also boasted a decline in production costs to $2.6 per barrel of oil equivalent in the fourth quarter of the year.
"The pandemic of new coronavirus infection led to an unprecedented drop in crude oil demand," chief executive Igor Sechin said. "The volatility of oil prices was at a critical level. At the same time, Rosneft fulfilled its obligations to balance market demand and supply as requested by the Russian Government."
Rosneft's CEO has been a vocal critic of Russia's OPEC+ obligations under the deal aimed at curbing the excess supply of oil in an environment of demand destruction amid the pandemic. The company has ambitious production growth plans despite forecasts for a looming demand peak.
Its latest move in this direction was the launch of the giant Vostok oil project in the Arctic, which is scheduled to be pumping some 600,000 bpd by 2024, or a total of 30 million tons by that year. According to plans, this should rise to 50 million tons during the second phase of the project, or 1 million bpd, and 100 million tons during its third phase, or 2 million barrels daily.
At the release of the 2020 results, Sechin noted the Vostok project as part of the company's focus on "large projects which are low cost, high-margin, with high-quality resources and a low carbon footprint."
Vostok is estimated to draw investments of $170 billion over ten years, tapping reserves estimated at 44 billion barrels of oil equivalent.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
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