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Rosneft reported a net profit of $2 billion (149 billion rubles) for the first quarter of the year, up from a loss of $2.11 billion (156 billion rubles) for the first quarter of 2020, also boasting increased free cash flow and lower debt.
Free cash flow, the company said, rose 2.6-fold from the final quarter of 2020 to $2.57 billion (190 billion rubles), and debt fell to $2.9 billion.
Upstream operating costs were reduced to a minimum of $2.6 per barrel of oil equivalent, Rosneft also said.
““Rosneft” continued to work on the implementation of strategically important projects, including “Vostok Oil” project, which guarantees the Company the stability of production and profit levels in the long term and provides a significant competitive advantage,” chief executive Igor Sechin said. ““Rosneft” also demonstrates its determination in the energy transition, consistently increasing the share of gas in the production of hydrocarbons.”
The Vostok Oil mega project in Siberia, which includes the Vankor and Payakha clusters, has resources estimated at 44 billion barrels. All those clusters are close to the Northern Sea Route that Rosneft wants to use to ship oil to Europe and Asia.
The project will make up the backbone of Russia’s future oil production, tapping into 5 billion tons of oil to yield 50 million tons by 2024 and 100 million tons by the end of the decade. The development of Vostok Oil over its lifetime is estimated at some $170 billion.
Because of the massive cost of Vostok Oil’s development, Rosneft has been looking for foreign partners. Commodity trading major Trafigura said last December it had acquired a 10-percent stake in the project, getting access to high-quality crude oil resources from a major new onshore oil-producing region in Siberia’s Taymyr province.
Reports from January had it that the Russian state giant was also negotiating with Trafigura’s peers—Gunvor, Glencore, and Vitol—to also participate in the project. Vostok Oil has been touted by Rosneft’s Igor Sechin as one of the company’s “large projects which are low cost, high-margin, with high-quality resources and a low carbon footprint.”
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.