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Rosneft Reports Profit Crash Under Western Sanctions

Rosneft Reports Profit Crash Under Western Sanctions

Russian energy giant Rosneft announces its third-quarter profits crashed as it operates under Western sanctions over the Ukraine crisis and the ruble plunges.

MOSCOW -- Russian energy giant Rosneft (IW 1000/22) on Wednesday announced its third-quarter profits crashed as it operates under Western sanctions over the Ukraine crisis and the ruble plunges.

Net profit fell by 99.3% to 18.3 million euros ($23.4 million).

The fall in profits year-on-year from 143 billion rubles to one billion (18.3 million euros) came after Rosneft asked the Russian government for massive financial support to help it survive US and EU sanctions imposed this summer.

The United States in July added Rosneft, which is almost 70% state-controlled, to its list of companies that face sanctions over the Ukraine crisis, drastically limiting its access to US markets. The European Union adopted sanctions against Rosneft and other major companies in September.

The company said in its report that it "considers these sanctions in its activities, continuously monitors them and analyses the effect of the sanctions on the Company's financial position and results of operations."

Rosneft's total revenues in the third quarter grew 1.92% to 1.382 billion rubles (25.2 billion euros). The Russian oil giant reported a fall in its profits over the first nine months of the year of more than 37% to 261 billion rubles (4.8 billion euros).

Mixed Picture

But excluding Rosneft's acquisitions of TNK-BP assets in 2013, the net profits for nine months were up 4.4%. Earnings before interest, tax, depreciation and amortization (EBITDA) were up 25.4% for the first nine months, to 4.192 billion rubles (76.7 billion euros).

Oil production has remained stable at 4.2 million barrels per day, while gas extraction has risen more than 56% over nine months to 40.87 billion cubic metres.

"The company's business is stable both operationally and financially," Rosneft chief Igor Sechin was quoted as saying in a company statement.

Rosneft in August asked the Russian government to give it huge financial bailout to help it repay a debt of nearly $45 billion.

Economic Development Minister Alexei Ulyukayev said on Wednesday that Russia could not satisfy a request from Rosneft for a further bailout. "The request in its current form does not meet the requirements for financing," Ulyukayev was quoted as saying by RIA Novosti news agency.

Rosneft accounts for more than 40% of Russia's oil production. Britain's BP owns around 19% of the Russian oil major.

Copyright Agence France-Presse, 2014

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