Russia's Rosneft sees Q3 profit double

State-owned Rosneft's net profit doubles to $5.7 billion in Q3 on higher oil price

Associated Press

MOSCOW (AP) -- Russia's largest oil company Rosneft said Thursday that it doubled its profit in the third quarter of the year thanks to strong sales and higher oil prices.

Rosneft's net profit rose to $5.7 billion in the July-September period from $2.8 billion last year. The increase was greater than expected in the markets and came despite a modest increase in revenues from $24.6 billion to $25.5 billion.

The firm, which is 75-percent owned by the government, last month sealed a historic deal to buy Russia's third-largest oil producer TNK-BP from BP and a group of Russian shareholders.

Rosneft's strong third-quarter figures were also driven by an increase in daily production, from 2.6 billion barrels of oil equivalent to 2.7 billion barrels in the third quarter this year, mainly thanks to the new oil fields of Vankor and Verkhnechonsk.

Rosneft's chief executive Igor Sechin said the company's strong results "reflect the beginning of broad-reaching transformations within the company to cut costs and improve efficiency, which have already yielded strong results in production and sales."

Separately on Thursday, Rosneft announced a major deal to supply state-owned electricity company Inter RAO with natural gas. Rosneft, which is boosting its gas business, has committed to sell to Inter RAO up to 875 billion cubic meters of gas between 2016 and 2040.

Rosneft last week agreed to buy 50 percent in TNK-BP from British oil company BP for about $17 billion in cash and a 12.84 percent of its own shares. Rosneft is buying the other half for $28 billion from a group of Russian shareholders.

The deal has received a split response from ratings agencies.

While Fitch and Moody's said the deal could trigger a rating downgrade for Rosneft, Standard and Poor's said it might upgrade the company if it finds the details of the agreement profitable for the firm.

The deal will allow Rosneft, already the country's top oil producer, to increase its global profile. Rosneft will leapfrog ExxonMobil Corp. to become the world's largest publicly traded producer of oil and gas, in terms of output. ExxonMobil's latest earnings show its daily output at 4.2 million barrels of oil, below the expanded Rosneft's projected 4.6 million.

Rosneft's shares were up 0.6 percent early afternoon at Moscow's MICEX exchange.

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