rosneft doubles profits ahead of tnkbp buyout
Last Updated : GMT 16:22:18
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Rosneft doubles profits ahead of TNK-BP buyout

Arab Today, arab today

Arab Today, arab today Rosneft doubles profits ahead of TNK-BP buyout

Moscow - AFP

Russia\'s oil champion Rosneft beat expectations on Thursday by doubling quarterly profits to $5.8 billion in advance of its controversial $61 billion acquisition of the private rival TNK-BP. The earnings report should help boost the confidence of one of the state\'s two most important energy companies on the eve of its planned alliance with BP and emergence as a global super-major through a buyout of its Anglo-Russian unit. Rosneft will be responsible for more than 40 percent of Russia\'s production and one-twentieth of the world\'s oil output by the time it takes command of both the British and Russian stakes of the country\'s third-biggest oil firm. \"The third-quarter 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,\" said Rosneft chief executive Igor Sechin. \"This allows us to improve the company\'s financial standing and build a stronger foundation for efficient implementation of our strategic projects,\" he said in partial reference to the TNK-BP buyout. The quarterly report was being watched closely for signs of residual weakness from a bad second quarter during which Rosneft made a rare loss due to export duty fluctuations and falling energy prices. The same export duty lag -- applicable to all oil companies -- was this time responsible for a jump in profit that further benefited from a 3.4-percent increase in output over the first nine months of the year. \"The strong financial performance was mostly due to the impact from the export duty lag,\" Moscow\'s IFC Metropol investment house said in a research note. Rosneft had also attributed its gains to better cost controls and efficiency. But analysts also warned that a large part of the third quarter result came from 65 billion ruble ($2.1 billion) in earnings the company reported from its acquisition of a 51 percent stake in the Itera natural gas supplier. The purchase reflected the giant\'s desire to diversify from its oil base and become an all-around producer that consolidates its position as a pillar of the modern Russian state under President Vladimir Putin along with gas firm Gazprom. Rosneft has now earned 285 billion rubles ($9.1 billion) through the first nine months of the year -- a 15.4-percent increase from the 2011 figure. The company reported a loss of $250 million in the second quarter of 2012 and a $2.8-billion profit in the same third quarter of last year. BP\'s alliance with Rosneft will hand the British firm 20 percent of its new partner\'s stock and open its way to Arctic reserves it had been coveting since its initial attempt to strike a similar agreement failed last year. The initially discussed Arctic projects -- licensed to Rosneft by the Russian state -- eventually went to Texas-based ExxonMobil. The Russian firm has since also struck offshore deals with Italy\'s ENI and Norway\'s Statoil. The raft of agreements provide Rosneft with massive growth opportunities and fill its toolbox with technical equipment and expertise it would have been unable to gain without Western partners. But is also leaves the world majors in the tricky position of relying on the same firm to promote competing oil projects -- conflicting alliances that Rosneft insisted on Thursday broke no competition or other rules. \"We have been and will continue to work with a multiple of partners on various projects,\" Rosneft vice president Dmitry Avdeyev told industry analysts in a conference call. \"We do not see any conflict between those projects and we do not see any conflict arising from the fact that BP may take a large minority stake in Rosneft.\"

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