Better price realization pushes Rosneft profit up by 64 percent

Russian State Oil Company Rosneft - Benefitting From Higher Crude Prices

Russian State Oil Company Rosneft – Benefitting From Higher Crude Prices

Thanks to higher price of oils and growth in refining volume, Russia’s state owned oil producer Rosneft has announced a 64 percent growth in profits for 2010.

The oil major’s revenue grew by 35 percent to $63 billion while net profit jumped to $10.7 billion. TNK-BP, a Russian joint venture with BP had earlier this week won an injunction against Rosneft’s new deal with BP to explore oil in Arctic Russia.

Rosneft denied market rumors on Friday that it has offered to buy out Russian partners in TNK-BP. TNK-BP is co-owned by Russian oligarch AAR consortium.

“We are not in talks about buying AAR’s stake or TNK-BP itself, of course not”, Russian news agency Interfax quoted Rosneft president Eduard Khudainatov as saying.

AAR consortium has argued in a London court that the Rosneft-BP deal of share swapping and oil exploration in Arctic Russia undermines their existing agreement with BP.

They said that under the existing laws, both parties can pursue commercial interests separately in Russia only when either refuses to participate in a project.

In an investor conference call in Moscow on Wednesday, Rosneft Chief Financial Officer Peter O’Brien said that AAR consortium has “neither the technology, nor the experience, nor the personnel” to participate in arctic oil exploration.

Giving out the details of its 2010 results, Rosneft said that oil production had grown by 6.4 percent over 2009.

“The biggest contributors to growth were the Vankor and Verkhnechonsk fields in East Siberia, and also Samaraneftegaz”, declared the company in its financial statement.

The global crude price was higher by 30% on an average, which helped the company realise better margins.

Last year the company had also managed to deleverage its balance sheet by reducing debts by 26% to $13.7 billion.

“Looking ahead, we are focused on our strategic investment projects, including continuing Vankor’s development to deliver peak production in 2014 and our refinery upgrade programme, as well as several new internal optimization projects and our recently announced strategic exploration partnerships”, said Mr. Khudainatov.

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