First fall

Rosneft's profit fell sharply

Rosneft's first report after the IPO according to US GAAP standards for the six months of this year unexpectedly showed a sharp decline in net profit compared to the same period last year - by more than 21%, to $1.88 billion. Such a significant drop in profit in " Rosneft is explained by the sale to Gazprom last year of a stake in the joint venture Sevmorneftegaz, which owns licenses for the Prirazlomnoye and Shtokman fields (the money was needed to purchase Yuganskneftegaz). Then, for its 50% stake in this joint venture, Rosneft received $1.3 billion, then this amount was reflected in the reporting for the six months of 2005. Excluding these funds, the company's profit grew by 14.2%.

However, the market expected more. According to surveys, most experts and traders expected a drop in profits of 15-18% with revenue growth of 64-65%. The analysts explained their position by record high oil prices and the company’s good financial policy. According to the report, during the six months of this year, the ratio of net debt to capital employed decreased by 3%, to 51%. Officially, Rosneft aims to reduce this ratio to 30%.

In general, if you look at all the indicators of the state-owned company, analysts point out, the report shows good results. “In general, no one expected that Rosneft would be able to increase profits to the level of the deal with Sevmorneftegaz,” said MDM Bank analyst Andrey Gromadin. “So without taking into account the deal, the indicators are not bad.” “In terms of the ratio of net profit to net revenue, which for Rosneft is about 17%, the company has almost caught up with such market leaders as Surgutneftegaz and Gazprom Neft, whose ratio is approximately 18%,” notes Denis Borisov from IC "Solid".

Other indicators of Rosneft caused optimism among experts. Thus, according to the report, the state-owned company’s revenue increased by almost 65%, to $16.37 billion, capital costs by 56.8%, to $1.4 billion, oil production increased by 8.2%, to 38. 4 million tons, including production of Yuganskneftegaz - by 8.5%.

But analysts’ forecasts for the future of Rosneft are less optimistic. As experts note, oil prices, which have a major impact on the profits of any oil company, have now fallen sharply. Compared to July, they have already decreased by 22% (Russian Urals last night cost $52.91 per barrel). At the same time, the export duty in September-October reached a record level of $216.4 per ton. In addition, Rosneft lacks its own refining capacity, and the company is forced to spend money on this that could go into profit. So in the third quarter, without taking into account Sevmorneftegaz, profits may decrease slightly, Mr. Borisov believes. “In just one year, the profit could be approximately $3.8-3.9 billion,” he believes.

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In June, Rosneft acquired a 97.5% stake in the Nakhodka oil-loading sea trade port for $19.5 million, the company’s report says. The seller of the port's stake was NK Alliance. The parties did not disclose the transaction amount. “With the acquisition of the port, Rosneft has completed the formation of a single technologically closed production complex in the waters of Nakhodka Bay, one of the largest not only in the Far East, but throughout Russia,” notes the company’s report. AK&M

Anna GORSHKOVA