Page 96 - RusRPTSept20

market will come back into balance by 2023, and even 2021 should look much. Better than 2020,” BCS GM said.
● Rosneft
Russian oil major Rosneft posted a RUB43bn ruble net profit in April– June under International Financial Reporting Standards (IFRS), the company said in a report on Friday. In January–June, the company had a net loss of RUB113bn against a net profit of RUB325bn in the same period of 2019. "Crude oil and gas production as well as refining volumes came under severe pressure in April–June 2020, which led to deterioration of financial indicators,” CEO Igor Sechin said as cited in the report. “Still in January–June 2020, the company kept a low level of operating expenses and demonstrated a material free cash flow. This enabled us to fulfill obligations to the shareholders and to continue implementation of our strategic goal -- reduction of financial debt and trading obligations -- even in the very difficult conditions." Revenue fell by 41% on the quarter to RUB1.039 trillion, while earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased 45% to RUB170bn in April–June. Capital expenditures fell 1.6% to RUB182bn.
Russia’s Rosneft has resumed drilling in the high-cost Arctic Kara Sea after a six-year hiatus, its CEO Igor Sechin announced in mid-August. The move comes despite the company making steep cuts to its upstream spending in response to the pandemic and its economic impact, Petroleum-Economist reported. Interest in Russia’s Arctic shelf reached a new high in September 2014, when Rosneft and its US partner ExxonMobil made the Pobeda oil discovery in the Kara Sea. By Rosneft’s estimates, the find held 130mn t
(953mn bl) of valuable ultra-light oil and 422bn m3 of gas. A week after its
announcement, though, Washington and its allies slapped sanctions on Russia for its annexation of Crimea, prohibiting Western firms from the country’s Arctic offshore oil projects. Work at Pobeda was immediately halted and, after seemingly giving up hope of the US changing its policy, ExxonMobil formally quit the Kara Sea in 2018. Low oil prices over the past six years have also dimmed Russia’s offshore Arctic prospects significantly. The country’s Arctic shelf containsbns of barrels of oil and trillions of square metres of gas in proven reserves, let alone prospective resources. But drilling in the area is incredibly costly, owing to its remoteness and difficult operating conditions. The Pobeda well’s price tag was $600mn; state subsoil licensing agency Rosnedra remarked last year that the discovery would only be profitable at $130-140/bl oil. While the market has recovered somewhat since the height of the Covid-19 crisis in April, Brent is still at c.$45/bl. The consensus is that even $60/bl oil could be several years away. And the energy transition has cast further doubt on long-term oil demand.
The oil and gas condensate output of Russian oil major Rosneft fell 13% on the quarter to 49.6 million tonnes in April–June, the company said in a press release on Friday. In January–June, production decreased by 7.3% on the year to 106.5 million tonnes. "January–June liquids production amounted to 4.34 million barrels per day (106.5 million tonnes), a 7.3% decrease on the year. April–June 2020 liquids production constituted to 4.04 million barrels per day (49.6 million tonnes), demonstrating a 13% decline on the quarter amid the company’s compliance with its quotas under the new OPEC+ Agreement," Rosneft said. Gas output fell by 8.8% on the quarter to 15.2 billion cubic meters in April–June. Rosneft also said its oil refining grew by 1.7% to 52.7 million tonnes in January–June. In April–June, Rosneft refined 24 million
96 RUSSIA Country Report September 2020 www.intellinews.com