Page 11 - FSUOGM Week 17

FSUOGM INVESTMENT FSUOGM
Rosneft to book Q1 loss, BP data indicates
RUSSIA
BP figures suggest Rosneft will book a $1.1bn loss for the first quarter.
BP suffered a $218mn loss before tax and interest in the first quarter from its 19.75% stake in Rus- sia’s Rosneft, the UK major reported on April 28, dragging down its overall earnings.
BP attributed the loss at Rosneft to lower oil prices, changes in exchange rates and custom- ers duties, partly offset by some one-off items. In contrast it earned a $526mn pre-tax income from its share in Rosneft in the first quarter of 2019, and a $534mn profit in the fourth quarter.
The Russian oil giant is not expected to pub- lish its financial results for the three-month period until May. And its figures may differ from those reported by BP, the latter warned.
BP’s figure, however, indicates that Rosneft will book a loss of $1.1bn in the first quarter. Like other Russian producers, Rosneft’s upstream costs are low, estimated by Moscow-based ACRA Ratings at just $5.1 per barrel of oil equiv- alent (boe), making it well placed to weather the downturn. The company will incur heavy losses this year relating to the ruble’s devaluation, however.
The weaker ruble has inflated Rosneft’s net debt, currently estimated at $45bn, of which half isdenominatedinforeigncurrencies,according to BCS Global Markets analyst Sergei Suverov. Russian companies suffered similar losses fol- lowing the ruble’s collapse in late 2014.
BP’s overall loss before tax and interest was $4.52bn, versus a $4.78bn profit a year earlier, as both its upstream and downstream division swung into the red.
The company’s underlying replacement-cost (RC) profit came to $2.39bn, versus $4.8bn a year before. The sum included $1.87bn from its upstream business and $921mn from its down- stream business. It booked an underlying RC loss of $17mn from its Rosneft stake, compared with a $567mn profit in the first quarter of 2019.
BP became a shareholder in Rosneft in 2006, but acquired most of its current stake as part of the Russian company’s $55bn acquisition of TNK-BP in 2013.
“There are significant uncertainties with regard to the implementation of OPEC+ restric- tions, price impacts on entitlement volumes, divestments, market restrictions given the lack of demand for oil and [coronavirus] COVID-19 operational impacts,” the company said.
Azerbaijan has reportedly asked the BP-led Azeri-Chirag-Gunashli (ACG) project to cut output by 80,000 bpd, which would result in a net cut to BP of around 30,000 bpd.
“We have never done it since they came to the countryin1994,”anAzeriofficialtoldReuters.
BP has also held talks with Russia, Angola and in the Middle East on implementing cuts, its CEO Bernard Looney has said. ™
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