Page 9 - FSUOGM Week 46 2021

FSUOGM PERFORMANCE FSUOGM

Rosneft profits soar in Q3 as CEO warns

of "super cycle" in energy markets

RUSSIA RUSSIA’S state-owned Rosneft followed other company to ramp up its liquids output by around
oil and gas majors in reporting a surge in profits 2% to 3.98mn barrels per day (bpd), and it also
Rosneft profits soared in the third quarter on the back of higher prices, increased gas flow by 12% to 1.11mn barrels of
in the third quarter. with its CEO Igor Sechin predicting a “super oil equivalent per day (boepd), primarily thanks
cycle” in energy markets would drive prices to growth at the Rospan project.
higher as demand recovers. Downstream, Rosneft’s refining through rose
Rosneft’s EBITDA came in at $8.7bn by 6% year on year to 27.1mn tonnes, driven by
(RUB638bn) in the three-month period, up “an increase in plant utilisation against the back-
13% quarter on quarter, while net income rose drop of growing demand for petroleum products
by 38.7% to $4.3bn. These results were achieved on the domestic market,” the company said.
thanks to an 8.1% growth in revenues to $32.2bn, Speaking in an earnings call, Sechin warned
while free cash flow expanded by 15.9% to of an incoming “super cycle” in energy markets.
$5.1bn. While producers often benefit from high prices
Moscow-based brokerages BCS Global Mar- in the short term, sustained very high prices
kets and Sova Capital both said the numbers can be detrimental in the long term, as they can
were higher than expectations. trigger an economic downturn, in turn causing
“We consider the quarter to have been a demand to collapse.
good one for the company,” BCS GM said in a “Despite the uncertainty in the global econ-
research note on November 12, noting that the omy due to the difficult epidemiological situa-
growth in cash flow was likely aided by the clos- tion, we observe a rapid growth in demand for
ing of the sale of a 5% stake in Rosneft’s Vostok traditional energy resources," CEO Igor Sechin
Oil project in the Russian Arctic to traders Vitol said. "As structural discrepancies between sup-
and Mercantile & Maritime. ply and demand on global energy markets are
“The results are solid, in our view, but we further revealed, we may witness a new super
see no major surprises,” Sova Capital said. “The cycle on the oil and gas markets."
company continues to book strong free cash To help meet rising demand, Rosneft
flow, even unadjusted, but it is not doing much aims to increase investments in new projects,
on the deleveraging front, at least in terms of Sechin said. The company’s capital expendi-
decreasing long-term and short-term debt.” ture amounted to RUB689bn ($9.7bn) in the
Sova Capital said it expected a dividend floor first nine months of this year, or a fifth higher
of RUB47bn for the 2021 financial year, implying than the same period in 2020. This was chiefly
a 7% yield, and a H2-2021 interim dividend of the result of ongoing work at Vostok Oil, and
RUB29 per share. increased development at Rosneft’s Yugansk-
Increased OPEC+ quotas enabled the neftegaz unit. ™

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