Russia's Rosneft Doubles Profits to $5.67 Billion in Third-Quarter 2012, Prior To TNK-BP Deal

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Researched by Industrial Info Resources (Sugar Land, Texas)--In the third quarter of 2012, Russian state-owned oil producer Rosneft (Moscow, Russia) saw net profits more than double to $5.67 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) of $5.98 billion on gross revenues of $25.1 billion, prior to its $55 billion deal to buy TNK-BP (Moscow).

Profits were lifted by a one-off gain from the acquisition of 51% of the closely held natural gas company Itera, and the effect of a time lag on oil-export duties. The better-than-expected performance comes 10 days after Rosneft agreed to acquire all of TNK-BP. Rosneft said oil and gas production increased 4.1% in the first nine months of 2012, compared with the same period last year.

The company also announced an estimated $80 billion, 25-year deal to supply gas to state power company Inter RAO (Moscow). With the agreement, Rosneft and Inter RAO concluded a contract on the supply of up to 875 billion cubic meters of gas. The contract calls for annual supplies of up to 35 billion cubic meters of Rosneft-produced gas to Inter RAO's power plants from January 1, 2016, through December 31, 2040, on a take-or-pay basis. In 2016, 32.3 billion cubic meters of gas is to be supplied. The company plans to raise its gas sales from 34 billion cubic meters next year to 72 billion cubic meters in 2016, and 72 billion cubic meters in 2017.

"The company's target of raising gas output to 55 billion cubic meters by 2020 no longer looks overly ambitious," said Evgeny Solovyov, an analyst at Societe Generale (London, England). "We also estimate that TNK-BP's greenfield projects could add up to 1 million barrels per day of extra oil and gas output close to the end of this decade."

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