Russia's largest oil producer Rosneft posted on Wednesday a 15 per cent fall in second-quarter net profit, hit by lower prices and weak oil production due to a domestic crude contamination issue.
Rosneft, which accounts for over 40 per cent of oil production in Russia, said this week that its oil production in the second quarter was up 0.3 per cent to 4.62 million barrels per day (bpd) in annual terms, but down almost 3 per cent from the first quarter due to the tainted oil scandal and global oil deal curbs.
Russia's oil exports were hit this year when crude transported to Europe via the Druzhba pipeline was contaminated by chlorides. Moscow managed to restore supplies in a couple of months.
Last month Transneft curbed oil intake from Yuganskneftegaz, the main upstream unit of Rosneft.
Rosneft reported net profit of 194 billion roubles (Dh11.01bn), down from 228bn roubles in the same period a year ago.
It generated 2.1 trillion roubles in revenue in the quarter, largely flat from a year ago, while earnings before interest, taxes, depreciation and amortisation (ebitda) were 515bn roubles, down from 565bn roubles in the year-ago quarter.
"The main reason for the underwhelming results was the Transneft situation," Aton brokerage said in a note.
Rosneft did not explain the fall in net profit in its statement but said that the price of Urals, Russia's main oil export blend, was at $67.9 per barrel in the second quarter versus $72.5 per barrel a year ago.
Investors were, however, cheered after the company declared a first half dividend of 15.34 roubles per share, or 50 per cent of the company's net profit. Rosneft shares were up by 1.3 per cent at 08.45 GMT, outperforming a wider index that was largely flat.
Rosneft also said its financial debt and trading liabilities had fallen by 14 per cent, or by more than 800bn roubles, since the beginning of 2019.
Net debt and trading liabilities declined by 157bn roubles in the first half of 2019 and its net debt was 1.3 times core earnings in rouble terms at the end of the quarter.