Russian Oil Majors Report Income Dip on Weak Price, Strong Ruble

(Bloomberg) – The profits of Russian oil manufacturers left in the first half of the year directed by a lower raw prices and a stronger ruble.

The manufacturer said on Saturday that Russia’s giant Rosneft PJSC, which constitutes more than one -third of the total oil production of Russia, reported a net revenue of 245 billion rubles ($ 3 billion) in the first six months of the year.

Rosneft Executive Board Chairman Igor Sechin said, “The first half of this year was first characterized by lower oil prices due to excessive production of oil,” he said. “In addition, there was an expansion of discounts in Russian oil due to the tightening of the EU and US sanctions restrictions and the significant strengthening of the Ruble exchange rate, which negatively affects the financial consequences of all exporters.”

The collapse follows weaker results than Rosneft’s Russian peers. At the beginning of the week, the country’s second largest oil producer Lukoil PJSC and Gazprom’s oil arm, the gas giant Gazprom’s gas giant Gazprom Neft PJSC, both reported more than 50% annually in the first half of snow. Smaller opponent Tatneft PJSC saw a 62% decrease.

Low global raw prices weakened snow for oil main branches worldwide in the first half of the year among a global global fears. While OPEC returns the restricted supply to the market faster than expected, US President Donald Trump’s tariff policy threatens to slow down the global economy.

It is unclear how much of the profit on Russia, which is given in response to the war in Ukraine to reduce the access to funds for conflict, depends on Western sanctions and restrictions.

According to Bloomberg calculations based on Argus media data, Urals, a key export mixture of Russia, fell over 13% in the first half of this year compared to an average of $ 58 years ago.

At the same time, Russia’s basic interest rate remains close to the record level, as of June 30th from the end of last year, the Ruble that was appreciated between almost 23% and 78,4685 per US dollar. The strengthening meant that Russian producers had less rubles for each barrel pumped and sold.

Sechin, the Central Bank of Russia, in June and July, according to meetings, while reducing borrowing costs by 300 basis points, while the speed of deductions “clearly insufficient,” he said.

“One of the consequences of protecting the key interest rate at a high level for a long time is the extreme appreciation of the Ruble, which causes losses for both Russian budget and export companies,” he said. In addition, it leads to an increase in debt service costs, causing to deteriorate the financial stability of corporate debtors and weaken the investment potential.

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