Net profit of Rosneft has fallen by half

The company estimated the loss from tax maneuver at 165 billion rubles.
Net profit of Rosneft in 2016 declined by 54.1% to $2.8 billion (or 181 billion rubles), as compared with 2015, the company said in a press release to the IFRS report. In Q4, the profit doubled to 52 billion rubles, that was "to a large extent due to an increase in operating profit." Net income is the basis for calculating the dividend. The company reports that this year it would pay dividends not only for 2016 but also the interim dividend for 2017

Proceeds of Rosneft dropped by 3.1% to 4.98 trillion rubles. ($77.2 billion). In Q4 it grew by 21.4% to 1.485 trillion rubles. ($24.1 billion) on the back of rising oil prices by 7% in ruble terms. "The positive effect on revenue growth have efficient distribution of commodity flows and consolidation of Bashneft," explained the company.

For 2016 EBITDA amounted to 1.278 trillion rubles. ($19.3 billion), an increase of 2.7% compared with a value of 2015. Excluding the effect of consolidation of Bashneft, EBITDA remained at the previous year's level (+ 0.3%) despite the significant negative impact of external factors: decrease in ruble prices for oil, accounting for 30 billion rubles, the effect of the additional fiscal burden that is associated mainly with the tax maneuver, accounting to 165 billion rubles, indicated Rosneft.

Net debt to EBITDA at the end of 2016 almost unchanged and amounted to 1.5 in dollar terms (including Bashneft consolidation). Free cash flow decreased by 59.4% to 302 billion rubles. The company emphasizes that it has been positive for the past 19 consecutive quarters.

Capital expenditure increased by 19.2% to 709 billion rubles (or $10.7 billion), which is associated with the development of new projects and the increase in the volume of work to develop fields. "Seasonality capital investment program of Rosneft takes into account the trend of increased investment activity, which led to a natural increase in capital expenditures in Q4 by 40.1% compared to the previous quarter," are the reported words of the CEO of Rosneft Igor Sechin .

The report also said the company bought a stake in German refinery Ruhr Oel GmbH from BP for $1.5 billion. "The deal will strengthen the company's position on one of the most promising European markets petroleum products. The company becomes the third-largest oil refiner in Germany and will begin to develop its own business in the country," commented Rosneft. In January 2017, Rosneft sold 12% of the Italian Saras reprocessing complex for 175 million euros.

Rosneft gave the Venezuelan PDVSA $1.5 billion in advances

Rosneft in 2016 ageve the Venezuelan state PDVSA advances in the amount of about $1.5 billion within a contract for the supply of oil, according to a report under IFRS.

"In May 2016 the company issued the advance payment in the amount of $500 million (32 billion rubles at the official rate of the Central Bank on the date of transfer of advance) under contract with PDVSA for the supply of oil. In November 2016, the Company issued two PDVSA advance payments for $500 million and $205 million (32 billion and 13 billion rubles respectively, at the official rate of the Central Bank on the date of transfer advances)," said in the document.

In addition, in December 2016, Rosnef gave PDVSA yet another advance for $280 million (18 billion rubles at the official Central Bank rate on the date of transfer of advance).

A year ago, PDVSA reported that Rosneft wanted to invest $500 million in projects in the oil of the Orinoco River basin in Venezuela and to purchase 23.33% in the joint venture PetroMonagas, where the Russian company had 16.7% at the time, while PDVSA had 83.3%. This year the Venezuelan National Assembly blocked the deal, while Rosneft stated that it was fully legitimate.

In Venezuela, Rosneft and PDVSA have several projects in oil production. In addition to the joint venture of Petromonagas, there are Petromiranda, Petrovictoria, and Boqueron (PDVSA has 60%, Rosneft" - 26.67%, Austrian OMV - 13,33%) and Petroperija (PDVSA has 60%, Rosneft - 40%).

In February, Reuters wrote that PDVSA delays the supply of oil and fuel to China's CNPC and Rosneft. As of the end of January, the Venezuelan company is overdue by 10 months from the delivery of 10 million barrels of fuel and 3.2 million barrels of crude oil worth about $750 million. Among the reasons for disruption of supplies it mentions the lack of storage facilities, unpreparedness of tankers and disputes with suppliers.