Rosneft first half profit jumps despite sanctions while EDF struggles

Top Russian oil producer Rosneft posted a 13 per cent rise in half-year net profit on Thursday while French power group EDF issued another profit warning, illustrating the difficulties Europe faces as it heads into winter.

Rosneft said profits for the first six months of the year surged to to 432 billion roubles (€7.22 billion) which it said was helped by tight cost controls. The growth came despite western sanctions on Russian oil firms which chief executive Igor Sechin described as “unlawful,” in a statement and put “unprecedented pressure” on the firm.

Rosneft said oil sales in the January to June period increased by 5.7 per cent year on year, while its debt dropped by 12 per cent compared to the beginning of the year.

“Thanks to high operational efficiency and appropriate management decisions, we were able to ensure business continuity and demonstrate stable results,” Mr Sechin, a long-standing ally of President Vladimir Putin, added.

Rosneft’s earnings came as France’s EDF warned that lower than expected output from its nuclear business would cut as much as €29 billion euros off so-called core earnings in 2022. That was its fifth profit warning so far this year, illustrating the difficulty the wider sector is facing.

The warning came a day after the French government said it would cap energy price increases at 15 per cent next year, up from 4 per cent this year. EDF will review its financial targets for next year once the details of the government’s cap had been hammered out.

EDF’s woes stand in stark contrast to Rosneft.

“1H 2022 financial results form a solid basis for interim dividends payment and a further growth of total payments for 2022,” the Russian firm said.

Rosneft said first-half hydrocarbon production reached 4.85 million barrels of oil equivalent per day, a 1.5 per cent increase from the year-earlier period “in a comparable perimeter” excluding assets disposed of in 2021.

Russia saw an exodus of western businesses following the start of what Moscow calls a “special military operation” in Ukraine on Feb. 24. BP announced in February it was abandoning its 19.75 per cent stake in Rosneft. The Russian firm accounted for around half of BP’s oil and gas reserves and a third of its production.

In June, Sechin said BP still remained its largest private shareholder despite the withdrawal announcement.

Sechin said at the time that BP's dividend would be transferred to special accounts, without elaborating. Russia has imposed capital controls and restricted cross-Border transfers of foreign currencies to weather Ukraine-related sanctions.

Rosneft said on Thursday that BP is still entitled to a part of more than 441 billion roubles for 2021. — Reuters