In the first quarter of this year, Rosneft earned RUB170 billion ($2.15 billion) in profit versus RUB399 billion in Q1 2024. Revenue slipped 12% to RUB2.28 trillion ($28.8 billion). The company reported negative operating cash flows of RUB365 billion ($4.61 billion), which fell short of covering capital expenditures of RUB403 billion ($5.1 billion).
“During the reporting period, the company operated in a context of further deterioration in the macroeconomic environment, including a decline in the price of Russian Urals crude and expanding discounts, new sanctions restrictions, and a stronger ruble,” the company said in a statement.
Rosneft also noted that the Russian central bank’s key rate hike has nearly doubled quarterly interest payments. To meet all its expenses, the company borrowed RUB1 trillion ($12.64 billion) during the quarter, four times as much as in Q1 2024.
The report cited sanctions as another factor affecting profit, noting that Rosneft had to increase oil discounts for China. Rising taxes also contributed to the sliding profits.
Despite the drop in financial results, experts remain confident that Rosneft will avoid long-term problems. Lower ruble-denominated oil prices threaten the Russian state budget, which could prompt authorities to devalue the ruble. Moreover, Rosneft can count on state support and is the only oil company in Russia positioned to expand production capacity. It is advancing the Vostok Oil project, considered the country’s last major untapped cluster of oil fields.