Russia's Rosneft Incurs $2.1 Billion First-Quarter Loss, Cuts Output

Russia's largest oil producer, Rosneft, on Friday reported a first-quarter loss of 156 billion roubles ($2.1 billion) hurt by the spread of the coronavirus and a weaker rouble.

Rosneft, which accounts for around 40% of Russia's total oil production, also said it cut its oil and gas condensate output in the first three months of the year by 2.2% from the year-earlier period to 4.64 million barrels per day (bpd) due to a global pact to curb output.

The global oil industry has been hit by weak oil prices, which declined by around two-thirds in January-March due to a supply glut and the economic fallout from the spread of the novel coronavirus.

To tackle the impact of the spread of the virus and overproduction, a group of leading oil producers including Russia, known as OPEC+, agreed last month to boost their combined oil output cuts to almost 10 million bpd, or 10% of global demand in May-June.

Rosneft, in which BP owns a 19.75% stake, plans to cut investment by around $2.7 billion, or 21%, this year due to the global pact.

"(This year) may become a turning point for the global oil and gas industry. As a result of the global COVID-19 virus pandemic, demand for crude oil has experienced an unprecedented decline, which resulted in a significant drop of energy prices," Rosneft CEO Igor Sechin said in a statement.

He, however, added that Rosneft was well-placed to weather the challenges.

The company said its first-quarter finances were negatively impacted by a weaker rouble, which inflated its foreign exchange denominated debt obligations.

Revenue for the January-March quarter fell 15% to 1.77 trillion roubles on lower oil prices, while earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 44% to 309 billion roubles.

Rosneft made net profit of 131 billion roubles in the first quarter of 2019.

(Reuters)