Rosneft PJSC, which is controlled by the state and produces more than a third of Russia’s oil, reported net income of 245 billion rubles ($3 billion) for the first six months, a fall of more than 68% compared with the same period in 2024, the company said in a statement on Saturday.
“The first half of this year was characterized by lower oil prices, primarily due to the overproduction of oil,” Rosneft Chief Executive Officer Igor Sechin said in the statement. “In addition, there was an expansion of discounts on Russian oil due to the tightening of EU and US sanctions restrictions and a significant strengthening of the ruble exchange rate, which negatively affected the financial results of all exporters.”
The sharp fall followed weaker results from Rosneft’s peers. Lukoil PJSC, Russia’s second-largest producer, and Gazprom Neft PJSC, the oil division of Gazprom, both recorded profit declines of more than 50% in the first half of the year compared with a year earlier. Smaller rival Tatneft PJSC reported a 62% drop.
The industry slump came as lower global crude prices hit oil majors worldwide. Prices have been pressured by fears of a glut, with OPEC+ returning curtailed supply faster than expected, and by the risk that US President Donald Trump’s tariff policy could slow the global economy.
It remains uncertain how much of the profit decline was directly caused by western sanctions and restrictions. These measures were imposed after Russia’s invasion of Ukraine with the aim of curbing the Kremlin’s access to funds for the war.Russia’s main export blend, Urals, averaged $58 a barrel in the first half of this year, more than 13% lower than in the same period a year ago, according to Bloomberg calculations using data from Argus Media.The ruble also strengthened sharply, gaining almost 23% against the US dollar to reach 78.4685 per dollar as of June 30 compared with the end of last year. The rise in the currency, supported by Russia’s key interest rate staying near record highs, meant producers received fewer rubles for each barrel of oil sold.
Although the central bank cut borrowing costs by 300 basis points in meetings in June and July, Sechin said the pace of easing was “clearly insufficient.”
“One of the consequences of maintaining the key interest rate at an elevated level for a long time is the excessive appreciation of the ruble, which leads to losses for both the Russian budget and exporting companies,” Sechin said. He added that this also increases debt-servicing costs, undermines the financial stability of corporate borrowers and reduces investment potential.
(with Bloomberg inputs)
as a Reliable and Trusted News Source