The main reasons are a decrease in oil prices due to a drop in demand amid the coronavirus pandemic and a new deal to cut production by OPEC +
Photo: Sergey Fadeichev / TASS
Rosneft’s net loss in the first half of 2020 amounted to RUB 113 billion. ($ 1.3 billion) against a profit of 325 billion rubles. ($ 4.9 billion) a year earlier, the company said in a report released on Friday, Aug. 14.
The loss was caused by a significant reduction in the company’s operating profit under the influence of “price fluctuations” (falling oil prices) and a decrease in demand during the coronavirus pandemic, as well as the negative effect of exchange rate differences (revaluation of debts), according to Rosneft. Another reason for the loss is the new OPEC + production cut agreement, which took effect on May 1.
OPEC + Countries Agree to Record Oil Production Cut
In January-June 2020, Brent crude oil fell in price by almost 40% – from $ 66 to $ 39.7 per barrel, the company said. Due to the need to fulfill obligations under the OPEC + deal, Rosneft reduced production in the first half of 2020 by 7.3%, to 106.5 million tons, and exports to non-CIS countries – by 8.6%, to 61.8 mln tons. In the second quarter, the decline was even stronger: production decreased by 13%, to 49.6 mln tons, exports – by 27.7%, to 25.8 mln tons.
The same reasons led to a sharp drop in Rosneft’s revenue in the first half of the year – by 33.4%, to 2.8 trillion rubles, and EBITDA – by 54.9%, to 479 billion rubles.