* Q1 net income up 8.3 percent to 13 bln roubles
* Results dented by rouble strength
* Market remains difficult, says CEO (Recasts, adds CEO quote, share price)
MOSCOW, May 5 (Reuters) - Russia's largest oil producer Rosneft posted a worse than expected rise in first-quarter net income on Friday, hit by a stronger rouble despite higher output and crude prices.
While the price of Russian Urals oil rose 28 percent year on year in rouble terms, Rosneft said that the currency's strength had a negative impact on its performance in the first three months of 2017.
Though a stronger rouble helps to lower payments of debt denominated in foreign currencies, it also reduces revenue from exports.
"The environment remains difficult. Continuing world commodity markets volatility, rouble appreciation -- all of this impacted the company's financial results," Rosneft's Chief Executive Igor Sechin said on Friday.
Net income rose 8.3 percent year on year to 13 billion roubles ($221.4 million), against a consensus forecast of 22 billion roubles among analysts polled by Reuters.
Rosneft shares were down 0.6 percent at 308.10 roubles in early trade as Russian assets were pressured by a drop in oil prices amid a global supply glut.
Rosneft also said that first-quarter free cash flow declined by 22.6 percent from a year ago to 89 billion roubles.
The company said on Wednesday that its oil and gas condensate production rose by 13 percent in the first quarter to 4.62 million barrels per day. ($1 = 58.7124 roubles) (Reporting by Vladimir Soldatkin; Editing by David Goodman)