May 15, 2020 / 9:11 AM / 10 days ago

Russia's Rosneft incurs $2.1 billion first-quarter loss, cuts output

MOSCOW (Reuters) - 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.

Christmas and New Year decorations depicting a Russia's Rosneft oil company logo are pictured at the "Biryusinka" toy factory, which has been producing decorations and toys for the festive season since 1942, in Krasnoyarsk, Russia November 29, 2018. REUTERS/Ilya Naymushin

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.

Reporting by Vladimir Soldatkin and Olesya Astakhova; editing by Jason Neely and Emelia Sithole-Matarise

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