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Russia's Rosneft posts 63 percent Q2 profit drop

Russia's biggest oil company Rosneft on Tuesday posted a 63 percent drop in second-quarter profits as oil prices tumbled from last summer's high.
/ Source: The Associated Press

Russia's biggest oil company Rosneft on Tuesday posted a 63 percent drop in second-quarter profits as oil prices tumbled from last summer's high.

Net profits dropped to $1.6 billion from $4.3 billion a year before, Rosneft said in a statement.

The company attributed the profit slump mostly to low oil prices as well as the appreciation of the Russian ruble. Oil currently trades around $70 per barrel — less than half the $147 it reached in June 2008 — and the company recorded a foreign exchange loss of $391 million in the second quarter.

Sales halved to $10.9 billion in April-June compared to $21.1 billion a year ago, even though daily crude output rose 0.5 percent to 2.1 million barrels per day.

Earnings before interest, tax, depreciation and amortization — a gauge of operating profit — declined to $3.6 billion from $7 billion in April-June 2008.

Rosneft's president Sergei Bogdanchikov said in a statement that the company hopes to increase its average daily production by 5 percent in the second half of the year following the recent launch of a huge oil field in Siberia.

Rosneft opened the Vankor field two weeks ago in an effort to revive flagging output.

The field will boost Rosneft's production by 510,000 barrels per day of oil — about one quarter of its output last year — when it reaches peak production in 2014, the company said.

Rosneft said that its production hit an all-time daily high of 2.3 million tons of crude last week.

Shares in the company rose 1 percent in late Tuesday afternoon trading on the MICEX stock exchange.