ROSNEFT ADDS $20 B
Rosneft has accumulated a $20bn "safety net" of cash on its balance sheet in order to reduce its dependence on international markets as foreign banks and investors shun Russian companies.
The Russian state-controlled oil company, whose chief executive, Igor Sechin, was sanctioned by the US on Monday, said that cash and other short-term assets on its balance sheet had risen 41 per cent in the first three months of the year to 717bn roubles ($20bn) by the end of March.
"We think that it's prudent to keep cash on the balance sheet and maintain our capacity to invest and repay debt on time, not being dependent on refinancing or public debt," Svyatoslav Slavinsky, Rosneft's chief financial officer, said on Wednesday.
Describing the $20bn cash balance as a "safety net", Mr Slavinsky said that Rosneft was paying close attention to the volatility in Russian markets "but we are not dependent on the current market conditions".
International debt and equity markets have all but closed to Russian companies since the escalation of the Ukraine crisis in March and subsequent US and European sanctions on Russia.
Rosneft has for months been attempting to raise several billion dollars from BP and Vitol in prepayments for future oil supplies. Bankers said the deal, for which the buyers would raise money from a syndicate of international banks, would be a major test of the willingness of western lenders to continue to provide new funds to Rosneft.
Alexander Kornilov, oil and gas analyst at Alfa-Bank in Moscow, said the increase in cash on Rosneft's balance sheet created a "cash cushion in the context of the situation in the international markets – or the worst-case scenario, where Rosneft might be sanctioned as well".
The company said it had 470bn roubles of debt to repay in the remaining three quarters of this year, having made 300bn roubles of repayments in the first quarter.
Mr Sechin said on Monday that the sanctions on him would have no effect on Rosneft's business. BP, which holds a stake of just under 20 per cent in Rosneft, said it would continue working with the Russian company.
Rosneft revealed the increase in its cash pile as it reported net profit of 88bn roubles for the first quarter of the year, down 34 per cent on the previous quarter. That was largely due to the impact of a weaker rouble, which weighed on Rosneft's earnings because of its large dollar-denominated debts.
Earnings before interest, tax, depreciation and amortisation rose 5.9 per cent from the previous quarter to 289bn roubles on the back of a 5 per cent increase in oil and gas production to 5.1m barrels a day of oil equivalent.
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