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article imageRosneft profit soars thanks to booming gas output

By Dmitry Zaks (AFP)     Feb 4, 2014 in Business

Russia's oil giant Rosneft reported a 51-percent jump in annual profit on Tuesday thanks to a huge boost in natural gas output that made it the country's third-largest producer.

The state-held firm -- the world's biggest publically-traded oil company by both production and reserves -- said its 2013 net income reached 551 billion rubles ($15.6 billion, 11.5 billion euros).

The company said its total hydrocarbon production grew by 80.3 percent thanks to a 132.9-percent leap in natural gas output.

"The 2013 performance has made Rosneft the third-largest gas producer in Russia with increased gas production to 38.17 billion cubic metres," the company said in a report.

Rosneft attributed its strong natural gas performance to last year's acquisition of the private Anglo-Russian venture TNK-BP along with the assets of the Itera energy group.

The company -- responsible for 40 percent of Russia's oil output and run by President Vladimir Putin's long-time confident Igor Sechin -- has long set its sights on cutting into rival Gazprom's huge advantage in natural gas.

Rosneft now plans to also enter the liquified natural gas market by building a LNG plant in Russia's Far East under an agreement signed in 2013 with the US super-major ExxonMobil.

Last year "was a transformational year in the company's history," Sechin said in a statement.

"We are proud to say that on a number of metrics...the company's results are the best not only in Russia, but also on a global scale."

Sechin added that Rosneft this year is preparing to launch "new major projects" whose details he did not disclose.

Russia's world-topping crude output hit a post-Soviet record of 523.3 million tonnes (10.51 million barrels per day) last year.

But analysts worry that about 90 percent of that production came from fast-depleting fields in West Siberia that were first developed in Soviet times.

Rosneft said production at new fields in East Siberia now accounted for 19 percent of all liquids -- an encouraging statistic that is watched closely by investors because of its importance to future output.

The firm added that output in older fields was improving thanks to new technology made available through a sting of successful tie-ups with Western majors it accomplished in the past two years.

Rosneft also said that a recent audit raised its proved hydrocarbon reserves by 74 percent to 33.00 billion barrels of oil equivalent on the basis of standards set by US regulators.

Rosneft shares in Moscow moved almost two percent higher within minutes of the report's filing on expectations of record dividend payments and a possible company stock buy-back plan.

The firm advised investors that dividend payments could grow by 60 percent to 12.86 rubles ($0.37) per share. A final decision is expected at a board meeting scheduled for April.

Sechin for his part said Rosneft was also mulling the option of launching a stock buy-back programme.

However such a move "is not our priority" and "we are focused on investing in our strategic projects," Russian news agencies quoted the Rosneft boss as saying.

Sechin told Russian President Vladimir Putin in January 2013 that his company was worth $92 billion and that the figure would grow to $120 billion by the end of this year.

But the amount its still a fraction of ExxonMobil's market capitalisation of $395 billion.

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