Rosneft second-quarter profit increased on higher oil prices

MOSCOW (MRC) -- Russian oil producer Rosneft’s second-quarter net profit showed a fivefold increase from the same period last year, said the company, citing recovering oil prices.

Net profit surged to 233 bn roubles (USD3.2 billion) while revenue doubled to 2.167 trln roubles.

Rosneft, which includes oil major BP among its shareholders, said that liquid hydrocarbon production was at an average of 3.9 mn barrels per day (bpd) in the quarter, down from 4.04 million bpd a year earlier, when OPEC+ launched its deepest oil supply cuts to prop-up global prices hit by the coronavirus pandemic.

Revenue increased 25% quarter on quarter to 2,167 billion billion. The company’s total hydrocarbon output increased 5.6% from the first quarter to 452.6 mn barrels of oil equivalent.

The results slightly exceeded analysts’ expectations but overall came as no surprise to the market. Analysts polled by Bloomberg estimated revenue 2,089 bn roubles and net income of 224.7 bn roubles.

The company’s net profit in the first half of the year amounted to 382 bn roubles against a loss of 113 bn roubles a year earlier. Rosneft’s net profit increased more than 5 times. Rosneft’s revenue increased by 39.6% year-on-year due to higher oil prices.

EBITDA (operating profit) of the company in the first half of the year increased by more than 100% in roubles and by 85.1% in US dollars, reaching 1,016 bn roubles and USD13.7 billion, respectively. EBITDA for the reporting period increased almost 3.5 times.

Rosneft’s capital expenditures in the first half of 2021 increased by 25.9% year-on-year, reaching Rb462 bn (USD13.7 bn). The increase in capital expenditures by more than a quarter is primarily due to the implementation of the ambitious Vostok Oil project (the project includes the development of 13 fields), which requires large investments.

As MRC reported, Rosneft intends to build a new polyolefin complex for the production of polyethylene (PE) and polypropylene (PP) based on Ufaorgsintez (UOS, Bashkortostan). Plans for the placement of new capacities at the UOS are mentioned in the tender published on 28 January on the Rosneft procurement website for the development of a basic project with the provision of a license for the technology of obtaining polyethylene. The design capacity for the production of PE is at least 250,000 tonnes per year, and the license provided should provide the ability to produce 230-250,000 tonnes per year of high-density polyethylene (HDPE), up to 20,000 tonnes per year of linear low-density polyethylene (LLDPE ) and up to 10,000 tonnes of LLDPE on a metallocene catalyst.

At the moment, the capacities of Ufaorgsintez allow to produce up to 90,000 tonnes per year of low-pressure polyethylene (LDPE) and 120,000 tonnes per year of polypropylene (PP).

According to the ICIS-MRC Price Report, from 9 June, the Ufaorgsintez resumed operation of the second stage of LDPE (158 and 153 polyethylene - PE) after stopping for scheduled preventive maintenance. The turnaround of the second stage of PE facilities was short-lived and took only a week. The first line of LDPE production facilities (108 PE) will be shut down for routine maintenance in September.

Rosneft became Russia's largest publicly traded oil company in March 2013 after the USD55 billion takeover of TNK-BP, which was Russia’s third-largest oil producer at the time.
MRC

1. European and US gasoline stocks down to near pre-pandemic levels but road ahead may be bumpy

MOSCOW (MRC) -- European and US gasoline stocks have fallen to near pre-pandemic levels as Western holiday-makers hit the roads, but the end of the driving season and the spread of the Delta variant of the coronavirus could slow the recovery in global oil demand, reported Reuters. The pandemic and resulting lockdowns around the world destroyed demand for oil products and led to massive stock builds in 2020 which have been gradually depleting this year. The International Energy Agency said on Thursday that global oil demand surged by 3.8 million barrels per day month-on-month in June, led by increased mobility in North America and Europe, but reversed course in July and is set to proceed more slowly for the rest of the year due to the spread of the Delta variant.


MRC

MOSCOW (MRC) -- Crude oil futures were lower during mid-morning Asian trade Aug. 16 as investor concerns over the fast spreading delta variant resurfaced amid restrictive movement curbs in oil consuming giant China and growing number of cases in the US, reported S&P Global.

At 10:51 am Singapore time (0251 GMT), the ICE October Brent futures contract was down 80 cents/b (1.13%) from the previous close at USD69.79/b, while the NYMEX September light sweet crude contract similarly fell 77 cents/b (1.13%) at USD67.67/b.

"The delta (variant) worries are tightening their grip on oil market sentiment," Vandana Hari, CEO of Vanda Insights, said. "The summer travel and tourism boom in the West is petering out, while the virus continues to fester in pockets across the world."

Oil demand in China has taken a hit in recent weeks after growing COVID-19 cases in the country prompted the government to impose strict movements curbs to bring the virus under control.

Most notably, the country's zero-tolerance approach to COVID-19 led to the closure mid-last week of its Meishan terminal at the world's third-busiest port, namely the Ningbo-Zhoushan port, which is expected to disrupt supply chains globally.

"The centre of demand remains China, where a COVID-zero approach by Chinese authorities has seen strict guidelines on movement to curb more infections," ANZ analysts said in a note.

"At least 144 areas, including 20 cities, have been (categorized) as having a medium to high virus risk, a measure that could see all public transport shut down," they added.

Nonetheless, recent case numbers in China suggest the movement curbs are working. The National Health Commission recorded 24 locally transmitted cases in the country as of Aug. 14, down by 6 on the day and also significantly lower than the high of 108 cases for the month on Aug. 10.

Analysts said the Aug. 16 dip in oil markers may be short-lived as investors take time to reassess the supply-demand outlook as the week progresses.

COVID-19 case numbers in the US have continued to grow. The US Centers for Disease Control and Prevention on Aug. 12 reported its highest number of COVID-19 cases since January 2021 at 146,949. The seven-day moving average stood at 119,523 as of Aug. 13, more than six times the average at the start of July.

As MRC informed earlier, crude oil stockpiles fell modestly last week, while gasoline inventories dipped to their lowest level since November, according to the US Energy Information Administration. Crude inventories fell by 447,000 barrels in the week to Aug. 6 to 438.8 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3 million-barrel drop. Overall crude inventories have been on the decline for several weeks due to increased demand.

We remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC

MOSCOW (MRC) -- On 10 August, the Central Bank registered an additional issue of ordinary shares of PJSC SIBUR Holding, the largest petrochemical holding in Russia and Eastern Europe, reported BusinessOnline, citing Interfax.

Now the authorized capital of PJSC SIBUR Holding is Rb21,784, 791. There are 2,178,479.1 ordinary shares in circulation with a par value of Rb10 each one.

In accordance with the decision on the additional issue, the issuer is placing 384,437,000.489 new ordinary shares by private subscription.

The shareholders of TAIF PSC and their affiliates participate in the placement of shares.

As MRC informed earlier, on 23 April 2021, SIBUR announced a merger with TAIF by exchanging 15% of its shares for 50% + 1 share in TAIF. The scope of the transaction includes only TAIF's petrochemical and generating companies. This merger will increase the scale of SIBUR's operations and strengthen its market leadership. SIBUR and TAIF expect to reach final terms and close the deal in the second half of 2021. TAIF together with SIBUR will spend more than Rb1 trillion for the implementation of joint projects. In total, the companies plan to realize over 30 projects.

It was also reported that the petition for the acquisition of 100% of the voting shares of TAIF PJSC by SIBUR Holding PJSC was received by the FAS of Russia on 26 May, and on 20 July the FAS granted SIBUR's petition to acquire 100% of the voting shares of TAIF.

As a result of the merger, the total capacity share of the new SIBUR-TAIF group will be 100% for linear low density polyethylene (LLDPE) production, 87.4% - for polypropylene (PP), 80.8% - for high density polyethylene (HDPE) and 59.3% - for low density polyethylene (LDPE).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

SIBUR manufactures and sells petrochemical products in the Russian and international markets in two business segments: olefins and polyolefins (polypropylene, polyethylene, BOPP, etc.), as well as plastics, elastomers and intermediate products (synthetic rubbers, expanded polystyrene, PET, etc.).

PSC "TAIF" was established in 1995 and is the parent company of the group with the same name, which includes enterprises structured in four business areas: oil and gas processing, chemistry and petrochemistry (energy); investment and financial services; building; telecommunications and complex services, including trade. TAIF Group of Companies is a large Russian holding that controls 96% of the chemical, petrochemical and oil and gas processing industries in Tatarstan. The most important of its areas is the Chemical, Petrochemical and Oil and Gas Processing Divisions, which include the leading Russian polymer producers Nizhnekamskneftekhim and Kazanorgsintez.
MRC

MOSCOW (MRC) -- Gazprom Neft will redeem BO-01 and BO-04 series bonds ahead of schedule on 24 August, said Finam with reference to the company's statement.

Bonds are repaid ahead of schedule at the outstanding part of the par value, while the coupon yield is paid for the coupon period, on the date of payment of which the securities are repaid ahead of schedule.

Bond issues with a total par value of Rb15 bln. were placed in 2016 with maturity in 2046.

As MRC reported before, Gazprom Neft's net profit as per IFRS totalled Rb84.16 bln in the first quarter of 2021 versus a loss of Rb13.8 bln a year earlier. Gazprom Neft's revenue for the reporting period increased by 18.7% to Rb610.98 bln.

Gazprom Neft (headquartered in St. Petersburg, part of Gazprom, which owns 95.68% of its shares) is one of the largest Russian oil companies. In 2015, Gazprom Neft remained one of the leaders in the oil industry in terms of key performance indicators - the level of operating profit and return on invested capital. In 2015, Gazprom Neft produced 79.7 mln tonnes of hydrocarbons, increasing production by more than 20% compared to 2014 and thus achieving the highest production growth in the Russian oil industry.

Gazpromneft - Moscow Oil Refinery is a subsidiary of Gazprom Neft. The plant's production capacity is 12.15 mln tonnes/year of hydrocarbons. The company produces motor gasolines, diesel, marine and aviation fuel, fuel oil, high-octane additives to motor gasoline, bitumen and gases for various purposes, as well as polypropylene (PP). And in 2010, Moscow Oil Refinery and SIBUR created a joint venture for PP production - NPP Neftekhimiya LLC.
MRC