Russia's largest oil producer Rosneft sank to a net loss in the third quarter despite a rise in revenues as it ramped up spending that had been scale back significantly earlier this year in response to the Covid-19 pandemic.

SIGN UP FOR OUR NEW ENERGY TRANSITION NEWSLETTER

Gain valuable insight into the global oil and gas industry's energy transition from Accelerate, the new weekly newsletter from Upstream and Recharge.
Sign up here.

The state-controlled giant increased its development and exploration spending after paring back expenditure in the first half due to the contraction in global oil demand and resulting price slump amid the pandemic.

Revenues in the third quarter rose by 39% to 1.44 trillion roubles ($18.7 billion) as against 1.04 trillion roubles in this year's second quarter.

However, Rosneft still posted a net loss of 64 billion roubles as against a net profit of 43 billion roubles in the preceding quarter.

For the first nine months of this year, revenues dropped 34% to 4.2 trillion roubles as against 6.45 trillion roubles in the same period of 2019, with the net loss widening to 177 billion roubles compared with a net profit of 550 billion roubles a year earlier.

In rouble terms, Rosneft’s long-term debt rose by one-third to 4 trillion roubles by 31 September as compared with where it stood on 31 December last year, following the steep decline in the exchange rate between the home currency and major international currencies.

Chairman Igor Sechin said that in US dollar terms, the company repaid $5.7 billion in debt and trade obligations to international customers between January and September.

On the operations front, drilling volumes rose by 16% to almost 3.1 million metres in the third quarter as against the second quarter. Rosneft’s contractors collected some 803 kilometres of 2D seismic in the reporting period as compared with just 56 kilometres between April and June.

The collection of 3D seismic was up to over 2500 square kilometres in the third quarter as against 837 square kilometres three months earlier.

However, the company said that, despite identifying 52 new fields and previously unknown reservoirs within existing licence blocks in the first nine months of this year, their combined recoverable reserves were estimated at a modest 390 million barrels of oil equivalent.

Oil and condensate production dropped by 10% to 155 million tonnes (1.14 billion barrels) between January and September against the same period of 2019.

Gas production fell by just 6% to less than 47 billion cubic metres in the first nine months of the year, with the company’s performance this year putting in doubt its earlier announced goal of reaching annual gas output of 100 Bcm in 2022.