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Rosneft boosts profits, cuts debt

With a stake in the oil company, Russia's president said the government keeping a close eye on markets.

By
Daniel J. Graeber
Russian President Vladimir Putin (L) told director of state oil company Rosneft the Kremlin is keeping a close eye on crude oil market conditions. Photo courtesy of the Office of the Russian President
Russian President Vladimir Putin (L) told director of state oil company Rosneft the Kremlin is keeping a close eye on crude oil market conditions. Photo courtesy of the Office of the Russian President

MOSCOW, March 31 (UPI) -- Russian oil company Rosneft said Thursday its gain in 2015 net profits and the decline in debt meant it was performing well against a weak market backdrop.

"The company continues to improve its efficiency responding to the challenges of the global market," Rosneft Chairman Igor Sechin said in a statement.

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Lower crude oil prices have harmed oil-exporting economies like Russia's. The Russian Central Bank said in early March it was keeping key interest rates steady at 11 percent, pointing to lingering economic pressures from lower oil prices and Western sanctions imposed in part in response to Russia's strategic policies in Eastern Europe and Syria.

Speaking to Russian President Vladimir Putin earlier this week, Sechin said that, at around $14.6 billion, spending for 2016 would be about 30 percent higher than last year.

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Addressing market strains, Sechin said in reporting 2015 results that drilling and maintenance expenses in the Russian energy sector increased, while efforts to control spending meant the company was able "to reduce its debt burden considerably, significantly increasing the sustainability of the business in challenging macroeconomic environment."

Putin during his meetings with the Rosneft director said that, with a stake in the company, the government was "not indifferent" about pressure it was facing from lower crude oil prices.

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The Kremlin has been reviewing privatization options as the Russian economy risks lingering in recession because of the strains brought on by sanctions and low crude oil prices. Deputy Finance Minister Yuri Zubarev said privatizing state oil company Rosneft could bring in as much as $6.5 billion to the federal budget.

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