MOSCOW, June 8 (UPI) -- Russian oil company Rosneft said Wednesday it still had a steady stream of operating cash flow despite a 75 percent drop in net profits.
One of the top producers of crude oil in the world, the Russian company reported its net profit of about $224 million was off 75 percent from last year. The company attributed lingering weakness in crude oil prices, tax pressures and an increase in overall investments for triggering the decline.
Igor Sechin, the company's chairman and close confidant of Russian President Vladimir Putin, said the company was still able to perform well under poor market conditions.
"In conditions of negative macroeconomic environment, the company sustains stable level of operating cash flow which supports financing of planned capital investments and timely meeting of all liabilities," he said in a statement.
In March, Sechin told the Russian president that investments for the year would be 30 percent higher despite the pressure from low oil prices. A broad portfolio of assets and industry experience meant spending could pass $10 billion for the year, he said.
Free cash flow of $1.5 billion was about 40 percent lower than first quarter 2015 and the company's net debt increased by 4 percent. In terms of revenue, the company said it managed to exploit the appropriate trading channels in a way that offset some of the pressures from lower crude oil prices while at the same time meeting its domestic and global contractual agreements.
Russia was among the major oil players calling for a freeze in production levels to correct the imbalance between supply and demand that pushed oil prices lower for much of last year. In March, the Kremlin warned a price above $50 per barrel might skew markets heavily toward the supply side as energy investors look to capitalize on the forward momentum for crude oil.
The World Bank estimates the Russian economy will linger in recession in part because of weak conditions in the oil market. The Russian Central Bank said there's a high level of uncertainty surrounding the movement in crude oil prices and the momentum for any positive trends recently observed in the Russian economy.