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Russia's Rosneft reports increase in spending

Company's CEO last year said there were few obstacles to increased production.

By Daniel J. Graeber
Russia's Rosneft reports increase in spending
Russian oil company Rosneft said its spending during the fourth quarter recovered alongside crude oil prices. Photo by Oskari Porkka/Shutterstock

Feb. 22 (UPI) -- Russian oil producer Rosneft, one of the largest companies of its kind in the world, said spending increased more than 40 percent by quarter.

In announcing results for the fourth quarter, Rosneft said its books were impacted positively by privatization efforts that brought international partners in as shareholders, as well as the steady gains in crude oil prices.

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"The strategic partnership with new shareholders offers the opportunities in the global trading of hydrocarbons and other projects' development," CEO Igor Sechin said in a statement.

Anglo-Swiss trader and mining company Glencore in December closed on a deal alongside the Qatar Investment Authority to spend $11 billion for a 19.5 percent stake in Russian oil producer Rosneft, a target of U.S. sanctions imposed after Moscow annexed the Crimean Peninsula in Ukraine following upheaval in the former Soviet republic in 2014. The White House under President Donald Trump is said to be reviewing some of those sanctions.

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Moscow has been reviewing privatization options as the Russian economy risked lingering in recession because of the strains brought on by Western sanctions and low crude oil prices. Finance officials in the Kremlin said in early 2016 that privatizing state oil companies could bring in billions of dollars to the federal budget.

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For spending in the fourth quarter, Rosneft posted an increase of around 42 percent and saw its expenses per barrel of oil equivalent produced increase by 8 percent.

Spending increases may reflect recovery for crude oil prices, which gained ground after members of the Organization of Petroleum Exporting Countries, in coordination with non-member states like Russia, agreed to trim production in an effort to stabilize a market characterized by oversupply.

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Sechin, a close ally of Russian President Vladimir Putin, said last year there were no market forces standing in the way of an increase in oil production long term.

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