Rosneft will pay a record dividend for 2021 off the back of surging crude prices, even as Russia’s state oil champion faces increasing problems because of western sanctions following Vladimir Putin’s invasion of Ukraine.
The company, led by key Putin ally Igor Sechin and responsible for 40 per cent of Russia’s crude output, said on Monday it would pay Rbs23.63 a share as a final dividend, taking the 2021 payout to Rbs41.66. In total it will pay Rbs441.5bn ($7bn), equivalent to half of its annual net profit.
The record payout comes after Gazprom, the state-owned gas producer, announced its largest ever dividend totalling Rbs1.24tn, which it said was the highest in Russian stock market history.
The payouts highlight the windfall for the Kremlin from rallying commodity prices, exacerbated by uncertainty over continued Russian supply to global markets following a rebound in energy demand as economies emerged from the coronavirus pandemic.
Brent crude breached $120 a barrel on Monday for the first time in two months as a squeeze on oil products tightened, the EU hammered out a compromise to embargo Russian oil and after Iran seized two Greek tankers on Friday, raising new fears over the free flow of Middle Eastern oil.
Rosneft in February reported its highest ever full-year net income of Rbs883bn for 2021, an almost sixfold rise on the year before when the pandemic led to a collapse in demand.
Despite the boost from higher crude prices, Rosneft has been struggling to maintain production levels as sanctions by the US, the EU and the UK bite.
Although only the UK and US have banned Russian oil imports, difficulties securing trade financing, shipping and insurance have led many market participants to self-sanction and shun Russian supplies.
Russian deputy prime minister Alexander Novak said this month the country’s oil production was about 1mn barrels a day lower in April. But it had recovered by 200,000 to 300,000 b/d in May and Moscow expects more volume to be restored next month as Russian sellers pivot to Asia. Analysts estimate the losses could be about 1mn-2mn b/d in the longer term.
Data from Russia’s energy ministry shows that Rosneft and its subsidiaries account for about two-thirds of Russia’s production cuts, meaning it has been disproportionately hit by sanctions.
From May 15, commodity traders based in the EU and Switzerland were banned from selling Rosneft barrels anywhere else in the world, cutting the Russian producer off from some of the world’s most powerful companies vital for getting oil to consumers.
Rosneft is also becoming increasingly isolated from the west after BP announced its intention to sell its near 20 per cent in the state-owned oil producer in February and former German chancellor Gerhard Schröder stepped down this month as chair.
