MOSCOW (Reuters) - Russia’s largest oil producer, Rosneft (ROSN.MM), said on Friday it expects a 10% decline in 2020 oil output, after reporting a first-quarter net loss of 156 billion roubles ($2.1 billion) due to the impact of the coronavirus and a weaker rouble.
Rosneft, which accounts for around 40% of Russia’s total oil extraction, also said it cut its oil and gas condensate production in the first three months of the year by 2.2% from the year-earlier period to 4.64 million barrels per day (bpd) due to a global pact to curb output.
The global oil industry has been hit by weak oil prices, which declined by around two-thirds in January-March due to a supply glut and the economic fallout from the spread of the novel coronavirus.
To tackle the impact of the spread of the virus and overproduction, a group of leading oil producers including Russia, known as OPEC+, agreed last month to boost their combined oil output cuts to almost 10 million bpd, or 10% of global demand in May-June.
“We can say that the year-on-year output decline will amount to around 10% and 5% in refining,” first vice-president, Pavel Fedorov, told investors on a conference call. This means production cuts could reach 467,000 bpd this year.
Rosneft, in which BP (BP.L) owns a 19.75% stake, also plans to cut investment by around $2.7 billion, or 21%, this year due to the global pact.
“(This year) may become a turning point for the global oil and gas industry. As a result of the global COVID-19 virus pandemic, demand for crude oil has experienced an unprecedented decline, which resulted in a significant drop of energy prices,” Rosneft CEO Igor Sechin said in a statement.
He, however, added that Rosneft was well-placed to weather the challenges.
The company said its first-quarter finances were negatively impacted by a weaker rouble, which inflated its foreign exchange denominated debt obligations.
Revenue for the January-March quarter fell 15% to 1.77 trillion roubles on lower oil prices, while earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 44% to 309 billion roubles.
Rosneft made net profit of 131 billion roubles in the first quarter of 2019.
The company also confirmed that newly set up Russian state entity, Roszarubezhneft, has bought its assets in Venezuela.
Reporting by Vladimir Soldatkin and Olesya Astakhova; editing by Jason Neely and Emelia Sithole-Matarise