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Rosneft cuts jobs as sanctions bite

Tuesday, September 09, 2014 - 01:55

The Kremlin's prized oil firm Rosneft is cutting staff and production and selling stakes in Siberian fields in the strongest evidence to date that Western sanctions are hurting what was the world's fastest growing oil firm in recent years. Hayley Platt reports.

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It's the world's biggest listed oil producer. But Russia's Rosneft is cutting staff and selling a prized oil field to China to cut costs. It's evidence western sanctions are working. Rosneft still has plenty of cash but it also has some serious debt. And with it's usual sources of credit in doubt, it's long-term plans are being curtailed, says BGC's Mike Ingram. SOUNDBITE: Mike Ingram, BGC Partners, saying (English): "Rosneft has massive investment needs over the next few years to develop new oil fields, principally in the east part of Siberia, that's north of $20 billion dollars a year. It has about $30 billion dollars of debt that it needs to roll over and it needs access to serious technology, most of it from the west in order to develop those fields." Further EU sanctions have just been agreed. They'll limit access to western financial markets - hitting Russia's top oil producers where it hurts. They're not coming into force quite yet - the EU wants to see how the current ceasefire in Ukraine holds. SOUNDBITE: Mike Ingram, BGC Partners, saying (English): "Europe needs to hit hard at the leadership in Moscow and they need to hit hard the oligarchs that support Vladimir Putin and this is what they're finally doing. My regret however is that they didn't do it much earlier when Mr Putin's double dealing was already very apparent but I guess the political reality was that we weren't going to get it very quickly." There was some relief for Europe's gas users. Gazprom, Europe's main gas supplier, isn't affected. Russian companies raising more than $26 billion dollars in the EU will be though. And a further two dozen individuals will have their assets frozen as well as being banned from the EU. In retaliation Moscow has said it's considering closing its airspace to western airlines. It's also working on becoming less reliant on foreign imports.