Oil giant Rosneft posts record $11.4bn profit

Russia's state oil giant Rosneft reported a record annual profit of $11.4 billion (8.3 billion euros) on Friday ahead of a year in which output should double thanks to the acquisition of BP's local joint venture. The stellar 2012 results from the company, Russia's biggest producer of crude, capped a busy 12 months in which it also struck a joint venture with the gas exploration firm Itera that is aimed at conquering untapped Arctic reserves. Chief executive Igor Sechin -- a confident of President Vladimir Putin who structured the $55 billion TNK-BP deal -- said Rosneft was fast becoming the world's largest energy firm. He particularly pointed to the progress Rosneft had made in moving beyond its traditional Siberian production base by striking offshore deals with firms such as the US super-giant ExxonMobil and Norway's Statoil. "Our efforts have made projects offshore on the Russian shelf a reality underpinned by investments by Rosneft and its strategic partners," Sechin said in a statement. "We plan to maintain this pace moving forward with our strategy to further grow shareholder value reflecting the company’s true potential." The government had earlier on awarded Rosneft the right to explore 12 new fields in the Arctic that had been previously eyed by private players such as Lukoil. Sechin said on Thursday that the TNK-BP deal would see the company's oil production nearly double to 4.3 million barrels per day from 2.5 million barrels per day in 2012. He added that the deal with Itera has already seen natural gas production climb 25.1 percent on the year. The company's fourth-quarter profit shrank by 68.5 percent because of the one-off difference with a third quarter in which Rosneft booked its Itera reserves and other gains. Rosneft's 7.2-percent rise in profit came in a year in which Russia recorded a post-Soviet oil production record and outpaced previous leader Saudi Arabia. Putin's energy strategy has focused on consolidating Russian growth around two dominant champions: Rosneft and its state-held natural gas counterpart Gazprom. Rosneft in particular has enjoyed a decade of rapid growth that in 2012 saw it secure deals that will see it control about 40 percent of the country's total production market. Sechin has also previously voiced plans to join Rosneft and Gazprom into a single behemoth reminiscent of the Soviet energy ministry. Sechin told Putin in a meeting this week that his company's market capitalisation had risen to $92 billion -- within sight of the magic $100 billion target previously set by the company. But Putin said he expected more from Rosneft and soon prompted Sechin to promise to soon lift the company's market value to $120 billion. That would put it on a par with the French firm Total and within striking distance of Britain's BP. Yet analysts worry less about the market capitalisation of Rosneft -- the majority of its shares are still held by the government -- than they do about its strategy after the acquisition of TNK-BP. Gazprom for one has been discounted by investors for its decision to spend billions on politically sensitive projects ranging from support for the 2014 Winter Olympic Games in Sochi to the sponsorship of a football team in Putin's native Saint Petersburg. Rosneft has been criticised for blocking competition by winning control of fields and then sitting on them just so that they will not fall into competitors' hands. Analysts believe that Rosneft will soon be forced to make a move on those sites -- many of them far from the firm's traditional European market -- because its production from old fields is gradually fading while its Asian client base is undergoing a boom.