Russia's state-controlled Rosneft has warned about the potential for a "super cycle" in energy markets after rising oil and gas prices helped the firm exceed its pre-pandemic profit levels in the third quarter.
"Despite the uncertainty in the global economy due to the difficult epidemiological situation, we observe a rapid growth in demand for traditional energy resources," chief executive Igor Sechin said at the firm's third-quarter results. "As structural discrepancies between supply and demand on global energy markets are further revealed, we may witness a new super cycle on the oil and gas markets."
To help meet rising demand, Rosneft plans to increase investment in new projects, Sechin said. The company's capital expenditure (capex) amounted to 689bn roubles ($9.7bn) in the first nine months of this year, over a fifth higher than the same period of 2020, mainly a result of implementation of the Vostok Oil project and expansion of the development programme at Yuganskneftegaz.
This year's sharp rise in oil and gas prices, combined with higher upstream production and increased domestic demand for oil products, helped Rosneft swing to a profit of Rbs314bn in the third quarter from a Rbs64bn loss a year earlier. The company made a profit of Rbs225bn in July-September 2019, before the start of the pandemic.
The increase in Opec+ crude output quotas enabled Rosneft to benefit from the higher oil price environment during the third quarter, with the firm's liquids production rising by around 2pc on the year to 3.98mn b/d. Natural gas production went up by 12pc to 1.11mn b/d of oil equivalent (boe/d) over the same period, driven by rising output at the Rospan project in Yamal Nenets.
In the downstream, Rosneft's refinery throughput rose by 6pc year on year to 27.1mn t driven by "an increase in plant utilisation against the backdrop of growing demand for petroleum products on the domestic market", it said.
