Source AP ©

Oil group Rosneft says 1Q net profit fell 55 percent after US$332 million charge

Russia's biggest oil producer, state-controlled OAO Rosneft, said Monday first-quarter net profit fell 55 percent as the company paid more tax and incurred a one-time charge.

The company reported net profit of US$358 million (euro269 million) compared with US$802 million in the first three months of 2006. Revenue rose to US$8.2 billion (euro6.2 billion) from US$7.3 billion.

Rosneft said in a press release it booked a charge of US$332 million because of tax debts at its Yuganskneftegaz subsidiary, which it bought from the OAO Yukos oil company.

Rosneft has since acquired Yukos' main production assets and refineries. Yukos was crushed by billions of dollars in back taxes in a campaign observers say was aimed to punish the political aspirations of its jailed ex-CEO Mikhail Khodorkovsky and secure a stronger role for state companies in the oil sector.

Net income was also affected by a strengthening ruble and rising taxes, the company said.

"The decrease in ... net income in the first quarter of 2007 over the same period in 2006 was largely due to an increase in export duties of 23.8 percent and real ruble appreciation of 11.7 percent," the statement said.

Rosneft, which is a creditor of Yukos, said in a footnote to the earnings report that it expected to receive over US$10 billion dollars in June 2007 from the proceeds of the liquidation. That would appear as an approximately US$8.8 billion dollar gain before taxes in its second quarter results, Rosneft said. It said the money would be used to pay down a part of the billions of dollars in loans it took out with western banks to participate in the auctions.

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