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UPDATE 3-Rosneft, TNK-BP score Q3 oil output rises

Published 10/26/2010, 01:42 PM

* Rosneft core earnings per barrel beat TNK-BP

* Rosneft enjoys lower duty bill for East Siberia

* Rosneft EBITDA per barrel higher - analyst

* TNK-BP had a one-off gain in Q3 2009

(Adds detail, quotes)

By Jessica Bachman and Vladimir Soldatkin

MOSCOW, Oct 26 (Reuters) - Large-scale production from new oilfields gave Rosneft, Russia's biggest oil producer, a profitability edge over rival TNK-BP, though both reported rapid growth in output.

State-owned Rosneft beat TNK-BP, a joint venture that makes up more than a quarter of oil major BP's reserves, in how effectively it extracts barrels as it enjoys wider benefits from tax breaks on East Siberian oil, which makes up a larger share of its output.

Denis Borisov from Bank of Moscow said Rosneft's earnings before interest, taxes, depreciation and amortisation (EBITDA) per barrel was $21.5 against $18.8 at TNK-BP in the third quarter due to the lower duty for oil from the Vankor field in East Siberia.

"The decision to introduce the export duty for Vankor hit Rosneft's profitability, but it still enjoys a lower fee than TNK-BP," Borisov said.

For the first six months of the year, companies operating East Siberian fields, including Vankor, were exempt from paying the oil export duty, but then it was reintroduced at a lower rate in July.

Rosneft Vice President Peter O'Brien told Reuters in an interview that the higher oil price cushioned the effect of the oil export duty for Vankor.

"It is pretty much the same as if we had a zero-export tax for the full year because the oil price has proven to be higher than planned," said O'Brien, adding that Vankor was producing at the top end of expectations.

TNK-BP's Verkhnechonskoye deposit is also a subject to lower fees, but it plays a smaller part in TNK-BP's overall production than the 270,000 barrels per day (bpd) that Vankor gives Rosneft.

Between January and September Verkhnechonskoye was pumping 51,000 bpd, up 148 percent for the first nine months of 2010, while output at another greenfield project, Uvat, was 78,000 bpd, up 126 percent.

COSTS RISE, CAPEX CUT

Both companies reported double-digit rises in the cost of transporting their oil, mainly through the state's Transneft pipeline system.

But Rosneft, in which the government is looking to privatise 15 percent in coming years, said earnings rose to $2.57 billion from $1.16 billion in the third quarter last year.

That was above the $2.46 billion analysts polled by Reuters had predicted and on the back of a 5.3 percent rise in crude output to 2.332 million barrels per day (bpd) from 2.214 million bpd in the same period last year.

TNK-BP's third-quarter net profit fell as it recorded a one-off gain from a sale in its servicing division in the same period of 2009.

The company generated net profit of $1.45 billion on revenues of $11.4 billion. A year earlier, TNK-BP earned $1.68 billion on revenues of $10.26 billion.

They also reported a reduction in net debt, and both said capital spending would come in around 10 percent below forecasts for 2010, at $9 billion for Rosneft and about $4 billion for TNK-BP, excluding acquisitions.

TNK-BP, which agreed to buy BP's Venezuelan and Vietnamese assets for $1.8 billion as the British major raises funds to pay for a catastrophic oil spill in the Gulf of Mexico, is at an "initial point" in talks for its Algerian assets, chief financial officer Jonathan Muir said in a briefing.

Muir also said Vietnamese state oil group Petrovietnam and Indian oil company ONGC had right of first refusal on BP's Vietnam assets and could exercise them before the year-end. (Reporting by Vladimir Soldatkin and Jessica Bachman; writing by Vladimir Soldatkin; Editing by Will Waterman)

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