Kremlin benefits from dividend at Russian oil giant Rosneft

Russia’s oil and gas giants are following their western peers by returning cash to investors, but in this case the government is a key recipient.

Rosneft PJSC, the nation’s biggest oil producer, said its board of directors recommended paying 20.39 roubles a share for the first three quarters of this year, compared with 18.03 roubles paid for the first six months of 2021.

The dividend is expected to total 216 billion roubles (€3.4bn) and deliver some 87 billion roubles (€1.4bn) to the Russian state, according to Ronald Smith, an analyst at BCS Global Markets.

High energy prices since President Vladimir Putin’s invasion of Ukraine have spurred Russian oil and gas producers to make more generous payouts.

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Gazprom PJSC, which is state controlled, paid interim dividends for the first time ever. Novatek PJSC, the country’s biggest producer of liquefied natural gas, gave shareholders the highest interim dividends in its history, while Lukoil PJSC recommended making the second largest payout.

“The dividend revolution of 2011-2019, when Russia’s oil and gas companies increased payouts to their shareholders, has apparently survived the current crisis intact, said Mr Smith.

However, foreign shareholders will scarcely be able to benefit from the payouts. In retaliation for international sanctions Mr Putin has ordered Russian companies to transfer money owed to investors or lenders from “unfriendly” states to special bank accounts in roubles. Moving funds out of those accounts – or converting them to another currency – is possible only with special government permission.

Payouts from Gazprom and Rosneft will help to ease the strain on Russia’s public finances caused by the invasion of Ukraine, international sanctions and Putin’s decision to halt the bulk of his country’s gas supplies to Europe. The Russian budget is set to post a 1.3 trillion roubles deficit this year, or 0.9 per cent of the gross domestic product (GDP), after initially projecting a surplus. – Bloomberg/Reuters