Azernews.Az

By Bloomberg

OAO Rosneft’s change in the way it accounts for foreign-currency risk may affect the dividend of Russia’s largest oil producer, in which BP Plc has a stake, analysts at UFS Finance Investment Co. and UralSib Financial Corp. said.

The move will allow Rosneft to increase net income by reducing foreign-exchange losses on dollar debt in the company’s ruble-based financial reports, Ilya Balakirev, chief analyst at Moscow-based UFS, told Bloomberg in an e-mail.

“It will have very real consequences for shareholders as the dividends are calculated based on net income,” he said. “The new rules will allow Rosneft to pay higher dividends for 2014.”

State-owned Rosneft paid $55 billion to buy TNK-BP and become the world’s largest traded oil producer by output in 2013. The acquisition has also made it Russia’s most indebted oil and gas producer. The revaluation of the dollar debt raised for that purchase contributed to Rosneft posting zero net income in the third quarter as Russia’s ruble weakened.

Rosneft’s dividend policy is to pay shareholders 25 percent of net income.

The company adopted “hedge accounting” starting from Oct. 1, 2014, to provide a more accurate picture of the relevance of risk, it said in a statement Tuesday.

“Foreign-currency risk will affect consolidated profit and loss only when the risk actually materializes,” it said.

The move may be a way to postpone recognition of some currency losses or defer them below the profit line, Alexei Kokin, an oil and gas analyst at UralSib Financial Corp. said by phone.

It’s hard to draw conclusions because “it’s not clear how Rosneft was hedging currency” or how this accounting will work, Kokin said. It may not be enough anyway for investors seeking high yields, he said.

“It’s not a dividend stock so we’re not really holding our breath for a yield that would be interesting,” Kokin said.