Profitability of Russian oil companies to decline

04/06/07 - Alfa Bank

LONDON, April 6 (newratings.com) – Analysts at Alfa Bank say that the profitability of Russian oil companies is expected to decline going ahead, despite the recent upturn in oil prices.

In a research note published this morning, the analysts mention that according to Interfax, Rosneft’s joint venture with Chinese Sinopec, Udmurtneft, has announced that it would hike its capex by 74% in 2007. The analysts believe that all Russian oil companies would announce similar, dramatic increases in capex. A decline in the profitability of Russian oil companies, especially those that are mainly involved in pure upstream business, may be expected, Alfa Bank says.