By Vladimir Soldatkin MOSCOW (Reuters) - Russia's biggest oil producer Rosneft said on Friday it has prepared steps to cope with the negative impact from international sanctions, as it reported higher net income on the back of a stronger rouble.
Kremlin-controlled Rosneft, which accounts for 40 percent of Russian oil production, was hit by sanctions from the United States over Moscow's actions in Ukraine, limiting the company's access to Western money.
The company, in which BP owns a 19.75 percent stake, is expected to comment on the sanctions and other topical issues, including the joint development of Russian offshore Arctic reserves with international majors such as ExxonMobil, during a conference call later today.
Rosneft's Chief Executive Officer Igor Sechin, a long-standing ally of President Vladimir Putin, said the company has been working on a plan to offset the negative effect of the punitive measures.
"Together with our partners - the world's leading oil companies - we are working on a plan to minimize the consequences of including Rosneft on the sanction lists," Sechin said in the statement.
The head of Norway's Statoil, with which Rosneft has plans to jointly develop Russia's Arctic offshore riches and hard-to-recover oil, said it has been studying the sanctions that have been implemented, but there has been no change in cooperation with the company.
However, Russian companies, including Rosneft, are facing tougher sanctions from the European Union as the deepest East-West spat since the end of the Cold War two decades ago flared.
The new round of punitive measures, following the downing of a Malaysian plane with 298 people on board over Ukraine in a pro-Moscow rebel-held province, may include ban on export to Russia oil and gas producing equipment.
PROFIT UP
Rosneft said its net income in the second quarter - when the sanctions were not yet introduced - surged by almost five times year-on-year to 172 billion roubles (2.8 billion pounds), beating analyst forecasts, due to a stronger rouble.
Analysts, polled by Reuters, said the company had expected April-June net income at 161 billion roubles. Excluding the foreign exchange effect, net income increased by 88 percent year-on-year.
Rosneft's shares declined by 0.8 percent in early afternoon trade, outperforming a 1.4 percent decline of the broader Moscow market.
The company said its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose to 304 billion roubles, almost in line with expectations.
Sales for the period rose to 1.44 trillion roubles, slightly above the 1.42 trillion roubles seen by analysts. Rosneft reported it received $1.9 billion of advanced payments from BP in July as had been agreed in an 5-year oil supply deal.
Rosneft also said free cash flow was 112 billion roubles, which is three times higher than in the second quarter 2013, while net debt declined to 1.495 trillion roubles.
(Editing by Megan Davies, William Hardy and David Evans)