Russian oil giant Rosneft plans to pay record dividend despite sanctions

  • Russian oil giant Rosneft has recommended record dividends for 2021.
  • Rosneft posted record profits last year on the back of higher oil prices as demand recovered following the easing of pandemic restrictions.
  • As Rosneft is a state-owned company, the Russian state would be the biggest winner in payments.

Russian oil giant Rosneft plans to distribute record dividends to its shareholders amid escalating war-related sanctions in Ukraine.

Rosneft’s board recommends 23.63 rubles ($0.38) per share for the second half of 2021, according to a notice published Monday on the London Stock Exchange, where the company has a secondary listing. This brings annual dividends to a record high of 41.66 rubles ($0.68).

Rosneft posted record profits in 2021 on the back of a surge in oil prices thanks to a recovery in demand following the easing of pandemic restrictions. In accordance with company policy, Rosneft pays 50% of its net profit in the form of dividends to shareholders. Shareholders will vote on the dividend recommendation on June 30, according to Rosneft’s notice.

As Rosneft is a state-owned company, the Russian state would be the biggest winner in payments. A Russian state-owned company owns more than 40% of Rosneft shares.

On the other hand, foreign investors may have difficulty getting paid. Russian President Vladimir Putin ordered that money owed to investors or lenders from “hostile states” be transferred to special ruble bank accounts, according to a Bloomberg translation of his decree in March. Recipients can only convert them to a different currency if they get special permission, according to Bloomberg.

Rosneft’s dividend recommendation came the same day the European Union agreed to cut Russian oil imports by 90% by the end of 2022. The trading bloc has stepped up sanctions against Russia following the invasion of Ukraine by the country.

With Russia being an energy giant, the war in Ukraine has impacted international markets as investors feared an interruption in the country’s supply due to trade restrictions or infrastructure damage. This has pushed oil prices up about 60% this year so far.

Russian gas giant Gazprom also offered its highest-ever dividend payout last Thursday on the basis of record profits.

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