Rosneft Plans to Pay Record-High Annual Dividend on Oil’s Rally

Bloomberg News, Bloomberg News

Oil storage tanks stand at the RN-Tuapsinsky refinery, operated by Rosneft Oil Co., in Tuapse, Russia, on Monday, March 23, 2020. Major oil currencies have fallen much more this month following the plunge in Brent crude prices to less than $30 a barrel, with Russia’s ruble down by 15%. , Bloomberg

(Bloomberg) -- Russian oil behemoth Rosneft PJSC promised record dividends on the back of soaring prices, but some foreign investors may struggle to access the payout.

The board recommended 23.63 rubles a share for the second half of 2021, bringing full-year dividends to an all-time high of 41.66 rubles. That follows an announcement last week by Russian gas giant Gazprom PJSC, which proposed its highest ever payout after benefiting from a supply crunch in Europe.

The decisions of both companies will see the Russian state gaining the most, as it’s the biggest shareholder. Many foreign investors could have difficulties obtaining the payout following restrictions imposed by President Vladimir Putin.

Russian firms have to transfer money owed to investors or lenders from “unfriendly states” to special bank accounts in rubles, according to a March decree. Moving funds from those accounts -- or converting them to another currency -- is possible only by special permission, according to the Russian central bank.

Rosneft’s bumper dividend follows record earnings in 2021 as global oil demand rebounded from the pandemic, pushing up prices. The company’s policy sets payouts at 50% of net income under international financial reporting standards.

Rosneft shares slid 2% to 393.50 rubles as of 12:27 p.m. in Moscow, erasing earlier gains as the broader Russian stock market fell. Shareholders will vote on the dividend recommendation at the annual general meeting on June 30.

The oil producer’s second-biggest shareholder is BP Plc with a 19.75% stake. The UK energy major announced at the end of February that it would sell its Rosneft holding in response to Russia’s invasion of Ukraine.

Next is QH Oil Investments, which is controlled by the Qatar Investment Authority and owns a 18.46% stake. Qatar, unlike the UK, isn’t included in the list of “unfriendly states” published by the Russian government in March.