Dec. 4 (Bloomberg) -- OAO Rosneft, Russia’s biggest oil producer, said the fourth quarter will be “difficult” because revenues will be reduced by lower oil prices and a high crude export duty.

The Moscow-based company expects net revenue of $7 a barrel from exporting oil in the fourth quarter, down from $35 a barrel in the first nine months of the year, Peter O’Brien, vice president for finance and investments, said. Export earnings will recover to more than $20 a barrel from Jan. 1, because of a tax decline, and “then we will be profitable,” he said.

“Until the export duty normalizes to the current price level our profit will be under pressure,” O’Brien said in a Bloomberg Television interview in London today. “The fourth quarter will be difficult” for the state-run company because oil “prices have come down and the export duty is still high.”

Crude exports from Russia, the world’s largest oil supplier after Saudi Arabia, fell 11 percent to 4.78 million barrels a day in November because of higher duties. The $192.10-a-ton ($26.21 a barrel) export tax set from Dec. 1 still makes investment in major projects unprofitable, some company executives have said, including Viktor Vekselberg, a director at TNK-BP, a Russian venture of BP Plc.

Oil futures declined 20 percent last month on signs an economic recession in the U.S. and Europe is curbing fuel consumption. Crude fell about 68 percent after it touched a record $147.27 a barrel on July 11 in New York.

“We are focused on cutting costs and improving how we sell both crude and products,” O’Brien said. “We will continue to invest in projects that are profitable even at today’s lower prices.”

Export Revenue

On Dec. 1 Moscow-based Rosneft said third-quarter net income climbed to $3.47 billion from $1.93 billion a year earlier. That beat the $2.68 billion median estimate of 10 analysts surveyed by Bloomberg News.

Analysts cited several reasons why Rosneft’s earnings beat expectations, including a foreign-exchange gain of $368 million, higher oil-product prices and lower-than-estimated export taxes for the period.

Rosneft rose as much as 2 percent to 98.50 rubles in Moscow and was trading up 0.65 ruble, or 0.7 percent, at 97.19 rubles at 2:50 p.m. Moscow time.

The company bases its estimate for fourth quarter export net revenue on the assumption that Russian Urals crude will average about $45 a barrel in December. It now forecasts Urals to average about $47 in 2009. Net export revenue is derived from the oil price less export duty and mineral extraction tax.

Refining Margins

The Russian government has approved a new export tax formula from Dec. 1, when the duty correlates with world oil prices with a one-month lag, down from a two-month delay earlier in the year, according to brokerage Troika Dialog.

Refining margins will be lower in the fourth quarter and the company will generate about 50 percent less in the period from marketing oil products, compared with third-quarter revenue, O’Brien said.

The company had $19.4 billion net debt as of the end of the third quarter. The debt portfolio was more than 80 percent dollar denominated. “It’s more difficult than it was a year ago” to raised debt, O’Brien said.

“Most recently we were borrowing in rubles, and the interest rates were a bit higher, but in light of what the ruble has done it’s actually worked out to be the right decision in terms of our dollar costs,” O’Brien said.

The company refinanced about $16 billion this year, which was “the most difficult year,” O’Brien said. Rosneft expects to be able to refinance its debt next year.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.netNina de Roy in London at nderoy@bloomberg.net;

Last Updated: December 4, 2008 06:52 EST