OAO Rosneft, Russia’s biggest oil producer, plans to more than double planned dividends, boosting the payout to 25 percent of last year’s profit, following an order from President Vladimir Putin.
State-run Rosneft will increase total dividends to 7.53 rubles a share for 2011, Chief Executive Officer Igor Sechin said at today’s annual meeting in St. Petersburg. The board had recommended 3.45 rubles a share in April. The additional payout of 43.2 billion rubles ($1.3 billion) will go to the board for approval, said Dmitry Avdeev, a company vice president.
Rosneft shares reversed losses, gaining as much as 0.8 percent and traded up 0.5 percent at 202 rubles at 2:53 p.m. in Moscow.
“The dividend increase will go mainly to the Sechin-led state company Rosneftegaz, giving it more cash for acquisitions,” Alexander Nazarov, an oil and gas analyst at OAO Gazprombank, said by phone. Sechin is board chairman of Rosneftegaz, which holds 75 percent of Rosneft.
Putin has said Rosneftegaz may bid in state assets sales and use its “significant financial resource” to bolster national energy companies. Rosneftegaz may gain stakes in Federal Grid Co. and OAO MRSK Holding, which manages interregional power distribution, Kommersant reported May 29, citing unidentified officials. It may also get shares in state power generator and exporter OAO Inter RAO UES, Nazarov said.
Putin told Sechin that Rosneft should pay 25 percent of its profit as dividends last week at a meeting in Tuapse, a Black Sea city where the oil producer runs a refinery. Sechin said today that that level will be maintained in future.
Selling part of the Russian state’s stake in Rosneft only makes sense this year at a price higher than at its initial public offering in 2006, Sechin said today. The stock trades about 18 percent lower than the IPO price of $7.55 a share, and less than 1 percent below the ruble equivalent at the time.
The company returned additional cash to shareholders via a 68.3 billion ruble share buyback this May, Sechin said. Those who didn’t participate in the buyback increased their stakes, he said.