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. Last Updated: 07/27/2016

Rosneft Ups Dividend Despite State Pressure

Rosneft will increase its 2008 dividend by 20 percent, it said on Wednesday, despite suggestions by some government officials that state firms should trim payouts.

The dividend increase comes on the back of a 72 percent rise in net profit in 2008, although they fell sharply in the final quarter because of a collapse in global oil prices.

The increase in dividends to 1.92 rubles per share is in line with the move by Russia's No. 2 oil firm and top private producer, Lukoil, which said this month that it would raise its payment to shareholders by 19 percent in spite of a $1.6 billion net loss in the fourth quarter.

Rosneft's total payout would amount to 20.3 billion rubles ($605.1 million).

The company also confirmed that Vladimir Bogdanov, the general director of Russia's No. 4 oil firm, privately owned Surgut, was among the candidates to the board of Rosneft to be elected at a general meeting on June 19.

Reports about the possible inclusion of Bogdanov, an oil industry veteran, to the list of Rosneft's board candidates have revived old rumors that the two companies may merge. Both companies have denied they are considering a tie-up.

Surgut has accumulated a cash pile of more than $20 billion, while Rosneft is one of Russia's most indebted companies, with obligations of more than $20 billion.

Other new candidates to the board include the head of Russian pipeline monopoly Transneft, Nikolai Tokarev, who alongside Rosneft head Sergei Bogdanchikov helped clinched a $25 billion oil-for-loan deal with China this year.

Under the deal, Russia would supply China with oil for 20 years via a new pipeline, while China would lend $10 billion to Transneft and $15 billion to Rosneft.

Rosneft said deliveries to China would begin in January 2011, with Rosneft sending 9 million tons of crude and Transneft selling the remaining 6 million.

As Transneft does not produce crude, Rosneft said it has signed a deal to sell it 6 million tons of oil per year for resale to China to help Transneft raise the money.

Crude will be delivered to the China National Petroleum Corporation or its affiliate at a price based on market quotes for Russian crude oil at the Kozmino terminal on the Pacific or the Baltic Sea terminal Primorsk, Rosneft said.

Rosneft will receive the money from China Development Bank at an interest rate linked to LIBOR. The loan has a five-year grace period. Some $10 billion will be disbursed this year, and the remaining $5 billion will be made available in 2010. "The value, cost and duration of the loan are unprecedented not only for Russian corporate borrowers but also for the global capital markets in general," Rosneft said in a statement.