By Stephen Bierman Feb. 1 (Bloomberg) -- OAO Rosneft, Russia’s largest oil producer, said profit more than doubled in the fourth quarter after oil prices recovered and output increased. Net income rose to $1.67 billion from $775 million a year earlier, the Moscow-based company said today in an e-mailed statement. That compares with the $1.7 billion median estimate of 10 analysts surveyed by Bloomberg. Sales climbed 35 percent to $14.6 billion. Output rose 2.9 percent to 2.18 million barrels of oil a day last year after the start of production at Rosneft’s Vankor field, the country’s largest oil development, in August. The price of Urals, Russia’s main export blend, rose 37 percent to average $74.26 a barrel from a year earlier, Rosneft said. “Year-on-year performance was much better,” Peter O’Brien, vice president for finance and investment, said in a phone interview today. “The main factor was crude and product prices but we also managed to grow volume and costs are substantially lower in dollars.” Earnings before interest, taxes, depreciation and amortization rose to $4.01 billion in the fourth quarter from $32 million in the same period of 2008, Rosneft said. The Russian government plans to hold a meeting within a month to decide on the future of an export duty exemption for Vankor and a group of other eastern Siberian deposits. State-run Rosneft is confident the Finance Ministry “will see that these investments make sense and should be provided certainty around profitability,” given the importance for the country’s economy and the company’s future revenue, O’Brien said. The profitability at Vankor, whose output reached 220,000 barrels a day at the end of last month, is dependent on tax breaks, O’Brien said. Rosneft is “more negatively exposed to potential regulatory changes than any other oil company in Russia in our view,” Alexander Burgansky, an analyst at Renaissance Capital, which has a hold on the stock, said last week. Rosneft reduced net debt by $2.79 billion to $18.49 billion and paid 622 million in dividends last year. Rosneft has $4.5 billion of debt due this year, O’Brien said. To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net.

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