Rosneft profits fall, customer pre-payments ease debt burden

MOSCOW, Nov 25 (Reuters) - Russia's biggest oil producer Rosneft said on Wednesday its third-quarter net profit fell 16 percent from the previous three months mainly due to a drop in oil prices.

The company also revealed that it received pre-payments worth more than 1 trillion roubles ($15.3 billion) under its long-term supply contracts with customers, providing cash that has helped the heavily-indebted group to repay a substantial part of short-term debt.

Rosneft, which accounts for 40 percent of Russian oil output, sells large volumes of oil and oil products to traders and companies, including BP which owns almost 20 percent in the company.

Rosneft said adjusted free cash flow was at 177 billion roubles in the third quarter.

"At this stage, sustainable cash flow generation ensures payment of dividends, decreasing financial leverage and financing the investment program."

Many big oil companies have cut back on oil production and exploration spending because of the steep drop in oil prices, which have fallen to around $40 from a June 2014 peak of $115.

Russian oil producers, already squeezed by low oil prices, have also had to cope with a big tax burden because the authorities decided not to cut taxes for the industry which, together with gas, generates half of state budget revenues.

But Rosneft said in September it expected no big changes to its plans even with oil at around $40 a barrel.

The state-controlled firm said its net income in the quarter to Sept. 30 fell to 113 billion roubles as the price for the Urals oil blend plunged 20 percent in dollar terms.

Rosneft, one of the most indebted Russian companies, managed to cut its net debt by 40 percent in the third quarter due to the forward payments by its clients, it said.

Net (LSE: 0LN0.L - news) debt fell to $24.5 billion in the third quarter when the company repaid $7.9 billion worth of loans.

It (Other OTC: ITGL - news) expects to repay $13.7 billion of loans in 2016 and a further $11.3 billion in 2017.

($1 = 65.5100 roubles) (Reporting by Vladimir Soldatkin; Editing by Maria Kiselyova and Jane Merriman)