OREANDA-NEWS. December 02, 2009. Rosneft held a conference call to comment on the 3Q09 US GAAP results it released last Wednesday. Although the company provided little guidance for next year (the 2010 plan is yet to be officially approved by its Board), management revealed what we believe is a more optimistic 2010 production volume guidance for the Vankorskoye field, reported the press-centre of OTKRITIE FC.

Rosneft now expects Vankor crude production in the 11.5-13.5MMt (230-270MBD) range, versus 10-11MMt (200-220MBD) before. Offsetting this was the news that Rosneft might not be able to use the adopted export duty exemption due to the fact that Vankor crude does not conform to the density specification stipulated in the relevant government decree.

According to management, however, this technical issue should be rectified in the next few weeks. In addition, management suggested that, excluding Vankor, Rosneft should see negative volume growth next year. This is somewhat disappointing, given that the company had projected growth through 2012-13 thanks to the ongoing development of the Priobskoye field (Yugansk). Output at Priobskoye should stabilize in the next couple of years as a result of a ramp-up in drilling volumes.

View: We see no reason to change our view on Rosneft. Despite the revision of Priobskoye volumes, Rosneft should remain the Russian oil sector’s leader in terms of production volume growth in the next few years.

Valuation and Action: We maintain our BUY rating on the stock with a US10.77 TP.