Russian oil giant Rosneft has holding company in Dublin
RUSSIAN STATE-OWNED oil giant Rosneft is using a holding company registered in Arbour Hill, Dublin, in the management of some of its largest exploration projects in eastern Siberia and at Sakhalin Island to the north of Japan, official filings reveal.
The loss-making entity in question, Rosneft International, was established 12 years ago but radically increased in scale in recent years as the Putin regime in Moscow reasserted state control over Russia's vast energy reserves after a series of controversial privatisations in the 1990s.
The Dublin-registered company provides consultancy services to other divisions within the Rosneft organisation. It has one Irish director, Kildare-based businesswoman Niamh O'Neill.
Contacted yesterday, neither Ms O'Neill nor a Moscow-based spokesman for Rosneft offered any comment on the operations of the organisation's Irish holding company.
Its subsidiaries - based in Russia, the British Virgin Islands, Cyprus, Jersey and the Netherlands - are engaged in oil and gas development, oil trading, the acquisition of assets for lease or sale to other Rosneft companies and ancillary services.
Big projects in which the company's subsidiaries have an involvement include exploration of the Vankor fields in eastern Siberia, which are currently estimated to contain 3.9 billion barrels of crude oil and more than 180 billion cubic metres of gas.
Capitalised expenditure on the Vankor projects amounted to $800 million at the end of 2006, according to Rosneft International's statutory accounts for 2006, which were filed in recent days to the Companies Office in Dublin.
These accounts also show that Rosneft International will have a 74.9 per cent share of the Sakhalin-3 project in a joint venture agreed last year with Sinopec, also known as China Petroleum Chemical Corporation.
The licensed bloc in question is in the Sea of Okhotsk, off the coast of Sakhalin Island.
The 2006 accounts show that Rosneft International achieved turnover of $2.6 billion (€1.8 billion) in 2006, the year its parent raised $10.7 billion in a partial flotation on the stock exchanges of Moscow and London.
The company's registered office is at Caplin Meehan House in Blackhall Place, where accounting firm Moore Stephens Caplin Meehan has had its base for many years. Moore Stephens Caplin Meehan recently merged with accountants FGS, the former Farrell Grant Sparks.
The consolidated profit-and-loss account for Rosneft International - one of only two non-Russian subsidiaries of the parent group listed in the prospectus for its initial public offering - shows that the company and its subsidiary incurred pre-tax losses of $189.89 million in 2006 and had a net cash outflow before financing of $1.08 billion.
The company paid out $1.23 million in corporation tax in 2006, $681,000 of which was paid in Ireland.
Almost $187 million in losses incurred by overseas subsidiaries were not subject to taxation.
According to the 2006 accounts, many of the transactions involving Rosneft International and its subsidiaries are structured in a complex manner across different jurisdictions to maximise the benefit to be derived by the holding company.
Such transactions may lead to "certain tax risks", the accounts say, but the company's management believes the related tax contingencies "are remote rather than possible and will not have any significant impact on the group's financial statements".
The scale of the company's activities grew significantly in 2006. It had a turnover of $1.13 billion in 2005 and pre-tax losses of $22.63 million.
In 2002, the company had a turnover of $3.91 million and pre-tax losses of $2.11 million.