Falling oil prices knocked pounds 1bn off the value of North Sea services firm Petrofac yesterday and are on course to cripple the Russian economy without a rescue package from the oil producers’ cartel Opec later this week.
Petrofac, which operates in almost 30 countries, saw its share price fall by more than a quarter after it said profits would be low this year to reflect a 30% decline in Brent crude prices since the summer. The oil and gas services firm said it expected 2015 net profit of about $500m (pounds 403m), $190m less than analysts had forecast and below the $580m predicted for this year.
Investors took the warning as a sign that oil majors Shell and BP along with a host of medium-sized operators in the sector would follow suit.
A barrel of Brent crude slid 40c a barrel to a fraction below $80, down from $86 a week ago. Five months of declines in the cost of oil have battered oil firms and the leading producer nations. The Russian finance minister said yesterday the country is losing up to $140bn (pounds 90bn) a year because of a combination of plunging oil prices and Western sanctions over the Ukraine conflict.
“We are losing around $140bn per year due to geopolitical sanctions,” finance minister Anton Siluanov said in a speech at an economic forum in Moscow, quoted by RIA Novosti news agency. The oil price was causing Russia economic damage of “some $90bn to $100bn per year”.
President Vladimir Putin has dismissed the economic damage as “not fatal”, insisting that the falling rouble would only hurt the Russian economy “to an extent, but not [cause] fatal” damage.