Russia's main oil producer Rosneft delivered a shock second quarter net loss of $250 million on Wednesday, hit by falling energy prices and prohibitive export duty rates.
Analysts had expected the state-held company's profits to suffer in the second quarter but they should still have come in at around $1.0-2.0 billion on the back of stable output and demand.
Net profit was $2.8 billion in the second quarter of 2011 and stood at $3.8 billion in the first three months of this year, showing the extent of the turnaround.
"Financial results of the first half of 2012 reflect the current economic situation, which is characterised by falling oil prices, higher export duties and considerable exchange rate volatility," Rosneft chief executive Igor Sechin said.
Sechin also highlighted the quarter's positives by noting two major Arctic field exploration agreements that Russia's largest company had struck with Italy's ENI and Norway's Statoil in recent months.
Rosneft "took a number of strategic steps to expand partnerships with international companies in hard-to-recover oil and offshore operations, and stepped up cooperation with the Russian government to create a favourable tax regime for such projects," Sechin said.
The rapidly growing firm is responsible for about a fifth of Russia's oil production and has recently developed into a Western investment darling because of its exclusive rights to previously untapped northern sea reserves.
But the entire Russian energy sector has been hit by a year-on-year drop in global oil prices that coincided with a steep depreciation of the ruble, increasing the debt burden.
"The company was always going to suffer from a devaluation in the ruble because of its dollar-denominated debt," the ATON investment bank said.
The quarter was particularly painful because export duties jumped to $443 from $401 per tonne as a result of a calculation lag that does not fully account for most recent energy price changes.
Energy firms the world over have recently posted disappointing figures but the slump in prices has been especially keenly felt in Russia, under pressure not only from global woes but also President Vladimir Putin's need to pay for his recent election promises.
"We expect the second quarter of 2012 to be one of the weakest for the (Russian) oil sector in the past two years," said Nomos Bank analyst Denis Borisov.
Wednesday's results also underscore some distinct problems at Rosneft that may trouble foreign partners as they weigh the temptation of future Russian oil gains against the reality of current political and bureaucratic risks.
Rosneft had benefited greatly as a key state holding from very favourable extraction rates at its most important Arctic oil field.
But those benefits expired at the start of the year when the government was forced to put the squeeze on all oil producers to help meet a massive new budget that Putin promised as he campaigned for an historic third term.
Rosneft estimated the impact of the higher levies at its big Vankor field at 96 billion rubles ($3.0 billion) over the first six months of the year.
Yet analysts said they were now particularly interested in a conference call Rosneft has planned for Friday during which it was expected to fill in some of the details of its negotiation plans with British energy giant BP.
The British firm on June 1 put its half of the troubled TNK-BP joint venture up for sale after a bitter falling out with the Russian billionaire partners.
Rosneft has expressed an interest but it is also presumed to be keen on buying out the Russian partners themselves after the tycoons managed to block a massive Arctic tie-up with BP last year.