Pretax losses at oil exploration and development company PetroNeft narrowed to $2.8 million (€2.1 million) last year, despite a challenging year for the company .

The company cut its losses from $16.4 million in 2011, and increased production from 2,049 barrels of oil per day (BOPD) to 2,204, with a full year output of 806,761.

Chief executive Dennis Francis said it had been a challenging year, overshadowed by production results from its Pad 2 operation at Lineynoye and consequent financial constraints.

Total revenues for 2012 were $34.6 million, up from $29 million the previous year.

The company said that last April’s conversion of a well at the Arbuzovskoye field to water injection was working well but would take several months to see the full benefit of the move. Production there is steady at 2,600 barrels daily, it said.

In March, it commenced monthly repayments of $650,000 to Macquarie Bank.

“While we are pleased we brought a second oil field into production regrettably this success was overshadowed by the production results from Pad 2 at Lineynoye and the consequent financial constraints that have slowed the group’s development,” Mr Francis said.