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History of Rosneft

 

The companies, which are now affiliated with Rosneft first appeared in the late 19th century. In 1889 Russian entrepreneurs started oil-field exploration in Sakhalin.

State oil production and refining enterprise Rosneft was founded in April 1993. More than 250 industrial enterprises and organizations, as well as oil and gas fields developed in the Soviet times, were placed into trust of this new government enterprise. Fuel and energy sector enterprises and associated public sector enterprises were consolidated into vertically integrated companies on the model of the world’s major corporations. OJSC Rosneft was established in accordance with the Russian Government Decree 971, issued 29 September 1995.

In 1998 Russia’s economic crisis presented significant financial and operational challenges for Rosneft, including a production decline due to a severely depleted resource base, low capacity utilization at refineries, and a fall in retail sales. Highly depreciated equipment and outdated technology also put obstacles in the way of Company development.

As far back as in 2000 (for the first time since 1998 financial crisis) Rosneft, however, managed to increase production. In 2001, although world and domestic oil prices fell, the Company has significantly improved its operating performance. Year-on-year growth exceeded 10%. Company’s Board of Directors adopted the development strategy of Rosneft, which provides development of geologic exploration, production of hydrocarbons, refining capacity development, and entry into new markets. As part of Sakhalin-1 project commercial hydrocarbon reserves have been discovered. Rosneft was the first Russian company (since 1998 financial crisis) to place an issue of Eurobonds. The further Company development was still questionable, as it couldn’t increase production and refining at the cost of available oil fields and refineries.

The Company has been increasing assets and expanding its international activity since 2002 to 2004. In 2002 Rosneft received a license to develop the Kaygansko-Vasyukansky block (Sakhalin-5 project), as well as Veninsky block (Sakhalin-3 project) in 2003. Rosneft acquired Severnaya Neft company, which greatly strengthened its positions in Timano-Pechora. The Company purchased Anglo-Siberian Oil Company, which owned the license to develop the Vankor field in Eastern Siberia.

In 2004 Igor Sechin was named Chairman of the Board of Directors of Rosneft. This has become the turning point in the Company’s history. Thanks to support from Chairman of the Board of Directors and cooperation with the key shareholder, which is the government, the Company has rapidly improved corporate management efficiency, carried out works aimed at consolidation of oil producing and refining assets, enhanced fiscal discipline. It has made Rosneft the leading Russian oil company in oil and gas production stream in 2005. As a result, in July of 2006 the Company conducted the Initial Public Offering on the London Stock Exchange. The offering raised USD 10.7 billion - the largest IPO completed to date in oil and gas industry, in Russia and the fifth largest ever worldwide. Such global power generating companies as BP and SINOPEC gave credence to Rosneft and acquired Company shares. More than 150,000 Russian individuals became Rosneft shareholders.

In 2009 Rosneft launched commercial production at Vankor, the largest field in Eastern Siberia. Due to effective field development Vankor has become the largest production project in modern history of Russian oil industry, and one of the world's top ten oil and gas projects.

Rosneft ranks first in the rating of Russia’s Most Transparent Companies by Standard & Poor’s. The Company demonstrated stable performance amid the global financial crisis, and continued to generate free cash flow and reduce net debt while preserving financing of strategic projects.

In 2010 Rosneft initiates new refining projects (a petrochemical plant in the Far East and a Tianjin refinery in China). Rosneft acquired stakes in four refineries in Germany, thanks to which total refining capacities of the Company increased more than 20% to 61.6 million tons. Rosneft maintained its leadership position in oil production growth among Russian and foreign competitors. The Company achieves record financial results, and net debt is cut back to its level in 2006. Rosneft had the highest incremental oil production rate among Russian companies in 2010. Vankorneft became second largest oil and gas producer company of Rosneft group.

In 2011 the Company continued to actively replace its reserve base. Rosneft received two licenses following the discovery of deposits – for the Baykalovsk deposit in the Krasnoyarsk region and the Buzerovsk deposit in the Samara region. The Company also received two certificates confirming the discovery of the Lisovsky deposit and the Sanarskoye deposit in the Irkutsk region. Another deposit in the same region has been discovered at the Danilovsk license block with light oil flowing to the surface at well 71. Innovative methods and upgraded exploration technologies were instrumental in making these discoveries possible in the face of extremely challenging geological conditions.

The Company's another priority strategy was to increase the oil recovery rate at mature deposits and deposits with heavy tight oil. For instance, a comprehensive program of exploration and reserve replacement at mature deposits controlled by Krasnodarneftegaz, Stavropolneftegaz and Grozneftegaz is in the works. As of mid-2011, the Company’s projected oil recovery rate stood at 38 percent which is significantly higher than the industry average.

23 May 2012 Rosneft's board has voted to appoint Igor Sechin as President of the Company. Rosneft announced its strategic priorities: industrial safety and environmental protection, refinery modernization, field development and oil production increase.

From May 2012 till present, Igor Sechin is Rosneft President and Chairman of the Management Board.

The key event for Rosneft in 2012 was reaching binding agreements to acquire a 100% stake in TNK-BP. “Full consolidation of this highly efficient company with its quality assets will make Rosneft the largest publicly traded oil company in the world, increase the scale of its gas business, and optimize supply and marketing channels,” Sechin said.

Separate course of Rosneft development is represented by agreements with leading global power generating companies for shelf development.

In 2012 an agreement was signed as part of strategic cooperation between Rosneft and ExxonMobil concerning pilot development of tight oil reserves at the Bazhenov and Achimov formations in Western Siberia. ExxonMobil will provide financing of up to $300 million. The two companies also agreed on participation by ExxonMobil in the Arctic Research and Design Center for Offshore Developments.

The agreements were signed with Statoil for creation of a joint venture (JV) to work at Rosneft areas in the Sea of Okhotsk and the Barents Sea, and for joint work to assess hard-to-recover oil reserves at Company fields in West Siberia and Stavropol Territory.

An agreement was signed with Eni for creation of a JV to develop license areas on the Russian shelf of the Barents and Black Seas. Eni will fully finance geological exploration work and will reimburse most historical costs.

A transaction was completed for creation of a JV on the basis of Itera for the production and sale of gas. Consolidated proved and probable reserves of the JV under PRMS classification are 427 bcm of gas and 25.8 million tons of liquid hydrocarbons.

The General Meeting of Shareholders voted to pay RUB 78.5 bln (25% of IFRS net income) as dividends for 2011. Dividends per share were RUB 7.53, which is nearly three times more than in 2010.

At the XVII St. Petersburg International Economic Forum, which gathered representatives of global political and business elites, Rosneft signed record number of agreements economically viable both for the Company and the country.

Rosneft will continue intensive work during 2013 to increase the shareholder value of the Company. The key objectives are efficient integration of TNK-BP assets, bringing unconventional hydrocarbon resources into production, development of gas business, and increasing output of light petroleum products.
 


 

 


2010

  • Two new fields with estimated recoverable reserves of over 170 mln tonnes (1.2 bln barrels) under Russian 1 and 2 classifications were discovered in the Eastern Siberia.
  • Agreement was reached with the National Oil Company of Venezuela on acquisition of 50% of Ruhr Oel GmbH, which owns stakes in four refineries in Germany.
  • The Company kept its top position in Standard & Poor’s Transparency & Disclosure survey of Russian companies in 2010.
  • An agreement on feasibility study was signed to mark the start of work on a new oil refinery with planned capacity of 13 mln tonnes in the Chinese city of Tianjin.
  • Rosneft’s Board of Directors approved the general concept for construction of a petrochemical plant with 3.4 mln tonnes capacity near Nakhodka in the Russian Far East.

2009

  • Commercial production is launched at the Vankor oil & gas field, which is the biggest field to have been discovered and brought into production in Russia in the last 25 years.
  • The first refining units, built to comply with government regulations on changeover to environmentally friendly engine fuels, are commissioned at three Company refineries.
  • Rosneft is the first Russian company to begin sales of petroleum products at the St. Petersburg International Commodity Exchange.
  • Rosneft obtains a 20-year credit from the Chinese Bank of Development on highly favorable terms and reaches a long-term agreement on annual oil delivery to China in 2011–2030.
  • Rosneft takes first place in the Standard & Poor’s survey of Russia’s Most Transparent Companies, up from second place in 2008 (Rosneft was in tenth place in the rating in 2007).

2008

  • Commercial oil production begins at the large Verkhnechonskoye field in Eastern Siberia. The field is being developed by Rosneft jointly with TNK-BP.
  • The Company begins sales of motor and gear oils under the Rosneft brand through its network of service stations in various regions across Russia.
  • Rosneft starts operations with a new strengthened ice-class tanker as part of its priority tanker fleet program.
  • Rosneft ranks second in the rating of Russia’s Most Transparent Companies by Standard & Poor’s – an improvement of eight places compared with 2007.

2007

  • Rosneft acquires major upstream and downstream assets, thus becoming the leading Russian petroleum company
  • Rosneft is included in the List of Russia’s Strategic Enterprises and Organizations
  • Rosneft becomes the first Russian oil company to hit a 100 mln. tonne crude output (over 730 mln. barrels)
  • Rosneft completes a project aimed at reducing time to prepare consolidated financial statements under US GAAP and RAS

2006

  • Rosneft and CNPC agree to establish a joint venture in Russia
  • Rosneft and BP sign an agreement to jointly develop the Sakhalin shelf
  • Rosneft and Gazprom enter into a strategic partnership agreement

2005

  • An exploration well is completed within the Sakhalin-5 project, leading to the discovery of highly promising hydrocarbon reserves
  • Rosneft acquires a license to the East-Sugdinsky block

2004

  • Exploratory drilling begins at the Sakhalin-5 project
  • Transport system commissioned using the Belokamenka floating oil reservoir and Privodino rail terminal

2003

  • Rosneft obtains a license to develop the Vankor and North Vankor fields in East Siberia
  • Oil production begins at the Aday block in Kazakhstan
  • Exploration begins on the shelf of the Azov Sea
  • Oil production begins at the Kynskoye field
  • Rosneft receives a license to develop the Veninsky block at the Sakhalin-3 project

2002

  • Rosneft is appointed Russia’s official representative in a project to develop the Kurmangazy structure in the Caspian Sea
  • Work begins at the Sakhalin-5 project; Rosneft receives a license to develop the Kaygansko-Vasyukansky block
  • Rosneft acquires licenses to develop the Kynsko-Chaselskyaya and Udmurtsko-Chatylkinskaya groups of fields

2001

  • Rosneft becomes government representative in projects based on Production Sharing Agreements (PSA)

2000

  • Financial performance begins to improve across the board
  • Program begins to install satellite communications at all the Company’s enterprises

1999

  • The Company begins to implement a cost-reduction program
  • Program to increase well productivity begins

1998

  • Russia’s August financial crisis
  • New management team takes over at Rosneft to reestablish the Company’s position in the sector
  • Rosneft produces the first oil from the Sakhalin shelf

1995

  • Rosneft becomes an open joint stock company

1993

  • Rosneft founded as a state enterprise

 



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