Rosneft was one of the last vertically integrated oil companies to emerge from the reorganization and large-scale privatization of Russia’s oil industry in the years following the dissolution of the Soviet Union.
Initially, Rosneft was established in 1993 as a state enterprise on the basis of assets previously held by Rosneftegaz, the successor to the USSR Ministry of Oil and Gas. In 1995, a Russian government decree transformed Rosneft into an open joint stock company (OJSC).
From 1995 to 1998, Rosneft’s management changed constantly and as a result its assets were left largely unmanaged. Oil production fell and oil refining collapsed to just one third of production capacity.
Rosneft’s oil production and refinery throughputs, mln tons
- Rosneft founded as
a state enterprise
- Rosneft becomes an open
joint stock company
- Rosneft produces the first oil
from the Sakhalin shelf
- Program to increase well
- Substantial increase in financial
performance across the board
- Rosneft becomes government
representative in projects based on
Production Sharing Agreements (PSA)
- Rosneft obtains an exploration license
for the Kaigansko-Vasuykansky block
- Rosneft acquires Severnaya Neft
- Rosneft obtains a license to develop the Vankor
and North Vankor fields in East Siberia and to
develop the Veninsky block (Sakhalin-3 project)
- Exploratory drilling begins at the Sakhalin-5
- Rosneft acquires OJSC Yuganskneftegaz
- Oil production at Sakhalin-1 begins
- Rosneft acquires a blocking stake
in the Verkhnechonskoye field
- Rosneft acquires a license to
the East-Sugdinsky block
- Rosneft holds its Initial Public Offering (IPO)
- Rosneft completes consolidation of its
- Rosneft signs cooperation agreements
with CNPC, BP, Gazprom
- Rosneft acquires major upstream
and downstream assets, thus
becoming the leading Russian
- The Company begins sales of motor
and gear oils under the Rosneft
- Rosneft starts operations with
a new strengthened ice-class tanker
- Rosneft ranks second in the rating
of Russia’s Most Transparent
Companies by Standard & Poor’s
- Commercial production is launched at the Vankor
oil & gas field
- 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
- Rosneft takes first place in the Standard & Poor’s
survey of Russia’s Most Transparent Companies
- Two new fields with estimated recoverable reserves of over 170 mln
tonnes (1.2 bln barrels) under Russian Ñ1 and Ñ2 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.
Improved management, consolidation of existing and newly acquired assets, strengthened financial discipline and deepened scientific and technical integration all led to a significant increase in the efficient use of resources and allowed the Company to adopt a program of growth and expanded production.
In just four years, Rosneft increased its oil output sharply from 98.56 mln barrels (13.47 mln tonnes) in 2000 to 148.26 mln barrels (20.27 mln tonnes) in 2004.
In 2001, the Company became Russia’s official representative on projects with Production Sharing Agreements (PSA). In 2002, Rosneft expanded its international activity by taking part in a project in Algeria, and in 2003, it began producing oil at the Aday block near the Caspian Sea in Western Kazakhstan. In 2005, Rosneft became a participant in the PSA to develop the Kurmangazy structure on the Caspian shelf in Kazakhstan.
Rosneft is rigorously implementing its strategy of acquiring new assets in Russia, with a particular focus on the geological characteristics of the fields and efficient transport.
Among the key assets acquired in recent years are Selkupneftegaz, which was purchased in 2000, Severnaya Neft and the Veninsky block on Sakhalin-3, both of which were purchased in 2003, and the Anglo-Siberian Oil Company, which was acquired in 2003 and which owns the license to develop the Vankor field in Eastern Siberia.
In December 2004, the Company acquired a controlling share in Yuganskneftegaz, one of the largest oil-producing enterprises in Russia. The acquisition of this asset, along with the significant growth of its own production, ensured further growth for Rosneft. As a result, in 2005, the Company became the second-largest producer of oil and gas in Russia, with an average daily output of 1.69 million barrels of oil equivalent.
At the beginning of 2005, Rosneft won an auction for the license to the Vorgamusur block in the Timano-Pechora oil province, which will ensure the continued growth of Severnaya Neft, whose production facilities are just 80 kilometers away.
At the end of 2005, Rosneft announced its acquisition of a 25.94% stake in Verkhnechonskneftegaz. The Company later supplemented this purchase with the acquisition of an exploration license to the East Sugdinsky block.
New acquisitions will help the Company to achieve its stated goal of transforming Eastern Siberia into one of the most modern bases in Russia for oil and gas production.
In April 2006, Rosneft announced plans to consolidate 12 subsidiaries engaged in exploration and production, as well as in the refining and sale of oil and petroleum products. The consolidation program was completed in October of the same year and resulted in increased management efficiency and transparency.
In July 2006, Rosneft conducted one of the largest and most successful IPOs in global financial history after placing nearly 15% of its shares on stock exchanges in London and Moscow. The Company’s offering raised USD 10.7 billion.
In 2007, Rosneft acquired major upstream assets in various regions of Russia (Samaraneftegaz, East Siberian Oil and Gas Company, and a 50% stake in Tomskneft) with total proved reserves of about 1.5 bln. barrels of oil equivalent and a crude output of more than 15 mln tonnes (110 ml. barrels) per year. The Company also acquired five major refineries (Kuibyshev, Novokuibyshevsk, Syzran, Angarsk, and Achinsk), thus increasing its aggregate refining capacity to more than 55 mln tonnes (400 mln barrels) per year. In addition, Rosneft’s retail network grew 2.5 times to about 1,700 stations.
Due to the new acquisitions and impressive organic growth, in 2007, Rosneft posted the best operating and financial performance since its establishment. The Company became the leader in terms of crude oil production, accounting for more than 20% of the Russian total, ranked first in terms of total refining capacity, and operated the second largest national retail network.
In 2008, Rosneft strengthened it leadership and posted another year of outstanding financial results as well as crude production growth (compared with major Russian and international peers). The Company successfully repaid and refinanced over USD 16 bln of debt and reduced its net debt by almost USD 5 bln. Rosneft also secured significant efficiency gains across its segments, supported by extensive measures to address the adverse price environment at the end of the year, and made substantial progress in enhancing corporate governance and transparency.
In 2009, Rosneft launched commercial production at Vankor, the largest field in Eastern Siberia, and took first place in the survey of Russia’s Most Transparent Companies compiled by the rating agency Standard &Poor’s. The Company continued to generate free cash flow and reduce its net debt, while maintaining financing of strategic projects, despite the global financial crisis. Provision of a long-term credit by the Chinese Bank of Development significantly improved the debt profile of Rosneft
In 2010, Rosneft stays in first position among Russian and foreign competitors by rates of oil production growth and initiates new refining projects (a petrochemical plant in the Far East and a refinery in China). Agreement is reached on acquisition of stakes in four refineries in Germany.
The Company achieves record financial results and net debt is cut back to its level in 2006 (prior to large-scale acquisitions). Rosneft keeps first place in the Transparency and Disclosure Survey of Russian companies by Standard & Poor’s.
In 2011 the Company is continuing 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. 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.
Separate efforts to replace the reserve base have been launched in the Company’s traditional operating regions at largely depleted deposits. They resulted in the discovery of a new high-yield oil deposit in the western part of the Sladkovsk-Morozovsky oil and gas field in the Slavyansko-Temryuksky license block in the Krasnodar region. A new oil accumulation was also discovered by Samaraneftegaz at the Yuzhno-Orlovsky deposit in the Samara region.
In another managerial initiative, the Company’s new management began efforts to increase the oil recovery rate at mature deposits and deposits with heavy hard-to-recover 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. In August 2011, Rosneft signed a Strategic Cooperation Agreement with ExxonMobil to initially conduct exploration of license blocks in the Kara Sea and the Black Sea. The alliance is planning to implement a number of hydrocarbon exploration and development projects in Russia, the United States and other countries, as well as to set up a joint Arctic Research Center (ARC) in St. Petersburg.