Development Prospects and Strategy
Rosneft aims to strengthen its positions among the world’s leading energy companies, ranking among the best in terms of operating and financial criteria, and by shareholder value.
The Company views the following factors as crucial for achieving these goals:
- constant efficiency improvements in all aspects of Company business;
- an innovative approach to development;
- raising levels of transparency and openness;
- high standards of corporate governance;
- high levels of social responsibility;
- strict observance of Russian and international standards for environmental and industrial safety.
Rosneft’s rapid development in recent years has created enormous potential for sustainable growth and implementation of strategic tasks. Main contributors to this potential are a unique resource base, highly qualified personnel and an efficient system of innovative development. The unfavorable macroeconomic situation, which came about at the end of 2008, has justified certain adjustments to Company plans but has not altered Company strategy.
The Company’s main strategic priorities are:
Steady Growth of Oil Production
Rosneft intends to increase annual oil production from 776 mln barrels (2,121 th. barrels per day) in 2008 to 1,300 mln barrels (3,600 th. barrels per day) by 2030, assuming that the macroeconomic environment is favorable.
Growth of output in the short term will be mainly driven by fields in traditional Rosneft production regions, principally Western Siberia. Most of the growth in Western Siberia is expected to be at the Priobskoye field, which is the Company’s largest. Reserves at Priobskoye are 30% of Rosneft’s total proved oil reserves. Also, during 2008 Rosneft, jointly with TNK-BP, brought into operation the Verkhnechonskoye field in Eastern Siberia, a new and promising region of oil production for the Company. Commercial production of oil is also scheduled to launch at the Vankor field in Eastern Siberia in the immediate future. Development of Vankor is the largest project of its kind in Russia for the last 20 years.
Assets in Eastern Siberia also play a large part in the Company’s medium term plans. Successful development of the large reserves at the Vankor and Verkhnechonskoye fields is a national priority for Russia as well as being a priority for the Company. Output from the fields will be used to fill the trunk pipeline from Eastern Siberia to the Pacific Ocean, which will enable Russia to diversify its oil deliveries and significantly expand its presence on the Asia-Pacific market. The Company’s traditional operating regions also offer much potential in the medium term, mainly thanks to the scope for increasing reserve recovery rates by use of new technologies.
Long-term production growth by Rosneft is dependent on Company assets in Eastern Siberia and the shelves of the Caspian, Black and Azov Seas. The Company is carrying out intensive geological exploration work in these regions. In Eastern Siberia, Rosneft has highly promising geological exploration blocks immediately adjacent to the Vankor field. Discovery of commercial reserves at these areas will enable the Company to create a major new oil province. In the future yet another oil province could be formed by the Verkhnechonskoye and Yurubcheno-Tokhomskoye fields (the latter is now in test production), together with other licence areas adjacent to these fields.
In the Far East, Rosneft is taking part in the promising Sakhalin-3 and Sakhalin-5 geological exploration projects on the shelf of the Sea of Okhotsk. These projects are being implemented with the Company’s foreign partners on a joint-financing basis, which minimizes risks for Rosneft. Successful development of the shelf of the Sea of Okhotsk will enable the Company to take a leading position in the energy market of the Far East.
The Sakhalin projects offer unique experience in development of complex shelf fields, which Rosneft will be able to put to good use in future projects for development of as yet undistributed resources beneath the Arctic shelf.
Commercialization of Gas Reserves
Rosneft has 784 bln cubic meters of proved gas reserves, and only 22% of them are being developed at present. Thus, development of the gas sector and commercialization of reserves are among priority tasks for the Company.
Rosneft plans to increase output of gas from 12.4 bln cubic meters in 2008 to 55 bln cubic meters by 2020. Most of the growth will be at the Kharampurskoye field in Western Siberia, where about half of the Company’s proved gas reserves are concentrated.
The goal of commercializing gas reserves is also supported by the program for raising utilization levels of associated gas to 95%. This target matches future requirements of Russian law.
Refining & Marketing Development
Rosneft’s main priority in the refining & marketing segment is to ensure steady growth of quantitative and qualitative indicators in order to maintain and, so far as possible, improve the balance between production and refining volumes, and to meet the latest standards for product quality.
The Company is systematically implementing large-scale programs of refinery modernization, expanding capacity of refineries and raising their complexity. Modernization work increases the valued-added of products and ensures that fuel outputs meet the latest environmental standards (Euro-4 and Euro-5), as well as expanding the product range.
Rosneft’s biggest refining projects are the expansion of annual capacities at the Tuapse Refinery to 88 mln barrels of oil and the increase of its complexity, as well as construction in the Far East of a modern refinery with high complexity levels and 145 mln barrels of annual capacity.
The Company’s strategic goals are to produce engine fuels, which meet Euro-5 standards, to raise the light product yield to at least 78% by 2015 and to increase annual refining volume to 585 mln barrels (1,600 th. barrels per day) by 2020.
Rosneft aims to sell as much as possible of its refining output directly to the end-user. The Company is therefore expanding and modernizing its network of service stations and is also developing new businesses (bunkering and aircraft refuelling).
|
