Development Prospects and Strategy
Rosneft aims to strengthen its positions among the world’s top energy companies, maintaining its leading positions by operating indicators and joining the leaders by financial criteria and shareholder value.
The Company views the following factors as crucial for achieving these goals:
- constant improvement of efficiency in all aspects of Company business;
- development and application of new technologies;
- raising levels of transparency and openness;
- high standards of corporate governance;
- high levels of social responsibility;
- an efficient personnel policy;
- 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 scheduled implementation of strategic tasks, founded on a unique resource base, highly qualified personnel and an efficient system of innovative development.
The Company’s main strategic priorities are:
Sustainable growth of oil production
Rosneft has set itself the goal of sustainable increase of oil production, assuming that the macroeconomic climate remains favorable and that the tax system is optimal.
Growth of output in the short and medium term will be determined mainly by fields in Eastern Siberia, which is a new and promising region of oil production for the Company. In 2008 the Verkhnechonskoye field in the north of Irkutsk Region was brought into commercial production through collaboration with TNK-BP, and in 2009 Rosneft launched commercial oil production at the Vankor field, development of which represents the largest project of its kind in Russia for the last 25 years. Development of the Yurubcheno-Tokhomskoye field is to begin in the near future. Production from these fields will fill the Eastern Siberia – Pacific Ocean trunk pipeline, enabling Russia to diversify its oil deliveries and substantially broaden its presence on the Asia-Pacific market.
The Company’s traditional production regions, such as Western Siberia and Central Russia, still have much potential and will remain of fundamental importance in the medium term, particularly in view of potential for increasing recovery rates through application of new technologies.
Long-term production growth by Rosneft will depend on projects in Eastern Siberia and the Far East, as well as projects on the shelves of Russia’s southern seas (Black, Caspian and Azov). 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. Commercial reserves discovered at these areas will enable the Company to create a major new oil production hub. In the future yet another production hub could be formed by the Verkhnechonskoye and Yurubcheno-Tokhomskoye fields, together with other license areas immediately adjacent to them. The most promising Company areas are located on the Black Sea shelf, and the first exploration well could be drilled there in 2011.
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. The Sakhalin projects offer unique experience in development of challenging shelf fields, which Rosneft will be able to put to good use in future projects for development of (as yet unallocated) resources beneath the Arctic shelf.
Commercialization of Gas Reserves
Rosneft has over 800 bln cubic meters of proved gas reserves by international classification, of which only 21% are currently being developed. Therefore, development in the gas sector and commercialization of reserves are among priority tasks for the Company.
Rosneft has the potential to increase annual output of gas to more than 55 bln cubic meters. Most of the growth should be at the Kharampurskoye field in Western Siberia, where 46% of the Company’s proved gas reserves are concentrated.
The goal of commercializing gas reserves is also supported by the Company’s ongoing program for raising utilization levels of associated gas to 95%, which is also necessary in order to meet requirements of incoming Russian legislation.
Refining & Marketing Development
Rosneft’s main priority in the refining & marketing segment is to ensure steady growth of quantitative and qualitative indicators, and to match the latest standards for product quality.
The Company is systematically implementing large-scale programs of refinery modernization to achieve greater refining depth and raise the quality of refined outputs. Modernization will enable more complete and efficient use of hydrocarbons, greater value-added from petroleum products, ensure that fuel outputs meet the latest environmental standards (Euro-4 and Euro-5), as well as expanding the range of products.
Rosneft’s biggest refining project is expansion of annual capacities at the Tuapse Refinery to 88 mln barrels of oil and increase of its refining complexity.
The Company’s strategic goals are to produce engine fuels which meet Euro-5 standards, to raise the light product yield to at least 75% by 2015, and to increase annual refinery throughputs.
To take advantage of vertical integration, Rosneft is constantly expanding, optimizing and modernizing its network of filling stations and is also developing new businesses (bunkering and aircraft refueling).
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