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Rosneft Board of Directors Approves “ROSNEFT-2030” Strategy

21 December 2021

Rosneft Board of Directors approved the new strategy “Rosneft-2030: Reliable Energy and Global Energy Transition”.

Rosneft achieved most of the targets set in “Rosneft-2022” strategy ahead of schedule by the end of 2021. The new strategy is built upon the achievements of the previous strategic cycle and, at the same time, is adjusted to current trends related to the low-carbon agenda, the global energy transition, and the need for reliable supplies of affordable and clean energy.

“ROSNEFT-2030” targets reduction of greenhouse gas emissions while further improving operational and financial efficiency of the Company. As a result, Rosneft will strengthen its position on the global hydrocarbon market as an efficient and reliable producer and supplier of energy resources, simultaneously minimizing its carbon footprint and environmental impact.

Rosneft sets a ”Net Zero” 2050 target (Scope 1 and 2 operational emissions). The Company will reach this ambitious target through a number of actions aimed at reducing emissions including the use of low-carbon power generation, zero routine flaring, usage of energy-saving technologies, carbon capture and storage technologies and use of natural forest offsets.

To deliver the path to ”Net Zero” a number of strategic targets have been set to 2030. These include:

  • 25% reduction in absolute emissions (Scopes 1 and 2 versus 2020 level), and implementation of additional projects related to the development of natural forest sinks, and carbon capture and storage. As an interim target, emissions to be reduced by 5% by 2025 (Scope 1 and 2);
  • “Zero routine flaring” of associated petroleum gas – 5 years earlier than envisaged in the previously announced 2035 Carbon Management Plan, and in line with the  World Bank's “Zero Routine Flaring by 2030” initiative;
  • Methane intensity reduction to less than 0.2%;
  • Phased transfer of Company's own vehicles to low-carbon fuels;
  • Expansion of CNG network and increase quantity of EV charging points at Rosneft's retail sites;
  • Production and sales of aviation fuels with lower carbon footprint.

These initiatives will help to support the achievement of 17 UN Sustainable Development Goals, as well as the goals of Russian ”2050 Strategy of Social and Economic Development with Low Greenhouse Gas Emission” and the Paris Agreement.

“ROSNEFT-2030” strategy sets the strategic goals and priorities for both Upstream and Downstream. This will enable the businesses to further improve efficiency and support the shareholder value growth.

Rosneft aims to keep its leadership in production costs. High efficiency of the portfolio of production assets allows the Company to keep its lifting cost at a level significantly lower than the industry average for many years.

In Upstream, “ROSNEFT-2030” strategy target is 330 million toe hydrocarbon production. The key drivers of production growth relative to the current level will be the flagship Vostok Oil project, the ongoing large new projects (including Russkoye, Yurubcheno-Tokhomskoye, Severo-Danilovskoye and Severo-Komsomolskoye fields), as well as gas projects (Rospan, Kharampur and others). Gas share in total hydrocarbon production will grow to 25% by 2025.

In Refining, the aim is at growth of light product yields in Russia to 69%.

Shareholder payouts growth and enhancing yield and efficiency of the assets remain among the key Company strategic targets. Rosneft aims to secure a stable free cash flow in the medium term and to increase it in the longer term.

Achievement of a set of strategic targets is expected to contribute to more than doubling of Company’s Free Cash Flow by 2030.

Protection of the environment is one of Rosneft’s key priorities. Our Company is committed to a “Net positive Biodiversity impact” and aims to implement the principles of circular economy across its operations.

Rosneft confirms environmental goals on remediation of 100% of the legacy contaminated land areas and waste announced earlier.

Rosneft plans to reach a step new level in safety culture with an aspiration for zero fatal accident rate (FAR including contractors) and zero process safety events rate (PSER-1). The Company will also continue to implement corporate and social programs that ensure development of human resources and contribute to implementation of the National Priorities of Russia.

Commenting on the approval of the “ROSNEFT-2030” strategy, Rosneft CEO Igor Sechin said: “The Board of Directors approved new strategy and laid the foundation for Company's development for decades to come. New strategy supports free cash flow growth, which is expected to more than double by 2030, facilitates sustainable growth of the Company's shareholder and investor value. Carbon reduction objectives confirm the Company's status as a responsible energy supplier and one of the leaders in energy transition in Russia”.

Commenting on the results of the Board meeting, Robert Dudley, Chairman of the Strategy and Sustainable Development Committee of the Board of Directors of Rosneft, pointed out: "I am glad to contribute to the development of new strategy. The new goal to achieve “Net Zero” by 2050 is an ambition that reflects the Company's deep sense of responsibility as a global citizen. Rosneft-2030 Strategy balances equitable sustainability with shareholder return, and positions Rosneft as a resilient industry leader".

Rosneft Department of Information and Advertising
21 December 2021

These materials contain statements regarding future events and expectations that are forward-looking estimates. Any statement in these materials that is not historical information constitutes a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by these forward-looking statements. We do not undertake any obligation to update the data contained herein to reflect actual results, changes in underlying assumptions or factors affecting the forward-looking statements.

Keywords: Corporate Governance 2021