JSC Gazprom Neft: Investor Releases

Gazprom Neft invests over 20 billion roubles into the Moscow Refinery Modernisation Program in 2012

Mon, 02 Apr 2012 10:53:00 +0200

Gazprom Neft has adopted a medium-term Moscow Oil Refinery investment program for the year 2012, according to which over 20 billion roubles will be spent. The program is aimed at modernizing the production facilities of the Gazprom Neft Moscow Refinery, thus improving the quality of petroleum products, increasing the depth of refining, and enhancing the productivity and environmental efficiency of the enterprise. In 2012, under the terms of the modernization program, construction of closed mechanical wastewater treatment facilities will be completed. This project will significantly reduce emissions of pollutants into the atmosphere and improve the refinery's waste treatment process. The Moscow Refinery is also planning to complete the reconstruction of its bitumen unit and chemical water treatment plant with a desalinated sulphur recovery unit. As a part of the medium-term investment program, in 2012 the refinery will continue construction of a light gasoline fractions isomerization unit and a catalyst cracking gasoline hydro refining unit. These facilities will enable the enterprise to begin producing Ecological Class 5 fuels. In addition, the Moscow Refinery will continue the reconstruction of its diesel hydrotreatment unit and gasoline stabilization and secondary distillation unit. REFERENCE: Gazprom Neft Moscow Refinery is a subsidiary of Gazprom Neft. The refinery has a production capacity of 12.15 million tons per year. The enterprise holds leading positions in the production of high octane gasoline and diesel fuels, meeting around 40% needs for oil products market of the Moscow Region. As of January 2011, the Moscow Refinery produces Ecological Class 4 fuels

Gazprom Neft’s Board of Directors reviewed progress on 2020 strategy

Mon, 26 Mar 2012 13:46:00 +0200

The Board of Directors havereviewed the outcome of selling the company’s oilfield services assets. In 2011, Gazprom Neft sold out of its oilfield services businesses, reducing its costs and contributing increased competition in the services market. Gazprom Neft Board of Directors has also reviewed the progress made to date in implementing the company’s long-term strategy up to 2020, which is based on JSC Gazprom’s oil business development strategy adopted in 2006 and revised in 2009. The approved guidelines aim to result in a significant increase in Gazprom Neft performance indicators in all areas of business by 2020:

production will increase to 100 million tonnes of hydrocarbons per year
the volume of oil refining in Russia and abroad will grow to 70 million tonnes per year
sales of premium petroleum products will reach 40 million tonnes per year (lubricants, aviation and bunker fuel, sales through its own network of filling stations and tank farms).

Gazprom Neft is actively transforming into an international oil company both in terms of the scale of its business, and the geography of its operations. Gazprom Neft’s operations, together with its subsidiaries, include Serbia and other Balkan states, Italy, Iraq, Cuba, Equatorial Guinea, Venezuela, Kyrgyzstan, Kazakhstan, and Tajikistan. 2011 was an important year for Gazprom Neft in achieving its strategic goals: production increased by almost 8% – to 57.3 million tonnes of oil equivalent, refining throughput grew by 7% totalling 40.5 million tonnes, while sales of premium products were up 37% compared to the 2010 numbers to 19.55 million tonnes. Based on the industry’s financial performance, Gazprom Neft demonstrates a leading position in efficiency particularly with regard to operating profit and cash flow per barrel of oil equivalent, as well as returns on invested capital. In 2011, a modernization program at the company’s oil refineries (NPZ), led to a 2-fold increase in the production of diesel fuel grades 4 and 5 (complying with European standards Euro 4 and Euro 5), with the production of petrol grades 4 and 5 commencing. The total number of filling stations increased by 10% to 1,689 in 2011. The company started selling its premium-grade branded fuel, G-Drive, and the number of participants in the Going One Way loyalty program at the Gazpromneft filling stations network exceeded 1.9 million people. Given the significant progress made in achieving Gazprom Neft’s desired goals, a decision was taken to adjust the strategy within two months. Alexei Miller, Chairman of the Board of Directors of Gazprom Neft, said: “The progress made to date on achieving Gazprom Neft’s strategic plans reinforces the view that it was absolutely the right decision to build a vertically-integrated oil business within Gazprom. Gazprom Neft’s priorities in the coming years will also be to maintain high growth rates of hydrocarbon production, develop new territories, both in Russia and abroad, improve the quality of products and processing ratio. Gazpromneft filling stations network brand will see further development and we will strengthen our position in the retail market in Russia and the CIS.”

Gazprom Neft starts work on third well at the Badra field in Iraq

Thu, 15 Mar 2012 09:54:00 +0100

Gazprom Neft has started work to reactivate well Bd1 at Badra, Iraq, where it is operator. The work will make it possible to determine the technical state of the well and subsequently test four productive stratas at the site. This is the third well at Badra that Gazprom Neft has started work on. The first appraisal well was drilled in November 2011, the second in January. Once investigation of the wells has been completed, the appraisal wells will become operational. Three drilling rigs operate simultaneously on the site. During 2012 an additional four wells will be drilled, including a deep exploration well to study the lower strata at the deposit. The results of the drilling and seismic work carried out in 2011 will provide a better understanding of the site structure, and the final exploration plan will be drawn up in 2013.
REFERENCE: Well Bd 1 is 5,000 m deep, a record for Iraq at the time it was drilled in 1979. The Badra oil field is located in the Wassit Province in Eastern Iraq with an estimated 3 billion barrels of oil in place. The contract to develop the Badra oil field was signed with the Iraqi Government in January 2010 following submission of a tender in December 2009. This tender was awarded to an international consortium comprising Gazprom Neft, Kogas (Korea), Petronas (Malaysia) and ТРАО (Turkey). Gazprom Neft's share, as lead operator on this project, is 30 per cent, Kogas' share is 22.5 per cent, Petronas' share is 15 per cent and ТРАО's share is 7.5 per cent. The Iraqi Government, represented by the Iraqi Oil Exploration Company (OEC) retains 25 per cent. The Badra development project is expected to last for 20 years with a five-year extension option. The calculated investment is expected to amount to about $2 billion. Under the agreement, investors will be reimbursed for costs incurred and paid a bonus of $ 5.5 per barrel of oil equivalent produced. First production at the deposit is planned for 2013. By 2017 production is expected to reach 170,000 barrels per day (about 8.5 million tonnes per year) and maintain at this level for 7 years. In total 17 operational and five injection wells will be drilled. In February 2012 Gazprom Neft received approval from the Iraqi government to enter into an engineering, procurement and construction (EPC) agreement to build a central oil gathering and processing facility at Badra. Over 2012 Gazprom Neft will continue to study the results of tenders to build infrastructure at Badra.

NIS's net income increased 2,5 times in 2011

Wed, 15 Feb 2012 09:39:00 +0100

NIS has published unaudited financial results for 2011 prepared in accordance with international financial reporting Standards (IFRS) and confirmed by independent auditor PricewaterhouseCoopers. In 2011, the net income of the company is 40.6 billion dinars ($507 mln), which is nearly 2,5 times more than in 2010. The growth in business profitability is primarily related to an increase in efficiency of core business, reduction of production costs and expenses, as well as an increase in hydrocarbon price in the global market. The total volume of capital investments in 2011 was 34.4 billion dinars ($441 mln), 75 % more the 2010 investment program volume. Company's total bank debt at the end of 2011 was $458 million, which is almost $186 million decrease. In 2011, NIS managed to increase oil and gas production volume for 24 per cent, i.e. to 1.52 million tons. REFERENCE NIS is one of the largest, vertically integrated oil and gas companies in Southeast Europe, dealing with exploration, production and refining of crude oil and natural gas, as well as with the sales of a broad range of petroleum products. The main shareholders of the Company are Gazprom neft (56,5%) and the Government of the Republic of Serbia. The Company owns two oil refineries in Pancevo and Novi Sad with joint capacity of 7,3 mln tons of oil a year, as well as 480 filling stations and storage depots. NIS operates exploration and production projects in Serbia, Hungary, Romania, Bosnia and Herzegovina and Angola.

Gazprom Neft reports unaudited FY 2011 results in accordance with US GAAP

Thu, 09 Feb 2012 13:40:00 +0100

JSC Gazprom Neft has published its unaudited consolidated financial results in accordance with accounting principles generally accepted in the United States of America (US GAAP) for the year ended 31 December 2011. The Company’s performance improved substantially in 2011 due to increases in hydrocarbon production, oil refining volumes and sales of premium products, together with higher crude and petroleum product prices. Revenue grew by 34.3% Y-o-Y to US$ 44,189 million and adjusted EBITDA grew by 40.3% to reach US$ 10,121 million — a record for the Company. Net income, increased by 71% Y-o-Y to US$ 5,347million. Hydrocarbon production volumes increased by 7.4% Y-o-Y to 421.63 mmboe (57.3 mmtoe) driven by continued production growth at the Priobskoye field, production start ups at the Muravlenkovskoye and Novogodneye fields and the acquisition of the Orenburg assets (eastern part of the Orenburgskoye field and the Tzharichanskoye and Capitonovskoye fields). Refining throughput increased by 6.8% Y-o-Y to 40.5 million tonnes, driven by higher utilization rates at the Company’s refineries in Russia in response to strong domestic demand. Sales in premium segments increased 37% Y-o-Y and average daily sales per retail site increased by 41% Y-o-Y. The CAPEX increase of 22% was driven by the Company’s large-scale refinery upgrade program in Russia and Serbia, and increased investments to expand the retail network. Commenting on the 2011 results, Chairman of Gazprom Neft Executive Board Alexander Dyukov stated: “In 2011 Gazprom Neft delivered an outstanding financial and operational performance. We achieved these results both because of the favorable market conditions and by consistent implementation of the Company’s long term strategy aimed at doubling key production ratios while maintaining leadership in operational and financial efficiency. In 2011 the Company led its Russian peers in hydrocarbon production growth and added a new production region in Orenburg. Gazprom Neft also continued upgrading its refining assets to improve the quality of petroleum products and produce gasoline to meet the highest environmental standards. The Company expanded its network of retail sites in Russia and abroad, became the leading supplier of gasoline and jet fuel to the domestic market and substantially increased its share in lubricants and bunkering markets. In 2012 Gazprom Neft plans to continue large-scale production projects in Russia and abroad, actively develop premium products sales and expand our retail network into new geographical regions. Modernization of our refining assets remains a major priority in the current year. As always, Gazprom Neft will pay significant attention to controlling costs and improving corporate governance.” Key performance indicators (unaudited)

	2011	2010	∆, %
Revenue (US$ million)	44,189	32,912	34.3%
Adjusted EBITDA (US$ million)	10,121	7,212	40.3%
US$ / boe	24.0	18.4	30.4%
Net income, attributable to the shareholders of Gazprom Neft (US$ million)	5,347	3,134	70.6%
Net Debt / EBITDA	0.57	0.75	-23.5%
CAPEX (US$ million)	4,029	3,301	22.1%

Hydrocarbons production, including our share in equity affiliates (millions of boe)	421.63	392.45	7.4%
Oil refining throughput at own and equity affiliates refineries (millions of tonnes)	40.49	37.90	6.8%
Sales volume through premium channels (millions of tonnes)	19.55	14.25	37.2%

PRESS OFFICE
JSC GAZPROM NEFT
e-mail: PR@gazprom-neft.ru
Tel: (495) 777-3143
fax: (495) 777-3142
web: http://www.gazprom-neft.ru

NIS and RAG start Exploratory Drilling in Hungary

Fri, 03 Feb 2012 10:42:00 +0100

NIS a.d and RAG Hungary Kft (Hungarian subsidiary of Austrian Rohöl-Aufsuchungs Aktiengesellschaft) started to drill a test well (“RAG Pirto-1”) in south Hungarian “Kiskunhalas” Block, honoring the Agreement for joint exploration signed last year. The anticipated drilling depth is nearly 3 000 meters. Another two test wells are to be drilled this year, for which the two partners jointly allocated a €10 million budget for 2012. If the prospecting is successful in detecting commercial deposits of hydrocarbons, their extraction may start as early as 2013. In Vienna on 19 December, NIS and RAG signed the Agreement for joint exploration for the exploration and appraisal of Kiskunhalas block in the south of Hungary. In the event of discovering commercial conventional resources, NIS gets 50 per cent share in the future production of this block, while RAG is to become the project operator.

NIS is one of the largest, vertically integrated oil and gas companies in Southeast Europe, dealing with exploration, production and refining of crude oil and natural gas, as well as with the sales of a broad range of petroleum products.The main shareholders of the Company are Russian energy company Gazprom neft and the Government of the Republic of Serbia. The Company owns two oil refineries in Pancevo and Novi Sad, as well as an extensive network of filling stations. The company operates in many European countries. In particular, NIS performs exploration and production projects in Serbia, Hungary, Romania, Bosnia and Hercegovina and Angola.

RAG carries out E&P activities in Austria, Germany, Hungary and Poland. In Hungary, RAG’s operations are carried out by its 100% subsidiary RAG Hungary.

In addition to exploration and production, RAG is one of Europe’s largest operators of underground gas storage. The gas storages of RAG and its storage partners not only serve the Austrian market but provide users in the larger Central European region with storage capacity of 5 BCM targeting up to 6 BCM by 2014.

Gazpromneft-Nefteservis sells Servisnaya Burovaya Kompaniya and KRS-Servis

Mon, 23 Jan 2012 15:26:00 +0100

At the end of December 2011, Gazpromneft-Nefteservis completed the sale of two of the main production unit’s companies - Servisnaya Burovaya Kompaniya (SBK) and KRS-Servis (KRS). Both assets were bought by OJSC RU-Energy Group. The deals were approved by the Russian Federal Anti-monopoly Service. SBK and KRS will retain their long-term contracts with the Gazprom Neft group companies, with a guaranteed amount of work by the end of 2013. The agreements also provide for the continuation of the new owner's obligations to comply with the conditions of collective employment agreements adopted by Servisnaya Burovaya Kompaniya and KRS-Servis. The decision to spin off the oilfield service companies from Gazprom Neft was made by the Board of Directors in March 2010, while the programme to withdraw from the oil field services business ran until the end of 2011. Muravlenkovskaya Transportnaya Kompaniya was sold at the end of January 2011, SpetsTransServis, Noyabrskaya Tsentralnaya Trubnaya Baza and Servisnaya Transportnaya Kompaniya were sold in the summer, and YamalServisTsentr was sold in October. Moreover, in 2011 Gazpromneft-Nefteservis sold a controlling stake in its subsidiary Noyabrskneftespetsstroy. In November 2011, Gazprom Neft Board of Directors reviewed the interim results of the programme to exit from the company's oilfield services business. "The finalisation of the transactions for the sale of SBK and KRS completes the company’s programme to withdraw from the oil field services business, which has enabled Gazprom Neft to reduce costs and promote competition in the relevant markets", said Alexander Dyukov, Chairman of Gazprom Neft’s Executive Board REFERENCE: ООО Servisnaya Burovaya Kompaniya provides services for the construction of wells of various types (operating, exploration, prospecting, water intake), sidetracking, coring and drilling gas wells. The company operates in the Yamalo-Nenets and Khanty-Mansi Autonomous Districts, Tomsk and Omsk regions. SBK has 47 operational and 19 exploratory rigs. In 2011, development and exploratory drilling excavation work totalled more than 1.176 mlnmetres. The company has over 1,600 employees. Servisnaya Burovaya Kompaniya’s revenues in 2011 amounted to 7.75 billion roubles. ООО KRS-Servis’s main activities are development, repair and overhaul of wells and enhanced oil recovery. KRS operates in Yamalo-Nenets and Khanty-Mansi autonomous districts. The company has 36 overhaul crews, 39 maintenance crews, and 7 units for enhancement oil recovery.
The company has over 1,900 employees. KRS-Servis’ revenues in 2011 amounted to 2.67 billion roubles.

Gazprom Neft Board of Directors prolonged Alexander Dyukov’s contract for 5 years

Fri, 30 Dec 2011 17:03:00 +0100

On December 29, Gazprom Neft Board of Directors has decided to appoint Alexander Dyukov as the General Director of the Company for the next 5 years starting from December 31, 2011. This issue was scheduled to discuss because the previous contract had expired. Alexander Dyukov has been heading Gazprom Neft since the end of the year 2006.

Gazprom Neft Board of Directors Approves 2012 Investment Program

Thu, 29 Dec 2011 10:43:00 +0100

On December 28, Gazprom Neft's Board of Directors has discussed the implementation status of the Company's 2011 financial borrowing program, debt structure and debt portfolio management. In 2011, through bank loans and bond placement, Gazprom Neft was able to raise US$2.6 billion, which was used to refinance current debt and investments. In 2011 the average interest rate on loans was reduced from 3.96% to 3.34%, and the average repayment period increased from 2.1 to 2.75 years. Long-term loans now make up 84% of the total debt portfolio. At the year-end the ratio of consolidated net debt to consolidated EBITDA has dropped to 0.89. The Board approved Gazprom Neft’s investment program for 2012 and the Company budget, formed in view of approved strategic objectives, including the growth of business in production, processing and marketing and expansion of the Company's geography, while at the same time maintaining efficiency and ensuring the highest possible gross income for the shareholders. In 2011 Gazprom Neft increased the investment volume by 15% compared to the previous year, to a total of 150.9 billion roubles. In 2011 Gazprom Neft has shown a high rate of production growth by increasing this figure by over 7% to 57.2 million tonnes of oil equivalent. The refining throughput has increased by 4% and reached 39.6 million tonnes. The sales of petroleum products through premium distribution channels have gone up by 20% to 17.4 million tonnes. The Company has been showing some of the industry’s best indicators of EBITDA, operational cash flow per barrel of oil equivalent and internal rate of return. The company plans to maintain a high level of investment in 2012. One of the major tasks faced by Gazprom Neft will be to ensure production growth in the long term through the development of new deposits in the Orenburg Oblast and the implementation of projects on the Novoportovskoye and Messoyakhskoye oil fields. By 2020 the projected hydrocarbon production from these deposits will amount to over 20 million tons of oil equivalent. The Company will also continue to implement its various projects overseas. In 2012 Gazprom Neft's production will grow by over 4%, reaching a total of 59.6 million tons of hydrocarbons per year. An important short-term objective is further improvement of motor fuels quality. For instance, in 2012 a gasoline and diesel fuels hydrotreatment plant will be put into operation at the Omsk refinery, following which the entire volume of motor fuels produced at the facility will comply with environmental classes 4 and 5. A program aimed at improving the quality of fuels is also in operation at the Moscow refinery. Between 2012 and 2014 over 25 billion roubles will be invested into these two programs. One of the Company’s priorities is development of high-margin sales channels for petroleum products, creation of the Company’s own network of bunkering terminals and expansion of the network of refuelling facilities at airports across Russia. The Board of Directors was informed about the prospects for developing the Company's network of filling stations in the markets of the Central Asian region of the CIS. Gazprom Neft already leads the fuel retail segment in Kyrgyzstan and Tajikistan, and plans to increase its presence in these markets. The Company also plans to increase its presence in the retail market of Kazakhstan up to 6% by 2020. Alexei Miller, the Chairman of Gazprom Neft’s Board of Directors, stated: “This passing year has been record setting for the Company’s financial and operational performance. Today, Gazprom Neft is the leader in the rate of production and is showing the steady growth in petroleum processing. The results we obtained have allowed us today to adapt a large-scale investment program for 2012, which will let us set even higher records in petroleum production and continue the all-round upgrade of the Company's refining assets. All of this will give an additional value to the products across the Company’s entire production chain.”

NIS and RAG sign an agreement for joint exploration in the South of Hungary

Wed, 21 Dec 2011 11:40:00 +0100

NIS and Austrian Rohöl-Aufsuchungs Aktiengesellschaft , via its Hungarian subsidiary RAG Hungary Kft (RAG), have entered into agreements to jointly explore and develop hydrocarbons in the Kiskunhalas exploration license area west of the city of Szeged in southern Hungary. The license held by RAG Hungary comprises an area of 2255 km2. The companies will invest jointly and share exploration risks and benefits from oil and gas production in the area. Under the terms of the agreement, NIS will have a 50 percent share in production volumes. Following completion of a high quality 3D seismic study, the partners plan to drill the first wells in 2012. Exploration, appraisal and development costs in the license area will be shared in accordance with the parties participating interest in the project. RAG Hungary shall be the operator under the agreement. By combining skills, knowledge and experience in neighbouring exploration areas in Hungary and Serbia, the partnership will be beneficial for both companies and stimulate investment in exploration activities in Hungary. Kirill Kravchenko, CEO of NIS, commented: “Partnership with RAG Hungary is another step in our strategy to actively develop NIS’s business abroad. We are focussed on exploration and production in the Pannonia basin area, and today there are several prospective projects in our portfolio in Hungary, Romania and Bosnia. Our strategic goal is not only to increase the volumes of hydrocarbon production but to grow our reserves and resource base. To achieve this we attract the best partners who are leaders in their industries. The partnership with RAG provides us with new experience, technologies and access to new regions ”. NIS is one of the largest, vertically integrated oil and gas companies in Southeast Europe, dealing with exploration, production and refining of crude oil and natural gas, as well as with the sales of a broad range of petroleum products.The main shareholders of the Company are Russian energy company Gazprom neft and the Government of the Republic of Serbia. The Company owns two oil refineries in Pancevo and Novi Sad, as well as an extensive network of filling stations. The company operates in many European countries. In particular, NIS performs exploration and production projects in Serbia, Hungary, Romania, Bosnia and Hercegovina and Angola. RAG carries out E&P activities in Austria, Germany, Hungary and Poland. In Hungary, RAG’s operations are carried out by its 100% subsidiary RAG Hungary. In addition to exploration and production, RAG is one of Europe’s largest operators of underground gas storage. The gas storages of RAG and its storage partners not only serve the Austrian market but provide users in the larger Central European region with storage capacity of 5 BCM targeting up to 6 BCM by 2014.