Gazprom Neft's Board reviews progress of company projects

28 September 2012

Gazprom Neft’s Board of Directors has carried out a review of the company’s portfolio of production assets. Taking into account estimated performance results for 2012, Gazprom Neft’s consolidated production will increase by nearly 35% compared to 2007.

Gazprom Neft’s development strategy up to 2020 enables further expansion of hydrocarbon production to 100 million tonnes. In order to achieve these figures, Gazprom Neft intends to utilise its access to subsurface areas in both licensed and unlicensed reserve funds in the regions where the company operates, including the Yamalo-Nenets and Khanty-Mansiysk autonomous districts and the Orenburg region. Gazprom Neft is actively increasing the scope of its geological exploration work. On the northern part of the Yamal peninsula it is implementing a major project to develop the Novoportovskoye field, while on the Gydan peninsula the company is preparing to bring the Messoyakha group of fields on stream. East Siberia also remains one of the priority areas for the company’s geological exploration work.

The company continues to develop its international projects as it seeks to expand in the Middle East, Latin America, Africa and the Balkans. According to Gazprom Neft’s strategy, annual production of oil equivalent outside Russia will reach around 10 million tonnes by 2020 , with the resulting project portfolio ensuring steady production trends continue beyond that date.

Another point of focus centres on developing extraction capabilities for hard-to-recover reserves, including studying potential development areas in the Bazhenov formation. Current oil prices and the possibility of preferential tax treatment means that these projects may soon become economically feasible. The development of offshore projects, particularly the Prirazlomnoye and Dolginskoye fields, which Gazprom Neft will help develop, remains an important strategic component.

The Board of Directors also approved the company’s adjusted investment programme and budget for 2012. In accordance with its development strategy, the adjusted investment programme outlines the expansion of the scale of the business. Favourable market conditions and steps to boost efficiency have enabled Gazprom Neft to generate greater operating cash flow than planned, allowing it to make additional investments without increasing external borrowing.

The Board of Directors resolved to call an extraordinary Meeting of Shareholders of Gazprom Neft, at which a proposal was put forward to amend the company’ charter and expand the Board of Directors from 10 to 11 members. Electing an odd number of directors represents best international corporate governance practises and will help expand the range of professional competencies of the Board’s members.

Information about the extraordinary Meeting of Shareholders will be published within the period required by law.