Gazprom Neft Board of Directors reviews preliminary results of the company’s activities in 2015 and plans for 2016

25 December 2015

The Gazprom Neft Board of Directors has reviewed preliminary outcomes of the company’s activities in 2015, as well as plans for 2016.

Production volumes of hydrocarbons are expected to reach 79.7 million tonnes of oil equivalent (mtoe) in 2015 — a 20.3-percent increase on 2014. Refining volumes will reach 43 million tonnes, and sales of premium products (through the filling station network, together with sales of aviation kerosene and marine fuels, plus sales of oils and bitumens) 25.7 million tonnes.

Over the past year Gazprom Neft has completed installation of the Vorota Arktiki (“Arctic Gate”) crude-loading terminal in the Ob Sea, northern Yamal, allowing the year-round shipment of oil from the Novoportovskoye oil field, as well as commissioning its Yuzhno-Priobsky gas processing plant in Khanty-Mansiysk. The company continues drilling at Prirazlomnoye oil field, increases output. The further steps to prepare the launch of the Messoyakha oil fields have been undertaken. A condensate receiving rack has been commissioned at the Omsk Refinery, and a gas fractionation plant brought into operation at the Moscow Refinery. Gazprom Neft has begun the second stage of a large-scale oil processing plants modernization programme which is aimed to increase the processing depth and yield of light oil products. Results for this accounting period show Gazprom Neft remains one of the oil industry’s leading companies in terms of viability — specifically in terms of net profit, cash flow from operations (CFO), and return on average capital employed (ROACE). Projected assimilation of capital investments throughout the Gazprom Neft Group in 2015 is expected to reach RUB 343 billion.

The Board of Directors also reviewed the company’s budget for 2016. The Gazprom Neft Group investment programme for 2016 provides for investment utilisation in the order of RUB 362 billion, an increase on the anticipated total for 2015. In the context of the company’s long-term strategic development, 2016–2017 will see peak investment in the company’s most significant exploration and production (E&P) projects, with the commissioning of the Novoportovskoye and Messoyakha fields.

The Board of Directors also reviewed data on initiatives directed at reducing environmental impacts from the Omsk and Moscow refineries.

Gazprom Neft refineries are currently undergoing a major modernisation and reconstruction programme, in which environmental projects play an important role, with initiatives to ensure environmental safety currently being undertaken in the following key areas: protecting air quality and the geological environment; industrial waste management; and in the effective treatment and purification of wastewater. Considerable attention is being paid to eliminating so-called “legacy waste” — the treatment of oil-contaminated waste accumulated by enterprises prior to their acquisition by Gazprom Neft.

Environmental emissions from the company’s refineries showed a 34-percent reduction between 2010 and 2015. At the Moscow Refinery this is the result of the reconstruction of facilities producing sulphur and bitumen, the decommissioning of a small bitumen facility, and the decommissioning of old mechanical waste treatment facilities. The Moscow Refinery has also seen the implementation of an automated air-quality control system. Unique among Russian refineries, this system allows real-time information to be obtained on air quality throughout the plant and, with the aid of automated control points, in the surrounding vicinity. A discharge rack for the leak-proof dispensing of bitumens for onward transportation by road and rail has been installed at the Omsk Refinery, and the operation of process furnaces optimised; reservoirs have also been retro-fitted with special pontoons to prevent the evaporation of oil products. Following the introduction of new technological capacity and the implementation of environmentally friendly production technologies, environmental emissions at the Omsk and Moscow Refineries are expected to see a further 32-percent reduction on current levels by 2020.

2015 saw the complete elimination of legacy waste at the Moscow Refinery, while the Omsk Refinery continues its programme of legacy waste recycling — the Moscow Refinery having previously, in 2012–2013, completed the reclamation and restoration of grounds and soil surrounding the plant and located within the Moscow River water conservation zone.

Waste treatment facilities are currently being designed and constructed throughout the company’s refineries, commissioning of which will allow a 1.5-fold to 2.5-fold reduction in water consumption, as well as increasing purification rates to 98–99 percent, and allowing up to 75 percent of water to be returned to the production cycle. Construction of the “Biosfera” complex, including modern biological treatment facilities and a sulphur-alkaline waste treatment plant, was initiated at the Moscow Refinery in 2015, expected to be commissioned in 2017. A range of waste management initiatives are planned at the Omsk Refinery, including the commissioning of new waste treatment facilities in 2018.

Legacy waste will have been completely eliminated throughout Gazprom Neft refineries by 2020, with all facilities fully compliant with the latest standards in environmental protection.

The Board of Directors also considered changes to internal regulation governing the purchase and procurement of imported products, with the company developing internal regulation to allow greater involvement by Russian companies in implementing the company’s projects.

Agreements have now been signed on strategic partnerships with major domestic producers. Gazprom Neft is an active participant in initiatives promoting import substitution, by developing the domestic production of catalysts, compressors and pumps for oil refining, and components for offshore projects; in promoting the construction of offshore drilling rigs and supply vessels; and in promoting the implementation of high-technology drilling services, software development to support oilfield services, and the development of supporting services for shale projects. The company also plans a range of research and development (R&D) initiatives in exploration and production (E&P), allowing the more viable development of unconventional reserves.

Alexei Miller, Chairman of the Gazprom Neft Board of Directors, commented: “Gazprom Neft maintained its leading position within the Russian oil industry throughout 2015, demonstrating record production growth, at 20 percent. We are completely ready to begin year-round oil shipments from the Novoportovskoye field. This is a landmark project which, on completion, will see Yamal emerge as a new oil province. Major development is also expected to commence at the Messoyakha fields next year. Gazprom Neft produced the millionth tonne of oil at the Prirazlomnoye field, consolidating our position on the Russian Arctic Shelf. The company’s refining assets moved on to the second stage of a major modernisation programme, directed at improving refining depth and increasing yield of light oil products. The company continues to pay close attention to the use of cutting-edge technologies, ensuring environmental safety throughout its refining facilities, allowing Gazprom Neft assets to reach international standards not just in refining depth and efficiency, but also in terms of environmental performance, by 2020. The company is steadily moving towards the fulfilment of its key strategic priorities: a key element in ensuring Gazprom Neft’s success here being the establishment and development of domestic technologies in those areas in which the company is most actively engaged.”