Gazprom Neft Board of Directors reviews preliminary results for 2017 and plans for 2018

25 December 2017

22 December — Gazprom Neft’s Board of Directors has reviewed the provisional outcomes of the company’s investment programme and budget for 2017, as well as plans for 2018.

2017 production volumes at Gazprom Neft are expected to reach 88.8 million tonnes of oil equivalent (mtoe), a 4.2-percent increase on 2016. Annual refining volumes are provisionally estimated at 39.7 million tonnes — optimum refinery throughput having delivered maximum profitability under current market conditions. Sales of premium oil products are expected to be in the order of 25.6 million tonnes, a two-percent increase on 2016.

The development of major new projects in the Arctic — the Novoportovskoye, Vostochno-Messoyakhskoye and Prirazlomnoye fields — delivered the greatest contribution to production growth in 2017. A number of key projects directed at developing the company’s resource base were also implemented, and included the discovery of the major new offshore Neptune field at the Ayashsky licence block in the Sea of Okhotsk, and the procurement of development rights to the Tazovskoye and Severo-Samburgskoye fields in Yamal. Gazprom Neft this year also acquired a 25.02-percent interest in Evrotek-Yugra (owner of seven licences in the Khanty-Mansiysk Autonomous Okrug) from Spain’s Repsol, ensuring the company’s further development in that region.

2017 saw the continuation of the second phase of Gazprom Neft’s full-scale modernisation of its refining facilities, with the company undertaking the full reconstruction of the cat-cracking facility at its Moscow Refinery. Construction of a Euro+ combined oil refining unit (CORU) has entered the final stage, with the complex expected to be completed in 2018. Construction of deep refining complexes has also started at the Omsk Refinery and the Pančevo refinery, Serbia. The Downstream Efficiency Control Centre, directed at improving efficiency and unique to the industry, went into operation in St Petersburg.

The most important environmental project in under Gazprom Neft’s refinery modernisation programme in 2017 concerned the “Biosfera” wastewater treatment project, with the company completing construction of biological treatment facilities at its Moscow Refinery, and commencing construction of a wastewater treatment in Omsk.

Provisional estimates suggest retail sales through the Gazprom Neft filling station network increased by approximately 5.2 percent on 2016 results, with sales of aviation fuels and bitumens also up and the company commencing sales of lubricants in new markets, including abroad.

The company’s total investments in 2017 are expected to reach RUB385 billion, as planned. Gazprom Neft’s year-end results show it remains an industry leader in terms of its consistently improving financial performance, as well as in terms of its effectiveness and efficiency, demonstrated by its net profit and return on average capital employed (ROACE).

The Board of Directors also reviewed the company’s budget for 2018, with the company’s investment programme next year expected to be maintained at the same level as in 2017, and most capital outlay expected to be made in the continued development of new upstream projects, and the construction of new production complexes at the company’s refineries.

Alexey Miller, Chairman of the Gazprom Neft Board of Directors, confirmed: "Gazprom Neft has consolidated its leading position in Russia’s oil industry, with the company demonstrating a high level of business efficiency, together with consistent and sustainable growth in key financial and operational metrics. Major projects are being undertaken, cutting-edge production and refining technologies are being implemented, and digital solutions — unique to the industry — are being developed.

"The successful implementation of projects such as creating technologies to develop the reserves of the Bazhenov Formation, and producing catalysts for secondary refining processes represent a major investment in ensuring the technological autonomy and independence of Russia’s oil industry, as a whole.

"The full-scale modernisation of the company’s refining facilities in Russia and Serbia is ongoing, sales of oil products through the retail network continue to increase, and we are consolidating our position in the aviation fuels, high-technology lubricants and bitumens markets.

“We have every confidence that next year, too, will see Gazprom Neft continue its consistent progress towards achieving its designated strategic objectives.”