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Russia’s oil major RussNeft adopts development strategy

June 26, 2012, 14:05 UTC+3

RussNeft’s debt in the first quarter of 2012 decreased from 5.06 billion U.S. dollars to 4.96 billion U.S. dollars

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BETHLEHEM, June 26 (Itar-Tass) — Russia’s oil major RussNeft has adopted a development strategy featuring more than 500 million U.S. dollar investments, RussNeft CEO Mikhail Gutseriyev said on Tuesday.

“The year 2017 – all debts repaid, annual oil output of 18 million tons, annual investments of at least 500 million U.S. dollars,” he told journalists.

In the meantime, RussNeft’s debt in the first quarter of 2012 decreased from 5.06 billion U.S. dollars to 4.96 billion U.S. dollars. The bulk of the sum is the debt to Russia’s Sberbank.

“Minimal capital expenditures and maximal output, with the oil price of 90 U.S. dollars per barrel, will make it possible to repay the entire debt by 2017,” he said. In his words, debts to Sberbank will be paid off by 2015, and to Glencore – by 2017. This is quite possible, he said, in case “there is no stock conversion, exchange, or sales and the company follows its existing development pattern.”

The company, he noted, plans to invest to individual fields and high-productive wells. The company’s annual oil output went up from 11.8 million tons two years ago to 14.1 million tons it plans to reach by the end of the current year.

Speaking about the company’s financial standing, Gutseriyev noted that RussNeft debts will decrease to 4.3 billion U.S. dollars by the end of 2012. In the past two years, he said, the debt went down from 6.5 billion U.S. dollars to 4.9 billion U.S. dollars at the beginning of 2012.

The development strategy however provides for purchase of no new assets. “There are no financial possibilities to buy assets till 2015, when we plan to pay off our debts to Sberbank, later on we will be able to borrow more from Sberbank,” he said.

When asked whether Glencore shares in RussNeft’s subsidiaries could be converted into RussNeft shares, Gutseriyev said it was the question of the price. “If we are offered a good price, I am ready to sell them right away, even to exchange. So far, no one has offered such price,” he added.

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