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Rosneft plans to increase oil refining in 2017

June 22, 13:54 UTC+3

Russia’s top oil producer Rosneft will present its new development strategy Rosneft-2022 by the end of this year

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© Vitaliy Belousov/TASS

SOCHI, June 22. /TASS/. Rosneft expects its oil refining to grow by 20 mln tonnes more in 2017, Chief Executive Officer of the Russian oil major Igor Sechin said on Wednesday.

"We will add 20 mln tonnes more to refining this year on account of entering Essar project," he said at the meeting of shareholders. 

Rosneft has completed legally warranted entrance into Indian Essar’s capital, he said. "The legally warranted entrance of Rosneft to Essar’s capital was officially registered yesterday," he said.  In October 2016, Rosneft signed an agreement to acquire a 49% stake in Essar Oil Limited (EOL). As a result of the acquisition, Rosneft will receive a stake in a modern oil refinery in the Asia-Pacific region in Indian Vadinar with integrated infrastructure.

"We generally assume the price of $40 per barrel, probably slightly higher in 2018," Sechin said.

 Advanced exploration methods will make possible to increase onshore exploration success of Rosneft to 95%, the company said. "Onshore exploration success to grow to 95% on account of state-of-the-art exploration methods," Rosneft said.

"The approved investment program for 2017-2018 implies that investment will exceed 1 trillion rubles ($16.7 bln), with new projects accounting for more than a half of it," he said, adding that Rosneft’s capex in 2017 seen at 1.066 trillion rubles ($17.8 bln).

Later First Vice-President Pavel Fyodorov said that "the company plans this year’s (investment - TASS) at slightly more than 1 trillion rubles," adding that "the money flow and accumulated reserves are the main source of funds."

Earlier the company said 0.6 trillion rubles ($10 bln) would be spent on exploration and production projects, and another 0.2 trillion rubles ($3.3 bln) - on refinery, commerce and logistics in 2017-2018.

New development strategy

Russia’s top oil producer Rosneft will present its new development strategy Rosneft-2022 by the end of this year, he went on. 

"The new strategy until 2022 that will be drafted by the end of this year, will contain the company’s key priorities," he said, adding that the strategy will raise capitalization by 25-30% versus current market value. "The implementation of the development strategy Rosneft-2022 in full will allow the company to enhance long-term competitiveness in all key areas, increase annual oil production at the level of extra 30 mln tonnes, and create 25-30% of Rosneft’s capitalization versus the current market value," he said.

Rosneft supports the initiative to raise dividend payment to 50% of net profit and plan to submit its dividend policy vision to the government shortly, according to Sechin. "We will submit this proposal to the government in the near future," he said, adding that the move will also raise the company’s capitalization.

"We see our strategic goal in the midterm is to bring the share of oil and gas chemistry to 20% of total refining facilities," Sechin said. Investments will be implemented using project financing, he added.

Rosneft will submit its dividend policy vision to government shortly, Sechin said. 

Dialogue with OPEC

Rosneft welcomes the Energy Ministry’s dialogue with the OPEC nations on crude output cut, the company is ready for any scenario. 

"We welcome the dialogue between Russia’s Energy Ministry and leading oil-producing countries and OPEC," he said, adding that it has driven up oil prices. However, Sechin added, the company will monitor the situation and is ready for any scenario.

According to CEO, Rosneft will take decisions regarding a number of its new projects assuming that the participants of the deal comply with the reached agreements. "We will ensure production in volumes efficient for our consumers," he said.

Bashneft’s integration into Rosneft

The effect of Bashneft’s integration into Rosneft structure has already reached 40 bln rubles ($670 mln) in 2017, he went on. 

"In the first two quarters of 2017 alone, the synergy effect of Bashneft’s integration (into Rosneft - TASS)has exceeded 40 bln rubles," he said.

In 2016, Rosneft acquired 50.08% of Bashneft's shares for 329.7 bln rubles ($5.7 bln). Later, after Rosneft made an offer to minority shareholders, it took control of 57.7% of Bashneft's authorized capital.

Gas production

Rosneft expects average annual gas production growth to be 10%, Sechin said. 

"Significant gas reserves and highly efficient portfolio of projects will make possible to continue proactively increase gas production with the average annual growth rate of 10%," Sechin said. Production on Rospan gas project of Rosneft can be 20 bln cubic meters in 2019, the top manager said.

Rosneft plans to produce 20 bcm of gas at Rospan projects in 2019, he added. 

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