AMID THE GLOBAL MARKET CRISIS, DUE TO HYDROCARBONS PRICE DOWNTURN WE FACED CHALLENGES OVER THE PAST YEARS.Igor Sechin
NEVERTHELESS I’M PROUD TO SAY THAT THE COMPANY GOT THROUGH THE MARKET VOLATILITY».
From the report to Vladimir Putin,
the President of the Russian Federation,
Moscow, March 28, 2016
2015 marked a historical milestone for the world’s oil and gas industry with the unprecedented “perfect storm” in the global markets that contributed to uncertainty for leading hydrocarbon producers. I would like to highlight that Rosneft not only survived this challenging year but also demonstrated a steady growth in the key operating and financial items against the backdrop of unparalleled price volatility.
Rosneft set another record in hydrocarbon production of more than 254 mmtoe in 2015. We remain the largest public oil company. That achievement was also driven by the implementation of our large-scale strategy to develop our own high-tech services division in order to guarantee fulfillment of production plans and create a competitive environment in terms of pricing and quality of the services. The Company’s own drilling fleet grew more than three times to 223 units which helped us to complete more than half of our scope development using own resources in 2015.
The Company is continuing to successfully develop the Sakhalin shelf. In 2015, jointly with our Sakhalin-1 partners, we surpassed our record by drilling the world’s longest well, stretching
13.5 th. meters, using a unique drilling rig.
Performance of our Upstream business is confirmed by another record — in 2015 we managed to significantly reduce the production cost from 3.9 $ /boe to 2.6 per boe.
Rosneft robustly reinforces its positions in the Russian gas market, having increased gas production by 10 % to 62.5 bcm in 2015.
I would like to emphasize that our significant achievements in hydrocarbon production are coupled with strong reserve replacement performance, this ratio having been substantially above 100 % for over ten years.
Importantly, the Company lives up to its debt commitments in the unstable global environment.
In 2015, we managed to reduce Rosneft net debt in dollar terms by 47 % year-on-year.
Negative changes in oil prices considerably impacted the competition in the industry. However,
I can assure you that Rosneft management will make every effort to protect the interests of its shareholders. Our goal is not only to preserve, but also to expand our presence in our traditional markets. We signed a series of oil supply contracts with our Polish partners in late 2015 and early 2016. These agreements confirm Rosneft’s status as a leading oil supplier for major European consumers. At the same time Rosneft increases its presence at the growing Asia-Pacific markets: record contracts with our Indian partners have been signed, number of Chinese customers has been increased.
Our achievements are important because they not only demonstrate the performance of the Company’s main asset — which is our people — but also re-confirm the Company’s commitment to its strategic goals.
By implementing our investment program we are ensuring meeting our long-term oil supply contract obligations to our partners, we are maintaining Rosneft’s leading positions in the market. We are also generating solid cash flows supporting the Company’s stability, replenishing the state budget and achieving positive social and economic effect in the regions of operation. Therefore,
we will continue to intensify our investment in hydrocarbon production and increase financing by more than one third in 2016. Rosneft is a driver for the Russian economy.
In 2015 the Company made sales of USD 45.5 bln which significantly supported the currency market of the Russian Federation and stability of the national currency rate. The cost of Rosneft share price in ruble terms increased by almost 30 % in 2016, Company management will continue to implement a strategy aimed at reinforcing our economic, technology, and professional competencies so that our country can take its rightfulplace as a leader in the new economic order.
Current global turbulence in markets provides opportunities for growth, and I am confident that Rosneft’s highly professional team will be able to efficiently capitalize them!
the Chairman of the Rosneft