Message from the Chairman of Rosneft’s Board of Directors

Gerhard Schroeder

Gerhard Schroeder

Chairman of Rosneft’s Board of Directors

Dear shareholders and investors!

As Chairman of the Board of Directors, I pay special attention to the Company’s strategic priorities and their implementation. In 2018, the Company continued to pursue the Rosneft-2022 Strategy. The strategy is aimed at qualitative changes, first of all, through mainstreaming new technologies in all areas of operations: from upstream to downstream.

Last year, the Company’s Technology Council, a consultative and advisory body designed to facilitate the implementation of the Strategy, held its first meeting. Rosneft continues to give considerable attention to the security matters, introduction of the best risk management practices and training methods for the Company’s employees and counterparties.

Sustainable development is one of the Company’s strategic priorities. In this light, the approval of the strategy by the Board of Directors as it pertains to the commitment to the 17 UN sustainable development goals was an important milestone for Rosneft in 2018. The Strategy identified five priority goals, the achievement of which is contributed by the Company in the course of its activities. Rosneft’s focus is turned towards rational development of natural resources. The Company implements large-scale oil and gas production projects, upgrades producing and refining capacities so as to reduce the environmental impact and manufacture modern, environmentally friendly fuels.

Since the Company’s primary focus is placed on the corporate environmental responsibility, Rosneft-2022 Strategy provides for the delivery of superior performance in minimizing environmental impact and bolstering the eco-friendliness of production. By the end of 2022, Rosneft intends to enter the first quartile of international oil and gas companies in HSE terms. Developing ecological programs adds to the investment appeal of the Company and serves as an important indicator for investors.

In 2018, the Company’s strategic shareholder structure was finalized, with the State having an over 50% stake and still being the controlling shareholder and the primary beneficiary of the dividends paid, while partners from the Qatar Investment Authority (QIA) increased their direct shareholding to 18.93%, becoming the second largest strategic shareholder after BP (19.75%). The switch to the direct holding system indicates that QIA trusts in the development direction chosen by the Company and considers its investment attractive.

Rosneft’s investment appeal also relies on the Dividend Policy, which stipulates that the payments shall be made twice a year and make up at least 50% of the net profit under IFRS. In H1 2018 alone, RUB 155 bln were paid out as dividends, almost 1.4 times higher than for the whole of 2017. Successful annual results will also promote higher final dividends, significantly increasing the returns of shareholders.

As a citizen and former chancellor of Germany, I have a keen interest in tracking Rosneft’s advances in the German market. Over the past year, the Company has gained an increasingly strong foothold there: it managed to assemble a professional international team of specialists, streamline key business processes, and create an own client base in Germany and neighboring countries. Also in 2018, Rosneft Deutschland began selling bitumen, which was delivered to more than 130 German companies. In addition, since 1 January 2019, the Company has stepped up to the direct sales of petroleum products in the domestic market. I am sure that the adopted strategy will be instrumental in further promoting Rosneft’s business in the European market.

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