Gazprom Neft Board Reviews Refinery Upgrade Program and Petroleum Product Sales in Central Asia

Press-release

The Gazprom Neft Board has reviewed the progress of the company’s oil refineries modernization and upgrade program.

In the recent six years, a large-scale refinery modernization and upgrade program and assets consolidation dramatically increased the Gazprom Neft refineries’ output by over 60% exceeding 39 million tons per year (this does not include the Serbian NIS (open in new window). The Gazprom Neft structure in Russia includes the Moscow Oil Refinery (open in new window) and the Omsk Oil Refinery (open in new window); also Gazprom Neft controls 50% of the Yaroslavl Oil Refinery through Slavneft (open in new window).

This program aimed at improvement in quality of produced motor fuels, is designed to help Gazprom Neft to start, as early as in 2013, a fast-paced production of grades 4 and 5 gasolines and diesel fuels in compliance with Russian technical regulations and European standards Euro-4 and Euro-5. Under the current version of the technical regulations for motor fuels, companies will be allowed to sell grade 3 gasoline and diesel fuel through December 31, 2014. This means that Gazprom Neft has started producing motor fuels meeting the new environmental requirements virtually two years before the deadline set by the Russian Government.

Further modernization efforts will focus on increasing the oil refining depth. Once the program is implemented Gazprom Neft’s refineries will produce more light oil products and less residual fuel oil (the so called „mazut”). By 2020, the company plans to increase the refining depth from 78.6% to 94% and the yield of light petroleum products from 62% to 80%.

Also, the Gazprom Neft Board has reviewed results of the company’s activities on the petroleum products markets of the CIS Central Asian countries: Kazakhstan, Kyrgyzstan and Tajikistan.

The past two years saw more than a 7 times growth of Gazprom Neft’s retail sales in Kazakhstan — from 24 thousand to 172 thousand tons per year while the number of its service station has doubled counting more than forty stations. By 2020, the company expects to take an about 6% of the country’s retail market.

In Kyrgyzstan and Tajikistan, Gazprom Neft holds the leading positions in the retail and small wholesale market segments. In Kyrgyzstan, the company runs 109 service stations and 8 petroleum storage depots; since 2012 the company’s retail sales in the country have grown up by 77%, from 235 thousand to 416 thousand tons per year. In Tajikistan, Gazprom Neft operates 25 service stations and 4 storage depots, holding about 17% of the country’s retail market.

The Board has also heard a report on results of the Gazprom Neft Internal Audit Department for the first half of 2012. In this period, 22 audits were performed to assess efficiency of business processes and financial/economic operations of the company’s divisions and subsidiaries. The auditors’ objectives were, in particular, to minimize risks related to acquisition of new subsidiaries, optimize business processes, and build the internal control system.

The work of the Anti-Fraud and Corruption Hot Line has continued. From the beginning of 2012, this hot line can be used not only by employees of Gazprom Neft and its subsidiaries but third parties (contractors, bidders, service station clients) as well.