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Gazprom Neft’s Board of Directors Reviews 1H 2013 and Full year Results


Gazprom Neft’s Board of Directors has reviewed the performance of the company’s investment programme in 1H 2013. The investment programme runs in accordance with the previously approved plans to meet the company’s medium-term and strategic objectives. Gazprom Neft remains an industry leader in terms of efficiency based on operating profitability, return on invested capital and operating cash flow per barrel of oil equivalent.

Gazprom Neft produced 30.61 million tonnes of oil equivalent in the first six months of 2013, a 3.7% increase from 1H 2012/The company is among the industry leaders in terms of production growth. Total refining throughput was 21.19 million tonnes, almost flat compared with the previous year. Average sales per petrol station in Russia rose 9% to 18 tonnes per day. Revenues and EBITDA in 1H 2013 were boosted by higher hydrocarbon production and petroleum product sales through premium channels, rising 1.8% to RUB 590.72 billion and by 0.9% to RUB 150.57 respectively, from the previous year.

The Board has approved an adjusted capex programme for 2013, increasing it by 0.6% to RUB 245.5 billion. This increase is based on higher investment in upstream and downstream than previously planned, and the redistribution of funds between different projects.

The increased investment in upstream is partly due to a higher number of wells drilled and a doubling of the number of more expensive horizontal wells. 186 wells were drilled, compared with the 90 wells planned previously. The company’s major projects this year have included its first ever four-shaft well and the completion of eight-stage fracking. By broadening its use of new technology and working with hard-to-recover and non-conventional reserves, Gazprom Neft expects to bring up to 300 million tonnes of additional reserves on stream, from reserves previously considered unprofitable. The company has increased investment in its assets in Orenburg region, where there has been a steady growth in hydrocarbon production.

Investment in downstream is aimed at raising the quality of fuels produced and improving refining depth at the company’s refineries. Specifically, the Moscow refinery has launched a light naphtha isomerisation unit and a hydro-processing facility for catalytic gasoline, and has refurbished a diesel hydro-processing unit. These projects have enabled the Moscow refinery to switch to producing Euro-5 standard products, significantly ahead of schedule. Gazprom Neft has thus completed its transition to produce fuel that meets the highest ecological standards at all of its sites.

The Board of Directors also reviewed the work of the company’s internal audit department. 19 audits were conducted in 1H 2013, 12 of which assessed business process efficiency at the company and its subsidiaries.