Igor Sechin: “Rosneft posted record-breaking production and financial figures for 2013.”
Transcript:
Meeting with Rosneft President Igor Sechin
Dmitry Medvedev: Mr Sechin, could you tell me about Rosneft’s performance in 2013? What were your production and financial successes?
Igor Sechin: Mr Medvedev, 2013 was a good year for our company. We posted record-breaking production and financial figures for 2013. In all, we produced 240 million tonnes of hydrocarbons BOE. This is a very decent result …
Dmitry Medvedev: How does this compare with 2012?
Igor Sechin: We have posted 70%-plus growth on 2012, and I think this is the most impressive result among public liability companies worldwide. Please note that organic growth totaled nine million tonnes, or 4%. It is very important that we are posting production growth not only through the purchase of assets but also as a result of our effective work …
Dmitry Medvedev: Through more intensive work …
Igor Sechin: … at existing fields. Importantly, the geological prospecting projects have provided a 250 million tonne increment. We have discovered six new fields and 70 new reservoirs. We have conducted a vast amount of work on the Russian continental shelf. We have implemented 2D seismic research projects over 31,000 running kilometres, and we have implemented 3D seismic research projects over an area of 2,500 square kilometres. This is an unprecedented amount of work ever performed on a continental shelf.
As for financial results, we paid 2.72 trillion roubles’ worth of taxes and customs duties to the federal budget. And, Mr Medvedev, we hope that this year we will even add some more to this figure in line with your directive. We estimate projected payments at 3.1 trillion roubles.
Dmitry Medvedev: Certainly, we need revenue, and, of course, you are the largest payer in this respect. The current developments are a positive change.
Igor Sechin: In 2013, corporate refineries processed 96 million tonnes. Our current perimeter comprises 18 refineries, including 11 Russian and seven foreign-based facilities, specifically, in Europe, in other post-Soviet republics, the Lisichansk refinery in Ukraine and the Mozyr refinery in Belarus.
Dmitry Medvedev: Is the Lisichansk refinery operating today?
Igor Sechin: We are getting ready to launch the Lisichansk refinery. We are working hard to upgrade it, and we’re planning for it to start operating in summer. Of course, we will have to work on the economic model, and we have a chain of petrol stations there. Mr Medvedev, we will brief you on that.
Dmitry Medvedev: You see, our partners are always asking for specific deadlines. I tell them that Rosneft is sorting things out once and for all. It’ll get everything prepared and the facility will be launched.
Igor Sechin: The refinery had to be upgraded.
Dmitry Medvedev: Yes, that was clear.
Igor Sechin: The refinery was old, it barely worked, and, of course, it required substantial investment to be modernised. We are installing new equipment there, and we will certainly keep you updated on our plans.
Mr Medvedev, I believe it is very important that we managed to obtain 50 new patents last year. In 2013, corporate investment, innovations, as well as investment in innovations and research and development projects, totaled 86 billion roubles.
We are cooperating with the Lomonosov Moscow State University in establishing a 3D geological database, as leading global companies are doing.
Dmitry Medvedev: Incidentally, it would be interesting to see this because I have never seen this 3D technology before.
Igor Sechin: We haven’t got it yet, Mr Medvedev. We don’t have it, but some of the leading companies do. We have taken note of this, and we will work on it.
Dmitry Medvedev: Well, that’s right. Of course you need to do this.
Igor Sechin: We will do the same. We have reached an agreement with the Moscow State University, and their experts are developing state-of-the-art IT systems. I believe that this will be a major step forward.
Well, those are the 2013 results in brief.
Dmitry Medvedev: These are good results, very optimistic overall. I hope that the company will continue to grow and that this will produce a direct result financially. We will now watch a presentation. We spoke about the minority shareholders during the Sochi forum. Have you resolved those issues?
Igor Sechin: Mr Medvedev, your initiative was supported, and 98.23% of all minority shareholders, including international funds, agreed voluntarily to sell their stakes. Clearly, some of them wanted greater profits, but their stakes were purchased at market prices, and everyone was satisfied with them. In all, 98.23% accepted this voluntary offer. Mr Medvedev, acting in line with your directive, we offered Rosneft shares to all former industry workers involved in the IPO of TNK.
Dmitry Medvedev: In effect, you offered to convert TNK shares into Rosneft ones.
Igor Sechin: Quite a few shareholders involved in the IPO agreed with that and they have now become Rosneft shareholders.
Dmitry Medvedev: This is an honourable task because you should not forget about former workers. Good thing you did that.
Igor Sechin: Moreover, we are confident that Rosneft’s capitalisation will continue to grow. As of 24 January 2014, we posted about 18% growth, and we hope to maintain this pace provided that macroeconomic conditions stay the same.
Dmitry Medvedev: This is the first point. Indeed, it’s good that you are posting growth given the current stock market situation which leaves a lot to be desired. Your company is a major indicator of our market’s value.
Igor Sechin: The company is a certain indicator for …
Dmitry Medvedev: It’s a blue chip in the stock market parlance.
Igor Sechin: Yes, a blue chip. Mr Medvedev, we are doing our job, and we are trying to support the stock market, first and foremost in the interests of our shareholders.
Dmitry Medvedev: Good. Thank you.
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