JSC Gazprom Neft Board of Directors reviews business development strategy

JSC Gazprom Neft Board of Directors reviews business development strategy

The JSC Gazprom Neft Board ofDirectors has reviewed information onits petroleum products quality-improvement program, throughout the company’s refineries. Following wide-ranging modernization all JSC Gazprom Neft facilities have (from 2013, significantly ahead ofRussian Federation government deadlines) switched tothe production ofEuro 5ultra-low-sulfur (ULS) fuels. Total investment inthis program since 2007 stands atRUB65billion.

The next stage ofthis modernization program will focus onimproving the depth ofrefining. Expected torun to2020, this program envisages the construction ofsix new plants and the reconstruction ofthree pre-existing facilities, with total investment estimated atRUB170billion. Depth ofrefining atJSC Gazprom Neft facilities isexpected toincrease from 80to94percent, with production oflight petroleum products growing from 69.1 to80.6percent.

The Board ofDirectors has also reviewed recent results and current strategy onthe development ofits international business. The JSC Gazprom Neft portfolio currently includes more than 20international projects, with the company engaged ingeological exploration and development inAngola, Bosnia and Herzegovina, Hungary, Iraq, Romania, Serbia and Venezuela, while continuing toinvestigate other new and viable EP opportunities inthe Middle East, Africa, and the Balkans.

Refining outside ofRussia isundertaken atfacilities inSerbia and Belarus.2014 should also see the company enter the South—East Asia market. International refining assets allow access topremium markets inother countries, supplies towhich would not beviable from Russian refineries. Increasing sales volumes and the further extension ofthe company’s geographic presence through its own high-margin retail channels (its filling station network, the wholesale and retail sale ofkerosene and marine fuels, and the sale oflubricants and bitumen products) also remains astrategic objective for the development ofthe company’s international operations.

Results ofthe company’s activities inthe petroleum products markets ofCentral Asia (Kazakhstan, Kyrgyzstan and Tajikistan) were also presented tothe Board ofDirectors for their review.

The rate ofbusiness growth in2013 exceeded planned targets cited under the company’s Development Strategy. Total retail sales through the company’s filling station networks inKazakhstan, Kyrgyzstan and Tajikistan in2013 are expected tobeinthe order of833,000 tons— anincrease of23percent onthe 677,000 tons sold in2012.

The company’s assets asatend-2013 are expected toinclude 54filling stations and one storage facility inKazakhstan, 110 filling stations and one storage facility inKyrgyzstan, and 25filling stations and one storage facility inTajikistan. Onthat basis, JSC Gazprom Neft’s market share inretail sales ofpetroleum products stands atsix percent inKazakhstan, 17percent inTajikistan, and approximately 72percent inKyrgyzstan.