The Expert Board of Transneft held Its Twelfth Meeting

Nikolay Tokarev, President of Transneft, JSC, who took part in the work of the Board, addressing the meeting, congratulated the participants with the fifth anniversary of the first shipment of  ESPO oil from the port of Kozmino. He said that each increase in the volume of exported oil reaffirms the growing interest of  Asia and Pacific countries in the supplies of high-quality Russian oil brand ESPO.

Speaking about the Company’s Long-Term Development Program, Nikolay Tokarev noted that following the results of discussion of the program in the Government of the Russian Federation, in ministries and departments, as well as on the grounds of public councils and of the open government, the experts unanimously decided that the Long-Term Development Program of Transneft, JSC, was the most substantively elaborated, from among the program submitted for revision in 2014.

In his turn, Ivan Grachev, deputy of the State Duma of the Russian Federation, Chairman of the State Duma Committee on Energy, who attended the meeting, stressed that within the framework of the Long-Term Development Program the Company resolves many complex technical problems by creating its own innovative equipment, localizing in Russia the production of foreign equipment used not only by Transneft, JSC, but by other oil and gas companies.

The meeting was also attended by Mikhail Margelov, (Vice President of Transneft, JSC), Andrey Komarov (Deputy Vice President of Transneft, JSC), Rasim Mingazetdinov (Head of the Strategic Development Department of Transneft, JSC), Natalya Kutsik (Director of the Department of Public Communications of Transneft, JSC), Dmitry Orlov (Chairman of the Expert Board of Transneft, JSC of Transneft, JSC), Dmitry Makhonin (Head of the Office of Fuel and Energy Complex of the Federal Anti-Monopoly Service of the Russian Federation), Aleksandr Bogatyrev (Head of the Department of Oil and Oil Products Transportation of the Ministry of Energy of Moscow Region), Natalya Shulyar (Chief Editor of oil and gas magazine  InfoTEC, Chairmain of the Sub-Committe for Motor Fuel of the Chamber of Commerce and Industry of the Russian Federation) and others.

The Deputy Vice President of Transneft, JSC, Andrey Komarov, in his turn, noted that the key section of the document was the investment program for the period of 2014-2020. In seven years, Transneft, JSC, expects to complete the construction of 2 thous. 300 km of new trunk pipelines; to build 38 pumping stations (PS), 125 tanks. Besides, they plan to build about 3 thous. km of external power supply facilities and overhead lines along the pipeline routes, 9 thous. km of fiber-optic communications lines, as well as construct two railway oil loading racks.

He stressed that within the framework of the Long-Term Development Program, Transneft, JSC, plans to complete a large-scale investment project, the implementation of which is now being pursued under an order of the Government of the Russian Federation. It comes to building the 485 km long Zapolyarye-Purpe transport system, which involves construction of 2 oil pumping stations with throughput capacity of 32 (45) mln tons per year. Besides, Kuyumba-Taishet oil trunk pipeline will be put into operation (length – 700 km, construction of 4 OPS,  throughput capacity – 15 mln tons per year).

Andrey Komarov also informed that in the foreseeable futures there will be completed the works on extension of the ESPO PS, which have been commenced by the Company in 2014 in accordance with an intergovernmental agreement signed between the Russian Federation and the PRC. By progressive stages, in 2017-2019, the ESPO PS will reach its design capacity: 80 mln tons – ESPO-1 (at the section Taishet-Skovorodino) and 50 mln tons – ESPO-2 (Skovorodino-Kozmino).

In turn, the Head of the Strategic Development Department of Transneft, JSC, Rasim Mingazetdinov said that within the framework of the Long-Term Development Program Transneft, JSC will complete the work on construction of the Yug oil product pipeline at the section Volgograd – Novorossiisk (length – 648 km, construction of 3 PS and a railway oil discharge rack, throughput capacity – 6 mln tons per year). Furthermore, they plan to increase the throughput capacity of the Sever oil products pipeline from 8.5 to 25 mln tons per year.

He also informed that to increase the volume of oil products supplied to the Moscow region, the system of trunk pipelines will be reconstructed (length – 85 km, construction of one PS and one  railway oil discharge rack).

It was pointed that the volume of financing of the  Long-Term Development Program of Transneft, JSC, until 2020 amounts to 1,992 mln rubles. The EBITDA profitability without taking into account the investment component, after adjustment for property tax, shall change from 50.5% in 2015 to 52,3% в 2020. At the same time, they are expecting to reduce operating cost by 3.2-3.7 pct per year, capital cost, by 1.1-3.7 pct per year. Cost saving until 2020 will be about 68 bln rubles.

The Head of the Strategic Development Department also informed that the said calculations have been effected in the prices of 2014, taking into account the historical data of 2011-2013. The data for 2011-2014 show almost 25 pct reduction of specific costs, during the last years, in the sector of oil transportation, which is the result of measures implemented under the instruction of the President of the RF dated April 2, 2011. With due consideration of the results obtained in recent years, a drastic reduction of costs will lead to multiple times greater expenditures for elimination of accidents consequence and restoration of the production capacity.

The oil freight turnover in the period from 2014 till 2020 will increase from 1 mln 143.8 thous. ton per km to 1 mln 210 thous. ton per km. Oil production transportation volumes will increase from 38.1 mln ton to 58.9 mln tons.

Rasim Mingazetdinov especially emphasized that, for the period till 2020, the Company puts before itself the goal of cutting the reduced accidents rates at trunk oil and oil product pipelines by more an 20 pct. Discharge of insufficiently treated wastewater into surface water bodies will be completely excluded; the volume of emissions of pollutants into the atmosphere will decrease by 44.5 thous. ton (from 96.9 thous. tons in 2014). Specific power consumption for oil transportation will decrease as well.

By 2020, the share of Russian equipment in the structure of the Company’s procurements will increase by 97 against the current level. Actually, the share of domestic production in the equipment procurements is 90 pct.