The Company signed a record-breaking number of 58 agreements, out of the 205 contracts for a total amount of USD 293.4 billion signed at the St.Petersburg International Economic Forum. Rosneft also organized of traditional Summit of Energy Companies. Despite the external economic pressure, the agreements signed have expanded the previously reached agreements with Russian and foreign partners and opened new prospects for cooperation within all business dimensions of the Company.
Assessing the results of the forum for the Company Chairman of Rosneft Management Board Igor Sechin said: «St.Petersburg International Economic Forum once again became a successful venue for meeting our partners, finalizing the negotiations, sharing opinions. The total number of signed agreements is 58, some of them have key nature.
The Company agreed to sell a 20 per cent share of Taas-Yuryakh Project for the total amount of USD 750 mln. This confirms the fundamental cost of the Rosneft’s assets and allows compensating part of expenses for consolidation of this project.
The Company is also developing cooperation with the regions of its business activity. In particular, about 20 agreements for implementation of industrial, financial, investment and social programs were signed with the Heads of the regions.
St.Petersburg International Economic Forum once again proved that our partners are oriented for the long-term cooperation with Rosneft within all its business-dimensions. This will certainly have a good impact on the Company’s work and its shareholder value”.
Exploration and production of oil and gas
One of the most important agreements signed at the St. Petersburg International Economic Forum was the signing of the final binding agreements with BP regarding joint venture based on Taas-Yuryakh Neftegazodobycha. Under the Agreement, Rosneft will sell BP 20% stake in Taas-Yuryakh Neftegazodobycha. The venture will further develop the Srednebotuobinskoye oil and gas condensate field which is one of the largest fields in eastern Siberia, currently producing about 20,000 barrels a day. The Taas venture will also undertake the development of suitable infrastructure for further exploration and development of the region’s reserves. Related to this, Rosneft and BP will also jointly undertake the exploration of an associated Area of Mutual Interest (AMI) in the region, covering approximately 115,000 square kilometres.
Also Rosneft and Skyland Petroleum Group signed Heads of Agreement providing for Rosneft’s sale of up to 29 per cent share of Taas-Yuryakh Neftegazodobycha and creation of joint venture for developing Srednebotuobinskoye oil and gas condensate field.
Rosneft and BP have also agreed jointly to explore two additional Areas of Mutual Interest (AMI) in the West Siberian and Yenisey-Khatanga basins covering a combined area of about 260,000 square kilometers. This agreement commits BP and Rosneft jointly to conduct studies and, if successful, establish new joint ventures to obtain licences and perform exploration activities. Any joint ventures will be owned 51 per cent by Rosneft and 49 per cent by BP. As part of this agreement Rosneft and BP will also form a joint venture to carry out further appraisal work on the 2009 Rosneft-discovered Baikalovskiy field inside the Yenisey-Khatanga AMI. Exploration activities in the two AMI will include screening studies, acquisition of seismic data, and drilling of exploration wells as new licences are added.
Rosneft and PDVSA signed a Memorandum regarding joint projects of the two companies in Venezuela. Moreover, the parties confirmed their intention to create a joint venture for gas and condensate offshore production in Venezuela as part of Mariscal Sucre project. The Memorandum also implies the parties’ intention to continue negotiations regarding increase of Rosneft’s stake in PetroMonagas project.
A Memorandum of Understanding was signed between Rosneft and Indonesian Pertamina. The document provides for a joint study of potential areas of cooperation between the two companies, particularly in hydrocarbons upstream in Russia and Indonesia, marketing and logistics (storage, oil and oil products blending), as well as oil refining in Indonesia.
Gas production and supplies
One of the strategic objectives of Rosneft in the area of gas business development is a long-term increase in shareholder value of the Company due to growth in gas production, secured by highly effective long-term sales portfolio.
Within the St. Petersburg International Economic Forum Rosneft and E.ON Russia signed a contract for gas supply. The contract provides for supply of 4.4 bсm of gas within 5 years. This resource will be directed to Surgutskaya GRES-2.
Also Rosneft and EuroChem signed a Memorandum under which the Parties intend to cooperate on the monetisation of hydrocarbon resources within the North-Eastern block of the Rospan East Urengoy licence area. Commercial contracts are expected to be signed for a 10 year period, with first gas shipments of 400 mcm scheduled for 2018.
Moreover Itera, a 100% Rosneft subsidiary signed an agreement with General Electric. The parties agreed to evaluate opportunities for potential cooperation on natural gas processing using GE technology for low-tonnage liquefied natural gas (LNG) production.
In particular, the agreement covers analysis of opportunities to cooperate on establishing LNG production at Bratskecogas assets, as well as potential joint work on deploying GE technology and equipment to boost the company’s efficiency and production capacity.
Rosneft and Alltech Group signed updated commercial parameters for cooperation on the project of the gas fields’ development in the Nenets Autonomous District. These agreements follow the framework agreement signed in 2014. The parties decided to update a range of the deal’s conditions due to significant change of macroeconomic parameters affecting the implementation of the project.
Gas motor fuel
Developing a network of automobile gas-filling compressor stations in Russia is one of the key priorities of Rosneft strategy in the retail business: the use of liquefied natural gas as motor fuel allows consumers to boost the maximal mileage for one gas-tank and considerably cut the negative impact of the motor transport on the environment. The company plans to commission up to 1,000 automobile CNG filling stations by 2023.
Within the St. Petersburg International Economic Forum Rosneft signed 7 agreements:
An agreement with CIMC Enric Holdings Limited. The signed document provides for implementation of joint technical and economic research for construction of infrastructure that will allow using natural gas as motor fuel in Russian Federation as well as switching the vehicle park to this type fuel. The companies also agreed to estimate the possibilities of construction of Rosneft’s filling stations using technologies of CIMC Enric Holdings.
A memorandum with Russian Machines. The MoU envisages joint projects to boost the use of compressed natural gas, or CNG, in vehicles and create CNG filling stations across the Russian Federation. The MoU also stipulates that the parties carry out shared technoeconomic research to create infrastructure and marketing framework for CNG as car fuel.
An agreement with Iskra-Energetika. The Agreement defines the key terms of cooperation in the area of production localization and future equipment supplies, construction and design of gas filling infrastructure facilities. Also, the parties intend to undertake joint technical and economic studies to be used as a basis for specific investment projects.
An agreement with Barrens. The signed document provides for implementation of joint technical and economic research for infrastructure construction. The companies also agreed to estimate construction of Rosneft’s filling stations using Barrens technologies. The signed agreements will synchronize the efforts made by Rosneft and Barrens to expand the use of natural gas as a motor fuel.
An agreement with Tegas. The document establishes procedures and terms of cooperation between the parties as part of measures to expand the use of Tegas manufactured compressor equipment by the Company. The parties also express their interest to join efforts to develop the market for natural gas as motor fuel and coordinate their actions to develop a gas-fueling stations network and expand the natural gas driven fleet.
Rosneft also signed Cooperation Agreements with the Heads of the Ulyanovsk Region and the Republic of Mordovia to expand use of natural gas as a motor fuel. The documents set forth the basic principles of interaction between the parties when implementing joint objectives to substitute gasoline and diesel used by vehicles as motor fuel with a gas motor fuel within the Ulyanovsk Region and the Republic of Mordovia. The Agreements also reflect the mutual interest in development of sustainable and long-term relations.
Oil and oil products supply
Rosneft pursues a policy aimed at balancing the channels of monetization of oil, including export sales under long-term contracts and on the basis of spot sales during the ongoing tenders and domestic sales. The Company plans to increase its presence at the trading market and expand areas of its products marketing.
At the St. Petersburg International Economic Forum Rosneft and PDVSA signed the Term Sheet of the export contract for URALS supplies to the Venezuelan company. The document, computed for 1 year with a three-year-extension option, envisages the joint analysis of Rosneft URALS deliveries for the scope of refining at PDVSA Isla refinery on the island of Curacao.
Rosneft and China National Chemical Corporation (ChemChina) signed a contract for crude oil supplies to the Chinese company. The contract envisages the delivery to China of 200.000 t of crude oil on a monthly basis. Moreover, within SPIEF-2015 Rosneft and ChemChina signed a Memorandum of Understanding regarding the planned purchase by Rosneft of 30% stake of ChemChina Petrochemical Co. Ltd (CCPC).
Another agreement in the area of oil products supplies was signed between Rosneft and the Egyptian General Petroleum Corporation. The signed document envisages cooperation in the area of Gasoil, Gasoline, Fuel Oil, LPG & Bitumen supplies allowing Rosneft to expand its portfolio of products delivered into North Africa.
Rosneft signed agreements for oil product supplies with TMK and Sinara group. The Agreements provide for joint research activities in the area of development, manufacturing, and implementation of high-tech lubricants. Moreover, it is supposed to hold a joint technical audit of equipment in order to reach maximum efficiency in use of the lubricants and production of the new product range.
Rosneft, the Ministry of Transportation and Kasnodar Territory Administration agreed to join efforts for the project “Creation of Dry Cargo Zone in the Sea Port of Taman” under a dedicated nationwide government program “Russian Transportation Network Enhancement for 2010-2020.” The agreement highlights the importance of creating infrastructure inside the port and by its premises, including federal owned facilities, which would allow for transshipment of petrochemical products with the calculated volume of 400,000 metric tons per year.
In order to strengthen its positions in the river transportation market and enhance the efficiency of operations the Russian Joint Venture between Rosneft, Sberbank Investments and Pietro Barbaro S.p.A. signed a legally binding Framework Agreement with regard to the acquisition by the Joint Venture (JV) of Pietro Barbaro Group shipping assets in the Russian Federation (100% share of Prime Shipping group of companies).
Rosneft and Pirelli Tyre S.p.A. signed an Agreement of cooperation in the area of marketing. The Agreement envisages further development of the retail chain of Pirelli products in the perimeter of Rosneft filling stations. Moreover the parties agreed to continue the implementation of the project aimed at the creation of a concept Pirelli flagship tyre-center. The signed document also envisages the joint analysis of possibilities of opening of mobile tyre-changing stations for seasonal use within the Rosneft retail station. The implementation of the terms of the agreement will allow Rosneft to expand the products’ portfolio, proposed within its retail chain. Till the end of 2019 Rosneft and Pirelli are planning to open up to 200 centers in Russia.
Refining
In 2014, refining throughput of both Russian and external assets of Rosneft amounted to 100 million tons, which is a record-breaking achievement. Besides supplying the domestic market with high quality products, one of the key goals of the Company is to make refining a sustainable and long-term profitable business, including that of the refineries abroad. That is why both Rosneft and its JV partner - BP - are implementing an integrated program aimed at increasing efficiency of refining processes, costs decrease for the ROG sites, and development of business in Germany.
Within the Saint Petersburg International Economic Forum, the Parties continued their cooperation and signed a heads of terms to pursue a reorganization of the German Ruhr Oel GmbH (ROG) refining joint venture. The document envisages restructuring the JV by dividing between the parties shares in four refineries and associated infrastructure. As a result of the planned deal Rosneft will double its shareholding the Bayernoil refinery – to 25% from 12.5%; MiRO refinery – to 24% from 12%; PCK Raffinerie – to 37.5% from 18.75%. BP in exchange will consolidate 100% of the equity of the Gelsenkirchen refinery and the solvent production facility DHC Solvent Chemie. The restructuring of Ruhr Oel GmbH will enable Rosneft and BP to re-focus their refining and petrochemicals strategies in Germany.
Another step aimed at strengthening of Rosneft’s positions as an integrated player in Western European energy market is signing of agreement between Rosneft and Total S.A., confirming the execution of a sale and purchase agreement with regard to the 16.67% share in PCK Raffinerie GmbH.
Along with the planned reorganization of Ruhr Oel GmbH, the deal with Total will allow Rosneft to shore up its position in the German market for refined oil products.
Within the SPIEF Rosneft and ChemChina signed a Memorandum of Understanding regarding the planned purchase by Rosneft of 30% stake of ChemChina Petrochemical Co. Ltd (CCPC). The document envisages Rosneft’s analysis of CCPC assets. It is assumed that the paying up of stocks will be performed from proceeds oil supplies to ChemChina. Moreover the signed Memorandum foresees the cooperation in the area of oil, oil products and petrochemical trading, the joint participation if FECPO project realization.
Import substitution
Effective implementation of import substitution program under the conditions of additional external political and economic pressure becomes a determining factor in the development of the market of the Russian products and strategic industries.
To implement the joint strategic projects, development, and implementation of import-substituting technologies in the areas of production operation, Rosneft and Rosatom signed a Cooperation Agreement. Under the Cooperation Agreement Rosneft and Rosatom will develop and approve a Scientific Technical Cooperation Program. To carry out the program the parties plan to exchange information on current and future needs of Rosneft and its subsidiaries in Rosatom’s and its companies’ products and services, test equipment prototypes of products; employ Rosatom’s best companies’ scientific-technical and manufacturing capacity in the interest of research and development.
The parties expressed interest in establishing cooperation in the following areas: exploration technologies and equipment; Arctic off-shore fields operation and support, including ice-breaker assistance by Atomflot vessels to ships and marine hardware during off-shore oil field operations; process control and measurement; energy efficiency; industrial safety and environmental protection.
Regional Cooperation
Rosneft, being one of the largest companies in Russia, always paid attention to developing mutually beneficial relations with the regions of its operation activity. The Copmpany is actively participating in the implementation of social and economic programs. At the St.Petersburg International Economic Forum Rosneft and the Heads of the Russian regions – the Republic of Ingushetia, Murmansk Region, Samara region, Khanty-Mansi Autonomous Area - Yugra, Irkutsk Region, Republic of Kabardino-Balkaria, Yamalo-Nenets Autonomous Area, Magadan Region, Republic of Mordovia, Ulyanovsk region, Krasnoyarsk Territory, Stavropol Territory, Primorsk Territory, Khabarovsk Territory, Saratov region signed Cooperation Agreements.The Agreements provide for the parties’ cooperation in implementing a number of relevant programs including industrial, financial, investment and social ones. Those Agreements will contribute to creating advantageous economic, legal and organizational framework for integrated development of the regions as well as to implementation of the Company’s business activities in the Russian Regions.
Education and Science
The development of its own technology and innovation, as well as scientific knowledge is one of the main factors of competitiveness and key to sustainable development of the Company.
Rosneft , General Electric and Advanced Research and Technology Center signed a Project Agreement for implementation of research and technological work aimed at developing an improved performance heat exchanger for LNG units. The works will be performed by a Rosneft and GE joint venture, Advanced Research and Technology Center and will focus on development of the new or upgrade of the existing technologies as well as on constructing development prototypes of equipment and materials.
As part of the quadruple Memorandum for cooperation in the area of education and science Rosneft, Petróleos de Venezuela S.A. (PDVSA), the I.M. Gubkin Russian State University of Oil and Gas and the Venezuelan University of Hydrocarbons intend to cooperate in the field of education and science, including training specialists for Rosneft's and PDVSA's joint projects at Russian and Venezuelan universities – Gubkin State University of Oil and Gas and Venezuelan University of Hydrocarbons – in 2016-2020 by offering higher vocational education and continuing professional education programs.
Moreover, Rosneft signed an agreement with the National University of the mineral resource Gorny and the St. Petersburg State Marine Technical University. The agreements provide for training on the basis of universities specialists in the areas and subjects demanded by the Company, to conduct fundamental research, R & D and design work and scientific and technical expertise on the basis of contracts concluded with the Company, its subsidiaries and affiliates, and cooperation in the framework of the innovative Development Program of Rosneft. Teachers and experts of these educational institutions will take part in pre-university youth support programs, carried out by the Company in the regions of its presence, especially on the basis of Rosneft-classes.
Rosneft, in turn, will provide students and teachers with the opportunity to take internships, production, pre-graduation and research practice in the companies, allocate corporate scholarships for students and special grants for teachers and researchers. In addition, these higher educational institutions will be assisted in upgrading the academic and educational infrastructure.
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