Gazprom Neft’s Board reviews the interim results of the company’s 2020 investment programme
The Gazprom Neft Board of Directors has reviewed the interim results of its 2020 investment programme, the company’s budget for 2020, and future plans
Gazprom Neft’s total 2020 hydrocarbon production is expected to reach 95.7 million tonnes of oil equivalent (mtoe). Provisional estimates indicate annual refining volumes of 40.1 million tonnes, and sales of premium petroleum products at 23 million tonnes. The challenging macroeconomic situation resulting from the COVID-19 epidemic, lower oil prices, and reduced demand for petroleum products notwithstanding, the company’s key performance indicators have ensured it maintains its market-leading position in Russia’s oil industry.
The main contribution to the company’s production data in 2020 came from higher production at the Novoportovskoye field in the Orenburg Region, at oil-rim development projects, and at Arcticgas fields. The company acquired subsoil usage rights to three new license blocks, as well as increasing acreage at 11 blocks in the Yamalo-Nenets and Khanty-Mansi Autonomous Okrugs.
Gazprom Neft continued its proactive development of joint projects with partners throughout 2020. The company reached an agreement with Shell on expanding development of the Salym group of fields at the start of the year, and in December established a joint venture to develop a major hydrocarbon cluster in the Gydan Peninsula. A transaction was concluded with LUKOIL and Tatneft to establish a business to develop technologies for hard-to-recover-reserves in the Orenburg Region, and a similar business established in partnership with Zarubezhneft to develop hard-to-recover-reserves in the Khanty-Mansi Autonomous Okrug.
Gazprom Neft continues to implement the full-scale modernisation of its refining assets, with the Moscow Refinery commissioning its unique EURO+ oil refining complex — the first oil refinery in Russia to cover the full production cycle, from primary refining of crude oil to manufacturing of petroleum products — in July. A “deep refining” complex, based around delayed coking technology, was commissioned at subsidiary NIS’ Pančevo refinery in November 2020, allowing the conversion factor (refining depth) to reach a record level — of more than 99% — while increasing production of diesel fuel by almost 40%.
The decline in demand for petroleum products under the constraints arising from the COVID-19 pandemic notwithstanding, Gazprom Neft has maintained its market share in premium sales channels. Q3 2020 saw the company produce its millionth tonne of innovative bitumens since launching commercial production of this product. In line with new international MARPOL Convention requirements the company increased its production and sales of environmentally friendly marine fuels, with the Omsk Refinery starting production of a new, proprietary low-sulphur fuel in 2020. Construction of Gazprom Neft’s LNG bunkering vessel is coming to an end, with the vessel expected to begin refuelling ships with environmentally friendly LNG fuel at Baltic Sea ports as soon as 2021.
Gazprom Neft’s 2020 investment programme is expected to reach ₽381 billion, with the company planning to maintain its 2021 investment programme at the same level. The greater part of this will be invested in developing upstream, technology, and resource-base development projects, projects to increase refining depth, construction of a catalyst production facility, construction of a high-quality base-oil production plant in Omsk, and other projects.
Alexei Miller, Chairman of the Gazprom Neft Board of Directors said: “Gazprom Neft continues to develop its business in line with the strategic objectives adopted by the Board of Directors. In response to the challenges of 2020 the company has implemented a range of highly effective initiatives in battling the COVID-19 pandemic, ensuring continuous production and employee safety are maintained. In the face of a challenging macroeconomic environment Gazprom Neft has maintained its financial sustainability while continuing to implement major projects in production and refining. The company is developing new Arctic fields, preparing new categories of reserves for development, modernising refining facilities and successfully competing in all sectors of the petroleum products market. In a very challenging 2020 Gazprom Neft has proved the stability and efficiency of the company’s production and organisational systems, meaning we can look to the future — even under continued high market uncertainty — with confidence.”
