In accordance with the recommendations of the Code of Corporate Governance, matters concerning the strategic development and priority areas of activities of Gazprom Neft PJSC are considered at in-person meetings of the Board of Directors.
The Board of Directors considered the following issues in strategic and investment planning in 2016:
- The implementation of the Gazprom Neft PJSC Development Strategy until 2025.
- The resource base development strategy of Gazprom Neft PJSC.
- The Gazprom Neft PJSC development programme on the shelf of the Russian Federation.
- The international business development plans of Gazprom Neft PJSC.
- The effectiveness and prospects of activities in small wholesale and retail segments for the sale of petroleum products.
- The implementation of the Investment Programme based on the Company’s performance results in 2015 and its implementation in 2016.
- The preliminary results of the implementation of the Gazprom Neft Group’s Investment Programme and Budget for 2016.
- The future plans for the development of raw materials processing capacity in the current economic conditions.
- The Gazprom Neft Group’s procurement activities in the changed market conditions and measures to minimise the share of import procurements.
- The status and prospects for the development of the exchange trading of Gazprom Neft PJSC oil and petroleum products on the Russian market.
- An analysis of the development of new energy and transport technologies and their impact on the future of the oil and gas industry.
The Board of Directors took under advisement information about the implementation of the Gazprom Neft PJSC Development Strategy. The existing Gazprom Neft PJSC Development Strategy until 2025 was approved by the Board of Directors in 2013 and updated in 2016 as regards the reserves target. The Gazprom Neft Board of Directors has approved the Company’s main priorities for the development of the resource base for the next five years. The primary objective in this area is to provide Gazprom Neft with resources to achieve its strategic goal of reaching production of 100 million tonnes of hydrocarbons per year by 2020 and maintaining this level after 2020.
The Gazprom Neft Board of Directors considered information about the implementation of the Company’s investment programme on two occasions in 2016. The investment programme aims to achieve the company’s medium- and long-term goals and is implemented taking into account previously approved plans. The Gazprom Neft Board of Directors decided to maintain the Company’s investment programme for 2016 at the level approved a year earlier.
The Company’s development programme on the Russian shelf was also submitted to the Gazprom Neft Board of Directors for consideration. In recent years, Gazprom Neft and its subsidiaries have carried out extensive work to confirm the cost-effectiveness of offshore projects that fall within the Company’s jurisdiction. The research conducted by the Company confirms there are prospects for increasing commercial hydrocarbon reserves by continuing geological exploration work on the shelf of Russia’s Arctic and also confirms the feasibility of the effective development of offshore fields.
The Board of Directors considered information in 2016 about plans to develop the international business of Gazprom Neft. At present, the Gazprom Neft portfolio includes over 20 projects involving the exploration and production of hydrocarbons, oil refining and the sale of petroleum products outside of Russia.
In an effort to achieve the goals envisaged in the Company’s long-term strategy, Gazprom Neft is considering options to further develop and improve the efficiency of existing foreign projects as well as the possibility of joining new oil production and refining projects. The feasibility of attracting foreign partners for joint work in Russia is also under consideration.
The Gazprom Neft PJSC Board of Directors took under advisement information about the Gazprom Group’s procurement activities in the changing market conditions and measures to minimise procurements of imported goods. Gazprom Neft is committed to providing comprehensive support to domestic producers in helping them to develop new types of products and technologies and promotes the development of a national production base and network of suppliers. When choosing services and equipment to implement its projects, the Company gives preference to goods, work and services of Russian origin. More than 90% of the funds that Gazprom Neft spends on procurements go to Russian contractors. The Company is also actively involved in the work of intersectoral groups to support initiatives associated with the establishment of joint ventures and the localisation of production capacity as well as the research and development work of leading foreign producers working in Russia.
The Gazprom Neft Board of Directors considered information in 2016 about the development of new energy and transport technologies and their potential impact on the future of the oil and gas industry. In particular, a presentation was given of the most significant technologies and trends that could influence the global energy balance, including gas production from hydrates, technologies that increase the efficiency of internal combustion engines, the development of the electric and unmanned vehicle segments, alternative generation and the use of natural gas in the transport sector. Supply and demand development scenarios are the basis for Gazprom Neft’s long-term development strategy. The company will continue to regularly monitor how technologies develop in the energy sector and related industries and analyse the appropriate risks and business opportunities.