Business model

ADVANTAGES OF BUSINESS MODEL

UNIQUE FEATURES OF ASSETS

IMPLEMENTATION OF STRATEGY

Ensuring efficiency in volatile market conditions

STRATEGIC GOALS FOR 2025

Major progress towards achieving our goals
BALANCED PORTFOLIO OF PRODUCTION ASSETS

Gazprom Neft’s portfolio includes conventional and offshore oil as well as oil and gas fields in different stages of development ranging from exploration to mature fields in Russia and abroad, which enables the Company to increase production in an effort to maximise profit based on market conditions.

RESERVES Per PRMS-SPE standards.
1,514 mn toe
1,500 mn toe PROVEN RESERVES
Maintained the level of hydrocarbon reserves due to revision and successful geological exploration
PRODUCTION
86.2 mn toe
100 mn toe per year
Record growth of 8.2% among Russian companies due to the commissioning of the Novoportovskoye and Messoyakha fields, growth in output at the Prirazlomnoye field as well as the increased yield of mature fields thanks to the use of production intensification technology and the integration of HTRR (hard-to-recover reserves).
MODERN, EFFECTIVE OIL REFINERIES IN RUSSIA AND ABROAD

An advantageous location, modernized facilities and ongoing projects to improve operating efficiency ensure a high level of oil refinery efficiency

REFINING At oil refineries in Russia.
38.66 mn t
40 mn t of oil at Russian oil refineries
81.8% – refining depth
64.4% – yield of light petroleum products
Implementation of the second stage of an ambitious project to modernise Gazprom Neft oil refineries to enhance oil refining depth and increase the yield of light petroleum products.
Direct sales network in 32 Russian regions and 10 countries

Having a large sales network in Russia and around the world allows for maximising the margin from the sale of oil and petroleum products to a wide range of customers – from retail consumers to major traders

SALES
22.7 mn t of oil 43.6 mn t of petroleum products
100%
Despite the negative market dynamics, Gazprom Neft maintained and increased its share on virtually all premium markets in Russia enabling the Company to retain its previous level of petroleum product sales. An increase in oil sales volumes from its own and purchased resources ensured profit growth in this segment.
 
ADJUSTED EBITDA
RUB 456,198 mn (+12.7%)
 
Rapid response to changes on the oil and petroleum product market as well as high efficiency in each business segment enabled the Company to generate record adjusted EBITDA for the last 5 years.

Implementing the plans outlined in the Strategy until 2025 is designed to create the greatest added value on the invested capital of shareholders in the oil and gas industry of the Russian Federation.

CREATING VALUE FOR STAKEHOLDERS

SHAREHOLDERS AND INVESTORS
VALUES

Long-term growth in the Company’s value and a high level of dividend yield.

HOW WE DO IT
  • Constant communication with investors, shareholders and analysts to support a fair price for the Company’s securities.
  • Development of a corporate governance system that balances compliance with the best Russian and international practices with a high level of industry specificity.
  • Information transparency in covering the results of the development strategy.
  • Equitable dividend policy.
  • Observance of minority shareholder rights.
  • Continuous development of a risk management system with a detailed elaboration of responsibility.
RESULTS
  • Fair share valuation: quotes of RUB 215 per share as of 31/12/2016 with a consensus forecast of RUB 233.5 per share.
  • Dividends of at least 15% of consolidated IFRS result or 25% of RAS net profit.
  • Total shareholder return of 40% for 2016.
CONSUMERS AND CUSTOMERS
VALUES

Good availability and a stable supply of petroleum products with excellent consumer and environmental properties.

HOW WE DO IT
  • Direct sales to corporate clients through the Company’s own distribution network.
  • Network of GazpromNeft petrol stations and a loyalty programme.
  • Partnership with leading automakers.
  • Enhanced environmental classes of products.
RESULTS
  • Leading positions on premium markets.
  • Best petrol pumping in Russia of 19.3 t/day per 1 petrol station.
  • 25% of consumers called GazpromNeft petrol stations their favourite.
  • 7.7 million participants in the Gazprom Neft petrol station loyalty programme.
  • All the Company’s oil refineries have fully switched to Euro-5 ahead of schedule.
PERSONNEL
VALUES

Stable employer that allows for effective development.Respectable compensation package.

HOW WE DO IT
  • Systematic recruitment and rotation of personnel.
  • Talent management, competency development and training.
  • Development of motivation systems and establishment of a culture of engagement.
  • Growth in labour productivity and organisational effectiveness.
  • Enhanced effectiveness of HR relations function.
RESULTS
  • In 2016, the Company ranked second in the rating of the most attractive employers on the Russian market.
  • 1% decrease in personnel turnover rate.
  • Average monthly salary of RUB 105,000.
  • Corporate University established along with a Faculty of Management and General Corporate Competencies .
SOCIETY AND REGIONS OF OPERATION
VALUES

Responsible business with a high level of contribution to the regions of operation.

HOW WE DO IT
  • Ensuring a significant volume of tax revenue to local budgets.
  • Contribution to the development of social infrastructure.
  • Creation of highly efficient jobs.
  • Minimising any negative environmental impact.
  • Ensuring a high level of production safety.
  • Growth in the energy efficiency of the Company’s enterprises.
  • Support for the population and key stakeholders.
RESULTS
  • Gazprom Neft is one of the largest taxpayers in the regions where it operates.
  • The ‘Native Towns’ social investment programme covers 35 Russian regions with comprehensive support for the development of social infrastructure.
  • Social investments totalled RUB 4.1 bn in 2016.
  • LTIFR – 0.402 with a downward trend.
  • 1.4% decrease in specific energy consumption at the Company’s enterprises in 2016.
GOVERNMENT
VALUES

Energy security. Tax payments.Technological development of the Russian oil and gas industry.

HOW WE DO IT
  • Stable growth in production and effective oil refining with a broad petroleum product sales network in Russia.
  • Among the top taxpayers in Russia (tax payments in subsidised regions of Russia).
  • Implementation of the first major offshore project – the Prirazlomnoye platform and the comprehensive development of Russia’s Arctic shelf.
  • Development of a centre of technological competencies and technological import substitution.
RESULTS
  • Hydrocarbon production – 86.2 mn TOE.
  • Export – 14.55 mn tonnes.
  • Availability of petroleum products for the population and business in 51 Russian regions.
  • RUB 381 bn in tax payments Paid by the Group’s Russian companies taking into account proportionally consolidated and joint ventures in accordance with equity participation, including taxation/fees, export duties and insurance contributions. in 2016.
  • Thanks to the use of modern technologies, Gazprom Neft has extended the service life of mature fields.