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The Gazprom Neft Board of Directors reviews a range of issues of the company’s key strategic objectives

, press release

The Gazprom Neft Board of Directors has approved the company’s key priorities in developing its resource base over the next five years. The overriding priority here being to ensure Gazprom Neft has the resources it needs to achieve its key objective of producing 100 million tonnes of hydrocarbons per year by 2020, and maintaining that level thereafter.

Gazprom Neft’s key priorities in terms of developing the company’s resource base will remain the continued organic growth of the company’s existing assets, closer collaboration with Gazprom PJSC, the search for further growth opportunities in new locations, supporting the company’s involvement in the acquisition of new assets and participation in government licensing rounds, the continued exploration and development of the Russian continental shelf, and the engagement of partners in projects in early development.

In line with international and domestic (Russian) best practice, a reserves-replacement ratio of 2P (proven and probable reserves) has been set as one of the company’s new key performance indicators in the replenishment of the company’s resource base: the rationale behind this being that 2P reserves are crucial to business modelling and long-term planning in field development.

The Board of Directors also took under review information on the company’s procurement policy in the purchasing of materials and equipment, and strategies directed at increasing the proportion of domestically produced goods.

Gazprom Neft is committed to providing every possible support to domestic producers in the development of new products and technologies, and is committed to promoting the development of the country’s industrial base and supplier networks. The company’s procurement of goods and services for project development is predicated upon prioritising goods, works and services of Russian origin. More than 90 percent of Gazprom Neft’s financial expenditure on procurement is accounted for by Russian contractors and suppliers. The company also takes an active role in the work of cross-industry groups involved in supporting initiatives relating to the establishment of joint enterprises, and the localisation of leading foreign manufacturers’ production capacity and research and development (R&D) activities within Russia.

In addition to this, Gazprom Neft is developing replacement strategies (import substitution) in 20 key areas — 11 of which are currently in active development. These include equipment for offshore seismic operations, directional and horizontal drilling, high-tech well completion operations, pumps and compressors, and catalysers for oil refining.

The Board of Directors also reviewed information on the company’s international business development strategy.

The company’s project portfolio currently includes more than 20 projects in exploration and development, oil refining, and the retailing of oil products, outside of Russia.

In production, the company is working in the centre of the Kurdistan Region of Iraq (KRI), in Venezuela, and — through its subsidiary, NIS — in Serbia, Angola, Bosnia and Herzegovina, Hungary and Romania: the company’s most significant refining asset being the NIS Serbian refinery in Pančevo.

The company is also developing its retail operations beyond Russia, with more than 650 filling stations operating under the Gazprom Neft brand throughout the CIS, and under the Gazprom and NIS brands throughout the Balkans. Aviation refuelling operations are now provided at 162 airports worldwide, and marine bunkering operations supported by the company’s own assets in Romania and Estonia.

To ensure the achievement of its long-term strategic objectives Gazprom Neft is considering various options for the further development and improved viability of its existing international projects, as well as opportunities for engagement in new projects in oil production and refining. The company is also considering opportunities for involving international partners in joint operations within Russia.

In 2016 the company concluded a joint cooperation agreement with the Ministry of International Affairs of the Russian Federation, under which the latter will support Gazprom Neft in activities directed at widening economic and financial collaboration (as well as collaboration in R&D) with countries abroad. The company, in turn, will provide all necessary business expertise to the Ministry of International Affairs.

The Board of Directors also reviewed information on initiatives in improving energy efficiency and resources management throughout the Gazprom Neft Group, and approved strategies on the design and development of the company’s energy management system.

Improving energy efficiency at its production assets is a priority objective in improving the company’s operational efficiency. Gazprom Neft’s energy strategy, adopted in 2013, is directed at improving energy efficiency throughout the company’s production facilities, at reducing environmental emissions, and reducing energy consumption.

Gazprom Neft’s energy strategy is based on the internationally recognised ISO 50001 standard, governing energy-efficiency management and systems. The company has developed an integrated energy management system fully compliant with this. The implementation of cutting-edge production management tools allows Gazprom Neft to utilise international and domestic best practice in fuel and energy resources management, to optimum effect.

The overall economic impact of implementing energy efficiency programmes totalled more than RUB4 billion in 2013–2015. Gazprom Neft’s performance in specific energy consumption per tonne of oil produced is among the best in the industry. The company’s refineries, as a result of energy-efficiency programmes and improved energy efficiency, have reduced specific energy consumption per tonne of oil refined by more than four percent.

Tags: production, sales
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