• implementation of geologic exploration programs in Iraq, West Africa, Romania, the Baltic Sea, the Komi Republic, Samara Oblast and the Northern Caspian Sea to ensure compensation of the hydrocarbon production with commercial reserves;
• start of commercial hydrocarbon production at West Qurna-2 field scheduled for the first half of 2014;
• implementation of the projects “Kandym Early Gas” and “Complete Development of  Hissar” in Uzbekistan;
• implementation of operating plans to develop fields in the Northern Caspian Sea, the Bolshekhetskaya Depression, the Imilorsko-Istochny and V. Vinogradov license areas located in West Siberia, the Denisovsky and Yaregsky license areas located in the Timano-Pechora Province and the fields of the Samara Oblast;
• implementation of measures aimed at increasing utilization of associated petroleum gas;
• conduct of pilot operations to bring into development the proved undeveloped reserves of fields located in the Nenets Autonomous Okrug;
• introduction of new highly efficient technologies to bring the hard-to-recover reserves into development and enhance the oil recovery;
• prompt implementation of projects to enhance the oil conversion rate, ensure modernization of the oil refining capacities in order to cut the fuel oil production rates;
• enhanced sales volume and expanded sales geography of branded engine fuels;
• implementation of the “Client-oriented Filling Station” concept and the Client Incentive Program;
• continued operations to hand over the retail sales assets overseas under  dealers’ control;
• efficiency enhancement of the Power Engineering business sector.

The Board of Directors also decided that in the process of formulating plans and approving budgets and investments full regard should be taken of the necessity to achieve the objectives outlined in the 2014-2018 Environmental Safety Program of LUKOIL Group organizations approved by the OAO LUKOIL Management Committee in December of 2013.
Over the years, LUKOIL Group has implemented four medium-term environmental-safety programs, which enabled it to considerably reduce negative environmental consequences, with parallel production growth. For instance, in the oil refining industry, a 5-fold reduction in the specific emissions and a 3-fold reduction in water consumption were registered.
Around USD 3.7 billion was allocated to implement environmental measures between 2009 and 2013. Specifically, the following indicators were achieved: the APG utilization level grew from 71% to 87.7%, while the volume of atmospheric pollution dropped by more than 90,000 tons. More than 40% of the total funds were allocated to raising the utilization level of associated petroleum gas to 95%. This goal was reached at the company’s fields in West Siberia, the Baltic Sea and the Lower Volga Region, including the Northern Caspian Sea.
The 2014-2018 Environmental Safety Program of LUKOIL Group organizations provides for 618 measures with a total cost of around USD 4.5 billion. The projected economic effect due to implementation of the measures as part of the above program may come to around USD 5 billion. The following results are expected from implementation of the 2014-2018 Program:

• 95% associated petroleum gas utilization level;
• volume of atmospheric emissions  reduced by 130,000 tons;
• additional treatment of 6.8 million cubic meters of waste waters;
• water consumption reduced by 7.6 million cubic meters;
• utilization of oil-contaminated waste: 300,000 tons;
• utilization of waste accumulated during the pre-privatization period: 550,000 tons;
• rehabilitation of disturbed and contaminated lands: 5,100 hectares;
• abandonment of sludge pits: 1,008 pieces;
• capital repair and replacement of pipelines: 4,000 kilometers;
• troubleshooting of pipelines: 31,600 kilometers;
• insulation of pipelines: 18,800 kilometers.

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In his report Igor Sechin noted that the Company tax payments to the budget amounted to 1.7 trillion RUR or 12% of all budget tax revenue. “Rosneft is actually the largest taxpayer in the country”, – said Igor Sechin.

Igor Sechin said that the last year’s instruction of the President on increase of the Company dividends to shareholders was fulfilled – they were almost tripled and the government received the additional 60 billion RUR in dividends. The Company also invested approximately 23 billion RUR into the social sector.

Large acquisitions influenced the growth of the Company’s capitalization. According to Rosneft CEO, the actual growth of share value was 35% – from $6.6 to $8.9 per share. “The Company’s capitalization currently stands at $92 billion”, – he said. In response to a question from Vladimir Putin on the potential for further growth of capitalization, Igor Sechin said that given the favorable international market conditions and efficient performance, a target of $120 billion would be a fair value.

“Last year the Company’s production grew by 2.7%, or 3.3 million tonnes in the absolute figures, and at the end of 2012 the total Company’s production under the RAS was 125.8 million tonnes”, – he noted. The overall reserves replacement ratio was 191%, which is “decent indicator”, he noted, having added that the incremental reserves from the last year equal 240 million tons. “Rosneft is the world’s leader at the oil and gas market in terms of reserves” – noted Igor Sechin.

Rosneft identified priority strategic partners that committed themselves to investing more than $6 billion into exploration of the offshore Arctic, Sea of Okhotsk and the Black Sea under the risk terms.

Year 2012 was notable for the start of large-scale operations in the Russian offshore, reported Igor Sechin. Over a short Arctic season Rosneft completed 5.3 thousand linear km of 2D seismic and 3.8 thousand sq. km of 3D seismic. Based on the acquired geological information Rosneft together with its partners from ExxonMobil have established the drilling location for the first well at Universitetskaya Structure in the Kara Sea. Drilling will start in 2014, one year earlier that initially planned.

Upgrade of the Company’s refineries was gaining momentum in 2012. Last year two new units were commissioned with 24 more process units being under construction, around 55% of key process equipment was contracted. The total investment in modernization will equal $25 billion net of VAT.

Source

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