Gazprom Neft

JSC Gazprom Neft
Native name
 ОАО «Газпром нефть»
Public(OAO)
Traded as
Industry Oil and gas
Predecessor Sibneft
Founded 1995
Headquarters St. Petersburg, Russia
Key people
 Alexei Miller (Chairman)
Alexander Dyukov (CEO)
Products Petroleum
Revenue Increase RUB 1.23 trillion (IFSR, 2012)
Increase RUB 176 billion (IFRS, 2012)
Owner Gazprom (95.68%)
Number of employees
 55,900 (2012)
Website www.gazprom-neft.com

Gazprom Neft (Russian: Газпром нефть, formerly: Sibneft), is the fourth largest oil producer in Russia and ranked third according to refining throughput. It is a subsidiary of Gazprom, which owns about 96% of its shares. The company is registered and headquartered in St. Petersburg after central offices were relocated from Moscow in 2011.

By the end of 2012 Gazprom Neft accounted for 10% of oil and gas production and 14.6% of refining activities in Russia. Production volumes in 2012 increased by 4,3% in comparison with 2011, refining throughput grew by 7%, revenue was up 19.5% with EBITDA and net profit advancing by 7.7% and 9.9% accordingly.

History

Gazprom Neft was created under the name Sibneft (Russian: Сибнефть) in 1995 by the transfer of state owned shares in Noyabrskneftegas (production unit), the Omsk Refinery (Russia's largest oil refining complex), Noyabrskneftegasgeophysica (exploration) and Omsknefteprodukt (oil products distribution network) from Rosneft.

In 1996 and 1997, Sibneft was privatised through a series of loans-for-shares auctions. Roman Abramovich and Boris Berezovsky acquired the company for US$100 million, after bidding through several front companies that had been set up for this specific purpose. Initially controlled by Berezovsky, Sibneft later came under the control of Abramovich.

Sibneft twice unsuccessfully attempted a merger with Yukos that would have created Russia's largest oil company, YukosSibneft. The first attempt in 1998 failed over a management dispute, while second time round Sibneft's shareholders called off the deal in November 2003 after the federal government cracked down on Yukos despite the process already being well under way.

In September 2005, Gazprom bought 75.7% of Sibneft's shares from Millhouse Capital (Roman Abramovich’s investment vehicle) for US$13.1 billion [1] in Russia's largest corporate takeover. In May 2006, Sibneft was renamed Gazprom Neft.

In 2006 Alexander Dyukov was elected as CEO of the company and in 2008 he was also appointed Chairman of the Management Board. His contract was extended for a further five years in December 2011.

In 2011 Berezovsky brought a civil case against Abramovich in the High Court of Justice in London, accusing Abramovich of blackmail and breach of contract over the privatisation of Sibneft, claiming that he had been a co-owner of Sibneft and seeking over £3 billion in damages.[2] This became the largest civil court case in British legal history.[3] The court dismissed the lawsuit, concluding "that the sum of $1.3 billion paid by Mr. Abramovich to Mr. Berezovsky and Mr. Patarkatsishvili did not represent the sale price of Mr. Berezovsky’s and Mr. Patarkatsishvili’s alleged Sibneft interest, but rather was a final lump sum payment in order to discharge what Mr. Abramovich regarded as his krysha obligations."[4][5]

Owners and management

The principal owner of Gazprom Neft is OAO Gazprom, which controls 95.68% of the company's shares, while the remaining 4.32% are publicly traded. 20% of Gazprom Neft's shares were originally owned by the Italian oil and gas company Eni before being purchased by Gazprom for $4.1 billion in April 2009. Alexander Dyukov is CEO and Chairman of the management Board. Alexey Miller is Chairman of the Board

Operations

Reserves and production

Prirazlomnoye field in the Pechora Sea, operated by Gazprom Neft.

As of 31 December 2012, Gazprom Neft and its subsidiaries hold the mineral rights to 74 license areas located in 11 regions of Russia. In Serbia, the Gazprom Neft's subsidiary Naftna Industrija Srbije, holds 69 licenses. Based on an audit of reserves conducted by DeGolyer and MacNaughton and according to the Petroleum Resources Management System standards, the company's proven reserves at the end of 2012 totaled 1.2 billion tonnes of oil equivalent, and its reserve replacement ratio was over 286%.

Most of the company's oil production operations in Russia are carried out by three subsidiaries: Gazpromneft-Noyabrskneftegaz, Gazpromneft-Khantos and Gazpromneft-Vostok. These companies are developing fields in the Yamalo-Nenets and Khanty-Mansi autonomous areas and the Omsk, Tomsk, Tyumen and Irkutsk regions. Gazprom Neft also holds 50% stakes in three dependent companies: Slavneft, Tomskneft and Salym Petroleum Development. In 2010, Gazprom Neft partnered with Novatek to acquire 51%of SeverEnergia which owns Arktikgaz and Urengoil companies.

Refining

In 2012, Gazprom Neft refined 43.3 million tonnes of oil. The company wholly or partly owns 5 oil refineries (the Omsk Oil Refinery, Moscow Oil Refinery, Slavneft-Yaroslavnefteorgsintez (YANOS) and two oil refineries in Pančevo and Novi Sad that belong to Naftna Industrija Srbije).

Sales

The company operates around 1,100 filling stations in Russia under the 'Gazpromneft' trademark (unlike the name of the company, the filling station brand is written as one word). In total, the company's retail network consists of more than 1,600 filling stations, including in Tajikistan, Kazakhstan, Kyrgyzstan, Belarus, Ukraine and Serbia (under the NIS brand). According to research by Romir Holding, the Gazpromneft brand is one of the top 3 filling station brands in Russia. In April 2011, it won the "Brand of the Year/Effie" award. In 2013 the company’s own fuel brands, G-Drive and G-Energy, also received this award. Nielsen, a global information and measurement company, named both Gazpromneft and G-Drive among the top three most popular brands in their categories.

The company also owns a number of distribution companies in the bunkering (Gazpromneft Marine Bunker) and aviation fuel (Gazpromneft-Aero) businesses, as well as a fuel and lubricant production business (Gazpromneft-Lubricants). Production of motor oils under the G-Energy premium brand began in 2010. British actor Jason Statham became the face of G-Energy's advertising campaign in 2011.[citation needed] In addition to G-Energy, the company's oils and lubricants are also sold under the Gazpromneft (industrial oils and lubricants), SibiMotor (light vehicles and commercial transport) and Texaco (marine oils, produced under Chevron's license) brands with over 300 trade names.[citation needed]

Performance indicators

The company's production volume in 2012 increased by 4.3% to 59.8 tonnes of oil equivalent.

In 2012 Gazprom Neft switched from US GAAP reporting in dollars to International Financial Reporting Standards (IFRS) reporting in rubles.

Company's financial indicators (US GAAP Standards)
2008 2009 2010 2011 2012
Sales revenue (mln) Increase $33,870 Decrease $24,305 Increase $32,912 Increase $44,172 Increase RUB 1,230,266
EBITDA (mln) Increase $8,610 Decrease $6,037 Increase $7,271 Increase $10,158 Increase RUB 323,106
Net profit (mln) Increase $4,658 Decrease $3,026 Increase $3,151 Increase $5,352 Increase RUB 176,296

Oil fields development

Novoportovskoye field

The recoverable C1+ C2 reserves of the Novoportovskoye oil and gas condensate field total over 230 million tonnes of oil and over 270 billion cubic metres (9.5 trillion cubic feet) of gas. The field is located in the Yamal District of the Yamalo-Nenets Autonomous Area, 30 km from the Gulf of Ob. The license for the Novoportovskoye field belongs to Gazprom Neft Novy Port with Gazprom Neft as the operator of the project. In spring 2011, Gazprom Neft confirmed the viability of year-round supply from the field by sea.

The Novoportovskoye field will be developed in two phases, first focussing on the southern part of the field where peak production will reach 5 mln tonnes of oil per year. The second phase will look at the northern part of the field, where peak production is expected to reach 3 mln tonnes of oil per year.

Messoyakha fields

The Messoyakha Group of oil and gas fields consists of the West-Messoyakha and East-Messoyakha sites. Messoyakhaneftegas, an equally owned joint venture with TNK-BP, holds the licenses for both blocks with Gazprom Neft as operator. The recoverable C1+C2 reserves of both blocks total 620 million tonnes of primarily heavy oil.

The fields were discovered in the 1980s and are the most northern-located onshore Russian fields. The Messoyakha oil and gas fields are located on the Gydan Peninsula in the Tazovsky District of the Yamalo-Nenets Autonomous Area - an Arctic climate zone with undeveloped infrastructure.

By 2020 the Messoyakha fields are expected to be producing 8 mln tonnes per year with the first million produced by 2016.

International projects

The service contract for development of the oil field was signed in the beginning of 2010. The winning bid was submitted by a consortium of companies consisting of:

The Badra oil field development project is scheduled to last 20 years with a possible 5-year extension. Production is expected to reach 170,000 barrels of oil per day, which is around 8.5 million tons a year by 2017, and it will remain at this level for 7 years.

Over a short period, new infrastructure for the field's commercial development has been installed at the oil field. It allowed for the commercial production of oil to begin in May 2014.

The first line of the central processing facility (CPF) has already been put into operation with a capacity of 60 thousand barrels per day. Oil gathering and preparation are carried out at this industrial facility. The Badra field was connected to the main Iraqi oil pipeline system by a 165-kilometer-long pipeline.

In the Iraqi's point of view, the Badra oil field in one of the most difficult in the region, primarily due to geological circumstances. The geological structure of the deposit can be compared with a "layer cake": argillaceous deposits are interleaved by limestone, which makes drilling difficult. Therefore, specialists are facing a more labor-intensive task. At the moment all these difficulties have been successfully overcome. Three development wells have now been constructed, successfully tested and their outputs have exceeded planned expectations.

New innovative technologies are applied at Badra. Among them are:

Solar panels can be another example of the usage of modern technologies. They allow the block valve station to work independently from electricity.

The Badra oil field development consortium annually invests in education, medicine and other social projects in Iraq. In 2013 Gazprom Neft donated some buses to the University in Kut, allowing students from the surrounding villages to regularly attend classes. In Badra City additional buildings for three secondary schools have been built in 2014. Moreover, Gazprom Neft provided modern computer equipment to the schools of the city. Gazprom Neft financed the renovation of the town medical clinic in Badra and supplied an emergency medical care unit with modern medical equipment. Also, the renovation and construction of power grids in Badra was financed in 2013.

For the town of Badra the oil field is, in fact, a local economic mainstay, as almost 30% of its residents work at the production field. The company is conducting a program of the retraining of Iraqi professionals to work in the field. Selection is made on a competitive basis. Prospective employees undergo a special 2-year profession and language training program. Today, more than 90 Iraqis have already been employed at the field.

Gazprom Neft launched the project from the initial stage and in a short period of time was able to complete work necessary for the commencement of commercial production at one of the most challenging fields in Iraq. International experience gained in Badra will be extremely useful for future international projects of Gazprom Neft.

Acquisition of interest in the Garmian (40%) and Shakal (80%) projects in Kurdistan region in 2012. In 2013 the company entered the Halabja project (80% share) with reserves of 90 mln tonnes of oil.

Sponsorship

Sibneft was the official sponsor of the CSKA Moscow football team. However, Gazprom Neft cancelled this deal in 2005 after Gazprom bought a majority stake in fellow Russian Premier Division football side, FC Zenit Saint Petersburg.

Gazprom Neft also sponsors the Avangard Omsk and SKA ice hockey clubs, and a variety of running, five-a-side football, Nordic skiing and motorcross events. In 2010, Gazprom Neft and Gazprombank sponsored Russian racing driver Mikhail Aleshin during his championship-winning year.

See also

References

  1. ↑ Financial Times, 28 September 2005
  2. ↑ "Berezovsky loses Abramovich claim". Press Association. 31 August 2012. Retrieved 31 August 2012.
  3. ↑ Duncan Gardham (31 August 2012). "Abramovich wins biggest private court case in history". Daily Telegraph. Retrieved 31 August 2012.
  4. ↑ Executive Summary of the Full Judgment of Gloster J in Berezovsky v Abramovich (PDF) (Report). High Court of Justice. 31 August 2012. Berezovsky v Abramovich Action 2007 Folio 942. Archived from the original (PDF) on September 5, 2012. Retrieved 31 August 2012.
  5. ↑ "Abramovich Wins Battle of Oligarchs Over 'Unreliable' Berezovsky". Bloomberg/Washington Post. 31 August 2012. Retrieved 31 August 2012.
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