Asset management & corporate structure
Work to improve the corporate management structure of Gazprom N eft seeks to raise the efficiency of the Companys business as a vertically integrated enterprise, and to optimize management of the main activities conducted by subsidiaries.
There were major organizational changes at the Company during 2011. Gazprom Neft continued to integrate its new assets into its overall corporate management structure. It also introduced Group standards of corporate management to the Groups new entities, which also received new charters and management teams.
The integration of Sibir Energy into Gazprom Neft Group continued in 2011. On February 14, 2011, a deal was closed to purchase 22% of the Sibir Energy stock owned by JSC Central Fuel Company (controlled by the Moscow City Government). Gazprom Neft thus became the sole shareholder of Sibir Energy in the first quarter of 2011.
Sibir Energy has been re-registered as a closed joint-stock company.
Ownership of the assets of Sibir Energy was optimized in 2011. This optimization included reassignment of ownership of JSC MNGK (the holding company of Sibir Energy Group that contained the Groups marketing assets and a 50% holding in JSC Gazprom Neft-Moscow Refinery) to the Russian jurisdiction of Gazprom Neft. Ownership of shares in Salym Petroleum Development (Netherlands) was reassigned to a subsidiary of Gazprom Neft to maximize the efficiency of profit repatriation.
To assist in integrating JSC Moscow Refinery into Gazprom Neft, the companys extraordinary general meeting of shareholders on October 14, 2011 agreed to change the company name to JSC Gazprom Neft- Moscow Refinery.
A holding in JSC Mosnefteprodukt was purchased from organizations owned by JSC Tatneft and steps were taken for JSC Gazprom Neft-Moscow Refinery to purchase shares from minority shareholders of JSC Mosnefteprodukt. This compulsory purchase of shares is to be completed in March 2012.
Four business entities within Sibir Energy Group were liquidated during 2011.
NIS à.d. Novi Sad
Our Serbian subsidiary NIS is one of the largest energy companies in southeast Europe and the Companys stock trades on the Belgrade Stock Exchange. Gazprom Neft currently owns 56.17% of the Companys shares and the second largest shareholder is the government of the Republic of Serbia, which holds 29.87%. The remaining shareholders are minority shareholders and include 2 mn individual Serbian citizens.
To meet obligations arising from Gazprom Nefts initial acquisition of NIS shares, the Company made an offer in January 2011 to purchase the minorityowned stake in NIS. This transaction involved 8.4 million NIS shares, representing 5.15% of the Companys registered capital, and the purchase was completed on March 16, 2011
Using a price of 4.8 per share (calculated under Serbian law), Gazprom Neft paid a total of 40.3 mn for the shares, and thus increased its holding in NIS a.d. Novi Sad from 51% to 56.15%.
Four NIS subsidiaries were established in the Balkans in 2011 (in Romania, Bulgaria, and Bosnia-Herzegovina) in order to expand the scope of petroleum, liquefied hydrocarbon, fuel and lubricant marketing in southeast Europe. A crude-oil production subsidiary was also incorporated in Hungary.
In November 2011, LLC Gazprom Neft- Lubricants purchased CJSC NK Select, the owner of a lubricant factory in Fryazino (Moscow Region). The name of the acquired asset has been changed to Gazprom Neft Moscow Lubricant Factory (Gazprom Neft MZSM).
Production Assets Reassigned to JSC Gazprom
In 2011, JSC Gazprom Neft bought 61.8% of the capital of CJSC Gazprom Neft Orenburg from JSC Gazprom. The remaining 38.2% of the businesss registered capital was placed in trust management to Gazprom Neft as from Q1 2012. CJSC Gazprom Neft Orenburg holds a mineral-use license for the eastern section of the Orenburg oil and gas condensate field.
Petroleum Service Units
In 2011, Gazprom Neft completed disposal of its petroleum service business by selling its subsidiaries, LLC Noyabrsk Centralnaya Trubnaya Baza, LLC Service Drilling Company, LLC Muravlenkovskaya Transportation Company, LLC SpetsTransService, LLC Kapitalny Remont Skvazhin-Service, LLC YamalServiceCentr and LLC Service Transportation Company.
The Companys successful exit from the petroleum service business will reduce Gazprom Nefts expenses and help it to compete in core markets as well as raise the quality of petroleum-related services used by the Company.
Other Entities in the Group
In 2011, the Group merged its production unit LLC NK SibneftYugra (previously
Liquidation procedures began in 2011 for LLC STS-Service, which was bought from Malka Oil A.B. (Sweden) in 2010. LLC STS-Service was purchased because it owned rights to mineral use at the Zapadno- Luginetsky area (Tomsk Region).
It was decided that JSC Gazprom Neft- Altay should merge with JSC Gazprom Neft- Novosibirsk to optimize Gazprom Nefts marketing structure in Altay Territory.
In 2011, JSC Gazprom Neft purchased 49% of the registered capital of LLC NGK Razvitie Regionov from JSC LUKOIL. The LLC was created earlier as a joint venture with LUKOIL for the purpose of field development.
In 2011, the Group purchased 86.38% of JSC Yuzhuralneftegaz and 100% of CJSC Science-Intensive Technologies Center, which holds development rights at the Kapitonovskoye and Tsarichanskoye fields (respectively) in Orenburg Region.