Investment Activities

Gazprom Neft’s fundamental investment principles are:
  • To comply with the investment plans set out in the Company’s approved Strategy;
  • To implement the most efficient projects, and to create an optimized investment portfolio;
  • To implement collegiate decisionmaking and delegate investment decision-making down through a hierarchy of responsibility;
  • To minimize the risks associated with project implementation;
  • To adopt a differentiated approach to decision-making concerning projects and control over their progress, depending on the type and complexity of each project;
  • To undertake mandatory periodical monitoring of project implementation.

The investment activities of Gazprom Neft aim to maximize the Company’s value, raise its efficiency, and achieve the Company’s strategic goals.

Conformity of investment plans with the approved Strategy is ensured through a three-year medium-term investment program. The program aims to achieve clear, detailed medium-term targets as it moves towards implementation of the Company’s long-term strategic goals. The program consists of investment projects whose financing needs and economic and operating indicators have been broadly defined, and whose scope is proportional to the Company’s investment capacities.

Large-scale plans for development in all business segments will require considerable investments. Total investments up to 2020, both for current operations and for development, including purchase of assets, are expected to amount to USD 40 bn. More than USD 10 bn will be invested in the period 2012 to 2013.

Investments in 2011amounted to USD 5.5 bn.

Capital investments by Gazprom Neft in organic growth and maintenance of conventional assets in 2011 amounted to USD 4.0 bn, or 22% more than in 2010:

  • Capital investments in crude oil production were USD 2.2 bn (not including investments in NIS). Investments decreased by 8% compared with 2010, due to optimization of the drilling program and infrastructure development program.
  • Capital investments in oil refining were USD 0.7 bn in 2011 (not including investments in NIS), which is 61% more than in 2010. Growth of investments compared to 2010 was due to completion of the construction of two large hydrotreatment plants at the Omsk Refinery, and the start of construction and installation work in projects to improve motor fuel quality at the oscow Refinery.
  • Capital investments in petroleum product marketing grew by 68% in 2011 to USD 0.5 bn. The growth was mainly due to the purchase of large chains of filling stations in Krasnodar Territory, Chelyabinsk, Novosibirsk, and Nizhny Novgorod Region.
  • Investments in NIS amounted to USD 0.6 bn in 2011, which is 250% more than in 2010. The growth is explained by the start at NIS of construction work on the hydrocracking complex at the Panchevo Refinery.
  • Other investments amounted to USD 0.1 bn.

The Company completed a series of asset purchases in 2011, the most notable of which were:

  • Purchase of a 22% holding in Sibir Energy from JSC STK (a corporate entity controlled by the Moscow City Government);
  • Purchase of a further 5.15% of the stock of NIS;
  • Purchase of assets in Orenburg Region (the eastern section of the Orenburg oil and gas condensate field, and the Tsarichanskoye and Kapitonovskoye fields).

Sale of a series of oil field service assets. Total investments in the purchase of assets, less revenues from sale of the oil field service businesses, were USD 1.0 bn; investments in foreign projects and projects to develop new assets amounted to USD 0.5 bn. Total investment in ‘non-organic growth’ was therefore USD 1.5 bn.

The large-scale investment program in 2012 will address the following key needs:

  • Maintaining current production levels at conventional assets;
  • Intensifying geological surveying and drilling at new fields (Novoportovskoye, the Messoyakha cluster, and Sibir Energy fields, as well as fields in Orenburg Region);
  • Implementing major foreign petroleum production projects in Venezuela, Cuba, Iraq and Equatorial Guinea;
  • Retrofitting oil refineries to comply with Russian Government requirements, ensuring transition to Euro 4 from 2012 and to Euro 5 from 2015, with increased output of high-octane gasoline;
  • Completing construction of the hydraulic cracking plant at the NIS Refinery;
  • Upgrading and rebranding filling stations
  • Making the tank farm network compliant with the Company’s formats and standards;
  • Reforming the system of aviation fuel supplies to Ministry of Defence airfields, along with improvements to the refueling network.
  • Developing our own infrastructure in the bunkering business.
  • Increasing production capacity for mixing and packaging of products in Omsk and Central Russia
  • Purchasing bituminen production assets in Russia and the CIS;
  • Setting up production facilities for terephthalic acid and PET (polyethylene terephthalate), polypropylene, and caprolactam compounds.