The world has changed, the oil market has changed, and Rosneft's strategy must change. The changes taking place in the world lead to an aggravation of the struggle of oil and gas companies for sales markets, to the need to search for strategies that will make it possible to be sustainable in any scenario of demand and oil prices.

High oil prices are a thing of the past

The period of relatively low oil prices is long overdue. Volatility in world markets has grown significantly, uncertainty continues to persist. The growth rate of the world economy is slowing down.

There is an active discussion in the world about when the peak of demand for oil will come. It seems to many analysts that the days of oil as the main source of energy are passing. But is it? Indeed, the development of alternative energy sources is underway, the electric vehicle production sector is developing, energy efficiency is growing ...

But what is completely overlooked? What an expensive pleasure it is to switch from hydrocarbons to renewable energy sources. And, most importantly, renewable energy sources cannot yet provide the necessary scale to replace traditional energy sources and sustainable energy supply. While the role of coal is decreasing for environmental reasons, nuclear energy is being limited ... Thus, the main burden of meeting the demand of the world economy ultimately falls on oil and gas. Until 2050 and beyond, hydrocarbon energy has been and will be in demand.

I would like to note that if oil prices remain at $ 40 per barrel for a sufficiently long time, half of the world's oil production will be unprofitable. Extraction will be unprofitable on the deep-sea sands of Brazil, on the oil sands of Canada. Shale oil producers will face difficulties, with the exception of highly efficient areas of the Permian Basin.

Only producers from Russia, Saudi Arabia, a number of effective projects in the USA, Iran and projects in some other countries that have relatively low costs are able to maintain stability at low oil prices. The rest of the producers will be forced to leave.

All this creates new opportunities for Rosneft and for Russia as a whole. Over the past five years, our company has transformed from a regional player into a global major, the largest public company in terms of production, reserves and business scale, as well as the most efficient in terms of operating costs. And I am sure that it should become even more successful, even more effective. This will require a new strategy and new organizational structure.

What strategy are we talking about? About the one that will ensure production at the lowest cost and the most effective promotion of products to consumer markets. We must find tools that will improve the company's efficiency at all stages of the production chain - from oil and gas exploration to retail sales of petroleum products. We will develop and present this strategy by the end of the year. For each business segment.

Smart mining technologies

Let's start with mining. Our strategic advantage is the huge traditional onshore oil reserves in regions with developed infrastructure. Our strategic prospects are enormous shelf reserves.

Our analysis shows that the existing reserves allow us to produce 500 million tons of oil more in 20 years than our existing technical plans suggest. But this can only be done if the efficiency of production processes is increased.

What measures should we take to achieve this? This is, first of all, an increase in the commercial drilling rate, the use of multi-stage hydraulic fracturing, an increase in the share of horizontal drilling of wells, at least up to 40%. This is an increase in the efficiency of internal services, the use of standard solutions in construction processes, a revision of standard solutions in favor of innovative ones.

Thanks to the development of technologies, we plan to ensure 98% of the success of geological exploration works. We are and will continue to conduct in-depth experimental studies of in-situ pressures for the development of smart waterflooding and enhanced oil and gas recovery technologies. We are looking for ways to introduce technological solutions of a new level for the production of "heavy" oil. These are “waterless” technologies for increasing well productivity, technologies for “in situ oil refining”, technologies for improved upgrading.

A good example of innovative solutions is the project to develop an ultra-light, ultra-strong polymer proppant based on polydicyclopentadiene. Refusal to use traditional proppant in favor of ultra-strong polymer proppant will make it possible to achieve a greater effect in hydraulic fracturing.

We will seek technological leadership in our work. We need to focus on increasing the oil recovery factor (ORF) of fields. We will analyze the entire well stock in order to identify idle and low-rate wells, which are not profitable for us as a big business. We are ready to lease / operate such wells to small and medium-sized businesses that may be looking for ways to improve efficiency at each individual well.

The new strategy will further expand our capabilities in oilfield services. We need to improve our technological competencies. You need to invest in IT solutions for drilling. We understand that the future in well construction lies in the large-scale use of highly automated drilling complexes, in the roboticization of construction processes, in the development of construction technologies and completion of high-tech wells of complex architecture. These are ultra-long horizontal, horizontally branched and multilateral wells. We need to change the approach to our services, change their strategy of "dependence" and force the service to reorganize taking into account the tendencies of the oil markets to lower oil prices and increasing competition in terms of costs. Ultimately, our oilfield services business should become more independent and develop cooperation with third-party customers. In turn, customers within the company should be able to receive service offers on the market.

Betting on petrochemicals and international trading

Equally important areas of our business are refining, petrochemicals, commerce and logistics. There is also a huge backlog here for additional profitability. In recent years, by the way, as a result of the modernization of refining, the main task has been solved - we have eliminated the shortage in the domestic auto gasoline market and switched to new, more environmentally friendly types of fuel. The company's new strategy should help make our refining portfolio resilient in any oil price scenario. And in any scenario of tax regulation.

Petrochemistry plays a special role here. We expect global demand for petrochemicals to grow faster than GDP growth and consumption of petroleum products. And this creates additional prospects for this area of ​​our business.

We have a number of promising projects. This is also a project in Eastern Siberia for the conversion of natural gas into polyolefins. The production capacity is about 2.2 million tons per year - the plant will be built in Boguchany or at another site. There is a project in the Volga region for the conversion of liquefied petroleum gas (LPG) and naphtha into polyolefins with a capacity of about 2.6 million tons per year, which is planned to be implemented in Samara. In the Far East, based on the Eastern Petrochemical Company (VNHK), we expect the production of polyolefins to reach 1.6 million tons per year. The petrochemical complex will also be created at the site of the Novokuibyshevsk Petrochemical Company. Our foreign assets also have great prospects in this area: Essara in India, Tubana in Indonesia, Tianjin in China. Our goal is to increase the share of oil and gas chemistry to 20% of the total refining capacity of Rosneft. And this goal is quite achievable, especially considering the fact that investments will be realized with the attraction of project financing.

As for logistics and trading, we have already learned how to get the greatest margin when selling our oil and oil products, we are exploring new sales markets, we continue to develop international trading, and we plan to open a new office in Singapore. We strive to create new trading hubs close to the end consumer, including in new promising markets.

Gas business

Last year, Rosneft became the largest independent gas producer in Russia and became the sixth largest public company in the world in terms of gas production. Our goal is to become the third company in the world at the beginning of the next decade. By 2020 - to increase gas production up to 100 billion cubic meters and a share in the Russian market - up to 20%. At the same time, we are expanding our gas business internationally - the strategic Zohr project offshore Egypt, promising projects in Venezuela, Brazil, Mozambique, Vietnam and Norway. We are considering the possibility of using gas for our own power generation. I would like to note that the company owns energy facilities in Russia with a capacity of more than 2.5 GW and plans to increase capacity to 3–3.5 GW. In terms of scale, this is comparable to the capacities of territorial generating companies. A separate topic is the expansion of sales markets for gas engine fuels, including for bunkering ships, for example, a tanker fleet.

Holding structure

We expect to create the right "climate" in the company: it is a combination of the organizational structure, business processes and norms of human behavior. In recent years, we have done a great deal of preparatory work, built incentive systems, took into account the best practices, improved business processes, and now we are ready for a new stage. This is a transition from a centralized management structure to a holding one. First of all, we will work out this model in our retail. This is a pilot reorganization project: almost 90% of retail has already been consolidated into a single sub-holding, and already now the consolidation of retail assets has proven its effectiveness.

Taking into account the growth of the scale of the business, the decision to switch to the holding model is absolutely logical. First, it is used O greater responsibility of business units for financial results and a more flexible decision-making system that will simplify the introduction of innovations at the business level. Secondly, it is an opportunity for individual business segments to compete for capital, which makes it easier to attract project financing for individual projects. As a result, we expect that the holding structure will allow us to more efficiently allocate financial resources, increase the return on invested capital and increase the profitability for our shareholders.

Digital economy

Rosneft will seek technological leadership. Let me remind you that the president instructed the government to prepare a program for the development of the digital economy, relying on the innovative resources of Russian companies. I would like to note that Rosneft is just such a company: we have 26 scientific institutes, it is 12 thousand highly qualified specialists - a huge scientific and technical complex, the core of which is the Center for Technological Competencies (RN-TsIR), colossal experience in introducing the latest technologies and innovative solutions. Due to this, by the way, we managed to stabilize production at the "old" fields in Western Siberia. The company holds world records for drilling wells: for example, Sakhalin-1 has the world's longest borehole length - 15,000 meters with more than 14,000 deviations from the vertical. This is our potential.

But we understand that in a world where information is becoming an increasingly valuable asset, it will be difficult to compete without advanced IT technologies. The future belongs to technologies for remote monitoring, diagnostics and production management based on processing big data arrays (Big data), predictive analytics, and self-learning neural networks. We must move to a new, “digital” model of the company. Last week, we agreed with the industry leader, General Electric, to set up a joint venture to implement modern digital technologies and new industrial Internet standards at our assets.

At the meeting of shareholders, I proposed to form a technology council in the company, which will include such respected representatives of business and science as BP President Robert Dudley, GE Oil and Gas President Lorenzo Simonelli, MSU Rector Viktor Sadovnichy.

I think the new strategy will allow us to pay dividends at the level of 50% of profits, which contributes to the growth of shares and, accordingly, the capitalization of the company. We expect that the implementation of the Rosneft-2022 strategy will increase capitalization by 25-30%. And, as I have already noted, 500 million tons of additional production over 20 years in relation to our current plans. But the main thing is a significant increase in efficiency and competitiveness. We set a goal for the company to achieve long-term production costs at the level of Saudi Aramco. This guarantees Rosneft and the Russian oil and gas industry leadership in the global energy sector.

MORE ON THE TOPIC

STRATEGIC PLANNING AT ROSNEFT Oil Company

Formulation of the mission and setting of development goals for Rosneft

One of the key management tasks is maintaining a balance between entering and exiting the organization. Another equally important task of management is to establish a balance of interests of various social institutions and groups of people interested in the functioning of the organization and influencing the nature, content and direction of its functioning. The balance of interests determines where the organization will move, its target orientation in the form of mission and goals.

The definition of the mission and goals of the organization, considered as one of the strategic management processes, consists of three sub-processes, each of which requires a large and extremely responsible work. The first sub-process consists in the formation of the mission of the firm, which in a concentrated form expresses the meaning of the firm's existence, its purpose. The mission gives the organization originality, fills the work of people with a special meaning. Next comes the process of defining long-term goals. And this part of strategic management ends under the process of setting short-term goals. The formation of the mission and the setting of the goals of the firm lead to the fact that it becomes clear what the firm functions for and what it strives for.

Company's mission:

“Environmentally safe and economically efficient satisfaction of society’s needs for energy resources. Our activity contributes to social stability, prosperity and progress of the regions ”.

Since this formulation of the mission does not take into account modern conditions in the development of the domestic and world economy, I propose to improve the mission as follows:

“Innovative, environmentally friendly and cost-effective satisfaction of society's energy needs. With a unique resource base, high technology level and a team of dedicated professionals, the company ensures sustainable business growth and increased shareholder returns. Our activity contributes to social stability, prosperity and progress of the regions ”.

Rosneft sets itself the task of steadily increasing oil production, subject to a favorable macroeconomic environment and an optimal taxation system. The strategic priority of the Company is the efficient recovery of reserves and ensuring the maximum oil recovery factor in the fields under development.

In the short and medium term, production growth will be provided by fields in Eastern Siberia. The key project in this region is the Vankor field, which was commissioned in mid-2009. The design level of production at the field, which is planned to be achieved in the coming years, is 25 million tonnes (in 2011, production at the field exceeded 12 million tonnes).

To ensure sustainable production growth in the long term, Rosneft is constantly developing its resource base. An extensive exploration program is underway in the new regions. The key resources are the resources of Eastern Siberia and the Black Sea, and in the more distant future, the resources of the Arctic shelf. In 2011, the Company acquired the first licenses for exploration and development of the Arctic shelf.

Rosneft owns about 800 billion cubic meters. m of proven gas reserves according to international classification. Only 24% of the reserves are currently in development. In this regard, the development of the gas sector and the monetization of reserves are one of the priority tasks of the Company.

Rosneft's gas production potential exceeds 55 billion cubic meters. m per year. The main increase in production may come from the Kharampurskoye field in Western Siberia, where 50% of Rosneft's proven gas reserves are concentrated.

The monetization of gas reserves is also facilitated by the program implemented by Rosneft to increase the level of associated petroleum gas utilization to 95%, including in order to comply with the requirements of Russian legislation.

In the downstream sector, Rosneft's main priority is to ensure sustainable growth in both quantitative and qualitative indicators, as well as compliance with modern requirements for manufactured products.

The company systematically implements large-scale modernization programs for existing refineries aimed at increasing the depth of refining and improving the quality of products. The modernization will result in the most complete and efficient use of hydrocarbon raw materials, an increase in the added value of produced petroleum products, compliance of products with modern environmental standards (Euro-4 and Euro-5), as well as an expansion of its range.

Rosneft's largest ongoing project to increase capacity in the refining sector is the Tuapse Refinery reconstruction project, the implementation of which will increase the refinery's capacity from 5 to 12 million tons. In 2010, a decision was made to build a 3.4 million tons petrochemical plant at Dalniy In the East of Russia and a modern refinery with a capacity of 1 million tons in Grozny in the south of the country. In addition, an agreement was reached to acquire a 50% stake in Ruhr Oel GmbH, which owns stakes in four refineries in Germany, and the foundation stone was laid for a refinery in China with a capacity of 13 million tons.

To maximize the effect of vertical integration, Rosneft is continuously expanding, optimizing and modernizing its filling station network, as well as developing new types of business - bunkering and the aviation business.

Table 3

Rosneft's current targets for 2013

In addition to the current goals, on the basis of the mission, long-term corporate goals of the enterprise are formed (Table 4). They mainly reflect information about what the company wants to get and what it wants to achieve.

Table 4

Rosneft's long-term corporate goals until 2020

The implementation of the above goals will allow Rosneft not only to maintain its position in the domestic market, but also to compete with other oil companies.

Approved the Rosneft-2022 Strategy, focused on a qualitative change in the company's business by introducing advanced management approaches, new technologies and increasing the return on existing assets. This is stated in a press release from Rosneft.

The company sets itself goals, the achievement of which depends on the implementation of a number of strategic initiatives.

First, maintaining the leadership in terms of unit costs in production with a decrease in unit operating costs by 2-3 percent per year in comparable conditions.

Second, creating a sustainable technological advantage and intensifying production. The company intends to replace at least 100 percent of the produced liquid hydrocarbons. To implement this point of the strategy in the coming years, it is planned to actively develop a number of new promising projects (including the Vankor cluster, Erginsky cluster, Russkoye and Severo-Komsomolskoye fields) with bringing the production volume through organic growth (production intensification) to 250 million tons by 2022 year.

Third, the development of the gas business. The implementation of major gas production projects on time and within budget will increase the positive free cash flow in 2018-2022 and allow Rosneft to take a 20 percent share in the Russian gas market while production increases to over 100 billion cubic meters.

Fourth, strengthening the manufacturability of the service business. The company will continue to improve its service business performance, including reducing non-productive times, reducing drilling times by 5 percent and improving workover crew efficiency by 20 percent, and increasing drilling rig efficiency by 20-30 percent.

Fifth, the development of the petrochemical business by separating the existing portfolio of assets on the basis of a separate business with its own financial statements.

Sixth, strengthening the quality of investment and project management. The priority in the field of project management is the completion of development projects for the company's Russian refineries, which will help to increase their profitability. In addition, work will continue to improve investment discipline and optimize the portfolio of investment projects along the entire value chain.

Seventh, technological development and digitalization. An important element of the strategy is digitalization and accelerated technological development in all areas of the company's activities, primarily due to the accelerated replication of proven digital solutions.

Eighth, the transition to a holding management structure, the implementation of a pilot project in retail.

The Rosneft Board of Directors approved the Rosneft-2022 Strategy aimed at qualitatively changing the Company's business by introducing advanced management approaches, new technologies and increasing the return on the Company's existing assets.

The Rosneft-2022 strategy fully meets the current challenges of the energy industry. The strategy provides for an increase in business profitability and return on core assets by intensifying their development, focus on the implementation of key projects and changing the management model, which will allow accelerating the replication of new technologies and transferring the company to a qualitatively new level, taking into account the challenges of the digital age.

The new Strategy will be based on building a business that takes into account the highest requirements in the field of ecology, industrial safety and environmental protection. By adopting the Rosneft-2022 Strategy in 2017, which was announced by the President of the Russian Federation Vladimir Putin as the Year of the Environment, Rosneft is committed to enter the first quarter of the list of world oil and gas companies in terms of key indicators in this area by 2022.

The company sets itself goals, the achievement of which depends on the implementation of a number of strategic initiatives, which include:

1. Maintaining leadership in terms of unit costs in production with a decrease in unit operating costs by 2-3% per year in comparable conditions.

2. Creation of a sustainable technological advantage and production intensification. The company intends to replace at least 100% of the produced liquid hydrocarbons. At the same time, the goal will be to accelerate the involvement of reserves in development with a reduction in project preparation time, transfer of resources to reserves, taking into account their profitability, and increase the success of prospecting and exploration drilling onshore in the Russian Federation. In the coming years, it is planned to actively develop a number of new promising projects (including the Vankor cluster, Erginsky cluster, Russkoye and Severo-Komsomolskoye fields) with an increase in production through organic growth (production intensification) to 250 million tons by 2022. By optimizing capital costs and the development of onshore fields in the Russian Federation, it is planned to achieve a 5% increase in the average flow rate of new wells in the next five years, reduce the cost of their construction by 10%, and significantly increase the share of horizontal wells.

3. Development of the gas business. The implementation of major gas production projects on time and on budget will increase the positive free cash flow in 2018-2022. and will allow Rosneft to take a 20% share in the gas market of the Russian Federation with production growth to over 100 billion cubic meters. During this period, it is planned to commission a number of new promising projects, such as Rospan, Kharampur, Kynsko-Chaselskaya group of fields. An important condition for the development of the gas business is to improve the manufacturability of production and create a favorable regulatory environment, in particular, gaining access to gas exports. This will make it possible to effectively monetize the Company's gas resources by exporting pipeline gas to new European consumers.

4. Strengthening the manufacturability of the service business. The company will continue to improve the operational performance of the service business, including reducing non-productive time, reducing well drilling time by 5% and increasing the efficiency of workover teams by 20%, increasing the efficiency of drilling rigs by 20-30%.

5. Development of the petrochemical business by separating the existing portfolio of assets on the basis of a separate business with its own financial statements. Strategic objectives include changing the product basket, implementing long-term contracts, optimizing capacity utilization and increasing the level of integration with the Company's refineries. Availability of available raw materials in close proximity to existing and prospective assets will help to increase the profitability of this business to the level of leading competing companies. New projects will be implemented with the involvement of partners and project financing.

6. Strengthening the quality of investment and project management. The priority in the field of project management is the completion of development projects for the Company's Russian refineries, which will help increase their profitability. Rosneft also plans to implement highly efficient projects to “unlock bottlenecks” (overcoming production and technical constraints). Other tasks include implementing a program to improve operational efficiency based on benchmarking for Solomon indicators (refinery efficiency index), reducing operating costs, fuel consumption and losses, as well as increasing the turnaround time at refineries, including through the massive implementation of digital solutions.

Work will continue to improve investment discipline and optimize the portfolio of investment projects along the entire value chain.

7. Technological development and digitalization. An important element of the Strategy is digitalization and accelerated technological development in all areas of the Company's activities, primarily due to the accelerated replication of proven digital solutions. The implemented programs “digital field”, “digital plant”, “digital supply chain”, “digital filling station” will allow moving to a qualitatively new level of modern information business, increasing the reliability and efficiency of production, and reducing losses. The focus on the implementation of digital technologies will increase transparency, manageability and speed of decision-making throughout the entire production chain of the Company, as well as strengthen the foundation of the developing digital economy in Russia.

8. Transition to a holding management structure, implementation of a pilot project in retail. To increase the efficiency of the retail business and increase the return on capital, it is planned to increase the share of non-fuel sales by expanding the range of goods and services provided, developing the network in the regions, improving the customer offer at gas stations, developing small wholesale, optimizing costs and reducing losses. The retail business will become a pilot project as part of the initiative to transfer Rosneft to a holding management system. It is expected that the spin-off of the retail business into a separate sub-holding with the involvement of a strategic investor will significantly improve its financial results.

As part of the formation of the Rosneft-2022 Strategy, a detailed analysis of the state of the external environment and challenges for each of the Company's business segments was carried out. Strategic initiatives for each of the business areas have been worked out in detail, allowing to develop and implement the priorities formulated earlier by Igor Sechin, Chief Executive Officer of Rosneft Oil Company, within the framework of the Annual General Meeting of Shareholders.

On December 18, Rosneft Chief Executive Officer Igor Sechin presented the company's five-year development strategy in Sochi. The company intends to increase oil production to 250 million tons by 2022

Photo: Andrey Rudakov / Bloomberg

The strategy has been prepared based on an oil price of $ 47 per barrel. It assumes an increase in production to more than 250 million tons by 2022 due to organic growth (in 2016 the company produced 210 million tons), Sechin said. According to him, the implementation of the strategy will additionally bring the company more than 180 billion rubles. in the production segment for five years.

The target for increasing production was approved at the annual meeting of shareholders in Sochi. About her Sechin at a meeting with the management of subsidiaries in the Khanty-Mansiysk Autonomous Okrug at the end of November.

On Monday, Sechin noted that he estimates "the net effect from the implementation of the new strategy at 15-20% of the current capitalization" (3.1 trillion rubles on the Moscow Exchange on December 18). The production of hydrocarbons by Rosneft in 2017, according to him, will amount to 281 million tons of oil equivalent (in 2016 - 265.2 million tons of oil equivalent).

Pavel Fedorov, vice president of the company for finance, clarified that production of 250 million tons will be achieved only through organic growth of the existing portfolio, but the company will also continue to look at other development opportunities. “Our strategy on international markets is non-aggressive, we are working to find an attractive opportunity for shareholders, the projects we enter are distinguished by a high degree of efficiency and synergy,” Fedorov believes and cites the purchase of Bashneft, with which we have already achieved synergy. in 40 billion rubles. And in five years, the synergy will amount to 170 billion rubles, he added.

The main increase in production, as predicted by Fedorov, will occur in 2018-2019 - the time of launching large projects. In 2018, it is planned to start production at the Russkoye field - 1.3 million tons of oil in the first year. Rosneft's investments in key assets will grow: in 2018 they are planned at the level of RUB 950 billion. (in 2017 - 910 billion rubles), and in 2019 will already exceed 1 trillion rubles.

As for gas production, Rosneft maintains plans to produce 100 billion cubic meters. m by 2020, said the vice president of Rosneft Vlada Rusakova. She explained that the company revised its portfolio of projects, choosing the most effective ones that maximize cash flow and profit (EBITDA). “We are looking at partners all the time, but so far there are no visible partners in Russian gas projects, we continue to work on a concept for the development of the gas market,” she added.

Rosneft intends to split the retail and drilling divisions into two holdings and found potential investors for them, Pavel Fedorov, vice president of the company, told reporters: “We see two key potential projects: Rosneft-Retail and the second - Rosneft-Burenie ". Drilling companies are trading at higher ratios, and Rosneft sees great potential for additional capitalization of this business, Fedorov said. According to him, partial or full sale of the drilling and retail business will add value to the company, and retail will become the first pilot holding.

Sechin on Rosneft's plans to move to a holding management structure. The company hopes to attract a strategic partner at retail, which will be able to develop additional services at the filling stations, analysts of Otkritie Capital said in a review following a meeting with top managers of the company. Until now, the company has attracted investors mainly in production projects, and the holding structure will allow looking for partners for various areas.