Letter from the Chairman of the Board of DirectorsDear shareholders and investors,
2020 was a challenging year for the entire global economy. Despite the constraints imposed under the COVID-19 pandemic and the subsequent sharp deterioration in the global oil and gas market, Gazprom Neft’s development continued in line with the objectives outlined under the company’s long-term strategy.
Gazprom Neft was the first Russian oil company to start communicating clearly and openly what the strategy was for operating under the pandemic. A series of initiatives was quickly put in place to protect employees’ health and wellbeing, and to ensure the consistent uninterrupted operation of Gazprom Neft’s fields and facilities.
This year saw a major new hydrocarbon cluster – covering the Khanty-Mansi Autonomous Okrug–Yugra and the Tomsk Oblast – go into full-scale development. Preparations for developing liquid hydrocarbons at the Gazprom Bovanenkovskoye and Kharasaveyskoye fields on the Yamal peninsula are going at full speed. Gazprom Neft saw major successes in working with hard-to-recover oil, developing a prototype for working with hydrocarbons in Bazhenov strata – deployment of which will allow the company to commence profitable oil production at the Bazhenov Formation (an asset with colossal resource potential).
The company is continuing its implementation of a major programme to modernise and upgrade its refining assets. In 2020, the unique Euro+ oil refining complex was launched at the Moscow Refinery. In Pancevo, at the NIS refinery (the Gazprom Neft Serbian asset), a delayed coking complex was put into operation. This allowed us to increase the oil refining depth to 99%– one of the highest rates in the world oil refining.
Gazprom Neft’s retail operations saw some proactive development, with the company significantly expanding its geographic coverage for deliveries of high-tech bitumen materials – supplying products for use in the construction of strategic transport corridors in South America, as well as projects in Scandinavia and the Baltic.
Construction of Russia’s first ever LNG-bunkering vessel is reaching completion, with the Dmitry Mendeleev – designed for refuelling freight and passenger vessels with environmentally-friendly LNG – having been successfully floated in December 2020. The vessel is expected to go into operation in 2021.
The company remains committed to ensuring maximum environmental friendliness in pursuing its strategic operational objectives. For which reason, every one of the company’s projects includes an environmental element. The effectiveness of the company’s work in sustainable development was confirmed by Gazprom Neft PJSC receiving the highest ranking of all Russia’s oil companies in the prestigious Climate Disclosure Project (CDP) 2020 survey.
In the face of a very challenging year Gazprom Neft recorded a strong financial performance, ensuring the business’s ongoing sustainability and increasing the dividend payout to 50% of net profit.
The company has, once again, confirmed its ability to adapt to any economic situation quickly, maintaining financial and operational stability in the face of considerable uncertainty. I have every confidence that Gazprom Neft will continue its consistent progress in achieving the company’s long-term strategic goals, and will maintain its impetus in delivering projects of strategic importance to the entire oil industry.
Chairman of the Board of Directors
Gazprom Neft PJSC