Rosneft
Encyclopedia
Rosneft is an integrated oil company majority owned by the Government of Russia
. Rosneft is headquartered in Moscow’s Balchug
district near the Kremlin
, across the Moskva river. Rosneft became Russia's leading extraction and refinement company after purchasing assets of former oil giant Yukos
at state-run auctions.
island, Siberia
, Timan-Pechora field and southern Russia, including Chechnya. It owns and operates two refineries. The refinery in Tuapse
, on the Black Sea
, focuses on refining high-gravity oil from western Siberia. Another plant in Komsomolsk-on-Amur
is the easternmost refinery in Russia. The Komsomolsk
Refinery benefits from its technological integration with Nakhodkanefteprodukt, while the Tuapse
Refinery is noted for its favorable location on the Black Sea
coast and is part of an integrated complex with Tuapsenefteprodukt. Rosneft operates shipping (Arkhangelsknefteprodukt), pipeline
and marketing companies. As of 29 December 2006, the company’s market value was US$83.908 billion.
Rosneft net income fell 20% for the first quarter of 2009 from $2.56 billion to $2.06 billion due to the weakness of oil price Rosneft is 75.16% owned by the Russian state, while around 15% of the shares are in free float.
on the basis of assets previously held by Rosneftegaz, the successor to the Soviet Union
's Ministry of Oil and Gas. During early 90s almost all Russian local oil companies and refineries were extracted from Rosneft to form ten integrated companies (later their number was halved as a result of acquisitions). On 29 September 1995, a Government of Russia
Resolution № 971 transformed Rosneft into an open joint stock company. In October 1998, the Russian government appointed Sergey Bogdanchikov as president. The company had only two obsolete refineries and several low-productive and poorly managed oil-producing assets. Several plans for company's privatization were composed in late 90s but due to struggle of equal influential pretenders they were never fulfilled.
Rosneft increased oil output from 98.56 million bbl (13.47 million tonnes) in 2000 to 148.26 million bbl (20.27 million tonnes) in 2004. In 2001, the company became Russia’s official representative on projects with production sharing agreements (PSA). In 2003, it began production at the Aday block near the Caspian Sea in Western Kazakhstan. In 2004 the company agreed to merge with Gazprom
. The merger plans were discarded in May 2005, allegedly because Bogdanchikov did not wish to take a lesser role in the integrated company answering to Gazprom CEO Alexei Miller
.
(Yugansk) at a state-run auction, ostensibly to satisfy tax debts. This was viewed by many as a de-facto nationalization of Yugansk, and was denounced by Andrei Illarionov, then a senior Putin economic advisor, as “the scam of the year.” However, despite criticisms, the addition of Yungansk resulted in Rosneft becoming Russia’s second-largest producer of oil and gas by 2005, with an average output of 1.69 million bpd. In June 2007, Rosneft paid $731 million for Yukos transportation assets. Although the Yukos acquisition increased debt considerably, the company still plans to triple refining capacity and expand into China. Bogdanchikov has said the company plans to reduce debt to 30% of total assets by 2010. Rosneft wants to extract 140 million tonnes of oil by 2012 and become a global top three energy company. The group also hopes to increase production from 80 million tonnes in 2006 to 103-million-tonne by the end of 2007.
(RTS) and the London Stock Exchange
(LSE). The offering raised USD 10.7 billion. Shares were priced at $7.55, near the upper end of the range forecast when the IPO was announced, resulting in Rosneft being valued at $79.8 billion. Rosneft achieved its objective largely by arranging bilateral deals with strategic investors, such as British Petroleum (BP), Petronas
and CNPC, which bought almost $2.6 billion worth of shares during the IPO. Three oligarchs
invested over $1 billion each on the LSE (Roman Abramovich
, Vladimir Lisin
, and Oleg Deripaska
. Critics of the deal included financier George Soros
, who called on investors to boycott it on ethical grounds, and Andrei Illarionov, who called the deal illegal and "a crime against the Russian people," because none of the proceeds will go into the state budget. The British Financial Services Authority authorised the flotation of Rosneft shares despite an appeal from Yukos, which claimed that allowing the Rosneft IPO would be tantamount to facilitating the sale of stolen goods.
on the Russian arctic shelf between the Yamal Peninsula
and Novaya Zemlya
island. As part of the deal Rosneft was to receive 5% of BP's shares (worth approximately $7.8 billion, as of January 2011) and BP would get approximately 9.5% of Rosneft's shares in exchange. According to the deal, the two companies would also create an Arctic technology centre in Russia to develop technologies and engineering practices for safe arctic hydrocarbons extraction. The BP-Rosneft deal was blocked in international courts by AAR - BP's Russian partners in the TNK-BP
joint venture - as breaching earlier contractual arrangements between BP and AAR. The TNK-BP partners had previously signed a shareholding agreement which stipulated that their Russian joint venture would be the primary corporate vehicle for BP’s oil and gas operations in Russia. On 30 August 2011, Rosneft announced that instead of BP the partner for EPNZ-1, EPNZ-2 and EPNZ-3 in the Kara Sea
will be ExxonMobil. In exchange, subject to approval by U.S. regulators, in addition to a share in oil production in Russian fields, Rosnoft was granted participation in U.S. fields in Texas and the Gulf of Mexico.
signed a deal to establish a joint venture for the purpose of prospecting and extracting oil from the Tuapse field
deepwater area on the Black Sea shelf, near the coast of the Krasnodar Krai
. The value of the deal is unknown, but ExxonMobil is expected to invest $1 billion in the project. The venture will be shared 50-50 between the companies during prospecting phase, and 2/3 - 1/3 in Rosneft's favour during the extraction phase. The Tuapse Trough is estimated to contain 7.2 billion barrels of oil equivalent. The first well could be drilled in 2012. The joint venture will benefit from ExxonMobil's innovative technology and Rosneft's resources and experience in the region, enabling production from the difficult-to-develop offshore area. The deal also contains options for additional cooperation, such as extended exploration and production, deliveries to Rosneft's oil refinery in Tuapse
, development of transport infrastructure and research on offshore oil production technologies. According to analysts, offshore areas are central to Rosneft's expansionist plans, and the company is looking for foreign cooperation to bring in new technology and share risks.
As of December 2006, the Rosneft Board of Directors consists of:
As of December 2006, the Rosneft Management Committee consists of:
Government of Russia
The Government of the Russian Federation exercises executive power in the Russian Federation. The members of the government are the prime minister , the deputy prime ministers, and the federal ministers...
. Rosneft is headquartered in Moscow’s Balchug
Balchug
Balchug , also known as Bolotny Ostrov , is an island in the very centre of Moscow, Russia, squeezed between the Moskva River and its old river-bed which was turned into the Vodootvodny Canal in 1786...
district near the Kremlin
Kremlin
A kremlin , same root as in kremen is a major fortified central complex found in historic Russian cities. This word is often used to refer to the best-known one, the Moscow Kremlin, or metonymically to the government that is based there...
, across the Moskva river. Rosneft became Russia's leading extraction and refinement company after purchasing assets of former oil giant Yukos
YUKOS
OJSC "Yukos Oil Company" was a petroleum company in Russia which, until 2003, was controlled by Russian oligarch Mikhail Khodorkovsky and a number of other prominent Russian businessmen. After Yukos was bankrupted, Khodorkovsky was convicted and sent to prison.Yukos headquarters was located in...
at state-run auctions.
Overview
Rosneft conducts oil and gas exploration and production activities on SakhalinSakhalin
Sakhalin or Saghalien, is a large island in the North Pacific, lying between 45°50' and 54°24' N.It is part of Russia, and is Russia's largest island, and is administered as part of Sakhalin Oblast...
island, Siberia
Siberia
Siberia is an extensive region constituting almost all of Northern Asia. Comprising the central and eastern portion of the Russian Federation, it was part of the Soviet Union from its beginning, as its predecessor states, the Tsardom of Russia and the Russian Empire, conquered it during the 16th...
, Timan-Pechora field and southern Russia, including Chechnya. It owns and operates two refineries. The refinery in Tuapse
Tuapse
Tuapse is a town in Krasnodar Krai, Russia, situated on the northeast shore of the Black Sea, south of Gelendzhik and north of Sochi. It serves as the administrative center of Tuapsinsky District, although administratively it is separate from it...
, on the Black Sea
Black Sea
The Black Sea is bounded by Europe, Anatolia and the Caucasus and is ultimately connected to the Atlantic Ocean via the Mediterranean and the Aegean seas and various straits. The Bosphorus strait connects it to the Sea of Marmara, and the strait of the Dardanelles connects that sea to the Aegean...
, focuses on refining high-gravity oil from western Siberia. Another plant in Komsomolsk-on-Amur
Komsomolsk-on-Amur
Komsomolsk-on-Amur is a city in Khabarovsk Krai, Russia, situated on the left bank of Amur River. It is located on the BAM railway line, northeast of Khabarovsk. Population: -Geography and climate:...
is the easternmost refinery in Russia. The Komsomolsk
Komsomolsk
Komsomolsk may refer to:Places*Komsomolsk-on-Amur, a city in Khabarovsk Krai, Russia*Komsomolsk, Russia, name of several inhabited localities in Russia*Komsomolsk, Ukraine, a city in Poltava Oblast, UkraineOther...
Refinery benefits from its technological integration with Nakhodkanefteprodukt, while the Tuapse
Tuapse
Tuapse is a town in Krasnodar Krai, Russia, situated on the northeast shore of the Black Sea, south of Gelendzhik and north of Sochi. It serves as the administrative center of Tuapsinsky District, although administratively it is separate from it...
Refinery is noted for its favorable location on the Black Sea
Black Sea
The Black Sea is bounded by Europe, Anatolia and the Caucasus and is ultimately connected to the Atlantic Ocean via the Mediterranean and the Aegean seas and various straits. The Bosphorus strait connects it to the Sea of Marmara, and the strait of the Dardanelles connects that sea to the Aegean...
coast and is part of an integrated complex with Tuapsenefteprodukt. Rosneft operates shipping (Arkhangelsknefteprodukt), pipeline
Pipeline transport
Pipeline transport is the transportation of goods through a pipe. Most commonly, liquids and gases are sent, but pneumatic tubes that transport solid capsules using compressed air are also used....
and marketing companies. As of 29 December 2006, the company’s market value was US$83.908 billion.
Rosneft net income fell 20% for the first quarter of 2009 from $2.56 billion to $2.06 billion due to the weakness of oil price Rosneft is 75.16% owned by the Russian state, while around 15% of the shares are in free float.
Origin
Rosneft was established in 1993 as a Unitary enterpriseUnitary enterprise
A unitary enterprise is a government-owned corporation in Russia and some other post-Soviet states. Unitary enterprises are business entities that have no ownership rights to the assets they use in their operations....
on the basis of assets previously held by Rosneftegaz, the successor to the Soviet Union
Soviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
's Ministry of Oil and Gas. During early 90s almost all Russian local oil companies and refineries were extracted from Rosneft to form ten integrated companies (later their number was halved as a result of acquisitions). On 29 September 1995, a Government of Russia
Government of Russia
The Government of the Russian Federation exercises executive power in the Russian Federation. The members of the government are the prime minister , the deputy prime ministers, and the federal ministers...
Resolution № 971 transformed Rosneft into an open joint stock company. In October 1998, the Russian government appointed Sergey Bogdanchikov as president. The company had only two obsolete refineries and several low-productive and poorly managed oil-producing assets. Several plans for company's privatization were composed in late 90s but due to struggle of equal influential pretenders they were never fulfilled.
Rosneft increased oil output from 98.56 million bbl (13.47 million tonnes) in 2000 to 148.26 million bbl (20.27 million tonnes) in 2004. In 2001, the company became Russia’s official representative on projects with production sharing agreements (PSA). In 2003, it began production at the Aday block near the Caspian Sea in Western Kazakhstan. In 2004 the company agreed to merge with Gazprom
Gazprom
Open Joint Stock Company Gazprom is the largest extractor of natural gas in the world and the largest Russian company. Its headquarters are in Cheryomushki District, South-Western Administrative Okrug, Moscow...
. The merger plans were discarded in May 2005, allegedly because Bogdanchikov did not wish to take a lesser role in the integrated company answering to Gazprom CEO Alexei Miller
Alexei Miller
Alexey Borisovich Miller is Deputy Chairman of the Board of Directors and Chairman of the Management Committee of Russian energy company Gazprom, Russia's largest company and the world's biggest natural gas producer....
.
Yukos auctions
Since 2004, a series of government auctions have been organized to sell Yukos assets, the majority being won by Rosneft. On 22 December 2004, Rosneft purchased a little known Russian oil company called Baikal Finance Group. Three days earlier, the previously unheard-of Baikal Group had purchased former Yukos subsidiary YuganskneftegazYuganskneftegaz
Yuganskneftegaz is a wholly integrated subsidiary of Rosneft that owns and operates the second largest oil production complex in Russia. It was formerly the most important production subsidiary of Yukos, but was expropriated by the Russian government and given to Rosneft, a state-owned...
(Yugansk) at a state-run auction, ostensibly to satisfy tax debts. This was viewed by many as a de-facto nationalization of Yugansk, and was denounced by Andrei Illarionov, then a senior Putin economic advisor, as “the scam of the year.” However, despite criticisms, the addition of Yungansk resulted in Rosneft becoming Russia’s second-largest producer of oil and gas by 2005, with an average output of 1.69 million bpd. In June 2007, Rosneft paid $731 million for Yukos transportation assets. Although the Yukos acquisition increased debt considerably, the company still plans to triple refining capacity and expand into China. Bogdanchikov has said the company plans to reduce debt to 30% of total assets by 2010. Rosneft wants to extract 140 million tonnes of oil by 2012 and become a global top three energy company. The group also hopes to increase production from 80 million tonnes in 2006 to 103-million-tonne by the end of 2007.
2006 IPO
On 14 July 2006, Rosneft conducted one of the largest initial public offerings (IPO) in financial history after placing nearly 15% of its shares on the Russian Trading SystemRussian Trading System
The Russian Trading System is a stock market established in 1995 in Moscow, consolidating various regional trading floors into one exchange. Originally RTS was modelled on NASDAQ's trading and settlement software; in 1998 the exchange went on line with its own in-house system...
(RTS) and the London Stock Exchange
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...
(LSE). The offering raised USD 10.7 billion. Shares were priced at $7.55, near the upper end of the range forecast when the IPO was announced, resulting in Rosneft being valued at $79.8 billion. Rosneft achieved its objective largely by arranging bilateral deals with strategic investors, such as British Petroleum (BP), Petronas
Petronas
PETRONAS, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company that was founded on August 17, 1974. Wholly owned by the Government of Malaysia, the corporation is vested with the entire oil and gas resources in Malaysia and is entrusted with the responsibility of developing and...
and CNPC, which bought almost $2.6 billion worth of shares during the IPO. Three oligarchs
Oligarchy
Oligarchy is a form of power structure in which power effectively rests with an elite class distinguished by royalty, wealth, family ties, commercial, and/or military legitimacy...
invested over $1 billion each on the LSE (Roman Abramovich
Roman Abramovich
Roman Arkadyevich Abramovich is a Russian businessman and the main owner of the private investment company Millhouse LLC.In 2003, Abramovich was named Person of the Year by Expert, a Russian business magazine. He shared this title with Mikhail Khodorkovsky...
, Vladimir Lisin
Vladimir Lisin
Vladimir Lisin is a Russian steel tycoon. He is considered by Forbes magazine to be the richest man in Russia and 14th richest in the world. His estimated net worth is $24 billion.-Background:...
, and Oleg Deripaska
Oleg Deripaska
Oleg Vladimirovich Deripaska is the Russian Chief executive officer of Basic Element company and a member of the Board of Directors and CEO of United Company RUSAL, a Russian aluminium industry company...
. Critics of the deal included financier George Soros
George Soros
George Soros is a Hungarian-American business magnate, investor, philosopher, and philanthropist. He is the chairman of Soros Fund Management. Soros supports progressive-liberal causes...
, who called on investors to boycott it on ethical grounds, and Andrei Illarionov, who called the deal illegal and "a crime against the Russian people," because none of the proceeds will go into the state budget. The British Financial Services Authority authorised the flotation of Rosneft shares despite an appeal from Yukos, which claimed that allowing the Rosneft IPO would be tantamount to facilitating the sale of stolen goods.
Arctic shelf deals with BP and ExxonMobil
On 15 January 2011, Rosneft and British Petroleum (BP) announced a deal to develop the East-Prinovozemelsky fieldEast-Prinovozemelsky field
The East-Prinovozemelsky field is a gigantic undeveloped Arctic oil and gas field located on the continental shelf of Russia in the South Kara Sea between the Yamal Peninsula and Novaya Zemlya island.-History:The field is divided into three license blocks: EPNZ-1, EPNZ2, and...
on the Russian arctic shelf between the Yamal Peninsula
Yamal Peninsula
The Yamal Peninsula , located in Yamal-Nenets autonomous district of northwest Siberia, Russia, extends roughly 700 km and is bordered principally by the Kara Sea, Baydaratskaya Bay on the west, and by the Gulf of Ob on the east...
and Novaya Zemlya
Novaya Zemlya
Novaya Zemlya , also known in Dutch as Nova Zembla and in Norwegian as , is an archipelago in the Arctic Ocean in the north of Russia and the extreme northeast of Europe, the easternmost point of Europe lying at Cape Flissingsky on the northern island...
island. As part of the deal Rosneft was to receive 5% of BP's shares (worth approximately $7.8 billion, as of January 2011) and BP would get approximately 9.5% of Rosneft's shares in exchange. According to the deal, the two companies would also create an Arctic technology centre in Russia to develop technologies and engineering practices for safe arctic hydrocarbons extraction. The BP-Rosneft deal was blocked in international courts by AAR - BP's Russian partners in the TNK-BP
TNK-BP
TNK-BP is a major vertically integrated Russian oil company. It is Russia's third largest oil producer and among the ten largest private oil companies in the world. TNK-BP is Russia's third largest oil company in terms of reserves and crude oil production...
joint venture - as breaching earlier contractual arrangements between BP and AAR. The TNK-BP partners had previously signed a shareholding agreement which stipulated that their Russian joint venture would be the primary corporate vehicle for BP’s oil and gas operations in Russia. On 30 August 2011, Rosneft announced that instead of BP the partner for EPNZ-1, EPNZ-2 and EPNZ-3 in the Kara Sea
Kara Sea
The Kara Sea is part of the Arctic Ocean north of Siberia. It is separated from the Barents Sea to the west by the Kara Strait and Novaya Zemlya, and the Laptev Sea to the east by the Severnaya Zemlya....
will be ExxonMobil. In exchange, subject to approval by U.S. regulators, in addition to a share in oil production in Russian fields, Rosnoft was granted participation in U.S. fields in Texas and the Gulf of Mexico.
Black sea shelf deal with ExxonMobil
On 27 January 2011, Rosneft and the American company ExxonMobilExxonMobil
Exxon Mobil Corporation or ExxonMobil, is an American multinational oil and gas corporation. It is a direct descendant of John D. Rockefeller's Standard Oil company, and was formed on November 30, 1999, by the merger of Exxon and Mobil. Its headquarters are in Irving, Texas...
signed a deal to establish a joint venture for the purpose of prospecting and extracting oil from the Tuapse field
Tuapse field
The Tuapse field is a large offshore oil field located in the Black Sea, roughly in size and between underwater, containing between of oil.-History:...
deepwater area on the Black Sea shelf, near the coast of the Krasnodar Krai
Krasnodar Krai
-External links:* **...
. The value of the deal is unknown, but ExxonMobil is expected to invest $1 billion in the project. The venture will be shared 50-50 between the companies during prospecting phase, and 2/3 - 1/3 in Rosneft's favour during the extraction phase. The Tuapse Trough is estimated to contain 7.2 billion barrels of oil equivalent. The first well could be drilled in 2012. The joint venture will benefit from ExxonMobil's innovative technology and Rosneft's resources and experience in the region, enabling production from the difficult-to-develop offshore area. The deal also contains options for additional cooperation, such as extended exploration and production, deliveries to Rosneft's oil refinery in Tuapse
Tuapse
Tuapse is a town in Krasnodar Krai, Russia, situated on the northeast shore of the Black Sea, south of Gelendzhik and north of Sochi. It serves as the administrative center of Tuapsinsky District, although administratively it is separate from it...
, development of transport infrastructure and research on offshore oil production technologies. According to analysts, offshore areas are central to Rosneft's expansionist plans, and the company is looking for foreign cooperation to bring in new technology and share risks.
Management
- Igor SechinIgor SechinIgor Ivanovich Sechin is a Russian official, considered a close ally of Vladimir Putin. Sechin is often described as one of Putin's most conservative counselors and the leader of the Kremlin's Siloviki faction, a statist lobby gathering former security services agents...
(Chairman, Deputy Prime Minister) - Sergey BogdanchikovSergey BogdanchikovSergey Mikhailovich Bogdanchikov is a Russian manager.He received a degree from Buguruslansky Gas Technicum in 1976. In 1981, Mr Bogdanchikov earned a PhD from Ufa Gas Institute....
(President of Rosneft) - Hans Jorg Rudloff (Chairman, Audit Committee, CEO of Barclays CapitalBarclays CapitalBarclays Capital is a global British investment bank. It is the investment banking division of Barclays plc which has a balance sheet of over £1.2 trillion . Barclays Capital provides financing and risk management services to large companies, institutions and government clients. It is a primary...
bank) - Andrey Kostin (Chairman, Committee for Staff & Fees Allocation, CEO of VneshtorgbankVneshtorgbankBank VTB , former Vneshtorgbank, is one of the leading universal banks of Russia and the largest in terms of authorized capital....
) - Alexander Nekipelov (Chairman, Committee for Strategic Planning, VP Russian Academy of SciencesRussian Academy of SciencesThe Russian Academy of Sciences consists of the national academy of Russia and a network of scientific research institutes from across the Russian Federation as well as auxiliary scientific and social units like libraries, publishers and hospitals....
) - Kirill Androsov (Deputy Minister of Russian Economic Development & Trade)
- Sergey NaryshkinSergey NaryshkinSergey Yevgenyevich Naryshkin is a Russian official, politician and businessman, head of the Administration of the President of Russia from May 2008 and chairman of the Historical Truth Commission from May 2009....
(Deputy Chairman, Russian Chief of Staff) - Gleb Nikitin (Deputy Chairman)
- Andrey Reus (Deputy Minister of Industry & Energetics of Russia).
As of December 2006, the Rosneft Management Committee consists of:
- Nikolay Borisenko (First Deputy President)
- Sergey Kudryashov (First Deputy President)
- Anatoly Baranovsky (Deputy President)
- Stepan Zemlyuk (Deputy President)
- Sun Ne Kim (Chief Accountant)
- Peter Lloyd O'Brien
- Rizo Tursunov (Deputy President).