Rosneft

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Not to be confused with Russneft.
Rosneft OAO
Type Public (OAO)
Traded as MCXROSN
LSEROSN
Industry Oil and gas
Founded 1993
Headquarters Moscow, Russia
Key people Igor Sechin, (CEO)
Alexander Nekipelov, (Chairman)
Products Petroleum
Natural gas
Motor fuels
Petrochemicals
Revenue Increase US$ 102.0 billion (2012)
Net income Increase US$11.1 billion (2012)
Owner(s)

Russian government (69,5%),

BP (19,75%)
Employees 106,000
Parent Rosneftegaz
Website www.rosneft.com

Rosneft (Russian: Росне́фть, IPA: [rɐˈsnʲeftʲ]; MCXROSN, LSEROSN) 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. In March 2013, after completing acquisition of TNK-BP, Rosneft became the largest publicly traded oil company.[1][2]

Overview[edit]

Rosneft conducts oil and gas exploration and production activities on Sakhalin island, Siberia, Timan-Pechora field and in 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.[3] 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.[4] Rosneft is 75.16% owned by the Russian state, BP a British multinational oil and gas company headquartered in London, England, United Kingdom owns a 19.75% stake while around 5% of the shares are in free float.[5]

History[edit]

Origin[edit]

Rosneft was established in 1993 as a Unitary enterprise on the basis of assets previously held by Rosneftegaz, the successor to the Soviet Union's Ministry of Oil and Gas. During the 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 resolution of the Government of Russia №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 in addition to several low-productive and poorly managed oil-producing assets. Several plans for the company's privatization were formed in the late 1990s, but due to competition 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 Rosneft 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.

Yukos auctions[edit]

The Rosneft headquarters next to the Saint Sophia Church on the bank of the Moskva River

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 Yuganskneftegaz (Yugansk) at a state-run auction, supposedly 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.”[6] However, despite criticism, 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.[7] 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 the total assets by 2010.[8] 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.[9]

2006 IPO[edit]

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 System (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.

Arctic shelf deals with BP and ExxonMobil[edit]

Location of the EPNZ-1, EPNZ-2 and EPNZ-3 oil and gas areas in the Kara Sea

On 15 January 2011, Rosneft and British Petroleum (BP) announced a deal to develop the East-Prinovozemelsky field on the Russian arctic shelf between the Yamal Peninsula and Novaya Zemlya island.[10] 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.[11] 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.[12] 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.[13] 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.[14] 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, Rosneft was granted participation in U.S. fields in Texas and the Gulf of Mexico.[15][16]

Black sea shelf deal with ExxonMobil[edit]

On 27 January 2011, Rosneft and the American company ExxonMobil 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.[17] 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.[17][18] 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.[19] 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.[17]

TNK-BP acquisition[edit]

On 22 October 2012, it was announced that Rosneft will take over TNK-BP International, a parent company of TNK-BP Holding, which is the third largest oil company in Russia.[20] BP will receive in exchange of its stake $12.3 billion of cash and 18.5% of Rosneft's share, while ARR will receive $28 billion in cash.[21] According to Rosneft's CEO Igor Sechin, no discussion had been held on a buyout of minority shareholders in TNK-BP Holding.[22] The deal was completed on 22 March 2013.[1][2]

Management[edit]

A Rosneft petrol station, Moscow

As of December 2006, the Rosneft Board of Directors consisted of:

As of December 2006, the Rosneft Management Committee consisted of:

Member of the Board

See also[edit]

Notes[edit]

  1. ^ a b "Rosneft finalizes TNK-BP deal, becomes world’s largest oil producer". RT. 21 March 2013. Archived from the original on 29 April 2014. Retrieved 25 March 2013. 
  2. ^ a b Soldatkin, Vladimir; Callus, Andrew (22 March 2013). "Rosneft pays out in historic TNK-BP deal completion". Reuters. Archived from the original on 14 February 2014. Retrieved 25 March 2013. 
  3. ^ "Capitalization of Russian Stock Market Increases 1.6% on Thursday". Interfax. 29 December 2006. Archived from the original on 5 February 2012. Retrieved 27 August 2007. 
  4. ^ Clark, Torrey (28 May 2009). Rosneft's Net Income Falls 20% After Oil Prices Tumble (Update2), Bloomberg
  5. ^ "rosneft.com". Rosneft. Archived from the original on 9 February 2014. 
  6. ^ Moscow News December 2004
  7. ^ "Rosneft Gets More of Yukos". Oil & Gas Eurasia. June 2007. Archived from the original on 8 February 2012. Retrieved 27 August 2007. 
  8. ^ "Rosneft Goes on Absorbing Yukos". Russia Today. 7 August 2007. Archived from the original on 28 February 2008. Retrieved 27 August 2007. 
  9. ^ "AFP: Russia's Rosneft Aiming to Become Top Global Oil Company".
  10. ^ "Rosneft Strategic Alliance with BP" (PDF). Rosneft. January 2011. Archived from the original on 30 October 2012. Retrieved 30 January 2011. 
  11. ^ "BP and Russia in Arctic oil deal". BBC News. 14 January 2011. Archived from the original on 2 November 2011. 
  12. ^ "Rosneft and BP Form Global and Arctic Strategic Alliance". Rosneft. 14 January 2011. Archived from the original on 28 May 2012. 
  13. ^ Yenikeyeff, Shamil, "BP, Russian Billionaires, and the Kremlin: A Power Triangle That Never Was". Oxford Energy Comment. 23 November 2011. Retrieved 24 November 2011.
  14. ^ Flynn, Alexis; Gronholt-Pedersen, Jacob (18 May 2011). "BP, Rosneft Still in Talks". The Wall Street Journal. (subscription required). Archived from the original on 17 May 2013. Retrieved 22 May 2011. 
  15. ^ "ExxonMobil in $3.2bn Rosneft Arctic pact". Upstream Online (NHST Media Group). 30 August 2011. (subscription required). Archived from the original on 7 October 2012. Retrieved 31 August 2011. 
  16. ^ Vasilyeva, Nataliya (30 August 2011). "Rosneft Teams Up with Exxon Mobil in Arctic Deal". Associated Press (via Bloomberg Businessweek). Bloomberg. Archived from the original on 2 November 2012. Retrieved 24 October 2012. 
  17. ^ a b c Oliphant, Roland (28 January 2011). "Exxon, Rosneft Sink $1Bln in Black Sea". The Moscow Times. Archived from the original on 20 March 2014. 
  18. ^ "Rosneft signs up with ExxonMobil on Black sea energy development". Russia Today. 27 January 2011. Archived from the original on 13 November 2011. 
  19. ^ "Rosneft and ExxonMobil to Develop Black Sea Resources". Rosneft. 27 January 2011. Archived from the original on 28 May 2012. 
  20. ^ Taking a stake in Rosneft is a big gamble for BP. The Guardian, October 2012. Archived 17 May 2013 at the Wayback Machine
  21. ^ Korsunskaya, Darya; Callus, Andrew (22 October 2012). "Rosneft beefs up with TNK-BP purchase". Reuters. Archived from the original on 22 February 2014. Retrieved 22 October 2012. 
  22. ^ Lehane, Bill (23 October 2012). "Sechin points to multi-billion TNK-BP synergies". Upstream Online (NHST Media Group). Archived from the original on 1 March 2014. Retrieved 24 October 2012. 
  23. ^ "Rosneft's Board of Directors". Rosneft. Archived from the original on 9 February 2014. Retrieved 27 August 2007. 
  24. ^ "Rosneft's Management Board". Rosneft. Archived from the original on 9 February 2014. Retrieved 27 August 2007. 
  25. ^ Deutschlandradio - Startseite.
  26. ^ Baer, Justin (29 May 2014). "Mack Leaving Russia’s Rosneft Board". WSJ.com. Retrieved 6 July 2014. 

References[edit]

External links[edit]