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Rosneft Oil Company
Type Open joint stock company
Founded 1993
Headquarters Moscow, Russia
Key people Igor Sechin (Chairman)
Sergey Bogdanchikov (President)
Industry Oil and Gas
Products Natural Gas
Petroleum
Revenue $68,991 billion[1] (US GAAP, 2008
Operating income $10,721 billion[1] (US GAAP, 2007
Net income $11,1 billion[1] (US GAAP, 2008
Owner(s) OAO Rosneftegaz 75,16%, OOO RN-Razvitie 5,05%(both state owned), OAO Sberbank 13,09%, free-float 6,7%
Employees 106,000 (2008)
Website rosneft.com

OAO Rosneft Oil Company (Russian: Роснефть) (MICEX:ROSN RTS:ROSN) is an integrated petroleum company owned by the Russian Government. 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.

Contents

Overview

Rosneft conducts oil and gas exploration and production activities on Sakhalin island, Siberia, Timan-Pechora field and southern Russia, including Chechnya. It owns and operates two refineries. The 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 December 29, 2006, the company’s market value was US$83.908 billion.[2] 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 [3]

History

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Origin

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 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 September 29, 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.

Yukos auctions

Since 2004, a series of government auctions have been organized to sell Yukos assets, the majority being won by Rosneft. On December 22, 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, 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.”[4] 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.[5] 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.[6] 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.[7]

2006 IPO

On July 14, 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.[8]

Management

A Rosneft petrol station, Moscow

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

  • Igor Sechin (Chairman, Deputy Prime Minister)
  • Sergey Bogdanchikov (President of Rosneft)
  • Hans Jorg Rudloff (Chairman, Audit Committee, CEO of Barclays Capital bank)
  • Andrey Kostin (Chairman, Committee for Staff & Fees Allocation, CEO of Vneshtorgbank)
  • Alexander Nekipelov (Chairman, Committee for Strategic Planning, VP Russian Academy of Sciences)
  • Kirill Androsov (Deputy Minister of Russian Economic Development & Trade)
  • Sergey Naryshkin (Deputy Chairman, Russian Chief of Staff)
  • Gleb Nikitin (Deputy Chairman)
  • Andrey Reus (Deputy Minister of Industry & Energetics of Russia).[9]

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).[10]

Notes

References

External links


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