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Rosneft´s CEO reported to Vladimir Putin on the company's 2020 performance

I.Sechin reported that in contrast with a number of international majors, incl. ExxonMobil, Chevron, Shell and Total (they closed the year in the red), Rosneft has shown a profit for 2020.

Rosneft´s CEO reported to Vladimir Putin on the company's 2020 performance

Moscow, February 16 - Neftegaz.RU. Russian President Vladimir Putin hold a meeting with Rosneft CEO Igor Sechin to discuss the company’s performance in 2020 and its activities during the coronavirus pandemic.

During 2020, Rosneft has created an integrated pandemic threat response system.
Crisis centers for monitoring the dynamics of the infection spread operated at 284 Rosneft subsidiaries.

The company has already sent a request to the Russian Healthcare Ministry to reserve enough vaccines for 300 000 employees.
The Head of Rosneft hopes that 100 % of the company´s personnel will receive the vaccine in March, that is, all those whom the doctors allow to be vaccinated.

Regarding the 2020 report, I. Sechin stated that:
  • The financial performance was extremely positive for the company
  • Despite the dramatic impact of the pandemic, Rosneft has shown a profit for 2020, the only global major to show a profit so far
  • Despite the deterioration in the macro environment, this result allowed to create a reserve to pay dividends for 2020 in the amount of 50%
  • So, the only company from the global oil & gas sector that is still profitable today is Rosneft.
I. Sechin reported V. Putin that the company was able to further reduce the financial debt by almost $10 billion.
In addition, last year was a record year in terms of discovering new oil & gas fields.
Rosneft discovered 3 very large fields:
  • 2 in the Kara Sea, named after Marshal Zhukov and Rokossovsky
  • as well as the Zapadno-Irkinskoye field in the north of Taimyr
  • According to WoodMac, these new discoveries are the largest in the world, with their average resource potential exceeding 4 bln barrels of oil equivalent (boe)
In general, by the end of 2020, the organic increase in reserves at Rosneft’s active assets amounted to over 700 million tonnes of oil equivalent in international categories.
Rosneft also increased the volume of production drilling by 9.1 % against the previous year.

The company is also reducing unit operating costs; in production, they came down 9.7 % compared to 2019, to $2.8 per barrel of oil equivalent as of now.
This is one of the best indicators in the global industry.
As for general and administrative expenses, those have gone down by almost a 3rd, and interest expenses, by 15 %.

During the conversation, Sechin answered Putin's question about the average salary in the company.
According to I. Sechin:
  • High-category drillers, professional managers and skilled employees, hold on to their jobs, and the company has extremely low staff turnover rates
  • At the moment the average salary is about RUB 80 000 ($1 092)
It is worthwhile to mention that its not a big income, inasmuch as the average salary in Moscow is about RUB 88 000.
With regard to environmental issues, Rosnefts´s CEO reported that they plan to become a leader in curbing emissions and reach a near-complete utilisation of associated petroleum gas (APG).
Right now, the average level of associated gas utilisation is 83%.
In the company's plans to reach 95% within the next 2 years.

The total volume of Rosneft's obligations at the end of 2020 amounted to about RUB 8.5 trillion (excl. shipments from CNPC and Glencore in 2020).
It's a very large sum, with a net profit of only RUB 174 billion for 2020.
At the same time, 50% of the profits goes to dividends, incl. foreign companies - shareholders.
And who will pay off the debts?

To read the full story in Russian.

Author: Denis Savosin

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