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Project expansion begins to rise Rosneft enters the "growth" transition period

Project expansion begins to rise Rosneft enters the "growth" transition period

July 23, 2014

[China paint information] Rosneft enters the "growth" transition period

if you listen to Rosneft's latest strategic plan, you will find that this Russian government controlled oil giant not only does not pay any attention to Western sanctions, Instead, they are taking pains to enter a new "growth" stage. Of course, all this is due to Russian President Vladimir Putin and President Sechin of Rosneft. In his view, Rosneft's previous stage of "massive mergers and acquisitions" should come to an end, and then it should make every effort to accelerate the development of new projects

M & a "came to an end"

since taking over Rosneft in 2012, Xie Qin has shown extraordinary business talent, led Rosneft on the road of M & A, and "recruited" to accelerate the growth of the enterprise. Mergers and acquisitions require sufficient funds. Therefore, Rosneft has signed oil supply contracts with PetroChina, BP, former Glencore, Vitol, Trafigura and other buyer companies

among the enterprises under Rosneft, there are many "talents" in natural gas development, the "owners" of rich resource reserves, the "big players" in the refining and chemical industry, and the "pioneers" of energy technology. In Sechin's view, such "private customization" is undoubtedly "icing on the cake" for the future of Rosneft

the financial times pointed out that in the face of the "fierce pursuit" of Russia by western countries, after a period of active mergers and acquisitions, Rosneft is focusing on new projects that can drive the national economy. This is undoubtedly a significant strategic shift since Xie Qin took charge of Rosneft. Rosneft has been the most active company in mergers and acquisitions among global energy enterprises. In particular, the purchase and sale of the former British Russian joint venture TNK BP (TNK-BP) has triggered a heated debate in the industry

it is not difficult to see that Rosneft is moving towards "the world's largest oil company". Svyatoslavslav, the chief financial officer of Rosneft, said that Rosneft's strategic planning was "organic growth". "This is not to say that we will no longer conduct M & A transactions, but that the core of the enterprise strategy has changed." In an interview with the financial times, he said, "we rank first in four aspects: asset size, output growth rate, reserve strength and development efficiency. At present, there is no need to accelerate mergers and acquisitions."

however, slavinsky added: "each tolerance group has two tolerance values, group A and group B. of course, there are many M & A opportunities, especially in the drilling and oil service industries, but they will be carried out on a small scale."

new "growth" trilogy

it is understood that Rosneft's "growth plan" mainly focuses on three aspects. First, transform to major natural gas producers. In the past year, Rosneft acquired natural gas producer itera for 2.9 billion euros and Siberia oil and gas company (sibneftegas) for 4 billion euros. Itera is an independent natural gas production and trading company with CIS countries and Baltic States as the core

at present, Rosneft and ExxonMobil are also building liquefied natural gas terminals in the Far East of Russia. Although it is a "novice" in the natural gas market, Rosneft plans to achieve an annual output of 100billion cubic meters of natural gas by 2020, which exceeds the current average annual consumption of Germany

second, the center of gravity in Siberia has shifted from "West" to "East". As the center of Russian oil, western Siberia is gradually losing power. Rosneft plans to increase the production in the east to 50million tons/year from 2020, about 1million barrels/day. In order to achieve the above goals, Rosneft has begun to develop new oil resources. The region from eastern Siberia to the Arctic sea is predicted to have rich undeveloped resources

for a long time, Russia's traditional oil regions, such as West Siberia, have been the key to boosting the national economy. This region provides more than half of the revenue for the Russian government, but faces the risk of gradual decline in production. The oil blocks in West Siberia are old oil fields developed since the era of the former Soviet Union

slavinsky pointed out that Rosneft has set a target of increasing production by 30% in 2020 and doubling the total oil and gas production to 10million barrels/day of oil equivalent in the next 20 years. "The current output is stable at 5million barrels per day, and has the potential to increase to 10million barrels per day, which is more than the current total output of BP, shell and Chevron."

third, expand offshore oil and gas development. Compared with the development of land resources, the opinions on supporting the fight against "ground bar steel" and defining the scope of use of power frequency and medium frequency induction furnaces formulated by the offshore development guidance Industry Association has always been ignored. Rosneft said it would work with ExxonMobil to drill in the karasea in the Arctic in mid August. This area is considered by many geologists to be one of the largest undeveloped conventional oil and gas reserves in the world, but it still needs to be adjusted according to the weather conditions. In addition, Rosneft has launched the development of the world's largest offshore drilling platform, the Okhotsk Sea, in early July. The platform is equivalent to a 50 story building in height, and it is also the world's first oil exploitation platform using an earthquake proof system, which can ensure that the exploitation work will not be affected under the intensity of the magnitude 9 earthquake, and has low temperature resistance, and can work under the low temperature conditions of minus 44 degrees Celsius for more and more users, And it can withstand the tsunami 18 meters high and the ice pressure up to two meters thick

"you will not find another company with an average annual growth rate of 4% in hydrocarbon production." Slavinsky is ambitious. He revealed that the operating cost of Rosneft is only $4.3/barrel, which is the lowest in the global energy industry, and the capital expenditure is also less than $10/barrel. "We have established a balance sheet with safe and stable net cash, with about US $20billion of free cash flow as of the end of March, which is enough to resist any sanctions, including financial market fluctuations." He said, "the company also plans to release more than 400billion rubles (about US $11.6 billion) of free cash flow every year."

Petroleum Technology "self-cultivation"

analysts pointed out that the ambitious "organic growth" plan of Rosneft was an indirect counterattack to the sanctions imposed by the United States on Sechin, and hinted that it would grow rapidly through "self-cultivation" without relying on American oil and gas technology. At the end of June, the Obama administration began to draft a plan to strengthen sanctions on Russia's financial, energy and defense industries, including requiring U.S. energy companies to apply for licenses when exporting technology to Russia

not only Russia scoffs at this, but also European Union and American business leaders "don't buy it". The attitude of European Union leaders who are unwilling to follow the trend of the United States is very obvious. American business leaders also launched a public opinion offensive, saying that this will damage the economic interests of European and American enterprises. Even within the White House, there were differences, and treasury and trade officials opposed tougher sanctions

Karen kstanian, oil and gas analyst at Merrill Lynch in Moscow, said that the strategic shift of Russian oil is actually a clear statement from the Kremlin to the United States

According to Reuters, under the sanctions of "blocking" technology exports by the United States, Russia may seek technical assistance from China while seeking its own development. Bashneft, Russia's fastest-growing oil production company, believes that Western sanctions are bringing Russian energy companies closer to Chinese technology and equipment suppliers

it is understood that Rosneft is expanding its oil service department, RN burenie, and cooperating with Gazprom, novatek and other companies to build ships, drilling platforms and marine equipment. Xie Qin, who came to China and met with "three barrels of oil", was confirmed as a "more reliable and reliable" Chinese partner

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