- comply with the investment plans set out in the Company’s approved Strategy;
- implement the most efficient projects, and create an optimized investment portfolio;
- implement collaborative decision-making and delegate investment decision-making through a hierarchy of responsibility;
- minimize the risks associated with project implementation;
- adopt a differentiated decision-making approach to projects and control over their progress, depending on the type and complexity of each project; and
- undertake mandatory periodical monitoring of project implementation.
The medium-term investment program consists of investment projects 103 with broadly defined financing needs and economic and operating performance, and with a scope that is proportional to the Company’s investment capacities.
Large-scale development plans in all business segments will require considerable investments. Total investments were RUB182.2 million in 2012, an 8% increase over 2011. Investment grew both in oil production and refining. These increases were due to the implementation of several large projects in oil production and projects within the framework of a motor fuel quality program in oil refining.
Capital investment totaled RUB 158.7* billion in 2012.
- Capital investment in oil production totaled RUB 90.8 billion in 2012. Compared with 2011, investments in this business increased by 29% due to new asset purchases in the Orenburg Region at year-end 2011, and also investments in the Novoportovskoye field and development activities in Kurdistan.
- In 2012, RUB 41.8 billion were allocated for oil refining operat ions, which is 34% higher than the amount allocated to developing thi s business in 2011. This growth was due to increased investments in the Moscow Refinery, where the active construction stages of quality-related and environmental projects are now in progress.
- Gasoline and diesel hydrotreating units were put into operation at the company’s Omsk refinery, while the main refining project completed in 2012 at NIS was the construction of a MHC/DHT gas oil hydrocracking plant.
- Capital investment in petroleum products sales totaled RUB 16.2 billion in 2012, which is comparable to 2011. The main area of investment in sales was the development of a filling station chain in the Moscow region and St. Petersburg, where active construction and reconstruction of stations is under way. A total of 76 new stations (38 stations built and 38 acquired) were added to the network in 2012. In addition, 87 stations were rennovated and 55 were rebranded.
- Other capital investment totaled RUB 9.8 billion.
INVESTMENTS BY BUSINSS SEGMENTS, RUB BILLION
- Maintain the current level of production at conventional assets;
- Increase geological survey activity in Eastern Siberia, engage in production operations on the Arctic shelf, commence production at the Prirazlomnoye field, commence sea bound oil shipments from the Novoportovskoye field in 2013;
- Implement major foreign petroleum production projects in Venezuela, Iraq and Kurdistan;
- Convert production at the Moscow refinery to production of Emission Euro-4 and Euro-5 motor fuels, introduce projects for deeper refining at the Omsk refinery and deeper refining at the Moscow refinery;
- Reconstruct and rebrand filling stations, mostly in Moscow and St. Petersburg; bring the tank farm network into compliance with the Company’s formats and standards;
- Develop an aviation fueling network and the bunkering business ;and
- Increase production capacity for mixing and packaging of lubricant products in Omsk and Central Russia.
Longer-term investment projects totaled RUB 23.5 billion in 2012.
- Exploration and production projects accounted for RUB 12.2 billion, the bulk of which consists of major development projects at the Prirazlomnoye and Messoyakhnoye fields in the Russian Federation.
- Projects for petroleum product sales accounted for RUB 0.9 billion.
- Projects to acquire assets (M&A) accounted for RUB 7.40 billion; the bulk of these projects were aimed at acquiring licenses to develop new areas of oil production in the Russian Federation and the consolidation of shares of the Company’s subsidiaries.
- Investments in other activities amounted to RUB 3.0 billion.
The Company’s plans for 2013 involve increasing its investments to RUB 240.0 billion, including a 44% increase in exploration and production investments, and a 47% increase in investments for petroleum product sales. The Company intends to reduce oil refining investments by 34%, due to completing the quality program for refineries.