Rosneft Annual Report 2020
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Annual Report 2020 ROSNEFT ANNUAL REPORT 2020 Strategy Operating results Market Overview Sustainable Corporate Information and Competitive Development Governance for Shareholders Environment and Investors “Rosneft” and the “Company” mean Rosneft Oil Company PJSC either separately or together with its subsidiaries and affiliates, as the context may require. This Annual Report contains for- ward-looking statements that are subject to risks and uncer- tainties. The actual Rosneft results may differ materially from the information contained in the forward-looking state- ments due to a number of factors. To convert tonnes to barrels, a factor of 7.404 is used. To convert 1,000 cubic metres of gas to barrels of oil equivalent, an average factor of 6.09 is used. To convert Rospan’s gas condensate to barrels of oil equivalent, a factor of 8.3 is used. ANNUAL REPORT CONTAINING INTEGRATED REPORTING ELEMENTS Rosneft's 2020 Annual Report contains elements of integrated reporting as defined in the International Integrated Reporting Framework published by the International Integrated Reporting Council (IIRC). It aims to present the Company’s financial and non-financial results and sustainable development achieve- ments, highlighting the existing links between the competitive environment and Rosneft’s strategy, business model, risk man- agement and a clearly defined corporate governance structure. Since 2017, Rosneft has been involved in the activities of the IIRC business network, which seeks to develop fundamental principles of integrated reporting, while also contributing to and promoting the International Integrated Reporting Framework. The Annual Report was approved by the General Shareholders Meeting on June 01, 2021 (unnumbered Minutes). 1 ROSNEFT / ANNUAL REPORT 2020 Strategy Operating results Market Overview Sustainable Corporate Information and Competitive Development Governance for Shareholders Environment and Investors CONTENTS 4 SUSTAINABLE DEVELOPMENT Health, safety, environment. Climate change ...........................................................176 Personnel and social programmes ................................................................................. 185 Social and economic development of regions and charity in 2020.............200 Company sponsorship activities .................................................................................... 202 Energy efficiency and energy vingsa ............................................................................ 204 Message from the Chairman of Rosneft’s Board of Directors .............................4 Localisation and development of industrial clusters ...........................................207 Message from the Chief Executive Officer and Chairman Supplier and contractor relationships ...........................................................................212 of the Management Board ......................................................................................................6 Research, design, and innovations .................................................................................216 COVID-19 measures: caring for our people is our top priority ..............................8 Digital transformation ..........................................................................................................223 Assets and regions of operation ........................................................................................10 Mission and values .....................................................................................................................12 Investment case ..........................................................................................................................13 5 CORPORATE GOVERNANCE Business model ........................................................................................................................... 14 Message from the Chairman of the Board of Directors ..................................... 230 Company structure ................................................................................................................... 16 Corporate governance ..........................................................................................................232 General shareholders meeting .........................................................................................236 STRATEGY Members of the Board of Directors ...............................................................................238 1 Executive bodies .....................................................................................................................252 Rosneft–2022 Strategy .........................................................................................................20 Remuneration of members of the Board of Directors ........................................ 264 Focus on sustainable development .................................................................................22 Remuneration of the management ...............................................................................265 Committed to our consumers and environment ....................................................... 24 Civil liability insurance for the members of the Board of Directors Carbon management plan for the period until 2035 .............................................. 25 and the management .......................................................................................................... 266 Focus on digital transformation and technology ..................................................... 26 Managing possible conflicts of interest ..................................................................... 266 Progress against strategic objectives ............................................................................ 28 Audit commission ...................................................................................................................272 Long-term development programme and progress report ...................................31 Risk management and internal control system ...................................................... 273 KPI structure .................................................................................................................................32 Investment program in 2020 .............................................................................................. 34 6 INFORMATION FOR SHAREHOLDERS AND INVESTORS OPERATING RESULTS Share capital ............................................................................................................................ 286 2 Dividend policy ....................................................................................................................... 288 Key operating and financial results .................................................................................40 Shareholder relations, key events in 2020 ................................................................ 289 Rosneft’s exploration and reserve replacement ....................................................... 42 Institutional investor relations .........................................................................................292 Production of liquid hydrocarbons ..................................................................................50 Rosneft bonds and credit ratings .................................................................................. 298 Overview of production in regions of operation .......................................................60 Information disclosure ........................................................................................................300 Greenfield development projects .......................................................................................71 In-house oilfield services ......................................................................................................80 Offshore projects ...................................................................................................................... 82 Gas business ...............................................................................................................................86 Development of international projects in promising oil and gas regions ....98 Downstream (refining and marketing) .........................................................................104 Appendix 1. (Consolidated financial statements Rosneft Oil Company for the year ended December 31, 2020 with independent auditor’s report Rosneft Oil Company) ............................301 Appendix 2. (Key risk factors) ................................................................................................................................................310 3 MARKET OVERVIEW AND COMPETITIVE ENVIRONMENT Appendix 3.(Report on compliance with the principles and recommendations of the Corporate Governance Code) .......................................................................................................................................................................314 Macroeconomic environment in 2020 ..........................................................................138 Appendix 4. (Information on compliance with instructions issued by the President of the Russian Oil and gas industry overview .......................................................................................... 146 Federation and the Government of the Russian Federation) .............................................................................