12M AND Q4 2020 FINANCIAL AND OPERATIONAL RESULTS (IFRS)
St Petersburg – February 18, 2021 Agenda
Highlights, Alexey Yankevich Financials Member of the Management Board, CFO
Upstream Igor Shkirov Head of Planning, Performance and Data Management Department, Upstream
Downstream Alexey Urusov Head of Economics and Corporate Planning Directorate
Gazprom Neft 2 Disclaimer
This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Gazprom Neft and its consolidated subsidiaries.
All statements other than statements of There are a number of factors that can affect All forward-looking statements historical facts are, or may be deemed to be, the future operations of Gazprom Neft and can contained in this presentation are forward-looking statements. Forward-looking cause those results to differ materially from expressly qualified in their entirety by statements are statements of future those expressed in the forward-looking the cautionary statements contained or expectations that are based on statements included in this presentation, referred to in this section. Readers management’s current expectations and including (without limitation): should not place undue reliance on assumptions and involve known and unknown these forward-looking statements. Each risks and uncertainties that may cause actual a) price fluctuations in crude oil and oil forward-looking statement speaks only results, performance or events to differ products as of the date of this presentation. materially from those expressed or implied in b) changes in demand for the Company’s Neither Gazprom Neft nor any of its these statements. products subsidiaries undertake any obligation to publicly update or revise any forward- c) currency fluctuations looking statement as a result of new Forward-looking statements include, among d) drilling and production results other things, statements concerning the information, future events or other e) reserve estimates potential exposure of Gazprom Neft to market information. risks and statements expressing f) loss of market and industry competition management’s expectations, beliefs, g) environmental and physical risks estimates, forecasts, projections and h) risks associated with the identification of assumptions. These forward-looking suitable potential acquisition properties and statements are identified by their use of terms targets, and successful negotiation and and phrases such as ‘‘anticipate’’, ‘‘believe’’, completion of such transactions ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, i) economic and financial market conditions in ‘‘may’’, ‘‘plan’’, ‘‘objectives’’, ‘‘outlook’’, various countries and regions ‘‘probably’’, ‘‘project’’, ‘‘will’’, ‘‘seek’’, ‘‘target’’, j) political risks, project delays or ‘‘risks’’, ‘‘goals’’, ‘‘should’’ and similar terms advancements, approvals and cost and phrases. estimates k) changes in trading conditions
Gazprom Neft 3 “Antivirus”: Gazprom Neft’s anti-COVID program
Protecting the health of Continuous For partners and our employees production customers
COVID-19 testing program 140 “clean” shift-handover Continuity of cash payments (>1 million tests) terminals thanks to digital document workflow and signing Personal protective equipment ( Two-step pre-shift COVID-19 checks Flexible terms (45-day credit) for "Gradusnik" mobile app transport companies Safe transportation and workplace New rules for office working disinfection Contactless services for customers Employee vaccinations (AZS.GO mobile app) 60/90-day shifts “Dual-shift” cover at refineries
Personal protective equipment procurement (>2.7 million hazmat suits) Ventilators (for ALV) procured , , Free fuel and oil changes for ambulances, >1 600 >200 000 fuel cards for liters of free fuel through free coffee for doctors volunteers the #InItTogether Production of own antiseptic, and delivery voluntary initiative Help and support for to hospitals medics and volunteers
Gazprom Neft 4 Market engagement is further improved, with greater transparency and openness
Gazprom Neft is now a participant of the UN Global Compact
– the world’s largest corporate sustainability initiative
A A- CDP (former Carbon Disclosure Project) B – the world’s most extensive and B- authoritative examination of companies’ C Companies 1 and 2 performance on climate responsibility C- D Company 3 D-
* Companies 1– 3:Russia’s largest VIOCs
Gazprom Neft 5 2020 – key results
HSE performance
FAR*: 0 cases Gazprom Neft has been given the highest CDP climate rating of all Russia’s oil companies (level B) A unique APG-utilization project is being implemented at the Messoyakhskoye field
Financial results
Revenues: RUB 2,000 billion Adjusted EBITDA**: RUB 485 billion Net profit: RUB 118 billion Free cash flow: RUB 117 billion Interim 9M 2020 dividend approved at RUB 5 per share
Operational results
Hydrocarbon production (mtoe) at 2019 levels Refining volumes down 2.6% YoY (mt)
* FAR = fatality rate ** Includes proportional EBITDA from associated and jointly controlled companies
Gazprom Neft 6 Exploration and production
Flexible portfolio management is ensuring operational sustainability
Gazprom Neft 7 Production optimised under the OPEC+ deal
Daily hydrocarbon production Hydrocarbon production (mtoe) (thousand toe per day) +2.0% 24.8 24.2 23.8 23.5 24.0
272.4 7.4 7.3 7.1 6.7 6.9 262.7 261.4 260.5 255.5 2.1 2.0 1.7 1.2 1.3
14.8 15.4 15.0 15.6 15.8
4Q 19 1Q 20 2Q 20 3Q 20 4Q 20 4Q 19 1Q 20 2Q 20 3Q 20 4Q 20
JV* Gazprom Neft Joint operations**
* Joint ventures: equity-participation entities (Slavneft, Arcticgas, Northgas and Messoyakhaneftegaz) ** Joint operations: proportionally consolidated companies (Tomskneft, SPD) Percentage changes may differ from the calculated figures and values may not sum to total due to rounding
Gazprom Neft 8 Stable production volumes are supported by a balanced asset portfolio
Hydrocarbon production Production change factors (mtoe) (mtoe)
96.1 96.1 96.1 96.1 1.4 0.2 +8.5% -3.6 0.8 1.2
Gas 32.8 35.6
Brownfields 71.9 68.3 -4.4%
+15% Oil 63.3 60.5
Greenfields 24.2 27.8
2019 2020 2019 Brownfields Novy OGF, GPN- Others 2020 Port Zima Zapolyarye
Percentage changes may differ from the calculated figures and values may not sum to total due to rounding
Gazprom Neft 9 Operational efficiency ensured in the face of production constraints
ОPEX (RUB/toe)
-5.0% -4.5% -41 -47 -6 10
Operating expenses (RUB bn)
41 1,876 1,792 33 31 30 28 1,782
4Q 19 1Q 20 2Q 20 3Q 20 4Q 20
2019 Brownfields* Major projects** Joint operations*** 2020 International assets 2020 OPEX in Russia * Noyabrskneftegas, Khantos, Vostok, Orenburg, GPN Yamal ** Prirazlomnoye, Zapolyarye, Meretoyakhaneftegaz *** Tomskneft, SPD Percentage changes may differ from the calculated ones and the values may not converge in the totals due to rounding
Gazprom Neft 10 New projects
Hydrocarbon Zima OGF* GPN-Zapolyarye production
(mtoe) +162.9% +33.8% +608.3%
1.24 1.74 1.63
1.30
0.47
0.23
2019 2020 2019 2020 2019 2020
Key events Initial recoverable reserves up Two cluster pads drilled and Active commissioning of oil 71 million tonnes equipped: total cumulative wells at the Pestsovoye, En- 70 wells completed and production estimated at 2.8 million Yakhinskoye, and Zapadno- commissioned in 2020 tons Tarkosalinskoye fields Power center commissioned: Trunk section of the oil-gathering Chayandinskoye oil and gas transition from diesel- to gas- pipeline commissioned condensate field commissioned powered drilling Sidetrack at well: initial flow rate of 2020 Separation unit commissioned Q4 150 t/day APG production initiated at the 2020 Well pad confirmed, based at well Zapadno-Tarkosalinskoye OGCF Second pipestream of the Zima with cumulative production of 1.6 mt field high-pressure oil pipeline Gas infrastructure program commissioned realization continued
* The Otdalennaya Group of Fields
Gazprom Neft 11 Strategic development of Meretoyakhaneftegaz – establishing partnerships
YAMALO-NENENTS Autonomous Okrug Meretoyakhaneftegaz The Tazovsky project
Tazovsky
8 mtoe 3.3 mtoe peak hydrocarbon target hydrocarbon production 2024 production volumes 2021
Group 1 ₽26 bln under EPT investments 2020
Pilot works start 2018 2019 2020 2021
The design and main construction and installation works on infrastructure facilities have been completed: Commissioning of oil and gas infrastructure – Q2 2021 – external transport pipeline – oil and gas processing facility – high-pressure oil pipeline – delivery and acceptance point Project goes into “Operational” phase – power center – well cluster sites An agreement on the provision of services for receiving, preparing and compressing, transporting and transferring gas to the UGS was signed
Gazprom Neft 12 Downstream
Lower refining volumes in 2020 were the result of the prevailing pricing environment and economic efficiency
Gazprom Neft 13 A better pricing environment in 2H2020
Crude price and average netbacks Crude mix ($/bbl) (mt) 80 -3.5% 67.7 1.0 65.3 0.8 Brent 60 19.2 18.5
Refining 1.7 1.1 netback 4.4 4.6 40
Crude export netback
20 41.5 40.4
0 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 2019 2020 International market Domestic market Crude export Refining Export to CIS
Percentage changes may differ from the calculated ones and the values may not converge in the totals due to rounding
Gazprom Neft 14 The improvement in oil-refining performance is due to major projects at Group refineries going into operation
Refining throughput Conversion rate in Russia* (%) (mt)
-2.6% 82.7 +3.2 p.p. 85.9 41.5 40.4 Yaroslavl 65.3 66.7 NIS 3.1 +5.7% 3.3
Moscow 81.6 84.1 Yaroslavl 7.5 -3.3% 7.3 Omsk 89.5 93.9
Moscow 10.1 2019 2020 -0.6% 10.0
Light product yield in Russia* (%)
64.4 +1.3 p.p. 65.7
Yaroslavl 54.5 55.6 Omsk 20.7 -4.6% 19.8 Moscow 59.3 62.3
Omsk 70.6 71.2
2019 2020 2019 2020 Percentage changes may differ from the calculated ones and the values may not converge in the totals due * At company refineries to rounding
Gazprom Neft 15 Lower demand under the COVID-19 pandemic notwithstanding, the company has maintained its market share through premium sales channels
Aviation Bunkering Lubricants Bitumens
Premium sales in 2020 2.14 mt 1.77 mt 0.31 mt 0.49 mt
Market share in Russia 25.7% 19.1% 23.5% * The market leader in premium bitumens sales
-0.6 p.p. +3.4 p.p. +0.1 p.p. y-o-y y-o-y y-o-y
Key events The number of airports at which Russia’s first LNG bunkering Tender to supply first-fill oils A BRIT-branded protective– Gazprom Neft now has a vessel, the Dmitry Mendeleev, (lubricants) for the HYUNDAI restorative surfacing product presence has increased to 294, was launched in December 2020 AUTOMAKER production line won has been used on the drift- covering 69 countries (+11 as at racing track at the Sochi end-2019) Autodrom
Following a successful tender, A marine-fuels product line has Development of e-commerce Gazprom Neft is the first GPN-Aero is now the only been developed, fully compliant projects has included a new CRM bitumen producer in Russia aviation fuel supplier servicing all with MARPOL requirements: system, MERCAPP, and an online to deliver more than 1 million Chinese airlines at Sheremetyevo 0.9 mt of low-sulfur (0.5% or shop for commercial organizations tons of polymer-bitumen less) hybrid marine fuels were binders to its contractors The company has begun wing-tip (legal entities) G-Energy and sold in 2020 – a 22% market refuelling operations at Baikal Gazpromneft brand-zones have share in low-sulfur fuels in the International Airport, Ulan-Ude been created on ozon.ru Russian Federation
* Pre-packaged oils and lubricants in the Russian Federation – market share
Gazprom Neft 16 Deployment of digital and energy-efficiency technologies throughout the Gazpromneft filling stations network
100% of Gazprom Neft filling Installation of self-checkouts 1,252 launched stations are fully anti-COVID 4–5% of customers now using this compliant – following mask and total filling stations in operation service glove, social distancing and throughout the Russian Federation* disinfecting regimes, and using The network’s first solar- ultra-violet air-disinfectant powered filling station has lighting 17 tonnes been commissioned, covering 5% of operational average daily per-station sales energy needs every year in the Russian Federation Gazprom Neft filling station customers can pay for fuel online using the company’s own apps
Operator-free fuel intake 70% reduction in stations’ Self-checkouts have been operational downtime installed in test mode, allowing customers to pay directly for café and non-fuel goods
Virtual “On Our Way!” card in mobile phone
Online fuel payments through the Gazprom Neft filling station and AZS.GO apps
* Excluding franchisees
Gazprom Neft 17 Russia's first LNG bunkering vessel - a step towards low-carbon transportation
The high-tech Dmitry Mendeleev LNG bunkering vessel – a vessel designed for LNG transportation and “ship-to-ship” bunkering throughout Baltic Sea ports
13.5 knots 8 hours maximum speed average bunkering time
5.7 m draught 100 m TRG (tank- length 3,000 tonnes returned gas) displacement as fuel for the tonnage vessel’s own needs
Ice class PC Arc4 (1A) LNG tanks 19 m width
Portovaya CS
Hamina
LNG (liquefied Baltic Sea Primorsk natural gas)
Ust-Luga – an environmentally- The LNG bunker’s area of Big Port of St friendly marine fuel operation Petersburg
Gazprom Neft 18 Launch of the NIS deep refining complex (DRC)
Deep Refining Complex is the key facility in the second phase of modernizing the Pančevo Refinery Following the commissioning of the Delayed Cocking Unit the Pancevo Refinery's refining depth increased from 86% to 99.2%, with the light product yield increasing from 76% to 87%
€300 million investment in the project cessation of heavy fuel oil production 99% conversion rate – matching the world's best performers reductions in the company’s petroleum coke environmental footprint production launched full compliance with EU environmental increased standards Euro-5 fuel production
Gazprom Neft 19 Technology combines the construction of field facilities with using local materials
“Brit” technology Direct effectiveness of this technology:
At least 2.2 mln ₽/km Direction of movement savings in construction costs
Water or bituminous emulsion Lower infrastructure maintenance costs for the entire period the field is under development Mixing of optimally formulated mixture
Surface course (asphalt cement) Indirect effectiveness of this technology: Ready-made base Base course/subgrade course Earth foundation Cargo-delivery cost savings Delivery costs to oil and gas production facilities are optimized Road building using local materials and drill cuttings as Greater road safety a construction material (optionally) at oil fields
Potential for monetizing this technology Road-surface durability is enhanced specifically by (patenting) beyond Gazprom Neft avoiding the use of crushed stone in road surfacing
Process
Recycling, with the addition of Profiling of subgrade from Ballast Curing period Mixing with local aggregate composite organo-mineral “Brit” local aggregate tamping (3–5 days) 1 2 3additive 4 5 Gazprom Neft 20 Financials
Commitment to strategic priorities while maintaining focus on financial sustainability
Gazprom Neft 21 Recovery in financial performance in 2H 2020 despite challenging market environment
Revenue is down 19.5% y-o-y mainly due to the +2.5% -19.5% drop in oil and oil-product prices on the global 614 2 485 and domestic markets, together with lower 550 515 537 2 000 sales volumes of oil on the international and oil Revenue 398 products on the domestic markets (RUB billion) Revenue is up 2.5% q-o-q mainly due to the recovery in oil and oil-product prices on the global and domestic markets 4Q 19 1Q 20 2Q 20 3Q 20 4Q 20 2019 2020
+5.9% -39.0% Adjusted EBITDA decreased by 39% y-o-y mainly due to the drop in oil and oil-product 180 795 prices and lower contribution to EBITDA from 156 Adjusted 147 joint ventures EBITDA* 99 485 83 Adjusted EBITDA increased by 5.9% q-o-q (RUB billion) mainly due to oil and oil products prices recovery 4Q 19 1Q 20 2Q 20 3Q 20 4Q 20 2019 2020
+191.5% -70.6% The decrease in net profit attributable to Gazprom Neft shareholders y-o-y is mainly 400 80 82 due to EBITDA decline and changes in Net exchange rate income Net income increased q-o-q mainly due to the 28 118 (RUB billion) 22 EBITDA growth and ruble appreciation in Q4 2020 2019 2020 -14 * Adjusted EBITDA includes the share of EBITDA of 4Q 19 1Q 20 2Q 20 3Q 20 4Q 20 associated and jointly controlled companies Gazprom Neft 22 Adjusted EBITDA* reconciliation 2020 vs 2019 (RUB billion)
795
Group share in JV’s EBITDA 167 -295 Internal factors: +45 485 -27 19 11 -24 -9 15 118
628
367
2019 Prices OPEC+ EPT, COVID-19 Upstream Downstream Repairs at 2020 Novy Port Group’s refineries volumes & costs
* Adjusted EBITDA includes the share of EBITDA of associated and jointly controlled companies The values may not converge in the totals due to rounding
Gazprom Neft 23 Adjusted EBITDA* reconciliation 4Q 2020 vs 3Q 2020 (RUB billion)
-6 156 -3 147 18 Group share in JV’s EBITDA 36 34
113 120
3Q 2020 Price factors Seasonal factors One-offs 4Q 2020
* Adjusted EBITDA includes the share of EBITDA of associated and jointly controlled companies The values may not converge in the totals due to rounding
Gazprom Neft 24 New projects development is offset by optimizing other items in the investment program
Investments (RUB billion) Implementation of the Zima and OGF projects in traditional locations -11% Increased drilling and infrastructure construction at oil-rim projects and Meretoyakhaneftegaz assets
31 -28 Reduced activity in developing mature assets
435 The Y-o-Y reduction in capital investment in refining is mainly due to the phased implementation of deep refining projects -26 414 1 -14 400 26 Meretoyakhaneftegaz
388
2019 New projects Brownfields Refining Others 2020 Assets 2020 purchase/sale
Values may not converge in the totals due to rounding
Gazprom Neft 25 Efficient operational activities and optimizing investments has made it possible to generate significant free cash flow
12M 2020 cash flow reconciliation (RUB billion)
-400
517
117 -93 6 -11 16 35 Operating Investments Free cash flow Dividends Net borrowings Forex Others Net cash flow cash flow
Values may not converge in the totals due to rounding
Gazprom Neft 26 Effective debt portfolio management
Debt maturity as at end-2020 Debt portfolio and credit ratings 784.2
20%
The company’s ratings were affirmed by S&P, Moody’s, Fitch and AKRA during 2020 (investment grade, outlook 46% Ставкаstable) купона стала самой низкой в истории 738.5 российского рынка*
February 2020 - successful completion of a RUB10-billion five-year 6.2% p.a. coupon bond placement
28% 237.0
6% 45.7 Cash*, up to 1 year 2 years 3-5 years over 5 Debt RUB bn years (RUB bn)
Timely debt refinancing and cash reserves are key elements in ensuring sustainable liquidity Average debt maturity increased from 3.18 (end-2019) to 3.23 years as at 31 December 2020 The average interest rate declined from 6.18% (end-2019) to 5.13% as at 31 December 2020
* Cash and cash equivalents, short-term deposits
Gazprom Neft 27 The Dividend Policy Regulation approved in December 2020 stipulates a target dividend distribution of at least 50% of net profit
Dividend policy
Interim dividend payment program continued (interim dividends for 9M 2020 in the amount of 5 per share approved in December)
СтавкаDividend купона Policy стала Regulation самой низкой в историиapproved, российского establishing рынка* target dividend payments of at least 50% of adjusted net profit (IFRS)
Gazprom Neft 28