2016 ГANNUALОДОВОЙ ОREPORTТЧЕТ 6 6 01 01 2 2 Й ОТЧЕТ ОВО Д www.transneft.ru О Г ANNUAL REPORT Full corporate name in the Russian primary state registration number General Information language: Публичное акционерное (OGRN) 1027700049486 (certificate 4 общество «Транснефть». of entry into the Unified State Register of Legal Entities on the legal entity Abbreviated corporate name in the registered before July 1, 2002, Series Position in the industry Russian language: ПАО «Транснефть». 77 No. 007893052). 20 The former name in the Russian It is registered in the Russian Fede- language is Открытое акционерное ration in the federal city of Moscow. общество «Акционерная компания Location: Moscow, Russia. Development Strategy по транспорту нефти «Транснефть» 36 (ОАО «АК «Транснефть»). The decision Address: 57 Bolshaya Polyanka, to change the name of the Company Moscow, 119180. was adopted on June 30, 2016 in ap- proving the new version of the Articles Contact telephone: (495) 950-81-78. Financial Review of Association (Order of the Federal Fax: (495) 950-89-00. 58 Agency for State Property Manage- ment No. 520-r), the entry into the Website: http://www.transneft.ru. Unified State Register of Legal Entities Email: [email protected]. was made on July 21, 2016. Sustainable development As of December 31, 2016, the num- 74 Full corporate name of the Company ber of employees on the payroll of in the English language: Public Joint Transneft is 1,298. Stock Company “Transneft”. In the present Annual report the terms Corporate Governance Abbreviated corporate name of the Com- Transneft, the Company refer to the 86 pany in the English language: Transneft. Public Joint Stock Company “Trans- neft”. The terms Transneft, Transneft Transneft was registered by the Mos- Group, the Group refer to: Execution of instructions from the President cow Registration Chamber on August • Transneft and legal entities that com- 140 26, 1993, under No. 026.800 (Сertifi- prise Transneft subsidiaries in accord- and the Government of the Russian Federation cate of state registration series LA ance with the Articles of Association No. 009851). Information on the state of Transneft in describing business registration of Transneft was entered activities and production results; into the Unified State Register of • Transneft and its subsidiaries defined Legal Entities by the Department of in accordance with the International Annexes Russia’s Ministry for Taxes and Levies Financial Reporting Standards (IFRS) 152 for Moscow on July 24, 2002 under in describing the financial results. GENeraL COMPETITIVE • Monopoly on the oil pipeline market. • Tariffs for oil pumping are signifi- ADVANTAGES • Low operating costs in relation to cantly lower than those in the CIS INFORMATION the total transported oil compared and European countries. to rail and water transport. DEVELOPMENT PROSPECTS The Company’s strategic objective is Tayshet trunk oil pipeline; to develop and modernize the Russian • Development of the trunk pipeline trunk pipeline system in order to satu- system to increase the supply of rate both domestic and export markets petroleum products to the port of with oil and petroleum products trans- Primorsk to 15 million tons per year Largest pipeline company Natural monopoly About ported via pipelines. (the Sever (North) Project); in the world • Reconstruction of the approach dam In 2016, we completed the implementa- of the specialized sea oil-loading thousand tion of the following investment projects: port of Kozmino in order to ensure km • Construction of the Zapolyarye– the approach of tankers with a dead- 69 Purpe trunk oil pipeline; weight of 150,000 tons. of trunk pipelines • Construction of the Kuyumba– Main activity: Investment in infrastructure organizing and carrying Investment projects, Technical re-equipment and reno- Period RUB billion vation, RUB billion Controlled by the state and out transportation of oil Over is included in the List of and petroleum products 2016 154.4 183.1 Enterprises and Joint Stock through the system of 2017–2021 297.8 861.8 Companies of Strategic Im- trunk pipelines in the Rus- portance. sian Federation. 500 pump stations INFORMATION FOR • The authorized capital is divid- • The Company’s preferred shares SHAREHOLDERS ed into ordinary and preferred (1,554,875) are listed on the Moscow shares. Exchange. About • 100% of the Company’s ordinary Ticker TRNFP shares (5,546,847) are owned by Price of the preffered shares 197.950 1 the Russian Federation . as of December 31, 2016, RUB MCM Authorized capital, % 23 3,000 Volume Price 250,000 2,500 200,000 of storage tanks 21.9 % 2,000 150,000 1,500 1,000 100,000 500 50,000 0 0 May July April Transportation June March August October January February December November September 78.1 % Volume of trade, RUB million % Price of preferred shares of Transneſt, RUB 85 Ordinary shares of the oil produced in Russia Preferred shares 1. In February 2017, 21,901 additionally issued shares were placed. 4 TRANSNEFT Annual report 2016 5 KEY INdicaTORS ₽ 37.3 billion EBITDA growth in 2016 Transportation of oil and petroleum Oil freight turnover Transportation of petroleum products Revenue, EBITDA and net profit under Number of employees Environmental protection products IFRS, RUB billion 2014 477.5 2014 1,147.2 15.6 2014 31.2 705.8 2014 774.4 2015 115.5 2014 1,969 0.170 31.2 348.1 59.5 2015 1,185.0 16.5 2015 32.2 725.4 2016 114.2 2015 1,417 0.158 2015 481.4 2015 815.7 32.2 2016 1,219.1 17.7 2016 33.1 724.4 371.5 143.4 2016 3,400 0.156 Average number of employees on 2016 483.4 2016 848.1 the payroll of Transneſt subsidiaries, 33.1 thousand people Oil freight turnover, billion tkm Volume of petroleum products 408.8 232.9 Investment in environmental transported, million tons protection, RUB million Oil delivery to consignees, million Per unit costs per 100 tkm, RUB tons Per unit operating expenses for the Revenue Specific emissions of pollutants into transport of petroleum products*, the atmosphere, kg/ton RUB/ton EBITDA Petroleum products delivery to consignees, million tons Net profit * For the period of 2014–2015 the expenses are discounted to 2016 (inflation only) Core assets Transneft tariff for oil pumping compared to similar tariffs in the CIS and Europe based on 2016, USD per 100 tkm 53.3 JSC Polotsktranspetrol Druzhba, average tariff 0.57 2014 18.9 JSC Gomeltransneſt Druzhba, average tariff 0.69 52.3 Transneſt, average tariff 0.77 2015 17.9 TAL Pipeline (Italy, Austria, Germany), Trieste – Ingolstadt 0.87 52.8 Przyjaźń (Poland), average tariff 1.05 2016 16.2 JSC KazTransOil (Kazakhstan), domestic market 1.17 Length of trunk oil pipelines, JSC Ukrtransnaſta, average tariff for Hungary, Slovakia 1.30 thousand km Transpetrol (Slovakia) 1.69 Length of trunk petroleum products pipelines, thousand km JSC KazTransOil (Kazakhstan), for export 1.75 Baku-Tbilisi-Ceyhan Oil Pipeline (BTC Co), average tariff 1.78 Transnaſta (Serbia), average tariff 2.24 MERO (Czech Republic) 2.87 JANAF (Croatia), average tariff 3.14 6 TRANSNEFT Annual report 2016 7 ADDRESS OF THE CHAIRMAN OF THE BOARD OF DIRECTORS DEAR SHAREHOLDERS, namic development of the socio-eco- CORPORATE GOVERNANCE Dear shareholders, nomic infrastructure. The achievements made in 2016 The most significant outcome of As part of improving of the corporate enabled Transneft to maintain and Transneft’s activities in 2016 was the RESULTS ACHIEVED governance principles, the Company’s foster its stand as a Russian major completion of large-scale investment Dividend Policy has been approved. pipeline company in the domestic and projects and the sustained growth of In 2016, the Company successfully This Policy ensures the transparency international fuel and energy industry. the Company’s main production and achieved the production and financial of the procedure for determining divi- The proficiency and cohesion of the economic indicators. goals set by the Board of Directors. dends, unconditional fulfilment of the Company’s team ensure its further The Group’s revenues grew by 4.0% Company’s basic objectives, enhanc- effective development and achieve- PROJECTS IMPLEMENTED and the operating expenses de- ing its investment attractiveness and ment of goals, as well as safeguarding creased by 0.6%. As a result, the financial sustainability. In accordance of the long-term strategic interests of The construction of the Zapolyarye- EBITDA increased by 10.0%. The with the Action Plan (the “road map”) the Russian Federation. Purpe and Kuyumba-Tayshet trunk oil labor productivity increased by 5.6%. approved by the Board of Directors, pipelines (8.6 million tons per annum) The reliability of the piping system in- we continue to work on improving was completed as scheduled. The activi-­­ creased. The share of domestic equip- corporate governance in line with the ties were implemented to develop the ment purchased by Transneft subsid- rules of the Corporate Governance trunk pipeline system in order to in- iaries increased by 0.6% in 2016 as Code recommended by the Bank of Alexander crease the supply of petroleum products compared with 2015, amounting to Russia for joint stock companies. NOVAK to the port of Primorsk to 15 million 91.6%. tons per annum (the Sever Project), and STRATEGIC DEVELOPMENT Chairman of the Board of Directors the reconstruction of the facilities at SUSTAINABLE DEVELOPMENT of Transneft the specialized sea oil-loading port of The capacity of the trunk pipeline Kozmino was completed as scheduled. In the reporting year, Transneft con- system will be increased over the next sistently implemented the decrees of few years. The capacity of the Eastern The Company’s work is of great the President of the Russian Fed- Siberia – Pacific Ocean (ESPO) Pipeline strategic importance and is unique in eration, as well as the instructions, System is being increased in all areas.