PJSC Tatneft. Annual report 2017
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PJSC Tatneft. Annual report 2017

GROWTH STRATEGY

Integrated annual report of TATNEFT Company for 2017

IN 2017, WE LAUNCHED AN IMPORTANT STAGE OF OUR STRATEGY THAT COVERS ALL THE COMPANY'S BUSINESS UNITS AND IS AIMED AT INCREASING THE COMPANY'S VALUE

The key results of the year included a steady increase in performance indicators along principal business lines, achievement of current priority target values and consolidation of the Company's financial stability.

Strong performance in production ( ) indicates the effectiveness of the Company's business model. The Management has focused on creating new sources for the growth of earnings, strengthening the assets structure and maximizing productivity. We are building up our innovative potential and adopting progressive digital solutions to create a reliable technological foundation in the Company.

We take our commitment to sustainable development seriously. The Company’s goals include maintaining ecological balance, reducing the burden on the environment as a result of our production activity, and ensuring safe working conditions. One of our most important corporate priorities is to support the development of high-quality social infrastructure in the regions where we operate.

EXPANSION AND REPLENISHMENT OF THE RESOURCE BASE

OPERATING RESULTS

Volume of proved reserves

866,489 million tonnes of oil

Ensure the annual replenishmen

≥100%
2025 STRATEGIC GOALS

Expand and diversify the hydrocarbon resource portfolio outside the Republic of Tatarstan and the Russian Federation through access to oil and gas reserves, including by establishing strategic alliances.

RAMPING UP OF OIL AND GAS PRODUCTION

OPERATING RESULTS

Total volume of oil production

28,9 +0,9% by the end of 2016 million tonnes

Total volume of gas production

945,3 million cubic meters
To fulfill OPEC+ commitments, the Company held down the rate of production growth reached in previous years. Given that its vast hydrocarbon reserves are among the largest in Russia, TATNEFT has the potential to ramp up oil production.
2025 STRATEGIC GOALS

Stay on course to move from a stable level of oil production to growth.

Explore possibilities to expand potential production up to 30 million tonnes or higher in 2025.

CONSOLIDATION OF IN-HOUSE OIL AND GAS PROCESSING

OPERATING RESULTS OPERATING RESULTS

Production of oil products

8,5 million tonnes

Production of gas products

1,1 million tonnes

TANECO refinery yield 99,24%

Light oil products yield 87,5%

2025 STRATEGIC GOALS

Increase the production and sales of highly competitive finished goods produced at the high-tech TANECO Complex.

Increase the volume of refined oil to 14 million tons with a light oil output of 90% and a processing depth of at least 97%.

EFFECTIVENESS
OF RETAIL BUSINESS

OPERATING RESULTS OPERATING RESULTS

Retail and distribution network

685 FILLING STATIONS

Volume of sales

2,7 +4% by the end of 2016 million tonnes

Positive dynamics of average daily sale per filling station +6% in 2017

2025 STRATEGIC GOALS

Improve the performance and competitiveness of the retail network in the long run.

The target value - 680 FILLING STATIONS with the volume of sales of one filling stations 13.2 tons per day. .

IN-HOUSE
GENERATING CAPACITIES

OPERATING RESULTS OPERATING RESULTS

Generation of electricity

1,5 billion kw*h

Delivery of thermal energy

4,85 million Gcal
2025 STRATEGIC GOALS

Enhance the reliability of power supply to TATNEFT Group companies and increase the volume of power supplied to companies in the Nizhnekamsk industrial hub.

GROWTH OF THE YIELD OF THE PETROCHEMICAL UNIT

OPERATING RESULTS OPERATING RESULTS

Sale of tires

13,06 +9% by the end of 2016 million tires

Sale of carbon black

133,8 +12.7% by the end of 2016 thousands tonnes
2025 STRATEGIC GOALS

Develop new market niches by effectively launching marketing programs, improve the quality of our products, and expand our product lines.

Retain our leadership positions in the Russian tire market and increase sales of tires to more than 16 million per year.

BALANCED SALE
OF OIL AND OIL PRODUCTS

OPERATING RESULTS OPERATING RESULTS

Revenue from crude oil sales less export duties

365,2 +22,5% by the end of 2016 rub billion

Revenue from the sale of oil products less export duties and excises

241,7 +13,8% by the end of 2016 rub billion
2025 STRATEGIC GOALS

The Company maintains a balance of supply distribution based on strategic priorities and economic feasibility.

KEY PERFORMANCE INDICATORS

Капитализация
1097,0 +13,7% as of December 29, 2017 billion rub (USD 19.1 billion)
CONSOLIDATED ASSETS
1107,5 +1,8% by the end of 2016 billion rub
FREE CASH FLOW
105,3 +130% by the end of 2016 billion rub
INVESTMENT
89,1 billion rub
PROFIT ATTRIBUTABLE TO GROUP SHAREHOLDERS
123,1 +15% by the end of 2016 billion rub (IFRS)
NET INCOME
681,2 +17,4% by the end of 2016 billion rub (IFRS)
ADJUSTED EBITDA
199,1 +14,2% by the end of 2016 billion rub (IFRS)
Taxes and fees
308,9 billion rub (IFRS)

TATNEFT IS ONE OF THE BIGGEST INTERNATIONALLY RECOGNIZED VERTICALLY INTEGRATED OIL COMPANIES

IN THE LEADERS GROUP among oil companies in terms of growth of share price
TOP 10 Steady position in the TOP 10 global leaders among oil companies in terms of shareholder return
8th place among biggest public companies of Russia

THE MOST IMPORTANT PRIORITY OF THE COMPANY –
INDUSTRIAL AND ECOLOGICAL SAFETY

In 2017, 7,3 billion rub invested in environmental protection and security

The company builds production and business processes on the basis of a creative relationship to ecosystem and rational use of natural resources.

The level of anthropogenic pressure on the environment does not exceed the potential of self-fulfillment of eco-systems.

Key programs

  • A program in the field of industrial safery and labour protection to prevent injuries, risks’ reduction, accidents and unplanned losses for 2016-2018.
  • Environmental program for the period up to year 2020.

Key objectives

To ensure safe working conditions, protect health of personnel and the population living in the area where the company operates. As well as adhering to the established standards for permissible environmental impact and further reductions of anthropogenic impact on ecosystems in the area of industrial activity with the introduction of new technologies.

THE COMPANY IS RESPONSIBLE PARTNER OF THE STATE, BUSINESS COMMUNITY, AND ALSO POPULATION AND PUBLIC IN THE REGIONS OF ITS OPERATIONS

In 2017, 7 billion rub were invested in social segment

The company acknowledges that long term sustainable business development is based on social progress of society as a whole and makes a significant contribution to improving the life quality of employees and of local population via solving socially important issues.

Key social programs

  • Infrastructure Development of cities and villages.
  • Healthcare Support.
  • Support of Education.
  • Preservation of spiritual heritage.
  • Support for sports and development of physical culture.
  • TATNEFT Charity Foundation.

HUMAN CAPITAL –
BASIS OF SUCCESSFUL DEVELOPMENT OF THE COMPANY

High level of social warranties, identified by collective agreements of the Group’s enterprises, reflects the responsibility of the Company as a bona fide employer
147 Enterprises
54 thousand people the total number of personnel of Tatneft Group in 2017

Combining professionalism, creative potential of employees and a single corporate culture provides new opportunities for the development of highly efficient business.

Key principles of HR policy

  • Attraction and retention of the best professionals and talented employees.
  • Creating the most favourable working conditions for professional growth and creative development .
  • Development of individual responsibility for the performance and reputation of the Company.
  • Creating and effective equitable system of material and other employees benefits.