RUSSIA MONITOR

Date: 30 September 2018

Tatarstan’s Tatneft Sets Ambitious Goals

The management of Russia’s top oil company has approved the firm’s development strategy until 2030. Tatneft seeks to increase its overall oil production by one third; moreover, if possible, the concern aims to double its capitalization, provided that oil prices remain at their hitherto high level. Analysts have already paid attention to the fact that the Tatarstan-controlled corporation has intention to achieve its goals by increasing the efficiency of already existing assets, instead of carrying out aggressive expansion strategy.

SOURCE: TATNEFT.RU

In the latest S&P Global Platts Top 250 Global Energy Company Rankings, Tatneft has been ranked in 54th place. The company’s shares are essentially held by the regional government of Tatarstan; the authorities of this Russian republic have at their disposal as much as 34 percent of all stakes, including the “golden share”. In 2017, the company’s net profit in 2017 increased by almost 15 percent, amounting to 123 billion roubles, while its income grew by 17.4%, to the estimated value of 681 billion roubles. Such factors as ever-increasing results and apparent prosperity on the global oil market have probably constituted an important incentive for Russia’s oil firm to set more ambitious goals as well as to actually revise the development strategy, adopted two years ago, that provided for the concern’s further expansion until 2025. The recent meeting of the board of directors of Tatneft was held under the leadership of the President of Tatarstan on September 26 in the Russian city of Kazan. Apart from discussing the budget implementation for eight months of 2018 and approving current budgets for October and the fourth quarter of the current year, the company’s management decided to approve the objectives of the Group’s Development Strategy until 2030.

Russia’s Tatneft has announced that it plans to increase oil production by one third – to 38 million tonnes – by 2030; such decision has been taken based on the company’s greater use of their previously exploited deposits. The company also confirmed its intention to increase the processing capacity of the raw material, even regardless of the so-called a tax maneuver. Analysts claim that such goal seems attainable as Tatneft enjoys significant tax reliefs for already exploited deposits. Taking advantage of recent increases in oil prices, the company also boosted its mining forecast for 2020 to 33 million tonnes, compared to the strategy until 2025 as adopted two years ago. Such plans seem very ambitious, given the fact that Tatneft owns and operates Russia’s oldest functional oil deposits. All company’s operations have been hitherto based on the Romashkino field that has been operated for approximately 70 years, which eventually lead to its 80-percent exploitation.

According to the company’s newly adopted strategy, the firm does not plan to acquire any mining stations; instead, it seeks to improve efficiency of the already existing assets. Concern’s investments in both exploration and productions will have amounted to 799 billion roubles by 2030. The firm also plans a twofold increase in its EBIDTA (earnings before interest, taxes, depreciation and amortization) that shall eventually amount to 351 billion roubles. Apart from the aforementioned plans, Tatneft seeks to invest in oil processing; it is all about the modernisation of the NPZ TANEKO refinery, the capacity of which is expected to increase by as much as 80 percent in 2013 (to 14.8 million tonnes). Such maneuver shall provide the company with a five-fold increase in EBIDTA. The average annual increase in production is planned at 2.2 percent. Nonetheless, attaining such goal will largely depend on how efficiently the company aims to introduce innovations to the old deposits. In addition, the process of implementing the adopted objects will rely upon the situation on the global market, which is absolutely independent on Tatneft. Currently, the company’s capitalization is estimated at 28 billion dollars. By 2030, Tatneft’s management expects a 50-percent increase in the concern’s capitalization – up to 36 billion dollars. In the case of both low and high prices, it is expected to reach the amount of 31 billion dollars and 50 billion dollars respectively.

All texts (except images) published by the Warsaw Institute Foundation may be disseminated on condition that their origin is stated.

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