Following an extensive review of our current operations by the board of directors since taking office in January, our management has concluded that it is in the best and long-term interest of Rusneftegaz to diverge from our existing commercial strategy. Whilst our organization has previously undertaken business in multiple areas and invested in numerous industries, it has been perceived that existing operations focus too narrowly on oil production. It has also been resolved that our company maintains the intellectual and financial resources necessary to expand further within the broader scope of the wider petroleum and energy markets. Therefore, the development plan that is to be enacted in the years ahead should enable Rusneftegaz and our partners to not merely fulfill our potential, but also to enhance our revenues and profit accordingly. Following the publication of the new approach, Deputy Chief Executive Officer, Aleksandr Filyurin, commented:
“Since we joined Rusneftegaz earlier this year, the other directors and I immediately began to think of how we can improve this business. I think it is fair to say that the company has been expanding rapidly over the course of the past decade. But as we began to examine everything more closely and learned how things worked, it became apparent that there is a lot of potential to grow the business from its current foundations. When you look at what we do now, our upstream business is in excellent health, but we are missing out on extra profit by not developing our midstream or downstream operations. The same can be said for our power plants, they are old and aging. If we were to invest in all this properly, it will not only grow our revenues, but it will also grow our profits substantially. With this new strategy, we will be able to grow Rusneftegaz sustainably, not only for the long-term benefit of the company, but also for the long-term benefit of our staff too.”
The new strategy has two primary areas of focus, oil and electricity, and will be implemented in phases over the next five years, in unison with our current investment program. Whilst our intentions to overhaul our existing generation assets has been previously publicly documented and will be conducted in the immediate future in due course, in the longer-term the revised scheme will also entail acquiring coal power plants across the world to expand our production portfolio by 2020. In this instance, Rusneftegaz will aim to purchase stations at a nominal price that have either retired or are approaching the end of their useful lives. Our company will then utilize our capital and skills to overhaul the sites and restore them to function at maximum capacity, while also renewing their environmental and economic credentials. These affairs, which form the later parts of the wider strategy, will be simultaneously undertaken with a major expansion of our petroleum trading business into new markets. We plan to increase international petroleum sales via a new global hub, dealing in not only our own crude and refined products, but also cargoes that do not necessarily originate in the Russian Federation. This particular project should grow our turnover significantly, allowing Rusneftegaz to commence commercial activities in new and expanding markets, such as Asia, with a view to further undertakings in these regions in the near future. Although this scheme will not be implemented until the end of the decade, primarily due to the volume of prior research required, the board of directors believes the scope to grow our existing oil operation within Russia is now limited. Whilst this is due to a number of both domestic and foreign factors, namely the restrictions on accessing the equipment needed to upgrade the efficiency and productivity of our petroleum business, this proposal should enable Rusneftegaz to form new, international partnerships with other companies and institutions to enable our future success. Further details regarding these changes will be circulated to all affected personnel at a suitable time. Any questions should be directed via the usual channels, and we necessitate your cooperation and understanding with these matters.