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Company History
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Business Strategy
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Oil and Gas
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Oil and Gas Production Map
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Trading
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Ethics and Fraud Prevention
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Electricity
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Research and Development
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Sustainability
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Energy Efficiency
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The company that would one day evolve into Rusneftegaz was first founded in 1999, to facilitate the acquisition of the Losinovskoye oil field in Ukhta, the Komi Republic. Following further investment, the Group rapidly increased in size with the purchase of further petroleum deposits across the Timan-Pechora basin, which over the following decades would evolve into the main production base of the new company. In its formative years, Rusneftegaz did not solely focus on petroleum and energy, but accumulated a broad range of investments across many industries. This strategy, however, was to prove consequential for the business and in 2005, it was decided that the Group would have to curtail its operations outside the scope of petroleum and power for the long-term benefit of the company. This decision was to prove pivotal, and in the years thereafter Rusneftegaz began a prolonged period of rapid growth.
During this timeframe, the company invested in numerous oil projects and accrued a significant portfolio of assets from major local and international petroleum producers operating in Russia. Consequently, Rusneftegaz continued its exceptional growth and ultimately managed to maintain its independence, despite many other Russian oil companies being absorbed into larger groups, and a worldwide financial crisis in the late-2010s. Extraction rates escalated substantially and the Group’s power generation business continued to thrive, reaching a peak in 2012 when Rusneftegaz’s then-managers opted to a buy a fleet of oil tankers to facilitate international exports. It was during this period that the company truly established itself as the largest independent petroleum producer in the Russian Federation, culminating in Rusneftegaz executives travelling the globe representing the group in meetings with both government ministers and senior officials from major international oil companies.
This is due to the fact for the entirety of our history, Rusneftegaz has been headquartered in Moscow, the capital of the Russian Federation and an economic center between Asia and Europe. The city provides Rusneftegaz with the opportunity for collaboration with leading companies and major research institutions working in the oil industry. Moscow also offers the Group the opportunity to recruit candidates of unparalleled quality, and provide training to industry-leading standards to ensure the highest levels of efficiency and workmanship. Rusneftegaz has always ensured employee safety, as well as guaranteeing compliance with all rules and regulations, through the continued deployment of qualified, educated and experienced staff.
In recent times, Rusneftegaz has focused on the development of its existing assets, instead of expanding its portfolio through further acquisitions. The Group also continues to operate its affairs in a demure, modest and unassuming manner, ultimately preferring to focus our resolve on achieving results and success instead of reveling in earned glory. As an ambitious and modern company, Rusneftegaz has continued to be successful in the fulfillment of our obligations to our key stakeholders, not limited to, but including our staff, partners, affiliates, subsidiaries and shareholders, but also the state, federal government, customers and the wider public-at-large. Company directors and managers accomplish this by deploying advanced technology in its production programs, using all resources rationally and appropriately, and by maintaining the highest standards for economic and social development. This includes sustaining the best environmental and safety practices available, and continuing to maintain Rusneftegaz’s transparency and ethics to ensure proper corporate governance.
Currently, Rusneftegaz is led by a skilled team of directors, who during their professional careers have accumulated decades of combined experience whilst working in countries around the world. The aspiration to work only with the best and most knowledgeable personnel has ensured that our organization has always prospered, regardless of any changes in commodity prices or prevailing economic conditions. These appointments have also assisted Rusneftegaz with the fulfillment of our strategic goals; in recent times this has included developing a comprehensive plan to commence physical commodity trading at a new base in New York, but also create an approach to mitigate the effects of the coronavirus pandemic on the company and our employees. As an exceptionally ambitious organization, in the future this will also include assisting us with realizing our long-term vision for our company, including continuing the modernization of existing production capacities and rapidly expanding our international petroleum trading business. Rusneftegaz has always exerted and held a strong interest in the future of energy and continues to do so, ultimately striving to become a global leader in the industry.
During this timeframe, the company invested in numerous oil projects and accrued a significant portfolio of assets from major local and international petroleum producers operating in Russia. Consequently, Rusneftegaz continued its exceptional growth and ultimately managed to maintain its independence, despite many other Russian oil companies being absorbed into larger groups, and a worldwide financial crisis in the late-2010s. Extraction rates escalated substantially and the Group’s power generation business continued to thrive, reaching a peak in 2012 when Rusneftegaz’s then-managers opted to a buy a fleet of oil tankers to facilitate international exports. It was during this period that the company truly established itself as the largest independent petroleum producer in the Russian Federation, culminating in Rusneftegaz executives travelling the globe representing the group in meetings with both government ministers and senior officials from major international oil companies.
This is due to the fact for the entirety of our history, Rusneftegaz has been headquartered in Moscow, the capital of the Russian Federation and an economic center between Asia and Europe. The city provides Rusneftegaz with the opportunity for collaboration with leading companies and major research institutions working in the oil industry. Moscow also offers the Group the opportunity to recruit candidates of unparalleled quality, and provide training to industry-leading standards to ensure the highest levels of efficiency and workmanship. Rusneftegaz has always ensured employee safety, as well as guaranteeing compliance with all rules and regulations, through the continued deployment of qualified, educated and experienced staff.
In recent times, Rusneftegaz has focused on the development of its existing assets, instead of expanding its portfolio through further acquisitions. The Group also continues to operate its affairs in a demure, modest and unassuming manner, ultimately preferring to focus our resolve on achieving results and success instead of reveling in earned glory. As an ambitious and modern company, Rusneftegaz has continued to be successful in the fulfillment of our obligations to our key stakeholders, not limited to, but including our staff, partners, affiliates, subsidiaries and shareholders, but also the state, federal government, customers and the wider public-at-large. Company directors and managers accomplish this by deploying advanced technology in its production programs, using all resources rationally and appropriately, and by maintaining the highest standards for economic and social development. This includes sustaining the best environmental and safety practices available, and continuing to maintain Rusneftegaz’s transparency and ethics to ensure proper corporate governance.
Currently, Rusneftegaz is led by a skilled team of directors, who during their professional careers have accumulated decades of combined experience whilst working in countries around the world. The aspiration to work only with the best and most knowledgeable personnel has ensured that our organization has always prospered, regardless of any changes in commodity prices or prevailing economic conditions. These appointments have also assisted Rusneftegaz with the fulfillment of our strategic goals; in recent times this has included developing a comprehensive plan to commence physical commodity trading at a new base in New York, but also create an approach to mitigate the effects of the coronavirus pandemic on the company and our employees. As an exceptionally ambitious organization, in the future this will also include assisting us with realizing our long-term vision for our company, including continuing the modernization of existing production capacities and rapidly expanding our international petroleum trading business. Rusneftegaz has always exerted and held a strong interest in the future of energy and continues to do so, ultimately striving to become a global leader in the industry.
As an ambitious and growing company, Rusneftegaz has devised a comprehensive plan to facilitate our corporate and economic development over the next decade. This includes setting strategic short and long-term goals for the advancement of all areas of our business operations, whilst also maintaining high aspirations for all those affiliated with our company, including our staff, affiliates, subsidiaries and partners. The expeditious nature of our growth over the past two decades has been primarily due to the ambitious goals and commitments set by both current and previous directors, ultimately yielding the expansion of one of the fastest-growing companies in the Russian Federation. Fundamentally, our primary corporate aim is to enhance the value of our hydrocarbons, primarily through increases in the production of crude oil, in addition to the expansion of our petroleum reserves. However, whilst such activities are financially fruitful immediately, the objective for Rusneftegaz over the course of the next ten years is to transform into a next-generation company acting as a model for other entities around the world, through the modicum of efficiency and technological effectiveness.
We seek to achieve these objectives by continuing to fulfill our technical, scientific and financial potential, whilst also upholding the highest possible standards of corporate governance and best practice. These factors, in unison with a fiscal policy with both liberal and conservative elements, should yield growth of a superior quality through efficient investment decisions in selected areas of development, but also retention of healthy cash balances as a contingency. This is evidenced in our oil business, where the long-term objective is to pursue the vertical integration of all aspects of our operations. Currently, Rusneftegaz is solely a petroleum producer, conducting only downstream and midstream undertakings. Nonetheless, within the next decade it is our aspiration to commence downstream activities, presumably through acquisition of other business or sites. In the immediate future, however, Rusneftegaz aims to maximize our revenue per barrel produced, primarily through the optimization of marketing and extraction strategies.
This essentially entails extricating petroleum in volumes adjusted by current demand, but also involves maintaining and investing in our physical infrastructure to minimize production costs, whilst also making lasting improvements to Rusneftegaz’s operating efficiency. Funds will additionally be directed towards introducing, developing and adopting new technologies, with innovation being a key tenet of our strategy to optimize production, mitigate costs and reduce the price of proven technologies. This is particularly vital with mature oil fields, which require enhanced recovery programs to sustain sufficient extraction rates. Maximizing cost-efficient production for both our hard-to-recover and more depleted hydrocarbon reserves requires technologies that in some instances cannot be solely formulated by us internally. Therefore, we will continue to utilize, facilitate and develop partnerships with other companies, institutions and universities to collectively share experience and knowledge.
Although our current oil operation is centered on upstream activities, recently Rusneftegaz has also rapidly expanded our midstream business, marketing petroleum products internationally to buyers around the world. Whilst we are an ambitious and growing company, we do not currently conduct any crude production or electricity generation activities outside the Russian Federation. Although we have previously ventured into commencing business across the Middle East and North Africa, pursuing schemes with unison with both national governments and the Russian Ministry of Energy, ultimately the discussions held with ministers, secretaries, and diplomats were not fruitful. Thus, the only non-domestic commerce Rusneftegaz conducts is commodities trading from a hub in New York, and it is our aim to grow both this and our other operations further and on a global scale.
Notwithstanding the fact petroleum is a significant component of our enterprise, the advancement of our energy generation business has been a revelation, becoming a vital source of new revenues. As a result, a broader strategy was devised increasing the role of the electricity sector in our future plans, including optimizing the structure of our production capacity to improve efficiency and reduce operating costs. As per our oil enterprise, this encompasses the effective implementation of investment proposals, including undertaking new construction planning and executing upgrades to existing sites. Conversely, despite the fact it is preferable to modernize all projects and enhance energy efficiency; in some instances it is imperative to decommission assets and facilities that are no longer economically viable. All such undertakings, when arranged into a formal production program, should yield increased operational reliability for our power assets, ensuring the reliable supply of power to our customers.
Nonetheless, whilst it is crucial to maintain profitability in the immediate future, with the energy sector currently in flux it is critical to ensure innovation is the fundamental consideration in our long-term strategic planning. Therefore, we intend to deploy the latest technologies, and create our own, to enable us to become market leaders within the next two decades. This may also incorporate expanding our energy business by entering promising and strategic markets both in Russia and abroad, should it be lucrative to do so. Overall, we believe that we have the capability to thrive in an energy transition. We also postulate that Rusneftegaz has the intellectual and financial resources to become a global leader in our field, as a result of our current efforts to engage with hydrogen and next generation power equipment.
We seek to achieve these objectives by continuing to fulfill our technical, scientific and financial potential, whilst also upholding the highest possible standards of corporate governance and best practice. These factors, in unison with a fiscal policy with both liberal and conservative elements, should yield growth of a superior quality through efficient investment decisions in selected areas of development, but also retention of healthy cash balances as a contingency. This is evidenced in our oil business, where the long-term objective is to pursue the vertical integration of all aspects of our operations. Currently, Rusneftegaz is solely a petroleum producer, conducting only downstream and midstream undertakings. Nonetheless, within the next decade it is our aspiration to commence downstream activities, presumably through acquisition of other business or sites. In the immediate future, however, Rusneftegaz aims to maximize our revenue per barrel produced, primarily through the optimization of marketing and extraction strategies.
This essentially entails extricating petroleum in volumes adjusted by current demand, but also involves maintaining and investing in our physical infrastructure to minimize production costs, whilst also making lasting improvements to Rusneftegaz’s operating efficiency. Funds will additionally be directed towards introducing, developing and adopting new technologies, with innovation being a key tenet of our strategy to optimize production, mitigate costs and reduce the price of proven technologies. This is particularly vital with mature oil fields, which require enhanced recovery programs to sustain sufficient extraction rates. Maximizing cost-efficient production for both our hard-to-recover and more depleted hydrocarbon reserves requires technologies that in some instances cannot be solely formulated by us internally. Therefore, we will continue to utilize, facilitate and develop partnerships with other companies, institutions and universities to collectively share experience and knowledge.
Although our current oil operation is centered on upstream activities, recently Rusneftegaz has also rapidly expanded our midstream business, marketing petroleum products internationally to buyers around the world. Whilst we are an ambitious and growing company, we do not currently conduct any crude production or electricity generation activities outside the Russian Federation. Although we have previously ventured into commencing business across the Middle East and North Africa, pursuing schemes with unison with both national governments and the Russian Ministry of Energy, ultimately the discussions held with ministers, secretaries, and diplomats were not fruitful. Thus, the only non-domestic commerce Rusneftegaz conducts is commodities trading from a hub in New York, and it is our aim to grow both this and our other operations further and on a global scale.
Notwithstanding the fact petroleum is a significant component of our enterprise, the advancement of our energy generation business has been a revelation, becoming a vital source of new revenues. As a result, a broader strategy was devised increasing the role of the electricity sector in our future plans, including optimizing the structure of our production capacity to improve efficiency and reduce operating costs. As per our oil enterprise, this encompasses the effective implementation of investment proposals, including undertaking new construction planning and executing upgrades to existing sites. Conversely, despite the fact it is preferable to modernize all projects and enhance energy efficiency; in some instances it is imperative to decommission assets and facilities that are no longer economically viable. All such undertakings, when arranged into a formal production program, should yield increased operational reliability for our power assets, ensuring the reliable supply of power to our customers.
Nonetheless, whilst it is crucial to maintain profitability in the immediate future, with the energy sector currently in flux it is critical to ensure innovation is the fundamental consideration in our long-term strategic planning. Therefore, we intend to deploy the latest technologies, and create our own, to enable us to become market leaders within the next two decades. This may also incorporate expanding our energy business by entering promising and strategic markets both in Russia and abroad, should it be lucrative to do so. Overall, we believe that we have the capability to thrive in an energy transition. We also postulate that Rusneftegaz has the intellectual and financial resources to become a global leader in our field, as a result of our current efforts to engage with hydrogen and next generation power equipment.
As the largest independent oil company in the Russian Federation, Rusneftegaz has significant investments in the production of petroleum. Our subsidiaries, affiliates, and partners are involved in the extraction and processing of hydrocarbons to produce crude oil and a wide range of petroleum products, including various grades of liquid and gaseous fuels, lubricants and industrial chemicals. Through our subsidiaries and affiliates, Rusneftegaz operates 26 oil licenses across both the Timan-Pechora basin in the Komi Republic, and also the Khanty-Mansi Autonomous Okrug in the West Siberian petroleum basin, the two richest oil-producing regions in the Russian Federation. At the end of 2019, DeGolyer and MacNaughton conducted an audit conforming to PRMS international standards, with Rusneftegaz’s total proven and probable hydrocarbon reserves being estimated at 100 million barrels of oil equivalent. Our total extraction data for the past six years can be seen in the table below:
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|
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2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
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Total oil production |
(barrels) |
5.882.190 |
6.026.349 |
6.163.117 |
4.759.826 |
5.632.344 |
6.062.812 |
5.597.263 |
|
Average daily oil production |
(bpd) |
16.713 |
17.747 |
17.789 |
13.041 |
15.431 |
16.565 |
15.335 |
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Peak daily oil production |
(bpd) |
18.394 |
18.823 |
19.754 |
15.309 |
16.642 |
18.959 |
16.219 |
The production of oil is the central pillar of Rusneftegaz's business, and the reorganization of the Group in 2005 provided an opportunity for Rusneftegaz to improve, update and modernize its existing petroleum extraction program. This included the dual aims of both improving production volumes, and also providing additional financial and intellectual resources to develop operative oil reserves. As a result, total oil production in the last financial year was approximately 5,60 million barrels, creating a strong basis for our organization to move forward from in the future. This success can be attributed to numerous factors, including Rusneftegaz's extensive technical expertise and vast experience in implementing large-scale petroleum projects. Consequently, our organization capitalizes on its rich reserves of crude oil whilst maintaining low extraction costs per barrel.
With such extensive resources available, a framework has been devised and approved by managers and engineers to ensure sustainable growth in Rusneftegaz’s oil operations. Fundamentally, technology is the bulwark of the company’s modernization program, such as utilizing software and systems to assist with the management of sites, in addition to calculating an optimum extraction rate to maximize both short and long-term benefits. These practices have conclusively lowered operating costs for Rusneftegaz, and ensured the preservation of extraction capacity for decades into the future. The strategy also relies on the use of specialized and innovative techniques to work on wells that require production intensification and enhanced recovery methods, in addition to the implementation of technical solutions to increase the productivity of sites that operate with a low yields and profits.
Despite ongoing updates to the production framework, our organization has always profited from the application of innovative engineering. For example, Rusneftegaz is continually conducting full geological and hydrodynamic studies of all our oil deposits to accumulate data that can be utilized in our state-of-the-art stimulation software. The computer models generated as a result ultimately improve Rusneftegaz’s understanding of the technological support required to develop the oil production process more effectively. This includes more advanced quality assurance methods and the enhancement of economic and technical analysis across all locations. Such undertakings ultimately would not be able to be conducted without the utilization of expert personnel recruited from across the world, with Rusneftegaz also consulting and collaborating regularly with international companies to establish best practices and maintain contemporary production practices.
Rusneftegaz also upholds rigorous standards and ethics when trading and transporting both petroleum and petroleum products. Whilst the company itself is not involved in refining and other downstream operations, Rusneftegaz conducts extensive upstream and midstream activities, selling millions of barrels of oil and its derivatives every year. All the crude extracted by Rusneftegaz from our fields is sent to a delivery point designated by Transneft, either via road in tankers, or by rail on cargo trains. At this particular location, the petroleum produced by Rusneftegaz is pumped into pipelines, from which it can be transported across the Russian Federation. In most instances, the product arrives at refineries for processing, or to major international shipping ports for sale and to be exported later. In our case, the majority of Rusneftegaz’s commodities trade on the domestic market on exchanges, mostly to refineries in Moscow, Krasnoyarsk and Ufa, but also the ports of Novorossiysk, Primorsk and Ust-Luga.
Whilst Rusneftegaz itself is not involved in the business, a percentage of the petroleum extracted by our organization is also processed into petrochemical products, including aromatics such as xylenes in addition to olefins. Although the majority of what our company produces transforms into useful commodities that are consumed every second across the world, including but not limited to gasoline, jet fuel, diesel and both motor and heating oil, Rusneftegaz does not currently have any short-term plans to enter the downstream sector. Our organization does, however, currently intend to expand our production capabilities internationally in the future, in addition to focusing on the long-term development of all existing projects. Ultimately, with over twenty years of history in the oil and gas industry, we have accrued an abundance of experience and knowledge to continue to face any challenges that occur in the next twenty years and beyond.
With such extensive resources available, a framework has been devised and approved by managers and engineers to ensure sustainable growth in Rusneftegaz’s oil operations. Fundamentally, technology is the bulwark of the company’s modernization program, such as utilizing software and systems to assist with the management of sites, in addition to calculating an optimum extraction rate to maximize both short and long-term benefits. These practices have conclusively lowered operating costs for Rusneftegaz, and ensured the preservation of extraction capacity for decades into the future. The strategy also relies on the use of specialized and innovative techniques to work on wells that require production intensification and enhanced recovery methods, in addition to the implementation of technical solutions to increase the productivity of sites that operate with a low yields and profits.
Despite ongoing updates to the production framework, our organization has always profited from the application of innovative engineering. For example, Rusneftegaz is continually conducting full geological and hydrodynamic studies of all our oil deposits to accumulate data that can be utilized in our state-of-the-art stimulation software. The computer models generated as a result ultimately improve Rusneftegaz’s understanding of the technological support required to develop the oil production process more effectively. This includes more advanced quality assurance methods and the enhancement of economic and technical analysis across all locations. Such undertakings ultimately would not be able to be conducted without the utilization of expert personnel recruited from across the world, with Rusneftegaz also consulting and collaborating regularly with international companies to establish best practices and maintain contemporary production practices.
Rusneftegaz also upholds rigorous standards and ethics when trading and transporting both petroleum and petroleum products. Whilst the company itself is not involved in refining and other downstream operations, Rusneftegaz conducts extensive upstream and midstream activities, selling millions of barrels of oil and its derivatives every year. All the crude extracted by Rusneftegaz from our fields is sent to a delivery point designated by Transneft, either via road in tankers, or by rail on cargo trains. At this particular location, the petroleum produced by Rusneftegaz is pumped into pipelines, from which it can be transported across the Russian Federation. In most instances, the product arrives at refineries for processing, or to major international shipping ports for sale and to be exported later. In our case, the majority of Rusneftegaz’s commodities trade on the domestic market on exchanges, mostly to refineries in Moscow, Krasnoyarsk and Ufa, but also the ports of Novorossiysk, Primorsk and Ust-Luga.
Whilst Rusneftegaz itself is not involved in the business, a percentage of the petroleum extracted by our organization is also processed into petrochemical products, including aromatics such as xylenes in addition to olefins. Although the majority of what our company produces transforms into useful commodities that are consumed every second across the world, including but not limited to gasoline, jet fuel, diesel and both motor and heating oil, Rusneftegaz does not currently have any short-term plans to enter the downstream sector. Our organization does, however, currently intend to expand our production capabilities internationally in the future, in addition to focusing on the long-term development of all existing projects. Ultimately, with over twenty years of history in the oil and gas industry, we have accrued an abundance of experience and knowledge to continue to face any challenges that occur in the next twenty years and beyond.
Below is a comprehensive map detailing all of Rusneftegaz’s current oil production sites in the Timan-Pechora Basin, an expansive geographical area containing a significant percentage of Russia’s petroleum deposits. Although this region overlies the Arctic Circle, our activities are located to the south of the line in both the Komi Republic, on the east side of the map, and the Khanty Mansi Autonomous Okrug, positioned to the west. In the latter, our undertakings occur in the Nizhnevartovskiy District, the most easterly part of the province, tens of kilometers outside the eponymous city. Similarly as remote are our oil fields in the Komi Republic, where we control licenses spanning four localities. Whilst Rusneftegaz owns a single area in the north-west of the territory in the Ust-Tsilemskiy District, the majority of our extraction in the Republic extends over the Pechora, Vuktyl and Troitsko-Pechorskiy Districts in a broadly homogenous agglomeration. As such, the rural nature of our business in western Siberia means all the crude we produce must be transported by truck to local delivery points, from where it can be transported by railway or pipeline to refineries, ports and storage facilitates across the Russian Federation. The diagram below only broadly represents the positions of our sites, and the points can be clicked for more information:
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Average daily oil production
(Barrels, 2021)
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Annual oil production
(Mbbl, 2021)
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Peak daily oil production
(Barrels, 2021)
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Estimated oil reserves
(MMbbl)
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Total oil license areas
(Areas)
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Almost all of Rusneftegaz’s sales are made via trading on exchanges, with the remaining revenues being earned from participation in tenders to supply large companies, including airports and power stations. Whilst we prioritize servicing the Russian market, the gasoline, jet fuel, diesel and both motor and heating oil derived from the petroleum we produce may also be exported, with an amount transferred and sold to entities located in both Northern Europe and ports on the Black Sea. This, however, was considerably expanded in 2019, when Rusneftegaz began its first foray into the business of global commodities trading, establishing ourselves as a reliable supplier of crude oil and petroleum products to both domestic and foreign customers. This operation started when Rusneftegaz opened an international trading in New York, which acts as the sole vendor of our products outside Russia. The single operation, which retains our corporate branding, aims to strengthen our global presence and accelerate our ongoing expansion into new markets, including Africa, the Asian-Pacific and both North and South America. Assigning our international trading operations to a single office has also simplified and optimized workflows, whilst ensuring accountability, efficiency, and transparency. This undertaking also allows us to maximize the value of our petroleum production program via comprehensive sales, shipping and storage strategies, whilst also retaining flexibility in our ability to supply, and undertaking effective hedging to both mitigate the effects of and speculate on fluctuations in commodity prices.
Preceding the commencement of this particular venture, we sold and delivered the goods we extracted to refiners and exporters within the vicinity of the loading port, however, a monumental shift in market dynamics now means that Rusneftegaz has the capacity to supply any industry in all corners of the world. Under the new program, our trading hub in New York has the capability to take control of the crude derived from the Timan-Pechora basin, and can utilize the pipeline system controlled by Transneft to relocate products to major ports, including Novorossiysk, Primorsk, and Ust-Luga, on our behalf. Similarly, Rusneftegaz also undertakes more entrepreneurial business by purchasing discounted petroleum from third parties and remarketing the acquired product for an increased margin. We manage to make incremental gains on our procured fuels, thus ensuring greater profitability, through effective supply chain management, maintaining strong working relationships with our contemporaries and by increasing trade volumes.
Value can also be increased through the minimization of costs, maintaining effective logistics and via blending. Therefore, as a rapidly growing trader of petroleum, Rusneftegaz has been able to facilitate this through numerous partnerships and agreements with worldwide commercial operators, ultimately to expedite execution and delivery. These companies are ultimately responsible for the fulfillment of our contractual arrangements, operating the barges, railways, terminals, and vessels necessary to transport our oil products to their destinations. Rusneftegaz also collaborates with other firms to resolve legal, financial, and tax issues, maintain high safety standards and inspect product quality. In the long term, we view the integration of these services into our own business as a vital modicum to reduce costs further, and are currently devising long-term strategies to expand our trading operation. This involves leasing additional tank storage and deploying a larger number of our own road tankers, rail wagons and sea-faring vessels. With additional financial resources, Rusneftegaz will be able to transport and trade greater quantities of goods, whilst also expanding control of our business from initial extraction to seamless transfer in an international port. The enlargement of our trading operation will be enabled by our team of experts, who are engaged all hours of the day with our aforementioned partners to fulfil our contractual duties almost every day of the year. These personnel are also entrusted to uphold the highest standards of corporate ethics and promote transparency in our operations.
Preceding the commencement of this particular venture, we sold and delivered the goods we extracted to refiners and exporters within the vicinity of the loading port, however, a monumental shift in market dynamics now means that Rusneftegaz has the capacity to supply any industry in all corners of the world. Under the new program, our trading hub in New York has the capability to take control of the crude derived from the Timan-Pechora basin, and can utilize the pipeline system controlled by Transneft to relocate products to major ports, including Novorossiysk, Primorsk, and Ust-Luga, on our behalf. Similarly, Rusneftegaz also undertakes more entrepreneurial business by purchasing discounted petroleum from third parties and remarketing the acquired product for an increased margin. We manage to make incremental gains on our procured fuels, thus ensuring greater profitability, through effective supply chain management, maintaining strong working relationships with our contemporaries and by increasing trade volumes.
Value can also be increased through the minimization of costs, maintaining effective logistics and via blending. Therefore, as a rapidly growing trader of petroleum, Rusneftegaz has been able to facilitate this through numerous partnerships and agreements with worldwide commercial operators, ultimately to expedite execution and delivery. These companies are ultimately responsible for the fulfillment of our contractual arrangements, operating the barges, railways, terminals, and vessels necessary to transport our oil products to their destinations. Rusneftegaz also collaborates with other firms to resolve legal, financial, and tax issues, maintain high safety standards and inspect product quality. In the long term, we view the integration of these services into our own business as a vital modicum to reduce costs further, and are currently devising long-term strategies to expand our trading operation. This involves leasing additional tank storage and deploying a larger number of our own road tankers, rail wagons and sea-faring vessels. With additional financial resources, Rusneftegaz will be able to transport and trade greater quantities of goods, whilst also expanding control of our business from initial extraction to seamless transfer in an international port. The enlargement of our trading operation will be enabled by our team of experts, who are engaged all hours of the day with our aforementioned partners to fulfil our contractual duties almost every day of the year. These personnel are also entrusted to uphold the highest standards of corporate ethics and promote transparency in our operations.
Rusneftegaz completes all of its activities not only in full compliance with the law, but also to the highest ethical standards, to minimize the risk of corruption, fraud, waste, and abuse. All said transgressions are tantamount to serious misconduct, and if not prevented have the potential to cost our company millions of dollars, or be subject to criminal sanctions. Therefore, our organization maintains rigorous procedures and protocols to not only mitigate illegality and transgressions within Rusneftegaz, but also to stop the possibility of malpractice arsing in the first place. The primary conduit for this is through extensive and rigorous internal audit of all aspects of corporate life to prevent criminality and negligence, in addition to perpetuating transparency in all areas of operation.
For instance, to prevent opportunities for fraud to occur, Rusneftegaz sells almost all of its petroleum-based goods via recognized, regulated brokers operating on both domestic and international commodity exchanges, and does not offer any of our products for sale publicly. These markets, which have due processes that make it impossible for monetary loss to occur, are used by Rusneftegaz for trading purposes. This includes the Saint-Petersburg International Mercantile Exchange and also the St. Petersburg Exchange, both of which have long-standing reputations and history. Rusneftegaz’s remaining business is conducted via bidding in tenders to supply major infrastructure and heavy industry, although this only accounts for a minority of our revenues.
However, Rusneftegaz frequently receives solicitations for the supply of both crude oil and refined products via email and telephone. The offers, which are usually derived from free email accounts, almost exclusively originate from both fraudsters and those who are ignorant to the correct way to purchase petroleum. Despite the frequency of these solicitations, our organization has never concluded a deal that has originated via electronic means, and does not believe it shall do so in the immediate future. As a result, Rusneftegaz rejects all prospective contracts that originate via email or telephone without conducting due diligence, with our organization recommending that any prospective buyer find their own regulated commodities broker to meet their requirements.
We can therefore confirm that we have never appointed any entity or individual to act as an agent, mandate, or any other similar title, to sell products on our behalf, and we can also verify that anyone who claims to have such authority is a fraudster and should be reported both law enforcement and to our fraud prevention officer immediately. Similarly, we can also confirm that we do not, and never will, sell any of our products via any social media channel or any business-to-business website, with any listing or offer with Rusneftegaz’s name or branding being entirely fraudulent. To reassert aforementioned statements, our organization maintains the highest ethical standards when trading commodities both domestically and internationally, to uphold good corporate governance and to mitigate corruption, fraud, waste, and abuse. This includes never endorsing or recommending brokers, shipping, and transportation companies or oil storage terminals under any circumstances.
Notwithstanding this, we can attest that in recent times our company has been subject to the fraudulent use of the name, branding and corporate identity of Rusneftegaz and our subsidiaries by criminals. In such instances, scammers send their victims bogus offers for the purchase of either crude or refined petroleum produced by our company, including forged contracts, price lists, letterheads, and bank instructions. Rusneftegaz can also confirm that in majority of cases, the identities of genuine employees are used to deceive their intended target, although upon occasion the names used by these criminals have no affiliation with us. We have also observed situations where web addresses similar to the rusneftegaz.com domain were registered to perpetuate scams, including sending deceptive emails. Further to this, emails allegedly originating from our organization may include hyperlinks to our genuine website in an attempt to appear authentic.
Such communications could also contain malicious links to hoax websites that may contain material stolen from our own official website to seem genuine, and make attempts to phish for personal data. Similarly, fraudsters have been noted for requesting payments to companies with names that are identical or similar to Rusneftegaz, or the names of our subsidiaries, but are not affiliated with our organization. It is also noteworthy that none of our executives, including our Chief Executive Officer, will ever act as a signatory on a transaction or contract arranged by Rusneftegaz. Thus, any agreement that appears to been signed by any such figure can immediately be disregarded as fraudulent, as Rusneftegaz delegates power of attorney to the relevant member of our staff to endorse any arrangement our company enters into.
The most common scheme used by criminals involves the use of supposed over-the-counter, or off-exchange, contracts that allegedly require a payment to a third-party acting as an intermediary or broker. However, Rusneftegaz will never do any business with anyone looking to act as an unregulated intermediary on behalf of another entity. A proposal where our organization is asked to pay commission for the facilitation of a contract is immediately and unilaterally rejected with prejudice. Likewise, our organization does not enter into multilateral arrangements whereby Rusneftegaz would transfer or delegate our rights to anyone to sell our products on our behalf, and a purported buyer would be obliged to make payments to a third party. As aforementioned, our organization does not conduct our business in this manner, and under no circumstances will we ever employ a third party to send commercial offers on our behalf. Rusneftegaz can also clarify that we will never finalize any contract or delivery via email, and if any individual or company is requested to make payments to a supposed intermediary or broker to purchase our products, it is a scam.
We request that all potential commodity buyers remain perennially vigilant to fraud, and that all actors conduct extensive due diligence on their potential counterparties. Do not under any circumstances make payments to Rusneftegaz without clarifying settlement information and procedures first. It is vital to note that we do not use any third parties, such as PayPal, to settle payments, as we require that all monies are sent directly to our bank accounts via wire or bank transfer. If doubts arise regarding the authority or the authenticity of someone who claims to work for or on behalf of Rusneftegaz, we request that you contact us without delay via any of the means on our official website, runseftegaz.com, to verify their legitimacy. Crucially, we would advise anyone suspicious of someone claiming to represent Rusneftegaz to check the telephone numbers and the domain of the email address used to facilitate communication, either by cross-referencing with information or resources on rusneftegaz.com or by contacting us directly through our official site.
Please avoid using any contact information that has been acquired through unverified sources before making any arrangements or transferring funds to anyone purporting to represent our company. Our team will gladly clarify the credibility of anyone affiliated with Rusneftegaz, or the authenticity of a document, if necessary. Also note that all information regarding our company can be obtained through rusneftegaz.com, and that any details on other sites may be incorrect or illegitimate. Rusneftegaz reports all fraudulent websites, entities, and schemes it uncovers to the appropriate legal authorities, and always urges governmental authorities to enforce harsh custodial sanctions on those whom attempt to perpetuate these offenses. If you believe that you are a victim of an economic crime committed in the name of our company, we advise you to contact your local law enforcement authorities immediately, and also report the incident to us via the report@rusneftegaz.com email address.
For instance, to prevent opportunities for fraud to occur, Rusneftegaz sells almost all of its petroleum-based goods via recognized, regulated brokers operating on both domestic and international commodity exchanges, and does not offer any of our products for sale publicly. These markets, which have due processes that make it impossible for monetary loss to occur, are used by Rusneftegaz for trading purposes. This includes the Saint-Petersburg International Mercantile Exchange and also the St. Petersburg Exchange, both of which have long-standing reputations and history. Rusneftegaz’s remaining business is conducted via bidding in tenders to supply major infrastructure and heavy industry, although this only accounts for a minority of our revenues.
However, Rusneftegaz frequently receives solicitations for the supply of both crude oil and refined products via email and telephone. The offers, which are usually derived from free email accounts, almost exclusively originate from both fraudsters and those who are ignorant to the correct way to purchase petroleum. Despite the frequency of these solicitations, our organization has never concluded a deal that has originated via electronic means, and does not believe it shall do so in the immediate future. As a result, Rusneftegaz rejects all prospective contracts that originate via email or telephone without conducting due diligence, with our organization recommending that any prospective buyer find their own regulated commodities broker to meet their requirements.
We can therefore confirm that we have never appointed any entity or individual to act as an agent, mandate, or any other similar title, to sell products on our behalf, and we can also verify that anyone who claims to have such authority is a fraudster and should be reported both law enforcement and to our fraud prevention officer immediately. Similarly, we can also confirm that we do not, and never will, sell any of our products via any social media channel or any business-to-business website, with any listing or offer with Rusneftegaz’s name or branding being entirely fraudulent. To reassert aforementioned statements, our organization maintains the highest ethical standards when trading commodities both domestically and internationally, to uphold good corporate governance and to mitigate corruption, fraud, waste, and abuse. This includes never endorsing or recommending brokers, shipping, and transportation companies or oil storage terminals under any circumstances.
Notwithstanding this, we can attest that in recent times our company has been subject to the fraudulent use of the name, branding and corporate identity of Rusneftegaz and our subsidiaries by criminals. In such instances, scammers send their victims bogus offers for the purchase of either crude or refined petroleum produced by our company, including forged contracts, price lists, letterheads, and bank instructions. Rusneftegaz can also confirm that in majority of cases, the identities of genuine employees are used to deceive their intended target, although upon occasion the names used by these criminals have no affiliation with us. We have also observed situations where web addresses similar to the rusneftegaz.com domain were registered to perpetuate scams, including sending deceptive emails. Further to this, emails allegedly originating from our organization may include hyperlinks to our genuine website in an attempt to appear authentic.
Such communications could also contain malicious links to hoax websites that may contain material stolen from our own official website to seem genuine, and make attempts to phish for personal data. Similarly, fraudsters have been noted for requesting payments to companies with names that are identical or similar to Rusneftegaz, or the names of our subsidiaries, but are not affiliated with our organization. It is also noteworthy that none of our executives, including our Chief Executive Officer, will ever act as a signatory on a transaction or contract arranged by Rusneftegaz. Thus, any agreement that appears to been signed by any such figure can immediately be disregarded as fraudulent, as Rusneftegaz delegates power of attorney to the relevant member of our staff to endorse any arrangement our company enters into.
The most common scheme used by criminals involves the use of supposed over-the-counter, or off-exchange, contracts that allegedly require a payment to a third-party acting as an intermediary or broker. However, Rusneftegaz will never do any business with anyone looking to act as an unregulated intermediary on behalf of another entity. A proposal where our organization is asked to pay commission for the facilitation of a contract is immediately and unilaterally rejected with prejudice. Likewise, our organization does not enter into multilateral arrangements whereby Rusneftegaz would transfer or delegate our rights to anyone to sell our products on our behalf, and a purported buyer would be obliged to make payments to a third party. As aforementioned, our organization does not conduct our business in this manner, and under no circumstances will we ever employ a third party to send commercial offers on our behalf. Rusneftegaz can also clarify that we will never finalize any contract or delivery via email, and if any individual or company is requested to make payments to a supposed intermediary or broker to purchase our products, it is a scam.
We request that all potential commodity buyers remain perennially vigilant to fraud, and that all actors conduct extensive due diligence on their potential counterparties. Do not under any circumstances make payments to Rusneftegaz without clarifying settlement information and procedures first. It is vital to note that we do not use any third parties, such as PayPal, to settle payments, as we require that all monies are sent directly to our bank accounts via wire or bank transfer. If doubts arise regarding the authority or the authenticity of someone who claims to work for or on behalf of Rusneftegaz, we request that you contact us without delay via any of the means on our official website, runseftegaz.com, to verify their legitimacy. Crucially, we would advise anyone suspicious of someone claiming to represent Rusneftegaz to check the telephone numbers and the domain of the email address used to facilitate communication, either by cross-referencing with information or resources on rusneftegaz.com or by contacting us directly through our official site.
Please avoid using any contact information that has been acquired through unverified sources before making any arrangements or transferring funds to anyone purporting to represent our company. Our team will gladly clarify the credibility of anyone affiliated with Rusneftegaz, or the authenticity of a document, if necessary. Also note that all information regarding our company can be obtained through rusneftegaz.com, and that any details on other sites may be incorrect or illegitimate. Rusneftegaz reports all fraudulent websites, entities, and schemes it uncovers to the appropriate legal authorities, and always urges governmental authorities to enforce harsh custodial sanctions on those whom attempt to perpetuate these offenses. If you believe that you are a victim of an economic crime committed in the name of our company, we advise you to contact your local law enforcement authorities immediately, and also report the incident to us via the report@rusneftegaz.com email address.
Whilst Rusneftegaz is one of the leading Russian oil companies in terms of hydrocarbon extraction, our organization has also successfully accumulated a considerable holding of energy generation assets. Consequently, the production and sale of both electrical power and heat has now become one of the most lucrative areas of our business, with Rusneftegaz emerging as a leading entity in the management and renovation of thermal power stations globally. Through the deployment of both world-class expertise and innovation, our company has engineered a considerable percentage of the equipment utilized in our plants, significantly reducing costs to maximize reliability and profitability. This has ultimately resulted in Rusneftegaz becoming one of the most efficient entities currently operating in the Russian electricity sector, including through the application of best practices from across the globe and the utilization of advanced and innovative equipment, solutions, and technologies.
In recent years, the average annual output of our group has been approximately 10,0 billion kilowatt hours (KWh), with Rusneftegaz currently operating 1.860 megawatt (MW) of coal-fired generating capacity across three 600 MW units in the province of Vologda. The plants were originally constructed to supply electricity and heat to industrial enterprises, and since their acquisition by our company has been significantly overhauled to adhere to contemporary standards. In its current configuration, our power station is arranged in a block layout, with each unit consisting of a steam condensing turbine manufactured in France by Alstom, in conjunction with a once-through supercritical steam generator, functioning via passive heat exchange. The site also maintains a condenser working via a closed circulating water supply system with dry fan cooling towers. This process operates with the cooled liquid circulating within a closed circuit, ultimately not increasing in air pollution or humidity as a result. Our total energy production for the past six years can be reviewed in the table below:
In recent years, the average annual output of our group has been approximately 10,0 billion kilowatt hours (KWh), with Rusneftegaz currently operating 1.860 megawatt (MW) of coal-fired generating capacity across three 600 MW units in the province of Vologda. The plants were originally constructed to supply electricity and heat to industrial enterprises, and since their acquisition by our company has been significantly overhauled to adhere to contemporary standards. In its current configuration, our power station is arranged in a block layout, with each unit consisting of a steam condensing turbine manufactured in France by Alstom, in conjunction with a once-through supercritical steam generator, functioning via passive heat exchange. The site also maintains a condenser working via a closed circulating water supply system with dry fan cooling towers. This process operates with the cooled liquid circulating within a closed circuit, ultimately not increasing in air pollution or humidity as a result. Our total energy production for the past six years can be reviewed in the table below:
|
|
|
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
|
Total electricity production |
(TWh) |
11,39 |
10,00 |
10,45 |
10,27 |
10,46 |
8,55 |
9,44 |
|
Installed capacity utilization |
(%) |
69,90 |
61,21 |
64,14 |
63,03 |
64,20 |
52,47 |
57,94 |
|
Total installed capacity |
(MW) |
1.860 |
1.860 |
1.860 |
1.860 |
1.860 |
1.860 |
1.860 |
At present, our power capacity is structured to comply with all legal requirements regarding the generation of electricity and heat, including all environmental legislation. This is achieved through the utilization of equipment, material, and solutions that satisfy the highest Russian and international ecological standards. Thus, in recent times Rusneftegaz has operated in conformity with the ISO 50001, which provides stipulations with regard to energy consumption, efficiency, security, and usage. Consequently, our management has continuously strived to maintain and improve standards in accordance with this code, ensuring our internal assessors uphold such these practices prudently. Fundamentally, our primary objective is to devise and implement our projects through the introduction of state-of-the-art energy efficiency technologies, whilst also optimizing the reliability of the plant. For example, Rusneftegaz is currently planning to install advanced sensors that calculate loading and discharge rates to maximize operational efficiency and regulate fuel consumption. Although bituminous coal serves as the main and reserve fuel of our power station, Rusneftegaz also maintains a 60,0 MW diesel generator assembled by Wärtsilä for standby purposes.
Currently, Rusneftegaz is implementing a comprehensive regeneration program of our installed capacity, with the main intention of these investments being to improve the reliability, efficiency, and effectiveness of our assets. This ultimately entails replacing the existing generation architecture with contemporary, high-performance equipment and machinery that represents a marked improvement from its predecessor. The focus of this scheme, however, is to not replace individual components and parts, but to comprehensively modernize our generating facilities as single homogenous units with unique and complex requirements. Therefore, Rusneftegaz plans to replace or reconstruct all the main and auxiliary equipment of the power stations, in addition to the corresponding electrical equipment and systems. This necessitates reviewing multiple high-voltage circuit breakers and switch gears, plus hundreds of pieces of both secondary switching apparatus and other ancillary machinery.
With such extensive works being required, Rusneftegaz will need to work with an array of equipment manufactures from around the world to ensure the integrity of both our plant and our operations. Although our organization shall always prioritize collaborating with Russian companies, when signing these contracts our management will prioritize doing business with those who specialize in coal-fired power generation, and have developed technologies that are tailored to our current needs. For example, our organization requires infrastructure that can provide us with high efficiency and reliability, enhanced operational and environmental performance, whilst also reducing both fuel consumption and emissions into the atmosphere. We have previously reconstructed our steam generators to increase the quality and rate of the superheated gas, and may conduct upgrades to expand the megawatt capacity of our power plants. Despite this, the primary focus of our overhaul of our turbines and generators is to modernize this equipment to align with contemporary standards of power engineering. These revised designs will also guarantee greater efficiency, reliability and safety, whilst also significantly reducing repair costs and lengthening the service life of the assets.
Despite such extensive and costly upgrades, Rusneftegaz aims to ensure long-term profit growth and financial stability. However, the primary objective of our energy generation business is to provide a reliable heat and power supply to our customers. Such an undertaking is accomplished by focusing upon improving operational and technological efficiency, in conjunction with developing our personnel to maintain the highest professional standards attainable. This includes complying with all local and national laws and regulations, upholding our stringent safety requirements, and aspiring to protect the environment. As a result, Rusneftegaz conducts rigorous risk assessment and planning when conducting our activities, and ensures that work is completed effectively to guarantee the needs and requirements of our customers are satisfied. Our organization also makes a meticulous effort to safeguard this knowledge accrued by our staff by valuing both experience and the most longstanding members of our workforce, whilst also endeavoring to recruit the next generation of employees into our company.
In the longer term, our development strategy is focused upon further expansion within the Russian Federation and internationally. Rusneftegaz’s portfolio will be variegated further into more efficient and sustainable technologies, focusing on modern and advanced thermal generation. In 2030, we plan to have the capability to manufacture and export power equipment to expedite international expansion. In the meanwhile, our organization aspires to cooperate in the near and distant future with global corporations and businesses for the mutual benefit of our respective entities. For instance, we aim to continue collaborating with power equipment manufacturers to acquire advanced foreign technologies to accelerate our technological development and modernize our existing production assets. Both our management and our researchers will further monitor the development of the international power sector, with the expectation that the latest research will enable us to increase the competence of our undertakings, and allow us to consider expanding into new markets. All of such notions, however, will always be conducted in accordance with the best interests of Rusneftegaz, and the geopolitical strategic interests of the Russian Federation.
Currently, Rusneftegaz is implementing a comprehensive regeneration program of our installed capacity, with the main intention of these investments being to improve the reliability, efficiency, and effectiveness of our assets. This ultimately entails replacing the existing generation architecture with contemporary, high-performance equipment and machinery that represents a marked improvement from its predecessor. The focus of this scheme, however, is to not replace individual components and parts, but to comprehensively modernize our generating facilities as single homogenous units with unique and complex requirements. Therefore, Rusneftegaz plans to replace or reconstruct all the main and auxiliary equipment of the power stations, in addition to the corresponding electrical equipment and systems. This necessitates reviewing multiple high-voltage circuit breakers and switch gears, plus hundreds of pieces of both secondary switching apparatus and other ancillary machinery.
With such extensive works being required, Rusneftegaz will need to work with an array of equipment manufactures from around the world to ensure the integrity of both our plant and our operations. Although our organization shall always prioritize collaborating with Russian companies, when signing these contracts our management will prioritize doing business with those who specialize in coal-fired power generation, and have developed technologies that are tailored to our current needs. For example, our organization requires infrastructure that can provide us with high efficiency and reliability, enhanced operational and environmental performance, whilst also reducing both fuel consumption and emissions into the atmosphere. We have previously reconstructed our steam generators to increase the quality and rate of the superheated gas, and may conduct upgrades to expand the megawatt capacity of our power plants. Despite this, the primary focus of our overhaul of our turbines and generators is to modernize this equipment to align with contemporary standards of power engineering. These revised designs will also guarantee greater efficiency, reliability and safety, whilst also significantly reducing repair costs and lengthening the service life of the assets.
Despite such extensive and costly upgrades, Rusneftegaz aims to ensure long-term profit growth and financial stability. However, the primary objective of our energy generation business is to provide a reliable heat and power supply to our customers. Such an undertaking is accomplished by focusing upon improving operational and technological efficiency, in conjunction with developing our personnel to maintain the highest professional standards attainable. This includes complying with all local and national laws and regulations, upholding our stringent safety requirements, and aspiring to protect the environment. As a result, Rusneftegaz conducts rigorous risk assessment and planning when conducting our activities, and ensures that work is completed effectively to guarantee the needs and requirements of our customers are satisfied. Our organization also makes a meticulous effort to safeguard this knowledge accrued by our staff by valuing both experience and the most longstanding members of our workforce, whilst also endeavoring to recruit the next generation of employees into our company.
In the longer term, our development strategy is focused upon further expansion within the Russian Federation and internationally. Rusneftegaz’s portfolio will be variegated further into more efficient and sustainable technologies, focusing on modern and advanced thermal generation. In 2030, we plan to have the capability to manufacture and export power equipment to expedite international expansion. In the meanwhile, our organization aspires to cooperate in the near and distant future with global corporations and businesses for the mutual benefit of our respective entities. For instance, we aim to continue collaborating with power equipment manufacturers to acquire advanced foreign technologies to accelerate our technological development and modernize our existing production assets. Both our management and our researchers will further monitor the development of the international power sector, with the expectation that the latest research will enable us to increase the competence of our undertakings, and allow us to consider expanding into new markets. All of such notions, however, will always be conducted in accordance with the best interests of Rusneftegaz, and the geopolitical strategic interests of the Russian Federation.
Rusneftegaz places significant onus on innovation and advancement through the development of new technologies and approaches to satisfy our stringent sustainability and efficiency targets. Thus, our organization invests both financial and intellectual resources in research and development, not only for both the short and long-term benefit of the Russian Federation, but also the global oil and energy industries on a larger scale. This is ultimately enshrined in a comprehensive five-year research and development plan, detailing the design, engineering and technical measures to be undertaken to improve Rusneftegaz’s operations, including the development, implementation, and introduction of new equipment and methods. The strategy, which was last reviewed in 2020 and is due to be replaced at the beginning of 2025, is primarily based upon ensuring the maximum lifespan and viability of certain assets which are integral to Rusneftegaz’s long-term strategic goals. This also includes senior company researchers analyzing new or revised best practices from around the world, in addition to reviewing internal requirements for labor-saving and cost-reducing apparatus.
Whilst the majority of Rusneftegaz’s research policies are focused on our own immediate economic advancement, our organization has otherwise placed considerable impetus on the development of future power sources. For example, the Group has committed to invest in the next generation of sustainable technologies, and in all production areas there are plans to invest to improve commercial efficiency and raise effectiveness in the future. The Group believes that the latter can be expedited via research and development conducted both externally and internally, and therefore regularly contributes to projects conducted by learned academics and institutions. Thus, Rusneftegaz has recently begun studies to develop hydrogen, a potential alternative to traditional fuels, from modified catalytic reformation techniques. This particular program has been organized with the intention that our company one day acquires the collective knowledge and intellectual property to become one of the largest commercial producers of the element within ten years. Whilst current attention centers upon improvements in battery technology and energy storage, the most effective medium to power larger vehicles, including airplanes and rockets, involves the reformation of water molecules into useful, hydrogen fuel. Our research department is also currently investigating how to improve existing electrolysis technologies, which are used to separate hydrogen molecules from water using electricity. Should these programs successfully result in a decline in the production cost of hydrogen, our forecasts project that in the future, Rusneftegaz has the potential to transform into a leader in this new market.
As a consequence of this, Rusneftegaz has refined a blueprint to effectively manage any intellectual property requirements arising as a result of successful research and development projects orchestrated by our organization. Fundamentally, the company believes that if an innovation arises as a result of our work a legal process should be undertaken to protect our investment, whilst also progressing the longer-term interests of the Russian Federation, in conjunction with all relevant industries. To also facilitate the scientific advance of our nation, Rusneftegaz intends to establish prizes for adults and youth alike to contribute proposals and ideas for our future research and development plans. We believe that an annual award with financial remuneration with participation by external parties has the potential to mitigate the effects of groupthink among our staff, yielding less hegemony and creating new points of view. Collaboration with independent individuals and group is a central tenet of our research policies, and as previously aforementioned, Rusneftegaz periodically submits data to educational establishments, predominantly to contribute to scientific research projects. Each year, our company receives requests for collaboration from institutions both in Russia and abroad, and we create an annual program to render assistance to as many organizations as possible. This mostly includes contributing to geological studies, such as seismology, but also incorporates the supply of data and samples under the terms of agreements with non-academic bodies.
Whilst the majority of Rusneftegaz’s research policies are focused on our own immediate economic advancement, our organization has otherwise placed considerable impetus on the development of future power sources. For example, the Group has committed to invest in the next generation of sustainable technologies, and in all production areas there are plans to invest to improve commercial efficiency and raise effectiveness in the future. The Group believes that the latter can be expedited via research and development conducted both externally and internally, and therefore regularly contributes to projects conducted by learned academics and institutions. Thus, Rusneftegaz has recently begun studies to develop hydrogen, a potential alternative to traditional fuels, from modified catalytic reformation techniques. This particular program has been organized with the intention that our company one day acquires the collective knowledge and intellectual property to become one of the largest commercial producers of the element within ten years. Whilst current attention centers upon improvements in battery technology and energy storage, the most effective medium to power larger vehicles, including airplanes and rockets, involves the reformation of water molecules into useful, hydrogen fuel. Our research department is also currently investigating how to improve existing electrolysis technologies, which are used to separate hydrogen molecules from water using electricity. Should these programs successfully result in a decline in the production cost of hydrogen, our forecasts project that in the future, Rusneftegaz has the potential to transform into a leader in this new market.
As a consequence of this, Rusneftegaz has refined a blueprint to effectively manage any intellectual property requirements arising as a result of successful research and development projects orchestrated by our organization. Fundamentally, the company believes that if an innovation arises as a result of our work a legal process should be undertaken to protect our investment, whilst also progressing the longer-term interests of the Russian Federation, in conjunction with all relevant industries. To also facilitate the scientific advance of our nation, Rusneftegaz intends to establish prizes for adults and youth alike to contribute proposals and ideas for our future research and development plans. We believe that an annual award with financial remuneration with participation by external parties has the potential to mitigate the effects of groupthink among our staff, yielding less hegemony and creating new points of view. Collaboration with independent individuals and group is a central tenet of our research policies, and as previously aforementioned, Rusneftegaz periodically submits data to educational establishments, predominantly to contribute to scientific research projects. Each year, our company receives requests for collaboration from institutions both in Russia and abroad, and we create an annual program to render assistance to as many organizations as possible. This mostly includes contributing to geological studies, such as seismology, but also incorporates the supply of data and samples under the terms of agreements with non-academic bodies.
Rusneftegaz maintains appropriate sustainable development policies, and implements a responsible attitude to ecosystems in the best interest of both Federal and Regional governments. Currently, our fundamental environmental protection policy is to effectively mitigate the impact of our work on the sites we operate on, whilst having a constructive and rational attitude to natural resources. With oil and gas production, this ultimately entails identifying and minimizing potential hazards and risks to both our staff and both the local environment, which we aim to preserve and restore for the benefit of contemporary society and future generations. Thus, respecting nature is an essential component in our corporate strategy and culture, with our organization routinely conducting extensive work to ensure ecological safety and security. Primarily, this involves monitoring all areas of our production activities to create and revise strategies that can result in improved operational performance, including increasing the scope of our environmental protection efforts. A major component of this is the facilitation of investment in maintaining the highest ecological preservation standards possible, with Rusneftegaz, as a socially responsible company, regularly introducing new, advanced technologies and modern equipment to save resources. The implementation of these innovations requires staff to adapt to changes in our environmental policies, which are endorsed by our managers and directors, on a routine basis.
The minimization of the impact our work has on our surroundings, together with any corresponding risks, is wholly dependent on the implementation of the best available technologies, in addition to embracing the latest technical and scientific methods and ideas. Therefore, we are always seeking to better our current undertakings with effective environmental management across all areas of our company, including our subsidiaries, affiliates and partners. As a result, we continually look to educate our personnel to boost their ecological knowledge and understanding, whilst also expanding our cooperation with third parties, including governmental ministries and agencies, and insist upon remaining transparent regarding our sustainability efforts. As a central pillar of our business, Rusneftegaz always prioritizes the prevention of serious incidents, in contrast to potentially having to mitigate the consequences of a man-made occurrence. Hence, Rusneftegaz retains and regularly reviews comprehensive and detailed plans to prevent and manage any oil spills that may occur, in conjunction with all other potential serious incidents. A component of this involves possessing at all times extensive and specialized insurance coverage, principally to ensure that the financial and ecological costs of such a crisis can be met, whilst guaranteeing that the long-term consequences of an event will not cause severe damage either to Rusneftegaz or the affected area.
Consequently, our organization has undertaken a series of measures to ensure the sustainability of our operations. Namely, this includes utilizing modular facilities on oilfields to reduce the volume of construction on-location whilst minimizing the amount of necessary groundwork, conjointly with the adoption of both advanced biotechnologies and soil treatment methods to restore contaminated sites and remove pollutants from an area. For example, in places that are regularly at low or freezing temperatures that would otherwise be difficult to manage, Rusneftegaz has deployed a bacterium that is capable of degrading hydrocarbons, thus biologically treating land in need of restoration. More commonly, however, we use phytoremediation to repair soils and biodegrade hydrocarbon-based contaminants, primarily through the cultivation of grasses with extensive branched root systems. These structures allow gaseous exchange to take place over a larger surface area, yielding a greater volume of biologically active substances. Such plants also provide a low-cost process of reclamation via the provision of an optimized ecosystem that allows the decay of hydrocarbons at an accelerated speed. Therefore, grasses are always sewn in mixtures, as some of these are hardier than other varieties, and the growth of new flora is a reliable indicator of effective soil recovery, depending on the underlying climatic and environmental conditions.
On the other hand, good sustainable practices extend further than merely preserving the environment in which we extract petroleum. Rusneftegaz has always rigorously upheld and maintained the highest safety standards possible, exceeding local requirements and international recommendations, by systematically administering our compliance with these codes. Moreover, refuse disposal, particularly in our industry, is commonly associated with significant environmental risk, and our organization consumes considerable amounts of water in across all of our business activities. Rusneftegaz has, therefore, adopted new policies and state-of-the-art equipment to minimize or eliminate waste in all areas of our operations, whilst also committing to reduce water consumption. The latter includes recycling and reusing the water we use, ultimately by reducing the per-unit contaminants in wastewater, and also by treating a greater volume of the potable water discharged throughout our normal production operations. Rusneftegaz intends to do our utmost to ensure the integrity of the environments in which we work, from our production fields in West Siberia, to our offices across the Russian Federation. Such efforts, when arranged in unison, should provide long-term benefits for our company, through both the mitigation of costs and the preservation of the health of our workforce. Fundamentally, this should ensure that our organization prospers not only in the immediate future, but the years and decades ahead.
The minimization of the impact our work has on our surroundings, together with any corresponding risks, is wholly dependent on the implementation of the best available technologies, in addition to embracing the latest technical and scientific methods and ideas. Therefore, we are always seeking to better our current undertakings with effective environmental management across all areas of our company, including our subsidiaries, affiliates and partners. As a result, we continually look to educate our personnel to boost their ecological knowledge and understanding, whilst also expanding our cooperation with third parties, including governmental ministries and agencies, and insist upon remaining transparent regarding our sustainability efforts. As a central pillar of our business, Rusneftegaz always prioritizes the prevention of serious incidents, in contrast to potentially having to mitigate the consequences of a man-made occurrence. Hence, Rusneftegaz retains and regularly reviews comprehensive and detailed plans to prevent and manage any oil spills that may occur, in conjunction with all other potential serious incidents. A component of this involves possessing at all times extensive and specialized insurance coverage, principally to ensure that the financial and ecological costs of such a crisis can be met, whilst guaranteeing that the long-term consequences of an event will not cause severe damage either to Rusneftegaz or the affected area.
Consequently, our organization has undertaken a series of measures to ensure the sustainability of our operations. Namely, this includes utilizing modular facilities on oilfields to reduce the volume of construction on-location whilst minimizing the amount of necessary groundwork, conjointly with the adoption of both advanced biotechnologies and soil treatment methods to restore contaminated sites and remove pollutants from an area. For example, in places that are regularly at low or freezing temperatures that would otherwise be difficult to manage, Rusneftegaz has deployed a bacterium that is capable of degrading hydrocarbons, thus biologically treating land in need of restoration. More commonly, however, we use phytoremediation to repair soils and biodegrade hydrocarbon-based contaminants, primarily through the cultivation of grasses with extensive branched root systems. These structures allow gaseous exchange to take place over a larger surface area, yielding a greater volume of biologically active substances. Such plants also provide a low-cost process of reclamation via the provision of an optimized ecosystem that allows the decay of hydrocarbons at an accelerated speed. Therefore, grasses are always sewn in mixtures, as some of these are hardier than other varieties, and the growth of new flora is a reliable indicator of effective soil recovery, depending on the underlying climatic and environmental conditions.
On the other hand, good sustainable practices extend further than merely preserving the environment in which we extract petroleum. Rusneftegaz has always rigorously upheld and maintained the highest safety standards possible, exceeding local requirements and international recommendations, by systematically administering our compliance with these codes. Moreover, refuse disposal, particularly in our industry, is commonly associated with significant environmental risk, and our organization consumes considerable amounts of water in across all of our business activities. Rusneftegaz has, therefore, adopted new policies and state-of-the-art equipment to minimize or eliminate waste in all areas of our operations, whilst also committing to reduce water consumption. The latter includes recycling and reusing the water we use, ultimately by reducing the per-unit contaminants in wastewater, and also by treating a greater volume of the potable water discharged throughout our normal production operations. Rusneftegaz intends to do our utmost to ensure the integrity of the environments in which we work, from our production fields in West Siberia, to our offices across the Russian Federation. Such efforts, when arranged in unison, should provide long-term benefits for our company, through both the mitigation of costs and the preservation of the health of our workforce. Fundamentally, this should ensure that our organization prospers not only in the immediate future, but the years and decades ahead.
As a large and prosperous company, Rusneftegaz both produces large quantities of fuel whilst also consuming great amounts of energy in all areas of our operations. This extends from combusting bituminous coal in our power plants, to utilizing electricity for the equipment in our offices. Consequently, this accrues significant costs for our organization, both environmentally and in terms of financial expenses borne. Therefore, our management is constantly reviewing our current practices to ensure that these resources are used efficiently, and makes improvements accordingly when possible. At a minimum, this includes not only complying with all the relevant laws and regulations of the Russian Federation in regard to the efficient use and saving of energy, but also adhering to any subsequent legislation. Currently, this entails following the terms of Federal Law No. 261-FZ, although our company also acts in accordance with local and international requirements when applicable. In all areas of our operations, Rusneftegaz has recently updated our best practices in accordance with ISO 50001, a code meticulously detailing how to manage energy use and consumption efficiently.
For our organization, this involves implementing a variety of technical and operational measures to simultaneously reduce our resource usage, whilst also increasing our levels of productivity to align with our other strategic goals. These efforts, when in unison, should guarantee the sustainable development of Rusneftegaz both in the short and long term. For example, our company is actively reducing our energy consumption and usage, primarily through decreasing the fuel consumption in our electricity production business. Such cuts are being executed via our current regeneration of our existing generation assets, with the recent overhaul of our steam generators improving the heat efficiency of the combusted coal, whilst also reducing fuel consumption and therefore the corresponding costs. In the future, this will also lead to a decline in maintenance expenses, in addition to an enhanced capacity to monitor the performance indicators of the equipment, namely fuel usage. Similarly, the wider modernization and reconstruction of our power plants will also provide opportunities to improve the sites technologically, including the introduction of new equipment and processes, and optimize the supply and consumption of electricity.
Whilst Rusneftegaz has an extensive plan to increase energy efficiency in individual areas of our operations, our board of directors is also focusing on implementing schemes that will impact our organization more widely. For instance, Rusneftegaz conducts periodical surveys of our energy usage, with the data collated being amalgamated with other information and resources to make observations regarding both electricity and fuel consumption. The review is then utilized to review short and long-term trends, review indicators of future use, and calculate new objectives based upon these results. These statistics are then analyzed by management as a reference point when making decisions regarding investments, and also when delegating responsibility for energy efficiency and savings among our staff. The former has served a crucial basis in the implementation of our current five-year spending program, with a significant impetus placed upon energy conservation technologies. This ranges from sensors to monitor usage, apparatus to retain heat, and modernized electrical machinery that requires less power. Whilst this expenditure should improve efficiency significantly, the primary onus of our investments remains to acquire safe, reliable, productive assets that are in the best interests of Rusneftegaz.
However, regardless of circumstances the procurement of material that is energy efficient will remain a major priority for our organization, not merely from an ecological perspective, but also from an economic aspect. This extends from our smallest to our largest assets, where any new facilities that are constructed in the near and distant future shall be designed to fulfil the highest standards of energy efficiency. Fundamentally, this is important with regard to maintaining the potential longevity of a site, and whilst this will primarily entail deploying superior quality insulation and the latest appliances, it may also include utilizing automation to monitor energy usage and withdraw power from devices accordingly. In lieu with modern metering of electricity consumption, such contemporary technologies should yield continual and consistent savings in terms of both power usage and cash spent. Thereafter, the rise in performance targets that have been set by Rusneftegaz for almost a decade should be sustained in the months and years ahead.
Despite the fact our management often searches and selects for this equipment with relative ease, in some instances the technologies and systems that minimize power consumption are not yet commercially available or do not represent a worthwhile investment at present. Thus, Rusneftegaz occasionally finds it necessary to collaborate with other companies, institutions and organizations to implement research and development programs to work on this emerging science. Rusneftegaz also maintains the capacity to cooperate with both local and regional authorities on the application of energy efficiency measures, and actively promotes their use in both domestic and professional settings. At a corporate level, this includes training and developing all our staff to understand the complexities of saving electricity and fuel, and to be capable of managing their use efficiently. Consequently, Rusneftegaz intends to begin using a system of accounting for energy in the near future, with the intention that the consumption of these resources will be economically and technologically justified.
For our organization, this involves implementing a variety of technical and operational measures to simultaneously reduce our resource usage, whilst also increasing our levels of productivity to align with our other strategic goals. These efforts, when in unison, should guarantee the sustainable development of Rusneftegaz both in the short and long term. For example, our company is actively reducing our energy consumption and usage, primarily through decreasing the fuel consumption in our electricity production business. Such cuts are being executed via our current regeneration of our existing generation assets, with the recent overhaul of our steam generators improving the heat efficiency of the combusted coal, whilst also reducing fuel consumption and therefore the corresponding costs. In the future, this will also lead to a decline in maintenance expenses, in addition to an enhanced capacity to monitor the performance indicators of the equipment, namely fuel usage. Similarly, the wider modernization and reconstruction of our power plants will also provide opportunities to improve the sites technologically, including the introduction of new equipment and processes, and optimize the supply and consumption of electricity.
Whilst Rusneftegaz has an extensive plan to increase energy efficiency in individual areas of our operations, our board of directors is also focusing on implementing schemes that will impact our organization more widely. For instance, Rusneftegaz conducts periodical surveys of our energy usage, with the data collated being amalgamated with other information and resources to make observations regarding both electricity and fuel consumption. The review is then utilized to review short and long-term trends, review indicators of future use, and calculate new objectives based upon these results. These statistics are then analyzed by management as a reference point when making decisions regarding investments, and also when delegating responsibility for energy efficiency and savings among our staff. The former has served a crucial basis in the implementation of our current five-year spending program, with a significant impetus placed upon energy conservation technologies. This ranges from sensors to monitor usage, apparatus to retain heat, and modernized electrical machinery that requires less power. Whilst this expenditure should improve efficiency significantly, the primary onus of our investments remains to acquire safe, reliable, productive assets that are in the best interests of Rusneftegaz.
However, regardless of circumstances the procurement of material that is energy efficient will remain a major priority for our organization, not merely from an ecological perspective, but also from an economic aspect. This extends from our smallest to our largest assets, where any new facilities that are constructed in the near and distant future shall be designed to fulfil the highest standards of energy efficiency. Fundamentally, this is important with regard to maintaining the potential longevity of a site, and whilst this will primarily entail deploying superior quality insulation and the latest appliances, it may also include utilizing automation to monitor energy usage and withdraw power from devices accordingly. In lieu with modern metering of electricity consumption, such contemporary technologies should yield continual and consistent savings in terms of both power usage and cash spent. Thereafter, the rise in performance targets that have been set by Rusneftegaz for almost a decade should be sustained in the months and years ahead.
Despite the fact our management often searches and selects for this equipment with relative ease, in some instances the technologies and systems that minimize power consumption are not yet commercially available or do not represent a worthwhile investment at present. Thus, Rusneftegaz occasionally finds it necessary to collaborate with other companies, institutions and organizations to implement research and development programs to work on this emerging science. Rusneftegaz also maintains the capacity to cooperate with both local and regional authorities on the application of energy efficiency measures, and actively promotes their use in both domestic and professional settings. At a corporate level, this includes training and developing all our staff to understand the complexities of saving electricity and fuel, and to be capable of managing their use efficiently. Consequently, Rusneftegaz intends to begin using a system of accounting for energy in the near future, with the intention that the consumption of these resources will be economically and technologically justified.