Address by the Chairman of the Board of Directors and the President
Annual report JSOC Bashneft 2013
4
Address by the Chairman of the Board of Directors and the President
Annual report JSOC Bashneft 2013
5
Bashneft shareholders amounted to RUB 46.2 billion.
Thanks to these impressive financial results, the Company was able
to pay sizable dividends of RUB 233 per share to shareholders in 2013.
For the first time in Russian business history, Bashneft was listed
as one of the world’s top 10 companies for total shareholder return
(TSR), and also took first place in the industry ranking by Boston Con-
sulting Group.
Improvement of corporate governance remains a top priority area for
us. In 2013, we took new important steps toward increasing inves-
tor attractiveness and transparency of Bashneft’s shareholder capi-
tal – we divested a number of non-core assets and launched the final
stage of the Company’s reorganisation through initiating the merger of
Bashneft-Invest into the Group. The aim of this reorganisation stage,
which was completed in Q2 2014 – was to eliminate the cross-owner-
ship in Bashneft shares and and to complete the divesting of non-core
business activities. We are grateful to all our shareholders for their
support throughout this crucial endeavour.
The Company’s key achievements in 2013 include improvements
in workplace health and safety, and environmental protection. Ab-
sence of accidents on the production side, due care for the environ-
ment through the adoption of the very latest technology, modernisation
of machinery and reduction of waste and emissions as well as creating
a safe working environment remain our key priorities.
As a socially responsible company, Bashneft works jointly with its
main shareholder, JSFC Sistema, to continue to implement a range of
charity programmes in all regions of presence, which improve social
infrastructure and support the development of culture, education and
sport. In 2013, we invested in social projects a total of RUB 1.1 billion
in the regions where we operate.
As part of implementing our development strategy, covering the ex-
pansion of our resource base and the acquisition of attractive assets
with significant growth potential, in March 2014 we concluded a $1 bil-
lion deal to acquire Burneftegaz, which is involved in oil production
and exploration work in the Tyumen Region. Burneftegaz will make
an important contribution to Bashneft’s rising production figures
as soon as this year.
We are confident that the work done by all our employees in 2013 has
made a significant contribution to Bashneft’s future growth. We are
proud that Bashneft has, once again, confirmed its leadership position
among the most efficient companies in the Russian oil sector.
Quality, professionalism, safety, efficiency and team spirit are the key
values at Bashneft. It is these values that guide us in our day to day
work to achieve new successes for our shareholders, for the regions
in which we work, and for the country as a whole.
ALEXANDER KORSIK
President
Address by the Chairman
of the Board of Directors
and the President
Dear shareholders,
It is a pleasure to present you with the 2013 annual report. 2013 was
one of the most successful years in Bashneft’s history in both produc-
tion and financial terms. Last year the Company once again demon-
strated the ability to implement its development strategy in a commit-
ted and efficient way – focusing on adding value through increasing
output, growing reserves, modernising oil refineries, developing our
retail network, and adhering to the highest corporate governance
standards.
In 2013 Bashneft once again demonstrated the best production growth
rates in the Russian oil sector, increasing oil production by 4.1% year
on year. The achievement of a reserve replacement ratio of 133.7% in
2013 under PRMS standards was important as well.
Over half of the additions in oil production in 2013 came from our tradi-
tional regions, including the Republic of Bashkortorstan. We achieved
this by utilising our highly qualified employees, introducing effective
geological and engineering measures, and implementing the very lat-
est technologies.
Launching production, in record time, at the Trebs and Titov oilfields
in the Nenets Autonomous Region made a considerable contribution
to Bashneft’s increased production, and was one of the Company’s main
achievements last year. Bashneft also expanded the geographical reach
of its projects by winning a licence for Block EP-4 in Myanmar.
In line with our strategic goals, we continued to implement wide-scale
oil processing plant modernisation plans as well as the retail chain
rebranding.
Bashneft’s Ufa refinery complex processed 21.4 million tonnes of oil
in 2013, 3% more than in 2012. Average refining depth at the compa-
ny’s refineries stood at 84.7% in 2013. Average light oil product output
rose to 60.4%. We retain our leading position among Russian com-
panies in terms of the technological processing capacity: the Nelson
index complexity rating for Bashneft’s Ufa refinery increased last year
from 8.55 to 8.83.
This production success had a direct impact on our financial results.
Under IFRS accounting standards, Bashneft Group companies’ rev-
enue increased 5.3% on 2012, rising to RUB 563.3 billion. Adjusted
EBITDA rose by 3.6% to RUB 104 billion. Net profit attributable to JSOC
FELIX EVTUSHENKOV
Chairman of the Board of Directors
