ПРОЕКТ 01 /04/19 Investor presentation 9M 2019 IFRS financial results December 2019
CAUTIONARY STATEMENT 2 The information contained in this presentation has been This presentation does not constitute an offer to sell, or solicit prepared by the Company. The conclusions presented here are any offer of subscription to, or purchase of any securities. It is based on general information collected at the time of preparation hereby understood that no provision of this presentation shall of the material, and are subject to change without notice. The create the basis of any contract or obligation of any nature. Company relies on information obtained from sources that it The information contained in this presentation should not for any considers reliable; however, it does not guarantee its accuracy or purpose be relied upon as complete, accurate or impartial. The completeness. All indicators in this document are presented with information in this presentation is subject to review, finalization rounding, and therefore the sum of rounded indicators may differ and modification. The content of this presentation has not been from the rounded amount of actual indicators. verified by the Company. Accordingly, we did not and do not give These materials may contain statements regarding future events on behalf of the Company, its shareholders, directors, officers or and explanations representing a forecast of such events. Any employees, or any other persons, any assurances or guarantees, statements in these materials that are not a statement of whether expressed or implied, regarding the accuracy, historical facts are forward-looking statements, with known and completeness or objectivity of the information or opinions unknown risks, uncertainties and other factors, in connection contained herein. None of the directors of the Company, its with which our actual results, results and achievements may shareholders, officers or employees, or any other persons shall differ significantly from any future results, results or be liable for any losses of any kind that may be incurred as a achievements, reflected or implied by such forward-looking result of any use of this presentation or its content, or otherwise statements. The Company does not undertake any obligation to in conjunction with this presentation. update any forward-looking statements contained herein so that English version of the presentation was translated from the they reflect actual results, changes in assumptions or changes in original version in Russian. In case of any discrepancies, the factors affecting such statements. version in Russian language has priority.
COMPANY OVERVIEW 3 Global leader in oil transportation by pipelines Shares outstanding* Ordinary shares 5,694,468 78.55% 51.8 thousand kilometers of oil pipelines, 16.7 thousand kilometers of petroleum products pipelines, more than 24 million Preferred shares 1,554,875 21.45% cubic meters of storage tanks and over 500 pumping stations Total number of shares 7,249,343 Transportation of 83% of crude oil and 29% of light petroleum * Only preferred shares are traded. 100% of products produced in Russia ordinary shares are owned by the Russian Oil pipelines link major Russian oilfields with refineries and export Government. markets in Europe and Asia, either directly or through sea Preferred shares of Transneft are included in the tier 1 list of the Moscow Exchange. terminals. Petroleum products pipelines link refineries with key In accordance with Transneft’s Articles of consumption centers, sea ports, and other domestic and export Association, DPS per 1 preferred share may not be distribution markets less than DPS per 1 ordinary share. Credit Ratings A natural monopoly Moody’s Baa2 / Stable The monopoly operator of Russian network of oil and petroleum S&P ВВ B- / Stable products pipelines Tariffs are set by the Federal Antimonopoly Service (FAS) of Russia RAEX ruAAA / Stable
KEY INFRASTRUCTURE ASSETS OF TRANSNEFT GROUP 4 * * Classified as associate (7% - indirect ownership, 24% - held in trust by the Company)
TABLE OF CONTENTS 5 01. RECENT DEVELOPMENTS 02. KEY OPERATING AND FINANCIAL RESULTS 03. KEY FACTORS OF INVESTMENT ATTRACTIVENESS 04. ENVIRONMENTAL, SOCIAL AND GOVERNANCE ASPECTS (ESG) 05. APPENDIX. KEY FINANCIAL RESULTS ANALYZED BY SEGMENTS
01. Recent developments
KEY EVENTS 7 2019 February Raising of Moody’s credit rating to Baa2, with a Stable outlook April Incident involving the injection of organic chlorides into the system Signing a contract on the sale of Novorossiysk Grain Terminal June Oil transportation was restored in all directions AGM decision on dividends. 51.2% of normalized consolidated net profit under IFRS were allocated to dividends July Connection of Komsomolsk refinery to the ESPO pipeline system Approval by the Board of Directors of the procedure for making payments in connection with the ingress of substandard oil into the system and agreement on the maximum amount of payments to shippers under contracts for the provision of oil transportation services at the rate of USD 15 per barrel of substandard oil. At the same time, it was noted that shippers must give documentary evidence of the incurred losses September Commissioning of the plant for manufacturing drag reducing agents in the Alabuga Special Economic Zone (the Republic of Tatarstan) October Transneft has started signing agreements on settlement of the consequences of the incident on the Druzhba oil pipeline with the shippers (oil companies) November Implementation of maximum capacity under the project for expansion of the ESPO pipeline system AGM – Annual general meeting ESPO – East Siberia – Pacific Ocean
EXPANSION OF ESPO PIPELINE SYSTEM 8 Goal and timeline of the project Enlarged scheme Increasing the throughput capacity of the ESPO-1 pipeline system to 80 Mtpa, and the ESPO-2 pipeline system’s capacity to 50 Mtpa, to export oil to the People’s Republic of China and deliver oil to Kozmino SSOP (Specialized Sea Oil Port), as well as to refineries of the Russian Federation (RN-Komsomolsk Refinery, IOGC – Khabarovsk Oil Refinery) Key results of 2019 Project completed On 1 November 2019 the throughput capacity of the ESPO pipeline system was increased to its maximum capacity under the project: - at the Tayshet IPS – Skovorodino PS section to 80 Mtpa - at the Skovorodino PS – Kozmino SSOP section to 50 Mtpa Key technical aspects of the project Throughput capacity Construction of new Reconstruction of existing Oil pumping stations, Construction of new External power PS ESPO-1 / PS ESPO-2 including oil pumping stations oil pumping stations tanks supply objects 80/50 Mtpa 10 6 16 150 mcm ~908 km Completion of the project in November 2019 ESPO TS / ESPO PS – East Siberia – Pacific Ocean transportation (pipeline) system IOGC – independent oil and gas company SSOP – Specialized Sea Oil Port, IPS – initial pumping station, PS – pumping station
CONSTRUCTION OF TRANSNEFT SYNTHESIS DRAG REDUCING AGENTS PLANT 9 Transneft Synthesis plant Project goals and completion term for production of drag reducing agents (DRA) To establish a DRA plant for the oil transportation industry To ensure 100% localization of DRA production in the territory of the Russian Federation Uninterrupted supply of DRA, ensuring technological stability of oil and petroleum products transportation through trunk pipelines To cover in full Transneft Group’s needs in DRA Key results for 2019 Opening ceremony of the plant took place in September 2019 Catalyst synthesis equipment applied for DRA production Key technical figures Total area of the facility is 4 hectares The plant’s designed capacity is 3,000 tonnes of DRA for oil and petroleum products per year with a potential for further expansion to 10,000 tonnes per year. Project completion: 100% DRA – drag reducing agents
SETTLING THE INCIDENT AT THE DRUZHBA PIPELINE 10 MEASURES ES TAKEN: on on the operati ation side de Oil pumping resumed at all of the directions Transneft completed the Road Map of the Incident Recovery signed with the Belarus party and completed transportation of nonconforming crude oil out of Belarus Crude oil quality control for organic chloride compounds upgraded to a daily procedure on on the legisl slati tion impr mproveme ment nt side de Transneft prepared and submitted proposals to increase the oil quality for consideration to the Government of the Russian Federation, the Ministry of Energy, the Ministry of Economic Development and other interested authorities and organizations Key proposals: development of a regulatory document establishing mandatory requirements to quality control of oil delivered into the oil trunk pipeline system updating of existing government standards, including methodology, indicators and frequency of oil tests mandatory accreditation of testing laboratories, regulatory consolidation of requirements for testing laboratories transfer of third-party oil delivery and acceptance points under the operational control of Transneft
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