ПРОЕКТ 01 /04/19 Meeting with Transneft management to discuss IFRS financial results for 1Q 2019 June, 2019
IMPORTANT NOTICE 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% 51.5 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 about 82% of crude oil and about 30% of light * Only preferred shares are traded. 100% of petroleum 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 destinations. less than DPS per 1 ordinary share. Credit Ratings 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 ASSETS OF TRANSNEFT GROUP 4 * * Classified as associates (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. APPENDIX. ENVIROMENTAL, SOCIAL AND GOVERNANCE (ESG)
01. Recent developments
KEY EVENTS 7 August, 7 October – November March, 29 April, 23 Full repayment of foreign-currency Completion of the following Publication of Sale of denominated debt of Transneft: early investment projects: IFRS financial Novorossiysk repayment of a USD loan from China statements for “Sever - 25 ” project Grain Terminal Development Bank and redemption of “ Yug ” project, 2 nd stage 2018 eurobonds* on schedule (railway loading rack) 2019 2018 June, 30 February, 13 September, 27 April, 18 Decision on record Raising of Moody’s Acquisition of controlling Incident with the injection amount of dividends for credit rating to Baa2, stake in NCSP, increase of organic chlorides into 2017 of RUB 82.5 bln with a Stable outlook of stake in NCSP Group the system (incl. interim dividends of RUB 27.6 bln)** from 37% to 63%*** * As a result of the acquisition of NSCP Group in 4Q18, Transneft Group has foreign-currency denominated debt obligations as of March 31, 2019. ** 50% of normalized consolidated net income under IFRS *** effective share under IFRS
INCIDENT WITH THE INJECTION OF ORGANIC CHLORIDES INTO THE SYSTEM 8 Incident On 18 April crude oil with excessive level of organic chlorides content was detected at the Mozyr Refinery in Belarus. It was injected at a custody transfer point in Samara Region. No harm to human life and health, or to the environment, was caused as a result of the incident. Crude oil transportation resumed at all supply directions of the Druzhba pipeline on 9 June. injection of oil with excessive concentration of organic chlorides
THE INCIDENT RESPONSE MEASURES 9 The Road Map of measures for the displacement of oil with excessive content of organic chlorides and replacing it with oil conforming to the GOST standard requirements in the Druzhba pipeline, developed and agreed upon with partner midstream companies from Belarus, Ukraine and Eastern Europe, is currently being implemented. A Russian-Belorussian joint working group and a working group under the auspices of the Ministry of Energy have been established to settle the incident. Control of crude oil for organic chloride content is performed daily Crude oil shipments via the Druzhba pipeline resumed towards Ust-Luga, Belarus, Ukraine, South-Eastern Done Europe, Poland and Western Europe. Crude oil conforming to standard requirements has been supplied to the Mozyr Refinery in Belarus since 4 May Shipments from Ust-Luga Port resumed on 10 May Exports through Ukraine to Slovakia and towards the Czech Republic resumed on 23 May Exports to Hungary resumed on 29 May Exports to Poland and towards Western Europe resumed on 9 June The incident investigation by law enforcement authorities Replacing crude oil with excessive content of organic chlorides with oil conforming to the GOST standard requirements in the Druzhba pipeline, including at the territory of Belarus. Applying technical measures to recover oil quality parameters Under Un erway Submitting proposals to the Government of the Russian Federation as regards legislative changes to be introduced in crude oil quality control procedures delivered to the system, in particular, transition from periodic to daily control of crude oil quality. The list of relevant instructions from D.N. Kozak has been circulated among governmental agencies and companies
SETTLING THE INCIDENT 10 Key principles Transneft has repeatedly confirmed its readiness for out-of-court settlement with shippers of the consequences caused by the incident under the existing oil transportation contracts. Transneft, in cooperation with the Ministry of Energy, has proposed a mechanism of payments to shippers and in accordance with the law.
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