The opening of a subsidiary in Germany
Chief Executive officer PJSC «NC «Rosneft» Igor Sechin made a working visit to Germany, after a series of meetings with officials and business and taking part in the opening of the subsidiary companies of the company — Rosneft Deutschland GmbH in Berlin, said management information policy of Rosneft. Judging by the results of the visit and according to the company, «Rosneft» is actively developing its presence in the German oil refining.
Prospects of development of business «Rosneft» as an independent player on the German energy market was discussed at a meeting with the Minister of economy and energy, Germany Brigitte zypris. Improving the efficiency of operating activities in Germany and the strengthening of cooperation with German partners were discussed at the meeting Igor Sechin c Chairman of Committee of shareholders Nord Stream AG Gerhard Schroeder and managing Director of Nord Stream, a member of the Board of Directors of «Rosneft» Matthias Warnham.
In Germany Rosneft owns stakes in three refineries — PCK, Miro and Bayernoil. It should be noted that on 29 December 2016 PJSC «NC «Rosneft» and BP Plc. completed a deal to reform their SP and from 1 January 2017 these agreements entered into force. According to its results «Rosneft» became the direct shareholder and increased its stake in PCK refinery (Schwedt) – of 54.17% (35,42%), refinery MiRO – 24% (12%), refinery Bayernoil – 25% (from 12.5%). As a result of this reorganization, «Rosneft» has received control over more than 12% of refining capacity in Germany with a total capacity of processing up to 12.5 million tons per year, and became the third largest oil refiner in the German market.
Now developing your own business in Germany will contribute a subsidiary of Rosneft Deutschland. In a ceremony on the occasion of the opening of its office in Berlin was attended by the representatives of «Rosneft», the German business community and journalists. Speaking at the event, Igor Sechin said: «Over the past seven years we have supplied Germany with 132 million tonnes of oil worth more than 75 billion euros, providing about a quarter of oil imports of the country. Today we are shareholders of three major refineries and provide 5 thousand jobs directly on our enterprises in the country.»
As the words of the head of «Rosneft», the company has increased oil supplies to Germany from 12.9 MMT in 2012 to 22, 5 million tons in 2016. Last year the company produced here to 13.7 million tonnes, of which 80% is light oil. For five years «»Rosneft» will refer collectively 600 million euros for the modernization of its German refinery, of which 300 million euros have already been allocated,» — said Igor Sechin. «Now in Germany, will operate a subsidiary of Rosneft,» he added. We develop our business, including in the field of supply of petroleum products to German consumers in distribution networks, bunkering and aviation fuel».
The head of «Rosneft» stressed that the oil-refining business in Germany is a strategic direction of the company: «it seems to me, over 6 years of experience in this sector we have established ourselves as a reliable predictable partner with a long-term vision for the development of assets.»
Evaluating the beginning of work of the subsidiary Rosneft Deutschland GmbH on the German market, the head of the Eastern Committee of German economy Michael harms said, «business Development «Rosneft» it is evidence of the unabated interest from Russian oil companies to the European market,» adding that «this partnership that has lasted over 40 years, contributes to the energy security of Germany.»
«Rosneft» has entered the oil refining business in the German market in 2011. The choice of investment targets were not random. Refinery located in Eastern Germany, since its inception, technologically, and infrastructurally connected with the Russian oil fields. So, the refinery «Schwedt», created between 1959 and 1964, was initially technologically adjusted to supply the oil grade «Urals» in the Northern branch of the Druzhba pipeline. Given these factors, Rosneft has long been interested in creating an integrated supply chain of oil to Germany inside the corporate circuit.
Infrastructural advantage can be realized with the help of the southern branch of «Druzhba», technologically adjacent to the refinery in southern Germany with equity participation of «Rosneft» – «Miro» (MiRO) and «Bayernoil» (Bayernoil). In order to improve reliability of supply and efficiency of these refineries, «Rosneft» plans to implement the project of pumping of Russian oil through the southern branch of the Druzhba pipeline and then in the Czech pipeline «Kralupy-Ingolstadt» – up to 4 million tons per year – to the entrance to the Transalpine pipeline (TAL). Delivery will be cost-effective and complement traditional deliveries to these refineries from the Italian port of Trieste, which runs today at the limit of capacity.
The choice of Germany as the primary target market occurred with the acquisition of a stake in SP ROG in 2011. And bet on Germany was justified. The country’s economy is developing steadily. On the German market there is a shortage and the increasing consumption by main petroleum products such as diesel fuel, jet fuel. Key refining asset — refinery «Schwedt» allows you to provide the capital region Berlin-Brandenburg, which, according to experts, will be developed. With the beginning of independent operating activities before «Rosneft» opens a number of new business proposals.
The best in Europe
Three German refineries, the share in «Rosneft» is one of the most modern refineries in Western Europe. Refining depth to 93% difficulty index for Nelson and 9.1. For many years conducted the process of modernization of the plants. Nevertheless «Rosneft» intends to invest continuously in maintaining and building their capacities to maintain the reliability and availability of equipment to increase output of light oil products and petrochemicals. For example, MiRO refinery, the largest refinery in Germany with a capacity of 14.9 million tonnes a year refinery «Schwedt» with a capacity of 11.6 million tons per year — the main supplier of fuel to Berlin. Most of the aircraft departing from the German capital, fueled with this plant. Index Nelson refinery at «Schwedt» is 9.8. I must say also that the «Schwedt» — one of the first companies in Germany, where he began the production of fuel biocomponents.
Despite the fact that the refinery, shares in which are owned Rosneft, according to its performance is the best in Europe, along with other shareholders of Rosneft develops and implements programs to improve the efficiency of enterprises. The German refinery of «Rosneft» much better prepared for the decline of the refining margins in Europe than many of their competitors. Rosneft Deutschland concludes long-term contracts and seeks the most effective distribution channels, including special products. And another important point — the margin reduction could lead to a new cycle of rationalization and closure of inefficient and simple refinery, while the refinery, shares in which are owned by the Company are complex, and such the refinery will gain from disposal of inefficient facilities
To provide raw materials for its growing network of international refinery, Rosneft expands its activities in trading and plans to sign more deals to supply other manufacturers. The main strategy of the company — expansion of oil trading due to organic growth and the diversification of sources of oil. The company seeks to enter into transaction for the Deposit with other manufacturers similar deal with Iraqi Kurdistan. Kurdish oil in the first place, it is planned to send to German refineries. Supply volume of 600 thousand barrels will be shipped to the port of Trieste and focused on refining assets to TAL pipeline. Raw materials from Kurdistan allow the company to diversify its sources of oil.
Rosneft aims to become the consumers of Germany, not just a supplier of hydrocarbons, and a provider of spectrum of goods and services. Adhering to this approach, the company is considering the prospects of investment in the segments of gas stations, aviation fuel supply, German exports of petroleum products to the markets of nearby countries (Benelux, Switzerland, Austria, etc.), direct provision of electricity to the refinery.
«Rosneft» expects to implement the aviation fuel produced in German factories, under direct contracts with airlines in the largest German airports. In addition, she intends to enter the German road construction market with a special line of polymer-bitumen binders (PBB) Alphabet. Together with a number of institutes and scientific organizations of Germany «Rosneft» plans to adapt the formulation of the WSP Alphabet to the requirements of the German market. The company also intends to arrange supply of marine fuels in ports of Germany.
«We have no pipeline gas supplies in connection with legislative restrictions. But the gas trade, including in Europe, we are already doing,» said Sechin, Recalling that in European countries, gas trading, the Swiss «daughter» of «Rosneft» Rosneft Trading, «which buys gas on the market.» «We supply gas to Egypt via the long term contract, have gas assets in the international projects. And of course we are interested in developing this business,» he said. «In Germany will work in the market. Maybe someday you will have your gas, too. May not be Russian, but let’s say with the same project Zohr. Then, we have the gas liquefaction project «Pechora LNG» is also one of the alternative supply options, which does not enjoy limitations when exporting. So we can use all the options».
Sanctions and the stability of the company
At a press conference on the occasion of the opening of Rosneft Deutschland in Germany, Igor Sechin spoke about the fact that the sanctions imposed on the activities of «Rosneft» some European countries and the United States, had a significant impact on the company’s capitalization.
He also said, reports «RIA Novosti».presently it is useless to discuss the prospects of lifting the sanctions, «Rosneft» had to adapt to them. Igor Sechin said that the company continues to consider sanctions against negative decisions of the courts will not stop her from filing new claims. «Rosneft» will continue to protect the interests of its shareholders, almost half of which are foreign legal entities and individuals, including the European. The company believes the decision of the European court of justice General jurisdiction is recognized reasonable, EU sanctions against a Russian company — politicized, because the same court in other political circumstances for similar claims, such as Iran, took the opposite decision. The court, in essence, is an instrument of political reward or punishment, which is an indicator of the crisis of the European judicial system.
Despite the sanctions, the company’s debt burden, according to Sechin, is at a comfortable level. The fundamental value of «Rosneft» is about $ 100 billion, and in three or four years, in the case of the lifting of sanctions, this figure will increase to 130-150 billion.
Resources of the Russian oil company, said Igor Sechin, allow you to work without additional investments in exploration, 22 years old. «Even in the face of volatility in the markets, we are quite confident we will feel. I will once again draw your attention to the volume of the resource base. If necessary, we will not conduct a major capital investment, no exploration with this resource base without reducing the production can work for 22 years», — quotes its words news Agency.