Russia’s Rosneft works on new strategy, plans to hike dividends
SOCHI, Russia: Igor Sechin, the head of Russia’s state-controlled and largest oil producer Rosneft, said on Thursday the company was working on a new strategy to counter the challenges of the global oil market and planned to pay higher 2017 dividends.
Oil producers around the world have faced highly volatile oil markets and declining prices due to a supply glut.
Sechin, a close ally of Russian President Vladimir Putin, told the company’s annual general meeting that global markets were undergoing “tectonic shifts” shown by tougher competition, regulatory changes and higher risks for oil producers. He said Rosneft, in which BP owns around 20 percent, was working on a new strategy to tackle those issues.
“The basis for this strategy should be high-quality changes in the company’s business, thanks to a technological breakthrough,” he said, adding the strategy should be ready by the year-end.
He also said part of the strategy, called Rosneft-2022, would be a shift to a holding structure in Rosneft’s management, and would aim to unbundle the retail business and increase petrochemicals’ share of the company’s total refining capacity to 20 percent.
Within this strategy, Rosneft plans organic oil production growth of 20-30 million tons in the next five years thanks to new technologies. Last year, Rosneft produced 210 million tons of oil (4.2 million barrels per day).
Sechin also said Rosneft had budgeted for an average oil price of $40 per barrel in 2018 and a little over $40 for 2017.
Rosneft, controlled by stateowned holding Rosneftegaz, decided to pay 35 percent of its net income as dividends on 2016 results. The government, which is battling a budget deficit mainly due to falling oil prices, has ordered state companies to pay 50 percent of earnings in dividends.