On 7 April, Rusneftegaz hosted our annual general meeting in Moscow for a contingent of our executives and key stakeholders, who engaged in crucial discussions regarding our current activities. These talks followed the publication of our 2016 financial statements in the days prior, prepared in accordance with all material International Financial Reporting Standards, otherwise known as IFRS, and were audited pursuant to all relevant laws. On the day itself, all proposed resolutions were passed, including a motion to approve our director’s report, which proactively demonstrates the success we have achieved over the past twelve months. It was also resolved to retain the services of our external auditor, in addition to approving the additions of Sergei Kolesnikov and Eduard Rudakov as independent directors, who will thus commence such roles with immediate effect. Beyond the discussed amendments to this body, the board will keep its present composition with all existing members retaining their respective positions, although the constitution of our audit committee has been updated to reflect the changes in our management. It was also agreed at the yearly conference that no dividend should be paid for the results recorded last year, as this allows us to expedite our investment plans for the remainder of our five-year strategy. Such endeavors will yield increasingly efficient operations that will be capable of operating more profitably than today. After the event, our Deputy Chief Executive Officer, Aleksandr Filyurin, issued the following remarks:    

“First and foremost, I would like to congratulate Sergei and Eduard on their election and welcome them to our board. Both of them are incredibly talented and bring great skills to our organization. I am looking forward to working with them in the years ahead. I would also like to place on record the thanks that the board and I have for everyone who works for Rusneftegaz. It has been another incredible year for us, and we could not have done it without them. We have achieved great things this year; all our plans that we made when we first joined are now falling into place. We are making major investments in almost every area of this company and there is no doubt that we will begin to see the impact of that within the next few years. When we first arrived here, a lot of the infrastructure we inherited was really outdated, but to be honest with you, now some of it is truly state-of-the-art stuff. You only need to look at the state of our electricity division to see how it has been completely transformed; it is definitely much, much better than it was before. Obviously, there is still a lot that needs to be done, but we are very clearly making progress with everything now. We have had great success this year overhauling and streamlining our management structure, which is something that I knew that we needed to do almost from the moment that I started working here. Overall, I am very pleased that everything is beginning to take shape now; it really gives us ground to be optimistic for the future of this great company.”   

It must be noted that for next year earnings from oil and gas are projected to increase, principally in alignment with predicted commodity price rises, but also in response to the major investments we have undertaken during the last twenty-four months. However, ongoing volatility in the value of the former means there is a degree of variability in such projections. We also plan to reassert our current policy of reinvesting all our income into useful assets while simultaneously holding sufficient levels of cash. Our latest fiscal forecasts for the next three years suggest that such actions will result in higher profits not only throughout this timeframe, but may ultimately register an even greater impact in future periods. Similarly, our organization will continue to focus our expenditure on increasing power generation and adequately maintaining all our existing oil infrastructure. The continuing unpredictability in the valuation of petroleum products, combined with the political measures taken against both the Russian Federation and the oil and gas industry, means that our executive leadership believes that it is necessary to undertake plans to mitigate the effects of this uncertainty on our operations. Consequently, we foresee much of our growth deriving from electricity production, and in the longer term, we intend to further our expansion both domestically and overseas. Furthermore, we maintain our desire to be able to use our own technical expertise to produce equipment by 2030, as the acquisition of new apparatus is currently the greatest cash outflow reported in our consolidated financial statements for 2016. Likewise, our ambition to be one of the five largest energy companies in Russia by revenue within as short time as reasonably achievable is still our principal objective, with our board intending to commence a plan to achieve this before the end of the decade. Any questions regarding our annual general meeting or any other matters herein may be addressed to us via telephone or email. We necessitate your cooperation and understanding pertaining to this important topic. 

Rusneftegaz can announce that our website will be unavailable between 17 March and 20 March for planned maintenance, with our technical engineers doing their utmost to minimize the inconvenience to the users of this site. Although this outage will not result in any visual changes, it will yield a number of security and performance updates that have been necessary for several months. Due to the length of time this will require, it was deemed conducive to briefly interrupt the service of our virtual presence next week to allow this to be fully completed. All the material that is currently accessible, including all the news articles and documents we have published, will remain at your disposal once the upgrade is finished. However, we can confirm that all the regular means of communication we offer will be available throughout this period, except for the submissions form on our website, which will be unusable during the allocated timeframe. Therefore, we advise anyone who wishes to communicate with us to do so via telephone or fax on +7 (499) 370-65-58, through email at inquiries@rusneftegaz.ru, or by personally requesting the contact details of a known member of our staff if urgent. Despite the fact this disruption is anticipated to take less than the allotted time, it may hinder those who otherwise intended to use these resources, and thus we necessitate your cooperation and understanding with this pressing matter.

Rusneftegaz can today announce that following a comprehensive internal review of our management structure, our leadership has filed motions at our upcoming annual general meeting on 7 April to appoint two independent directors to our board. Likewise, each member of our current hierarchy has simultaneously acted as a signatory to a joint declaration addressed to all our stakeholders recommending their approval of this change, which would be implemented immediately after the vote has been passed. Therefore, propositions to elect both Sergei Kolesnikov and Eduard Rudakov have been tabled and will be voted upon in due course, each of whom will bring vast acumen and be capable of demanding accountability from our enterprise. It is the erstwhile belief of our present administration that the addition of these two personnel would add significant knowledge and expertise to the body, while also imparting wisdom and experience. Although we do not conceive that there is a shortage of skills or competence in its existing composition, our leaders broadly acknowledge that, as an organization seeking to rapidly expand, it is critical to find specialists who work in areas that we may be otherwise unfamiliar with. Whilst such potential issues are not anticipated to arise from any matter pertaining to production or trading, it is foreseen that we may require professionals that are proficient in expanding a corporation internationally. In response to this news, our Deputy Chief Executive Officer, Aleksandr Filyurin, issued this statement:  

“Firstly, I would like to thank the ownership group for their assistance and encouragement with this idea; they have always provided us with useful advice about the direction that they want Rusneftegaz to take. When we first had the idea of appointing some independent directors, it would have been too easy for them to reject the idea completely and tell us to move on from it, but they listened to what we had to say and then agreed on a good compromise with us. Since I joined this company in 2015, I have always been conscious of the fact that the board of directors and the day-to-day management board are identical. We have always wanted to maintain the highest standards here, whether that is in terms of the business we do or in terms of things like corporate governance. To be honest, trying to maintain these standards has major consequences. By being as open and as transparent as possible, we can work with more companies, whether that is to increase our trade finance lines or do deals with customers who want to do business with a good, credible company. Overall, I am optimistic that we will be able to make a couple of high-quality additions to our board soon. We have chosen two outstanding candidates after an extensive recruitment process, and I am confident that their approval will be a formality.”  

Both the proposed nominees are highly qualified individuals who have led exemplary and distinguished careers in their respective fields. In his role as an accountant, Rudakov was a senior auditor at Deloitte for over two decades prior to his retirement from this role this summer, whereas Kolesnikov originally graduated from Saint Petersburg State University with a degree in economics. He has spent his entire professional life in posts across various banks, including Sberbank and the predecessors to what is now VTB. After a long and exhaustive process, our board of directors mutually concluded that these were the two most suitable candidates for each position, with both expected to be confirmed in their roles during a confirmatory vote. However, it is to be emphasized that our executive leadership consulted with our stakeholders before the decision to commence this action had started, with our shareholders fully endorsing such plans, thus making their approval a formality. Whilst the recommendation to appoint these men has formed a key element of a broader plan to raise the standards of governance within Rusneftegaz that was first conceived two years ago, it should be noted that this proposal is the final component of that scheme, and now our management is wholly satisfied with the corporate ethics prevailing throughout our organization. Any inquiries regarding the prospective changes to the composition of this body or otherwise pertaining to our administrative policies must be directed via the conventional channels of telephone and email for a prompt reply. We necessitate your cooperation and understanding with this crucial matter.