On May 1, 2018, Rosneft’s board of directors approved additional provisions to Rosneft-2022 strategy that followed the annual address of Russia’s President Vladimir Putin to the Federal Assembly.

As previously announced, the key strategic focus of Rosneft-2022 is to increase the company’s profitability and the oil major’s returns on existing assets. The company’s portfolio is comprised of high-yield investments having the primary objectives of ensuring delivery on time and on budget. Rosneft’s other initiatives include employee development programs, educational and social projects, regional development programs, as well as accelerated technological advancement.

The board of directors supported enhancing shareholder returns and improving the company’s equity. Among the initiatives the management of Rosneft presented are proposals to establish a minimum target of debt and trading liabilities reduction in the amount of RUB500 billion for 2018. In order to achieve this substantial decrease, company management plans to enhance investment governance, project management practices, and procurement. These improvements would coincide with a corresponding decrease in capital expenditures guidance for 2018 to the level of RUB800 billion, a figure that would represent a 20-percent decline compared to the earlier estimates. The company intends to undertake this initiative with the purpose of achieving sustained cash flow within the framework of Rosneft-2022 strategy.

As part of its agenda, Rosneft eyes improving the company’s working capital position by the end of 2018 to the tune of 200 billion rubles, which would be achieved with a number of initiatives in the trading business and procurement practices.

Rosneft also envisions a strategic review of its asset portfolio focused on decreasing the share of tail and non-core assets, the disposal of which should provide incremental net cash flow to the shareholders.

Additionally, with the objective of enhancing shareholder returns, the management of Rosneft proposed that the company undertake a USD2.0 billion share buy-back program in the course of 2018-2020 through open market repurchases in addition to an approved dividend policy of a 50-percent payout of the IFRS net profit. IFRS stands for International Financial Reporting Standards.

The medium-term buy-back would be financed through Rosneft’s free cash flow and the divestment of non-core assets. The execution of the share buyback program would start in the second quarter of 2018, subject to the receipt of appropriate corporate approvals.