The largest Russian oil company OJSC Rosneft plans to increase the recovery of oil and gas condensate by 4.4 percent in 2010 compared to the results of 2009. The total volume of production should reach 117.6 million tons.

The board of directors of Rosneft held a special session at the end of December 2009 to confirm the business plan for the new year.

The results of 2009 show that oil recovery has increased by 2.3 percent, reaching 112.6 million tons.

Earlier the head of the company Sergey Bogdanchikov said that in 2010 the increase in the volume of extraction will be from 4 to 5 percent.

Processing

The volume of oil processed at Rosneft’s refineries (and mini-refineries) in 2009 was 49.9 million tons, a figure that exceeds the number for 2008 by 0.6 million tons. The total amount of petroleum products that the company produced increased to 47.9 million tons. The company exported 28 million tons of petroleum products, and the remaining volume was used on the domestic market. The company’s own gas stations sold 4.9 million tons of product. As of the end of 2009, Rosneft owned 1 700 service stations.

For 2010 the company expects to process 50.3 million tons of oil, over 400 thousand tons more than the volume for 2009. The production of petroleum products is expected to increase to 48.4 million tons.

The business plan for 2010 provides for intensifying the modernization of the company’s refineries to conform to the requirements set out in federal regulations. In particular, the company intends to complete the construction of the Angarsk Petrochemical Plant (isomer processing), the installations of a slowed-down coking mechanisms at the Komsomol refinery, the renovation of the Syzransky refinery, the installations of new equipment at the Novokuybyshevsk refinery and the Kuibyshev refinery. Other projects are also in the works.

In 2010, the company intends to begin renovating the Tuapse refinery and the Tuapse sea terminal. In addition, the business plan provides for ensuring the efficiency of oil and petrochemical manufactures.

Within the framework of developing its distribution network, Rosneft has planned for 2010 the reconstruction of 88 operating service stations. The company also plans to build 45 new gas stations. In preparation for the Olympics in Sochi, Rosneft is expected to begin gas station construction along federal highways from western borders of Russia to the capital of the winter Olympic Games 2014.

The new and approved business plan also envisions the reduction of debt. Rosneft executives are averse to using debt for financing key projects of the company, such as the exploration of the Vankor deposit, the expansion of capacities at the Tuapse refinery, the reconstruction of other refineries, and the development of oilfield service enterprises.

Exploration

In 2010, Rosneft plans to increase prospecting work significantly. The territory for seismic 3D exploration will be increased 2.5 times to 8.3 thousand square km. An additional 7.4 thousand km will be explored using conventional 2D systems. Exploratory drilling will increase by 60 percent to 99 thousand meters. For most of 2010, sites in Eastern Siberia and on the shelf of the Black Sea will be a priority.

Banks

On December 21, 2009, a litigation between Rosneft and Trust bank for collecting RUR 2.5 billion in favor of the oil company that was pending since 2005 came to an end. The parties have reached a settlement, whereby Trust bank’s debt was lowered to RUR 2 billion, of which it was deemed to have already paid RUR 1.1 billion. The long dispute between the bank and Rosneft lasted since the demise of YUKOS. The remaining RUR 900 million was to be paid before April 1, 2010.

In early January, Rosneft reached a deal to take over the ownership of Trust in exchange for writing off its debts. Trust bank ranks among the top 50 banks in Russia.

Rosneft also decided to conduct a merger of its smaller Russian Regional Development Bank with Trust. In the end, the oil company will own a 51-percent share of the new entity.

Trust bank belongs to a group of Russian businessmen that stands to retain a minority interest in the new bank. The group members will have three board seats, while Rosneft will have four.

Debt

Rosneft’s debt as of the end of 2009 was USD 20 billion. The debt figure stood at USD 19 billion at the conclusion of quarter III, 2009. At the start of last year, the company’s debt amounted to USD 22 billion. Analysts expect that the debt will rise by the end of the year due to the payment of dividends and advances.

This year the company is expected to switch to International Financial Reporting Standards in keeping its books. The oil major was using U.S. Generally Accepted Accounting Principles before.

Naftan

Rosneft has expressed interest in the privatization of the petrochemical refining complex Naftan-polyworld in Belarus, the president of the Russian oil company Sergey Bogdanchikov said. The head of Rosneft noted that the project is interesting, but there are certain conditions that must first be met. The Belarusian President Alexander Lukashenko has estimated the value of Naftan-Polymir at USD 3 billion. The company is now fully owned by the state.

Shareholders

Rosneft is a state-owned oil company that has by far the highest volumes of recovery. The shareholder of Rosneft include the state company Resneftegaz that owns 75.16 percent of the company’s stock. Resneftegaz is controlled by Rosimushchestvo. Rosneft charter capital is divided into 10.6 billion shares. There are a total of 160 000 shareholders. RN-Development, a Rosneft subsidiary, owns 9.44 percent of the parent.