the RUSSIA oil & gas competitive intelligence report - Report Buyer

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Russia Oil and Gas Competitive Intelligence Report 2010 Tatneft Company Analysis SWOT Analysis Tatneft is struggling to deliver upstream volumes, and has a small and inefficient downstream operation. Attempts to diversify internationally have met with mixed success, with modest exposure in Ukraine and a stalled deal in Turkey. State priorities do not necessarily coincide with those of the company, and Tatneft looks unlikely to be able to compete effectively with its larger Russian peers. Investment is required at high levels in order to maintain output, expand petrochemicals capacity and enlarge/improve its downstream arm. Financial Statistics Revenues: • RUB220bn (2009) • RUB444.3bn (2008) • RUB356.3bn (2007) • RUB318.3bn (2006) Net income/(loss): • (RUB100bn) (2009, prelim.) • RUB8.41bn (2008) • RUB43.3bn (2007) • RUB29.8bn (2006) Operating Statistics Crude production: • 519,100b/d (2009) • 501,500b/d (2008) • 517,000b/d (2007) Strengths: Weaknesses: Opportunities: Threats: Dominant oil producer in Tatarstan Growing CEE portfolio Domestic refining and marketing interests Involvement in petrochemicals supply Rising investment requirement Modest refining/retail capacity Limited upside potential in oil supply Growth in local oil/regional demand Expansion of petrochemicals segment Downstream oil upgrading/expansion Sustainability of upstream oil volumes Oversupply in CEE refining capacity Changes in national energy policy Gas production • 756Mcm (2009) • 760Mcm (2008) Proven oil reserves: • 6.311 bbl (2009) • 6.25bn bbl (2008) • 5.91bn bbl (2007) Proven gas reserves • 36.8bcm (2007) © Business Monitor International Ltd Page 45
Russia Oil and Gas Competitive Intelligence Report 2010 Market Position Strategy Tatneft is the main oil company active in the Volga region of Tatarstan and the country’s sixth largest oil producer. The group’s key shareholders are the regional government of Tatarstan (with 31%), the TAIF group of companies (6%) and employees (8%). Downstream assets include two Tatarstan refineries, the 20,000b/d Kichuyi plant (100%) and the Nizhnekamsk plant (63%), and a network of over 600 service stations in Russia and Ukraine. Tatneft holds an 8.6% stake in Ukraine’s largest refinery, the 370,000b/d UkrTatNaft. The company also has exploration acreage in Libya and Syria. Tatneft said in January 2004 that planned expansion projects through to 2010 would cost over US$2.7bn. This will include a US$1.3bn processing complex at the Nizhnekamsk refinery, incorporating a polypropylene and polyethylene production plant. Tatneft will also expand its service station network and the capacity of the Nizhnekamsk synthetic motor oil plant. The company’s crude output is expected to remain flat over the next five years, as it is already investing billions to maintain production levels at its ageing fields. Latest Developments In November 2009, Tatneft increased its syndicated loan to US$1.5bn from US$900mn. The three-year loan, which is secured on oil exports, was oversubscribed. The loan will be used for general corporate purposes particularly for Tatneft's refinery and petrochemical complex, which is currently being built at Nizhnekamsk in Tatarstan. In May 2009, Kalmneftegaz, in which Tatneft holds a 50% stake, has booked 35bcm of gas reserves from a discovery in northern Kalmykia. © Business Monitor International Ltd Page 46
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