Investment Projects in Russia and Abroad
8Indirect economic impact of the Company
WHY THIS TOPIC IS MATERIAL
The Group’s investment projects are more than a driver for Transneft’s development, but they also facilitate the economic development of the regions where Transneft subsidiaries operate.
The Development, Technical Upgrading and Revamping Programme for Transneft Trunk Pipeline Facilities is comprised of the following sections:
- The Technical Upgrading and Revamping Programme for Trunk Pipeline Facilities;
- The Investment Programme.
THE INVESTMENT MANAGEMENT EFFICIENCY
The efficiency of Transneft’s investment activities is determined within the framework of Transneft’s key performance indicators system, using the Integral Indicator of Investment Efficiency under the Development, Technical Upgrading and Revamping Programme for Transneft’s Trunk Pipeline Facilities.
|Target||Performance status||Target||Performance status||Target|
|Performance to the Development Programme funding plan, RUB billion (VAT included)||328.1||Achieved||243.3||Achieved||276.6|
|Performance to the capital investments assimilation plan under the Development Programme, RUB billion (exclusive of VAT)||278.7||Achieved||206.2||Achieved||232.4|
|Performance to the Action Plan for Reducing Capital Costs under the Development Programme, RUB billion (exclusive of VAT)||4.9||Achieved||3.8||Achieved||3.8|
|Meeting Investment project deadlines, units||7||Achieved||5||Achieved with regard for normalisation||4|
|Performance to pipeline replacement plan, kilometres||1,006||Achieved||1,018||Achieved||1,001|
|Performance to the storage tank construction and revamping plan, pcs.||63||Achieved||57||Achieved||80|
The Development Programme accommodates the Technical Upgrading and Revamping Programme for Transneft’s Trunk Pipeline Facilities with a focus on maintaining the operability and efficient technical state of the Company’s fixed production assets ensuring transportation of oil and petroleum products through Transneft system in the amounts requested by consumers, and with due regard of environmental and industrial safety standards.
INFRASTRUCTURE INVESTMENT PROJECTS UNDERWAY
In 2018, the funding amount under the investment programme made RUB 63.8 billion.
|Projects||Project Implementation Advantages||Commissioning Deadline|
|Development of the oil trunk pipeline system|
|Expansion of the Eastern Siberia – Pacific Ocean Pipeline System at the section between the Tayshet initial pumping station (IPS) and the Skovorodino PS to 80 million tonnes per year||Implementation of the projects to expand the ESPO PS will enable the diversification of Russian oil export flows to the People’s Republic of China and to Asia and the Pacific through the Kozmino specialised sea oil port (SSOP), as well as the delivery of oil to Russian refineries such as the Komsomolsk Refinery and the Khabarovsk Refinery||2019|
|Expansion of the Eastern Siberia – Pacific Ocean Pipeline System at the section between the Skovorodino PS and the Kozmino SSOP to 50 million tonnes per year||2019|
|Construction of the ESPO – Komsomolsk Refinery oil pipeline offshoot||Delivery of the project will enable the supply of oil to the Komsomolsk Refinery by pipeline transport.||2019|
|Development of the Petroleum Products Trunk Pipeline System|
|Increasing the throughput capacity of Sever pipeline to 25 million tonnes per year in order to expand the export capacity of the petroleum products pipeline system||Delivery of the project will ensure an increase in the volume of pumping diesel fuel towards the port of Primorsk in order to expand the export capacity of the petroleum products pipeline system||2018|
|Revamping the system of trunk pipelines to increase the volume of petroleum products delivered to the Moscow region||Delivery of the project will enable transportation of larger volumes of light petroleum products for the needs of the Moscow region, as well as expansion of the range of motor gasolines available.||2018|
In order to confirm the compliance of the selected process and design project solutions with the best domestic and international practices in the field of construction and operation, as well as to ensure the efficiency of capital expenditures, Transneft provides for technological and price audits performed with regard to investment projects, along with the cost-efficiency analysis of their implementation, in accordance with applicable rules and regulations.
INCREASING THE THROUGHPUT CAPACITY OF THE ESPO PS AT THE TAYSHET IPS – SKOVORODINO PS SECTION UP TO 80 MTPA
Project Objective and Timeline
Increase of the throughput capacity of the ESPO-1 pipeline system to 80 million tonnes to ensure transportation of oil for export to the People’s Republic of China, as well as to the Kozmino SSOP and to domestic refineries (the RN-Komsomolsk Refinery and the Khabarovsk Refinery).
Key Results of 2018
- After oil pumping stations No. 3, 6, and 9 were commissioned in 2018, the throughput capacity at the Tayshet IPS – Skovorodino PS section of the ESPO PS grew to 73 million tonnes per year.
- Comprehensive construction and installation were completed at the Tayshet IPS.
- A package of works including building installation, welding of process pipelines, mounting of loading racks, and putting up the tanks’ metal structures, was generally completed at oil pumping stations No. 2, 5, and 7.
Project completion: 2019
INCREASING THE THROUGHPUT CAPACITY OF THE ESPO PS AT THE SKOVORODINO PS – KOZMINO SSOP SECTION TO 50 MTPA
Project Objective and Timeline
Increase of the ESPO-2 pipeline system throughput capacity to 50 million tonnes in order to ensure transportation of oil for export through the Kozmino SSOP and to oil refineries of the Russian Federation (the RN-Komsomolsk refinery, the Khabarovsk refinery).
Key Results of 2018
- After oil pumping station No. 29 was commissioned in 2018, the throughput capacity at the Skovorodino PS – Kozmino SSOP section of the ESPO PS grew to 45 million tonnes per year.
- Construction of oil pumping stations No. 23, 26, and 32 is underway, with EPS and communication facilities provided.
- Revamping of oil pumping stations No. 27, 34, and 41 is underway.
Project completion: 2019
tonnes per year
INVESTMENT PROJECTS IMPLEMENTED ABROAD
In September 2018, the Group acquired 50% of the authorised capital of Omirico Limited, which has indirect control over 50.1% of NCSP’s shares.
As a result of the acquisition, the Group’s effective share in NCSP grew from 37% to 63% (according to IFRS), and the Group thus gained control over NCSP and its subsidiaries.
As NCSP Group has its terminals at the key transit points for exported and imported cargoes on the Black and the Baltic Sea, it allows for benefitting from the growing demand for cargo transshipment to all destinations. In terms of turnover, NCSP Group’s ports are No. 1 in Russia and No. 3 in Europe, after Rotterdam and Antwerp.
|Investment project||Performance status||Comment|
|Increase of the throughput capacity of the OTP supplying oil to TANECO refineries to 14 MTPA||Achieved||–|
|Development of the trunk pipelines system in order to increase petroleum products deliveries to the port of Primorsk to 25 MTPA (the Sever project)||Achieved||–|
|Revamping the system of trunk pipelines to increase the volume of petroleum products delivered to the Moscow region||Achieved||–|
|Plan for 2019|
|Increasing the throughput capacity of the ESPO PS at the Tayshet IPS – Skovorodino PS section to 80 million tonnes per year||The project is on track as scheduled||–|
|Increasing the throughput capacity of the ESPO PS at the Skovorodino PS – Kozmino SSOP Section to 50 million tonnes per year||The project is on track as scheduled||–|
|The ESPO PS – Komsomolsk Refinery oil pipeline offshoot||The deadline for the completion of the project was postponed from 2018 to 2019||The RN-Komsomolsk Refinery being the Principal under the agreement for technological connection to Transneft’s trunk pipeline system, failed to fulfil its obligations thereunder and to connect a technologically related facility, namely, a LACT delivery point, to the offshoot; consequently, Transneft is unable to conduct a comprehensive testing of the systems and equipment at the facilities and to accept them into service, and therefore the completion of the project is rescheduled for 2019|
|Increasing the throughput capacity of the Usa – Ukhta and the Ukhta – Yaroslavl oil trunk pipelines||The project is on track as scheduled||–|
For more information on the investment activities, please seeAnnual Report for 2018