Tatneft

Tatneft (Russian: публичное акционерное общество «Татнефть» имени В.Д. Шашина or ПАО «Татнефть» им. В.Д. Шашина; traded as: MCX: TATN (ordinary shares), MCX: TATNP (preferred shares),LSE: ATAD (ADRs)) is a Russian vertically integrated oil and gas company with headquarters in the city of Almetyevsk, Republic of Tatarstan, Russian Federation. It is the fifth largest oil company in Russia[5] and the eights largest listed company in Russia by market capitalization (as of 31 December 2019).[6]

PJSC Tatneft
Tatneft
Native name
ОАО «Татнефть»
Public (PJSC)
Traded asMCX: TATN (ordinary shares)
MCX: TATNP (preferred shares)
LSE: ATAD (ADRs)
ISINRU0009033591 
US8766292051
IndustryOil and gas
Founded1950 (1950)
FounderMinistry of Oil Industry
Headquarters
Almetyevsk
,
Russia
Key people
Rustam Minnikhanov (Chairman of the Board of Directors)
Nail Maganov (CEO)
ProductsPetroleum
Natural gas
Petrochemicals
Revenue$14.4 billion[1]2019
$3.96 billion[2]2019
$2.97 billion[1]2019
Total assets$15.9 billion[3]March 2020
Total equity$10 billion[3] March 2020
Number of employees
60,000[4]2019
Websitewww.tatneft.ru

Tatneft holds most of the exploration and production licenses and produces substantially all its crude oil in Tatarstan. Out of approximately 581.5 thousand barrels of oil produced daily 35.5% (206.7 thousand barrels per day) is refined at Tatneft’s TANECO refinery (as of 31 December 2019).[7]

Tatneft is also involved in treatment and refining of associated petroleum gas, petrochemicals’, mainly tires, production and marketing, manufacturing of equipment, engineering, procurement, and construction services for oil, gas and petrochemical projects and, from the fourth quarter of 2016 upon obtaining control over Bank ZENIT, in banking activities.

History

Tatneft was created by the Decree of the Council of Ministers of the USSR in April 1950 as a production association under the Ministry of Oil Industry of the USSR by uniting several drilling and derrick maintenance crews operating in Tatarstan.[8]

Upon its establishment Tatneft commenced the production from various crude oil fields in Tatarstan, most notably the Romashkino (Romashkinskoye) unique super-giant field discovered in 1948. By 1956 Tatneft became the largest crude oil producer in the USSR.[9] In 1971 Tatneft extracted the 1st billionth tonne of crude oil. The annual crude oil production by Tatneft reached 104 million tonnes in 1975.[10] In 2019 Tatneft’s annual production was 29,798 thousand tonnes or 212,252 thousand barrels.[7]

In 1994 upon its privatization Tatneft was reorganized into an open joint stock company. In October 1995 Tatneft shares started to be quoted on the Russian Trading System (RTS) and became one of the first constituents of the RTS Index RTSI. In December 2016 Tatneft listed its American Depositary Receipts (ADRs) on the London Stock Exchange LSE: ATAD Tatneft also had its ADRs listed on the New York Stock Exchange (stock symbol TNT) between March 1998 and September 2006.[11]

In August 1999 Tatneft shares were listed on MICEX. Currently the Moscow Exchange (which was formed following the merger of MICEX and RTS in 2011) is the primary market for Tatneft’s ordinary MCX: TATN and preferred MCX: TATNP shares. And the London Stock Exchange LSE: ATAD for its ADRs.

Tatneft’s ADR program is registered with the US Securities and Exchange Commission as Level 1.[12]

In 2005 Tatneft launched the project of building a new large refining and petrochemicals complex in Nizhnekamsk, Tatarstan, which was called TANECO (the company implementing the project and later operating the refinery received the same name – JSC TANECO). The first stage of the new refinery complex was completed in 2010 and put into operation in 2011.

In 2006 Tatneft launched the project of developing heavy oil natural bitumen (super-viscous or highly-viscous oil, HVO) reserves in Tatarstan. After exploring various options of carrying out the project in cooperation with its global peers, Tatneft decided to do so on its own. As of 31 May 2020 Tatneft is producing over 65 thousand barrels of highly-viscous oil per day from 1042 horizontal wells.[7]

Since September 2018 Tatneft is implementing the Strategy until 2030, which encompasses amongst other things the growth of crude oil production, expansion of Tatneft’s refining capability, its service stations network, and the development of petrochemicals segment.[13]

In 2019 Tatneft acquired from Neste Oil Corporation the Russian fuel retail business consisting of 75 fuel stations in North-West Russia and a terminal in Saint Petersburg.[14]

In November 2019 Tatneft completed the acquisition of certain assets, including the production of various types of synthetic rubber used for the manufacturing of high-performance tires, located in Togliatti, Samara Region, Russia, from SIBUR.[15]

Operations

The main activities of Tatneft are:

  • gas and oil exploration and production
  • gas and oil refining and marketing
  • petrochemicals (including Nizhnekamskshin tire-making plant)
  • banking services (through its subsidiaries Bank Zenit and Bank Devon-Credit)

Tatneft is the first Russian oil company, which developed a contract with Syria to extract oil. The contract became effective in March 2005.[16]

In 2007, Tatneft had total proved reserves of approximately 6.140 billion barrels of crude oil according to the audit by Miller and Lents.[17] It operated 77 oil fields, including the main field of the company - Romashkino, with total production capacity of 25 million tons of oil and a very high amount of natural gas annually. Other main oil fields are Novo-Yelokhov and Bavly.[18] In addition to Russia, it conducts exploration and production operations also in Libya, Angola, Syria, Iran, Vietnam, Oman and Saudi Arabia.[18][19] In 2008, Tatneft's crude oil production was 189 million barrels and was expected to shrink by 1.5% to 186 million barrels in 2009.[20]

As of 1 July 2010, Tatneft had 626 filling stations, of which 490 are located on the territory of the Russian Federation and 136 are located in Ukraine.[21]

In September 2007, Tatneft formed a strategic partnership with Royal Dutch Shell to develop heavy crude oil (bitumen) production in Tatarstan.[22] It considers similar partnership with Chevron.[23]

Through its subsidiary TANEKO, Tatneft is constructing the Nizhnekamsk refinery and petrochemical complex, which it intends to commission in phases in 2009 and 2011-2012.[24] The complex will include of refineries with the capacity of seven million tons per year, deep oil conversion plant of 3.5 million tons per year and petrochemical plant, which will produce linear alkyl benzene for production of washing materials and oil lubricants, paraxylene and terephthalic acid for production of polyester fibers (u1074), cellophane film and bottles, and polypropylene.[18] The complex is expected to cost US$3–3.2 billion, of which $2 billion was invested in 2008, and $1–1.2 billion would be invested in 2009.[25]

Metal Mining Wire reports that in the first half of 2013, Tatneft has installed 630 gas filling stations across Russia. In Ukraine, the number of filling stations has reached 114, and Belarus has received a total of eight gas filling stations. Tatneft delivered 730,000 tons of petroleumand gas products to its filling stations. Tatneft also upgraded many of its stations to deliver diesel fuel and eco-friendly grade five gasoline, both of which have a lower negative environmental impact than traditional gasoline. As of July 2013, Tatneft is evaluating ways to install solar panels at its filling stations in an effort to save resources.[26]

Shareholders

The main shareholder is the Republic of Tatarstan through its holding company Svyazinvestneftekhim, which holds 34% of Tatneft.[18] The Government of Tatarstan holds also a golden share in the company.

Controversies

Tatneft has an ongoing dispute with the Government of Ukraine over control in Ukrtatnafta, an owner of the Kremenchuk oil refinery.[27] Ukrainian state-owned energy company Naftogaz Ukrainy owns 43.1% of shares in Ukrtatnafta, Tatneft owns 8.6% and Government of Tatarstan owns 28.8%.[28] 18% of the shares were transferred to two offshore companies allied with Tatneft, transaction which was not recognized by Ukrainian authorities. According to the court decision, these share were handed over to Naftogaz and in October 2007, there was a management change, which is not recognized by Tatneft. In March Tatneft filed international arbitration against Ukraine.[27]

On 9 July 2008, after signing an agreement between the United States and the Czech Republic to host a tracking radar for an antiballistic missile system, Tatneft reduced oil supplies through the Druzhba pipeline to the Czech Republic. Tatneft said that it re-routed volumes from the Czech Republic to Turkey due to better prices.[29] Although officially the linkage between reduction of oil supplies and the radar agreement was not claimed, it was suspected.[30]

Ecology

In 2013, TatNIPIneft, the Tatar Oil Research and Design Institute devised a new technology called SSG-VUKSZHS, which increases the depletion of oil reservoirs using a composition based on silica gel. The technology has been applied by Tatneft to enhance the recovery of oil, after winning the Grand Prix for best exhibit, engineering design or technical solution at the XX International Oil and Gas Exhibition 2013 held in Baku, Azerbaijan, in June.[31]

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References
  1. "Tatneft published its audited IFRS consolidated financial statements for the year ended December 31, 2019". www.tatneft.ru. 31 March 2020. Retrieved 7 July 2020.
  2. "Tatneft Group IFRS consolidated financial statements and independent auditor's report" (PDF). tatneft.ru. Retrieved 7 July 2020.
  3. "Tatneft published its IFRS consolidated interim condensed financial statements for the first quarter of 2020". www.tatneft.ru. Retrieved 7 July 2020.
  4. "Tatneft's annual report of 2019" (PDF). Retrieved 7 July 2020.
  5. Vedomosti (2 March 2006). "Tatneft ready to encumber 5% stake". Antanta Capital. Retrieved 11 January 2009.
  6. "Самые дорогие публичные компании России – Рейтинг 2019". riarating.ru. Retrieved 3 July 2020.
  7. "Directors' report for the year ended December 2019" (PDF).
  8. "Юбилейный - «Татнефти» - 60!". jubilee.tatneft.ru. Retrieved 3 July 2020.
  9. "ПАО «Татнефть» - История Группы «Татнефть»". www.tatneft.ru. Retrieved 3 July 2020.
  10. "ПАО «Татнефть» - Первый миллиард тонн нефти". www.tatneft.ru. Retrieved 3 July 2020.
  11. "20-F". www.sec.gov. 2 November 2006. Retrieved 7 July 2020.
  12. "f-6-PRE". www.sec.gov. 29 April 2009. Retrieved 7 July 2020.
  13. "Tatneft group strategy 2030" (PDF). tatneft.ru. September 2018. Retrieved 7 July 2020.
  14. "Tatneft completed the acquisition of Neste's retail business in Russia". www.tatneft.ru. 31 October 2019. Retrieved 3 July 2020.
  15. "Tatneft and SIBUR completed the transaction in relation to petrochemical plant in Togliatti". www.tatneft.ru. 1 November 2019. Retrieved 3 July 2020.
  16. Katz, Mark N. (2006). "Putin's Foreign Policy Toward Syria" (PDF). MERIA. Retrieved 24 February 2013.
  17. "UPDATE 1-Russia Tatneft replaces 124 pct of reserves in 2007". Reuters. Reuters New Agency. 7 May 2008. Retrieved 8 May 2017.
  18. "Tatneft" (PDF). Veles Capital. 22 September 2008. Retrieved 11 January 2009. Cite journal requires |journal= (help)
  19. "Tatneft' OAO. Summary". Google Finance. Retrieved 11 January 2009.
  20. "Tatneft oil firm posts 21.7% net profit drop in 2008". sputniknews.com. Sputnik International. 27 April 2009. Retrieved 8 May 2017.
  21. "Home Page (in Russian)". OAO Tatneft. Retrieved 5 November 2010.
  22. "Tatneft and Shell to develop strategic partnership" (Press release). Royal Dutch Shell. 27 September 2007. Archived from the original on 12 December 2007. Retrieved 11 January 2009.
  23. "Russia's Tatneft eyes Chevron tie-up". Upstream Online. NHST Media Group. 1 April 2008. Retrieved 11 January 2009.
  24. "Fitch release on OAO Tatneft". Reuters. 11 July 2008. Retrieved 11 January 2009.
  25. Vladimir Soldatkin (5 May 2005). "Tatneft to seek up to $1.2 bln for refinery". Reuters. Retrieved 30 May 2005.
  26. Moran, Mike. "Tatneft installs 630 gas filling stations during first half of year" Archived 4 October 2013 at the Wayback Machine, Metal Mining Wire, 18 July 2013 (retrieved 22 July 2013).
  27. "O.A.O. Tatneft - Arbitration against Ukraine". Reuters. 17 March 2008. Retrieved 11 January 2009.
  28. "Ukraine deputy PM says Kremenchug head illegal". Reuters. 24 October 2007. Retrieved 11 January 2009.
  29. "Russia Tatneft says re-routed Druzhba oil to Turkey". Reuters. 15 July 2008. Retrieved 11 January 2009.
  30. Andrew E. Kramer (11 July 2008). "Russian oil to Czechs slows after U.S. pact". International Herald Tribune. Retrieved 11 January 2009.
  31. Waits, Douglas (1 October 2013). "Eco-friendly technologies to improve oil recovery". Cistran Finance. Archived from the original on 29 October 2013. Retrieved 25 October 2013.
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