Key Focus Areas in 2018

Implementation of the Refinery Development Program In Russia

Rosneft is continuing the refinery development projects in Russia covering the construction and renovation of production facilities and complexes for improving the refining depth and light product yields, and also increasing the clean motor fuels output to provide the Company’s sales channels with petroleum products meeting the requirements of the Technical Regulations of the Customs Union.

Completing the development projects will improve the product mix, competitive position, and profitability of the Company’s refineries in Russia.

In 2018:

• major retrofitting of the diesel fuel hydrotreater LCh-24/7 was completed at the Ryazan Refinery, thereby improving the performance indicators of the unit;
• the pre-investment phase of business project «Construction of Advanced Oil Refining Complex» was approved at the Yaroslavl Refinery.

Refinery Maintenance Program In Russia

The Company continued to pursue projects rectifying the violations and complying with the instructions issued by the regulatory authorities, and addressing the ecological risks by replacing worn-out equipment and implementing the following target programs at the Company’s refineries in Russia.

In 2018:

• a program was initiated to comply with the instructions issued by the Federal Environmental, Industrial, and Nuclear Supervision Service of Russia (Rostechnadzor), following the inspections of the Bashneft-Ufaneftekhim branch in 2016–2017;
• a program was initiated to provide measurements of internal product flows;
• the Company continued implementing the projects on renovation of the gas fractionation section of LK-6Us unit at the Achinsk Refinery and of the Bashneft-Ufaneftekhim Refinery’s hydrocracking unit after accidents;
• the Company continued the initiatives aimed to reduce the risk of unscheduled interruptions: replacement of worn-out equipment, industrial and fire safety projects, target programs for replacing and improving reliability of pipelines.

New Products

In 2018, the range of products from the Company’s Russian refineries was expanded to meet the market demand:

• the Ufa group of refineries and the Saratov Refinery started producing AI-95 Euro-6 gasoline that is superior to Euro-5 compliant motor fuels currently produced in the Russian Federation with respect to the environmental and performance indicators. Using a new class of gasoline will minimize the environmental impact of road transport, improve the ecological situation that is crucial for large cities;
• the first batch of Pulsar-100 high-octane gasoline was produced at the Ryazan Refinery in March 2018. This fuel with advanced environmental properties enables to achieve full potential and improve the high power engine performance. Pulsar-100 is the official Russian Circuit Racing Series fuel and is distributed among the majority of filling stations in the Moscow region as from August 2018;
• the Ufa group of refineries started commercial production of road bitumen complying with intergovernmental standards. A new production technology ensures long-term durability of obtained road bituminous binders.

Ecology

The Company’s efforts to improve the environmental and performance indicators of produced fuel are complemented by green investments. In the reporting year, the Company’s ecological projects entailed the following:

• reconstruction of isopropylbenzene (cumene) production facilities in Ufaorgsintez with capacity increase and transition to a technology minimizing the environmental impact;
• commissioning of an advanced treatment unit with a membrane bioreactor for the biochemical wastewater treatment facilities at the Novokuibyshevsk Refinery. The state-of-the-art wastewater treatment facility ensures a high purification rate and water return to the production cycle that helps minimize water consumption while maintaining full automation of the process.

Import Substitution, Development and Launch of New Products, and Product Approval Processes

• As part of the import substitution program, the Company’s refineries continued their shift to using additives and catalysts produced by Company-owned facilities in Russia. Thus, in 2018, the catalysts purchased for hydrogen production units at the Kuibyshev and Ryazan Refineries were replaced with the catalysts produced by the Angarsk Catalyzers and Organic Synthesis Plant.
• The comparison tests of additives from different producers for extending the list of potential suppliers, including domestic ones, allowed to select a supplier for two subsidiaries on a competitive basis – DDP (depressor dispersing additive) producer using a domestic component for additive production.
• Efforts were made to launch the production of RT jet fuel Jett A-1 and TS-1 at Bashneft-Novoil, using alternative anti-wear additives based on hydrotreated fraction, as well as improved motor fuels at the Achinsk refinery VNK, Komsomolsk, Novokuibyshevsk, Saratov, and Syzran Refineries.
• To ensure the timely delivery of fuel under the state orders, the Company obtained approvals for the use of improved motor gasolines, diesel, and RT jet fuels made at the Syzran Refinery, Bashneft-UNPZ, Bashneft-Novoil, Bashneft-Ufaneftekhim, Komsomolsk Refinery, Angarsk Petrochemical Company, Achinsk Refinery VNK, Novokuibyshevsk Refinery, YANOS, Ryazan Refinery for the special equipment.

Implementing a Comprehensive Accelerated Digitalization Plan

In 2018, the Company went ahead with the comprehensive plan of the accelerated digitalization across the Oil Refining Unit.

• The conceptual designs of 17 digitalization initiatives in nine Group Subsidiaries have been studied;
• A roadmap of projects and activities for 2019–2023 has been developed;
• The Company picked out the following focus projects to be implemented at its refineries:
  • integration of an advanced process control system (APCS) at nine refineries with a total of over 50;
  • improvement of the process equipment reliability;
  • organization of Predix - Predix collection infrastructure;
  • implementation of measuring instrument monitoring solutions and process monitoring at all refineries;
  • online blending of petroleum products

Improving the Operational Performance of Refineries in 2018

Scheduled and supplementary measures undertaken under the Operational Efficiency Improvement Program resulted in an economic benefit of RUB 17.2 bln in 2018.

The outcomes of the Energy Saving Program are as follows:

• economic benefit of about RUB 1 bln;
• improvement of Solomon energy intensity index by 2.9 p.p. in 2018.

In 2018, the Company implemented the previously approved Oil Refining and Petrochemicals Business Energy Savings Directive. The actual effect was 445.5 thsd tce, against the target of 412.1 thsd tce.