Long-term Development Program and Progress Report
The Long-Term Development Program was originally established in 2014 pursuant to Instruction No. Pr-3086 of the President of the Russian Federation Vladimir Putin dated 27 December 2013 and approved by the Board of Directors of Rosneft on 9 December 2014 (Minutes No. 12).
Pursuant to Directive No. 4955-P13 of the Government of the Russian Federation dated 17 July 2014, Rosneft’s Long-Term Development Program should be updated on an annual basis.
The Company’s Program efforts are guided by cost effectiveness and KPI targets for all key initiatives.
To increase the efficiency and transparency of the Long-Term Development Program updating process, the Company approved the Regulations on the Procedure for Updating Rosneft’s Long-Term Development Program.
In 2018, the Program was updated to include the provisions on the approved Rosneft–2022 Strategy regarding some detailed action plans to achieve strategic goals and updated initiatives, which had been developed pursuant to the Directives of the Government of the Russian Federation No. 4955p-P13 dated 17 July 2014, No. 7558p-P13 dated 12 November 2014, No. 1346p-P13 dated 5 March 2015 and No. 2303p-P13 dated 16 April 2015, No. 7389p-P13 dated 31 October 2014, No. 1472p-P13 dated 3 April 2016, No. 4531p-P13 dated 28 June 2016, No. 4750p-P13 dated 4 July 2016, No. 830p-P13 dated 6 February 2017. . The updated Long-Term Development Program was approved by Rosneft’s Board of Directors (Minutes No. 12 dated 20 December 2018).
The Program details the Company’s strategic focus, targets, and goals for all its businesses and corporate functions; it also includes a list of key initiatives for achieving strategic targets and completing the Strategy for the medium term.
The Long-Term Development Program provides a reserve replacement ratio of at least 100%, efficient brownfield operations, production growth through launching new projects, gas production growth on the back of a long-term sales portfolio, oil processing assets profitability growth, and higher margins across the entire value chain.
Key priorities, KPIs, and actions taken under the current Innovative Development Program (Section 4.8 Research, Design, and Innovation), the Import Substitution and Equipment Localization Program (Section 4.6 Localization and Industrial Cluster Development), and the Energy Saving Program (Section 4.5 Energy Saving and Efficiency) have been developed to incorporate the provisions of Rosneft’s Long-Term Development Program and are fully integrated within the current version of the Innovative Development Program.
The KPIs of the Long-Term Development Program also include an integrated index for innovations. Rosneft’s Investment Program is designed to drive strategic objectives for key businesses detailed in the Strategy and in the Long-Term Development Program (Section The Investment Program in 2018).
The Company has completed the 2018 action plan under the Long-Term Development Program for its key businesses and functions. The 2018 progress under the Long-Term Development Program is described in Section Operating Results.
The Company’s independent auditor, Ernst & Young LLC, audited Rosneft’s progress against its Long-Term Development Program. Following the independent audit, the auditor issued an opinion on whether the Long-Term Development Program Progress Report fairly presents the Company’s progress thereunder for 2018, and on the fairness of reasons given therein for deviations of actual results from the Company’s performance targets for 2018. The opinion was issued on 16 April 2019.