1.4.Key Events of the Year

January

  • 50.11% of shares (controlling stake) in NCSP was transferred to direct ownership of Transneft. The shares were transferred by the Company from Novoport’s Cyprus offshore to Russia’s jurisdiction. Moreover, Transneft also has indirect control of another 11.89% of NCSP shares.

February

  • Moody’s, an international rating agency, has raised the long-term rating of Transneft from Baa3 (positive outlook) to Baa2 (stable outlook). According to analysts of the agency, the Company boasts strong credit quality due to its resilient business model and diversified customer base, as well its moderate level of debt and strong liquidity profile.

March

  • Consolidated financial statements prepared in compliance with the International Financial Reporting Standards (IFRS) for the year ending 31 December 2018 were published.

April

  • An incident occurred when organic compounds entered the Druzhba oil trunk pipeline system as a result of illegal actions by third partiesFor more details on the impact of the Druzhba pipeline contamination on environmental performance and industrial safety, see the Sustainable Development Report 2019..
  • Transneft and Khanty-Mansi Autonomous Area — Yugra signed a cooperation agreement. The most promising area of interaction between the parties is developing relations between the Company’s subsidiaries and contractor companies based in KhMAA, as well as the Company’s involvement in the development of the region’s social infrastructure.
  • An agreement was signed on the sale of Novorossiysk Grain Terminal.

June

  • Oil transportation was restored along all routes.
  • Chaired by President of Transneft Nikolay Tokarev, the eleventh meeting of the Governing Board of the International Association of Oil Transporters (IAOT) took place in the city of Saint Petersburg. The participants reviewed the performance of the IAOT’s three Permanent Expert Groups for Energy Efficiency, Supplies and Legal Issues and updated the Association’s action plan for 2019-2020.
  • The Annual General Meeting of Shareholders adopted the decision to allocate 51.2% of the normalised consolidated net profit under IFRS for 2018 to dividends (the dividends amount to RUB 77.6 billion)

June

  • Transneft signed three mutual cooperation agreements within the St. Petersburg International Economic Forum: with Tula Region, Pskov Region and Yamal-Nenets Autonomous Area (YaNAA). Developing relations between the Company’s subsidiaries and contractor companies based in the regions, as well as the Company’s involvement in the development of the region’s social infrastructure, are the most promising areas of interaction between the parties. Also during the Forum, a strategic cooperation agreement was signed with Siemens.

July

  • The Board of Directors approved the procedure for making compensation payments to shippers for the losses incurred as a result of illegal actions by third parties which led to crude that did not meet GOST requirements entering the Druzhba oil trunk pipeline in April 2019 (the incident), provided that the shippers had documentary evidence of their property damages.

August

  • Implementation of the ESPO PS — Komsomolsk Refinery Oil Pipeline Offshoot investment project was completed. The relevant facilities were commissioned. The technical capacity for oil supply through the oil trunk pipeline system to the Komsomolsk Refinery in the amount of up to 8 MTPA was provided.

September

  • Implementation of the Increasing the Throughput Capacity of the Usa — Ukhta and the Ukhta — Yaroslavl Oil Trunk Pipelines investment project was completed. The facilities were commissioned. This provided the technical capacities the oil trunk pipeline system needed to allow extra intake of crude from the Timan-Pechora region.
  • The 12th meeting of the Governing Board of the International Association of Oil Transporters (IAOT) was held in Almaty. Croatian JANAF was admitted to the IAOT as an observer. Representatives of PERN also took part in the meeting. The Polish partners got acquainted with the IAOT’s work and activities.

  • Transneft launched the Transneft Synthesis plant for manufacturing drag-reducing agents in the Alabuga Special Economic Zone (the Republic of Tatarstan). The plant is designed to produce up to 3,000 tonnes of additives per year, with the possibility of increasing the figure to up to 10,000 tonnes per year.

October

  • Transneft closed the bookbuilding for placement of its exchange bonds with the maturity period of 7 years, series BO001R-13, at the total par value of RUB 15 billion. The coupon rate for this placement is set at the record low level of 6.85% for the corporate sector of the Russian public market of debt securities in 2019 for the indicated volume and circulation period, which once again confirmed the trust of investors in the Company’s credit quality.
  • Transneft and LUKOIL signed an agreement on settling the incident consequences. The documents regard the contaminated (as a result of the incident) volumes of LUKOIL crude transported to Hungary-based MOL Group. Payments under this agreement have been made to the full extent.

November

  • Transneft brought the Eastern Siberia — Pacific Ocean (ESPO PS) pipeline system to its maximum design capacity. The Eastern Siberia — Pacific Ocean oil pipeline capacity was increased in two segments: within the Tayshet IPS — Skovorodino PS (ESPO-1) section to 80 MTPA and within the Skovorodino PS — Kozmino SSOP (ESPO-2) section to 50 MTPA. The project was implemented 11 years ahead of schedule due to Russian oil companies’ high demand for the supply routes.
  • Transneft signed agreements on extrajudicial settlement of the incident consequences with 32 Kazakhstani shippers represented by KazTransOil; payments under these agreements have been made to the full extent.

December

  • The NCSP Development Strategy was approved.
  • A new industrial facility at the premises of Tyumen Machinery and Repair Plant (TMRP) in the city of Tyumen was commissioned. The project was implemented within the framework of the Special Investment Contract (SPIC) signed in June 2017 during the St. Petersburg International Economic Forum between the Russian Ministry of Industry and Trade, Tyumen Region’s Government and Transneft Siberia. The investments near RUB 3,7 billion.
  • A Memorandum of Cooperation between Transneft and the Kingdom of Morocco’s National Office for Hydrocarbons and Mines (ONHYM) was signed in the city of Rabat (the Kingdom of Morocco). The document is to promote development of cooperation in hydrocarbon transportation and maintenance of the respective infrastructure.
  • Transneft signed agreements on extrajudicial settlement of the incident consequences with 5 Kazakhstani shippers represented by KazTransOilIn January 2020, one more agreement with Kazakhstani shippers was concluded, and in February — with Surgutneftegas. Payments under these agreements were made in full in Q1 2020..