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Rosneft CEO Igor Sechin: Mr President, a few words about the 2014 results. The overall volume of hydrocarbons extracted as of the end of the year was 252 billion tons in oil equivalent. That is about 4.6% more than in 2013, in spite of the price drop in the second half of the year and market volatility. Net oil production accounted for 205 million tons, and gas production stood at nearly 60 billion cubic metres.

At year-end, the company’s hydrocarbon reserves were at 129 billion barrels, or 17 billion tons in oil equivalent. In other words, our geological exploration was quite successful and we fulfilled all our orders. At the same time, we meet all of our company’s license commitments.

If I may, Mr President, I would like to draw your attention to three key aspects that sum up this past year. We conducted a large-scale programme to increase the efficiency of petroleum industry, and mining and drilling services, and Rosneft’s own drilling fleet grew from 81 drilling rigs to 213.

We also increased the number of drilling crews from 51 to 200. This year, we will continue this work and increase that number to 230.

President of Russia Vladimir Putin: Are you renting these platforms?

Igor Sechin: These are our own drilling rigs. We did some purchases, including at Uralmash, and just recently, signed another contract for the delivery of 13 drilling rigs, after agreeing on price.

This is another important transaction. It now allows us to increase our drilling fleet so that we don’t depend on price hikes for contract services, which currently go hand in hand with the economic processes happening in the sector.

This year, we plan to increase the number of drilling crews up to 230 and thus carry out 75–80% of the main projects by our own effort, so as not to be dependent on market volatility.

The second thing I’d like to draw your attention to is that in the last 18 months, we have steadily lowered expenditures by 10% yearly. And we will maintain this same trend in 2015.

Based on the 2014 results, the company listed over three trillion rubles in the budgets at all levels, and this accounted for about 60% of the company’s proceeds, which is almost 12% higher than in 2013, when this figure was about 2.7 trillion.

I would also like to report that in 2014, Rosneft sales on the domestic currency market were about $93 billion. And, of course, this was our own contribution to stabilising the national currency system.

To conclude my report on the last year, the key events in 2014 were drilling in the Arctic and installing the world’s largest extraction platform, Berkut, in Sakhalin, which we reported to you (this was, I suppose, one of the most important events not only in our nation but in the global oil sector), as well as the launch of extraction at the new oil field in Sakhalin, Severnoye Chayvo.

As of today, Berkut has already drilled its first production well, with output of 2,000 tons per day. We already have an accumulated production at Berkut of about 60,000 thousand tons. Four oil tankers have already departed, including from Berkut. This work is being completed successfully and will be continued well.

Mr President, we have stipulated a rather conservative scenario in our business plan for 2015, assuming an average oil price of $50. This will allow us to confidently implement our investment programme.

The key actions we are planning involve preparations for drilling on the shelf, preparing logistics bases in Sakhalin, Murmansk Region and Magadan. We are holding tenders for drilling rigs and geological and engineering surveys. Our priorities in the Far East are, first and foremost, in Magadan. And in 2016, we plan to drill two exploration wells jointly with our partners.

Vladimir Putin: What about refineries in the Far East?

Igor Sechin: We are currently engaged in design engineering works. But now, we will have to look at this work from the perspective of the new tax regime, because it changes the project economics.

Vladimir Putin: For the better.

Igor Sechin: Mr President, we will, of course, proceed on the assumption that this asset is necessary. It is very important for the region to make good the shortfall in processing capacity. But we count on support from the regulatory bodies, since this project is a strategic one for the Far East.

Vladimir Putin: What kind of support do you need here? It seems there are preferential conditions. After all, you’re not starting from scratch. There is a greenfield, there are already plenty of benefits, including tax breaks.

Igor Sechin: Customs duties for crude oil and oil products are currently evening out following the tax manoeuvre. This, of course, changes the economics of refining. But we are doing all the necessary research and calculations, and the project will be implemented in the interest of developing the region and the economy.

Vladimir Putin: Mr Sechin, when you were working in the Government, you were in favour of that tax manoeuvre, but as soon as you moved to work in the company, you are now against it. Where is the real Sechin – the one before or after? Where are the government interests? The interests of the company are important, because the company is a sector-forming one, but there are also the interests of the economy in general.

Mr Sechin, let’s discuss this in more detail.

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