On 3 August 2017, Transneft President Nikolay Tokarev answered a number of questions asked by journalists in Novobureyskiy settlement of Amur region.
On American economic sanctions
Conversing with media people, Mr. Tokarev shared his confidence that the new U.S. sanctions wouldn’t affect Transneft.
“We thoroughly studied this matter and can say that our company won’t be affected because 94% of the equipment we use is made in Russia,” he remarked.
Mr. Tokarev reminded that for several years in a row the company had been implementing a large-scale import substitution program. “Not by virtue of the sanctions, but because it was necessary to manufacture many product types, including in heavy industries, we’ve been specifically engaged in the import substitution program during the recent 7 years: we have 19 products, starting from main line pumps, which we manufacture on our own, a complete line-up. Next year we are launching a plant of electric motors for these pumps,” he informed, adding that at the present time the company “has addressed all most sensitive issues.”
Also, in the words of Mr. Tokarev, Transneft does not draw financing or loans from abroad, fully content with domestic capabilities.
On the conversion of preferred shares
The company’s president informed that the preferred shares of Transneft can potentially be converted into ordinary shares.
“For now we’d like to preserve the status quo, but we do not exclude that in the future even preferred shares will be converted,” said Tokarev, answering the question.
He emphasized that under this scenario the government would retain its stake which would never be diffused or diluted. “No, this will never happen relative to Transneft; I am absolutely convinced that this is inadmissible,” stated the company’s president.
On the interest of CIC to buy Transneft shares
During the meetings with the management of Transneft, executives of China Investment Corporation (CIC) inquired about the possibility of buying a preferred stake in the Company. This matter is being studied, Mr. Tokarev told the journalists.
“Our Chinese partners were also interested to buy a preferred stock in Transneft. I can understand them in principle – this could be interesting for them. We confirmed our readiness to sell and at the present time we are elaborating on this matter. Quite likely we’ll get new partners in the person of Chinese investors,” he said.
On paying out the dividends
Answering the journalists’ questions, Mr. Tokarev also informed that Transneft is ready to pay out 50% of its profit as dividends if the shareholders decide so.
He reminded that a respective meeting of the Board of Directors took place at Transneft and there were directives to pay out about RUB 59 billion as dividends. “This is about 35% of the profit for 2016 and H1 2017. We stick to this status quo for the time being and we’ll see what happens in the future: if our shareholders order the payment of more dividends, this is what we’ll do,” he said, answering the question if it has been proposed to use 20% of the net profit by IFRS for dividend payment after reviewing the results of 2017.
Commenting on Transneft investing in its own shares via Transneft Invest, the president pointed out that dividends on preferred shares this year have been 5-6 higher than last year. “And we have assigned it to the management company of our pension fund which will have access to extra sources and new funding opportunities. I believe this is appropriate and justified,” he said.
On building an offshoot from ESPO to Komsomolsky refinery
Answering the journalists’ questions, Mr. Tokarev also informed that Transneft kept within the schedule of building an offshoot from the Eastern Siberia – Pacific Ocean (ESPO) oil pipeline to Komsomolsky refinery.
In his words, hydro tests have been already commenced. “We keep within the schedule and will complete this project in Q2 2018,” said Transneft president.