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Expected 2020 Results of Implementing Development Programme, Overhaul Programme, Other Capital Investments Plan, Liquidation Programme, Targeted Charity Programme and Corporate Charity Programme for Development Social Infrastructure in Russia’s Far East

Date of publication: 30 December 2020

In 2020, Transneft continued the implementation of two investment projects.

1. Revamping of oil trunk pipelines for transportation of oil to refineries in Krasnodar Territory:

- the first phase of the project was completed in 2019 with the process connection of the Ilsky Refinery;

- completion of the project’s second phase was postponed from 2020 to 2021 due to the Afipsky Refinery being unready for technological connection.

2. Developing a corporate data communication network to build Transneft’s unified information system (UIS). The construction of a trunk fibre-optic communications link with a total length of more than 9,000 km and 298 antenna-mast structures is being carried out within this project. So far, 7,819 km of the trunk fibre-optic communications link and 169 antenna-mast structures have been built. The project’s completion is scheduled for 2025.

In 2020, Transneft continued implementing a number of large-scale integrated revamping projects as part of the technical upgrading and revamping (TUR) programme, including:

1. Increasing the crude oil export via the port of Novorossiysk to 40 MTPA.

To ensure oil transportation over the Kuybyshev – Tikhoretsk oil trunk pipeline in the amount of 40 MTPA towards the port of Novorossiysk, the execution of works on 32 construction and revamping projects along the 823.2-km oil trunk pipeline as well as 13 oil pumping stations is planned.

As of today, 545 km of the pipeline (67%) have actually been welded into a string, 529 km (65%) have been laid and covered in soil, 361.7 km (44%) of OTP have been connected to the existing system, 138.9 km (17%) have been commissioned.  

As for onsite facilities, the revamping of six operating facilities has been completed while the revamping of seven oil pumping stations is still under way.

2. Integrated reconstruction of the Sokur LODS

In 2020, the most significant facilities revamped were commissioned: a railroad loading rack with automatic on-spot loading, unparalleled in the Transneft system, five tanks having the total capacity of 70,000 m3, a fire department building, an administrative and amenity building, a testing lab as well as a set of security equipment at the Sokur-1 and the Sokur-2 operating facilities. The project’s implementation completion is scheduled for 2023.

3. Integrated reconstruction of the Yuzhny Balyk LODS

In 2020, the implementation of the Yuzhny Balyk LODS integrated reconstruction project was completed. A 20,000-m3 tank and an automatic fire-extinguishing system have been commissioned; process pipelines and onsite roads have been revamped.

4. Integrated reconstruction of the Samara LODS

Reconstruction of the Samara-1 PS’ booster pump unit with process pipelines replaced and 8 booster pump units installed, revamping of an integrated automatic fire-extinguishing system, an oil mixing site and onsite services has been completed. The project’s implementation completion is scheduled for 2024.

5. Integrated revamping of the Sheskharis TC

In 2020, 8 tanks with the total capacity of 240,000 m3 were commissioned; a range of works aimed at the engineering protection of the Grushovaya and the Sheskharis operating facilities was completed. Process pipelines and equipment are still being replaced, landscaping is underway at the Grushovaya site. The project’s implementation completion is scheduled for 2027.

Construction of an underwater crossing at the Almetyevsk – Nizhny Novgorod PPTP over the river Kama at the 170th km has been completed within the TUR programme, including the installation of the oil pipeline’s 7.58-km standby leg and a 5.4-km oil trunk pipeline underwater crossing.

The works of dragging a 2.57-km siphon were completed in 2020 as part of the construction of the underwater crossing of the Surgut - Polotsk OTP over the river Kama at the 1,291st km. 

A total of 1,375 facilities have been commissioned in 2020 as part of the implemented programmes:

I. As part of the development programme, 724 newly built facilities have been commissioned along with technically upgraded and revamped ones, including the replacement of 884 km of trunk pipelines. The welding of more than 340 km of trunk pipelines has been done and 302 km of the pipelines to be commissioned in 2021 have been connected to the operational system.

75 tanks, 32 oil and petroleum products’ lease automatic custody transfer units (LACT) as well as 34 technical security equipment (TSE) facilities were put into operation in addition to the replacement of 103 pumps and 77 electric motors.

The anticipated execution in 2020 of the development programme in monetary value from the plan for the adjusted long-term development programme is:

- RUB 197.3 billion in terms of financing (101 %);

- RUB 179.6 billion in terms of assimilation of CAPEX (101 %).

II. Works have been completed on 78 facilities with volumes of financing standing at RUB 6.3 billion, as part of the TUR programme for Transneft subsidiaries engaged in services.

III. Works have been completed within the Other Capital Investments plan
on 85 facilities, with volumes of financing standing at RUB 7.7 billion.

IV. Works have been completed on 310 facilities with volumes of financing standing at RUB 11.1 billion as part of the overhaul programme.

V. Works have been completed on 178 facilities as part of the liquidation programme, with volumes of financing standing at RUB 1.7 billion.

VI. Five facilities have been commissioned as part of agreements and contracts for the connection of applicants’ facilities to Transneft’s trunk pipelines, including:

- based on the agreement with the Antipinsky Refinery – 1 facility;

- based on the agreement with VPK-Oil – 1 facility;

- based on the agreement with Kungur Oil Company – 1 facility;

- based on the agreement with LUKOIL-Trans – 2 facilities.

All contracts and agreements are implemented within the time limits provided.

VII. 69 projects to the tune of RUB 1.61 billion have been financed within the targeted charitable programme; the financing of 45 projects worth RUB 1.05 billion has been completed, including the following major projects:

- Construction10 feldsher-midwife stations (FMS) in the areas of Irkutsk Region, devastated by the flood. The construction of 4 FMS was completed in 2019 and 6 other FMS were built in 2020.

- Restoration of the Assumption Cathedral of the Moscow Kremlin (phase 2);

- Construction of the Rzhev Memorial to the Soviet Soldier in the city of Rzhev, Tver Region;

- Construction of a cultural centre in Valki Settlement of Lyskovsky District of Nizhny Novgorod Region;

- Repair works in the building and premises meant for accommodation of the children’s park Quantorium in the city of Velikiye Luki, Pskov Region;

- Landscaping of the public garden named after the 75th anniversary of Victory Day in the city of Novorossiysk, Krasnodar Territory, etc.

VIII. The level of financing within the corporate charitable social infrastructure development programme in the Far East for 2020-2022, included in the targeted charity programme, stood at RUB 0.13 billion, with 17 projects scheduled for 2020 completed (12 school education projects and 5 public health projects).

Based on the results of the Company’s development programme execution, the expected key performance indicator of the investing activity for 2020 comes to 100%, even taking into account the decision of the Board of Directors of the Company to readjust the planned key business performance indicators of Transneft (Minutes No. 18 dated 19 October 2020), made in view of Transneft’s tariff revenues reduction caused by cutting the crude oil production and transportation in Russia in 2020, as a result of the OPEC+ deal and restrictive measures imposed because of COVID-19.

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