20 YEARS
OF SUSTAINABLE DEVELOPMENT
IN THE STATUS OF JOINT STOCK COMPANY
Annual Report of JSC TATNEFT for 2014
1
CONTENTS
ABOUT THE COMPANY ............................................................................................01
Joint Address to Shareholders, Investors and Partners ........................................................................................................... 02
Company’s Mission ............................................................................................................................................................. 04
JSC TATNEFT Capitalization ................................................................................................................................................. 05
Strategic Initiatives .............................................................................................................................................................. 06
Sustainable Development .................................................................................................................................................... 07
Main Sectoral Factors impacting the Company’s Activity in 2014 ............................................................................................ 12
Risk Management ................................................................................................................................................................ 14
Stakeholder Engagement .................................................................................................................................................... 18
OPERATIONS .......................................................................................................20
Exploration and Oil & Gas Production .................................................................................................................................... 22
Oil & Gas Processing ........................................................................................................................................................... 30
Crude Oil Deliveries ............................................................................................................................................................. 33
Sales of Petroleum Products ................................................................................................................................................ 33
Petrochemical Business ...................................................................................................................................................... 35
Heat-and-Power Energy Sector ............................................................................................................................................ 36
Ensuring Environmental and Industrial Safety ........................................................................................................................ 38
Environmental Safety .......................................................................................................................................................... 39
CORPORATE MANAGEMENT .....................................................................................46
Managing the Company ...................................................................................................................................................... 48
General Shareholders Meeting of JSC TATNEFT .................................................................................................................... 50
JSC TATNEFT Board of Directors ......................................................................................................................................... 51
Composition of JSC TATNEFT Board of Directors .................................................................................................................. 52
Committees of the Board of Directors ................................................................................................................................... 56
Executive Bodies ................................................................................................................................................................ 58
Composition of JSC TATNEFT Management Board ................................................................................................................. 60
Corporate Interaction with Shareholders ............................................................................................................................... 64
Information Disclosure ......................................................................................................................................................... 66
Report on Compliance with Principles & Recommendations of Corporate Management Code .................................................... 70
Interaction with Stakeholders ............................................................................................................................................... 78
Awards and Nominations ..................................................................................................................................................... 86
FINANCIAL RESULTS ...............................................................................................90
Financial Accounting Statements prepared under Russian Accounting Standards.
Audit Opinion ...................................................................................................................................................................... 92
Balance Sheet of JSC TATNEFT, FY 2014 ............................................................................................................................... 94
Consolidated Financial Statements according to International Financial Reporting Standards
as of and for the year ended December 31, 2014.
Independent Auditor’s Report ............................................................................................................................................ 106
TATNEFT Consolidated Profit and Loss Statement ............................................................................................................... 108
Consolidated Statements of Profit or Loss and Other Comprehensive Income ........................................................................ 109
TATNEFT Consolidated Statement of Changes in Equity ....................................................................................................... 111
TATNEFT Consolidated Statement of Cash Flows ................................................................................................................ 112
Notes to Consolidated Financial Statements ........................................................................................................................ 114
SOCIAL RESPONSIBILITY .....................................................................................168
HR Management ............................................................................................................................................................... 170
Social Investment ............................................................................................................................................................. 180
Social Benefits under the Collective Agreement ................................................................................................................... 184
Social Aspects of the Company’s Activity ............................................................................................................................ 186
Corporate Standards and Regulations on Interaction with concerned parties ......................................................................... 188
Interaction with the Customers ........................................................................................................................................... 191
Informing on the activity related to Sustainable Development and Corporate Social Responsibility .......................................... 192
List of Abbreviations .......................................................................................................................................................... 193
FORWARD-LOOKING STATEMENTS
This annual report, in addition to the actual data of the previous period, contains some forward-looking statements. These statements, in particular, include statements
about future operational results, plans and/or forward-looking statements with respect to future economic and financial performance, goals and objectives of the
Company regarding the development plans, including those relating to products and services.
The forward-looking statements may include, but not limited to, the information concerning anticipated or expected revenue, profit (loss), net profit (loss) in respect
of shares, dividends, capital structure and other financial matters.
The content of these statements is forward-looking and is accompanied by the words «expects», «anticipates», «plans», «intends», etc. Due to their specific nature,
the forward-looking statements are subject to inherent risk and uncertainties, both general and specific. There is a risk that the future actual results may materially
differ from those plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements, or may not be implemented due to a
number of different factors.
JSC TATNEFT 2014 year-end Annual Report has been prepared on a uniform integrated
basis incorporating the requirements applicable to annual reports of public companies and
the corporate accounting standards applicable to sustainable development. The Integrated
Annual Report considers the principles of the Corporate Governance Code recommended
for use by the Letter of Bank of Russia No. 06-52/2463 dated 10 April 2014.
The Annual Report of the Company on the information disclosure corresponds to the
requirements of the following documents:
− Federal Law No. 208-FZ «On Joint Stock Companies» dated 26 December 1995.
− Federal Law No. 39-FZ «On the Securities Market» dated 22 April 1996.
− Regulations of the Central Bank of the Russian Federation No. 454-P «On the Disclosure
of Information by Issuers of Securities» dated 30 December 2014.
The Annual Report includes JSC TATNEFT Balance Sheet for the period from 1 January to
31 December 2014, certified by the Auditors’ Opinion of ZAO ENERGY CONSULTING/Audit
and the IFRS consolidated financial statements as of the year ended 31 December 2014,
certified by the Independent Auditor’s Report of ZAO PricewaterhouseCoopers Audit.
As related to the sustainable development aspects the integrated annual report of the
Company is focused on compliance with the following standards:
− Global Reporting Initiative (G4) Guidelines for annual reports on sustainable development;
− AA 1000 Stakeholder Engagement Standard;
− ISO 26000 Guidance on Social Responsibility Standard;
− Social Charter of Russian business;
− International Standard of Integrated Reporting (www.theiirc.org/international-ir-framework/).
The Annual Report of Joint Stock Company «TATNEFT» for 2014 has been preliminarily
approved by the Board of Directors of JSC TATNEFT. Minutes No. 13 dated 22 May 2015.
JSC TATNEFT ANNUAL REPORT 2014 ADDRESS TO SHAREHOLDERS,
INVESTORS AND PARTNERS
2
3
Improvement of the organization and production man-
agement system has become a priority in the work of the
Company. A five-year program of increasing the labor
productivity is being successfully implemented at all the
enterprises of the TATNEFT production Group. Introduc-
tion of the process control and project management
methods, as well as lean production tools allow increas-
ing the operational efficiency of the Company largely.
A new electronic document management system
“Praktika” was put into commercial operation as part
of the office processes optimization program, which
is now used by more than 16 thousand employees. In
addition, there is an automated information system
for operational control of industrial safety and health
operating at the Company, which has no analogues in
the Russian Federation. The Company ensures high-
level compliance with the environmental standards in
its activities, which is acknowledged by the govern-
ment authorities and industry experts.
The challenge of improving energy efficiency of
production has been vital throughout the Company’s
history and remains in the focus. High efficiency was
demonstrated by the introduction of special low-
speed motors, the technology of selective shutdown
of highly watered wells and a number of other in-
novations. The overall amount of resource saving for
the reporting year in the frame of implementing the
adopted program of resource saving exceeded 70
thousand tonnes of oil equivalent energy.
Through implementation of a set of effective
measures, the Company has strengthened its
competitive advantages, which is especially impor-
tant in the conditions of declining oil prices and the
national currency volatility. The Company promptly
and fully implements the obligations regarding
tax deductions to all the levels of the budget and
dividend payment to the shareholders. The vital
task for the near future is replacement of imported
technologies and equipment and switching over
to domestic manufacturers’ products. Remaining
among the priorities there will be the Company’s
strategic oil refining projects, development of
extra-viscous oil fields, as well as increasing the
volume of horizontal drilling in order to stabilize and
increase oil production volumes.
Being a socially oriented company, TATNEFT ensures
a high level of corporate social and environmental
responsibility. Sustainable development of the Joint
Stock Company in the past year is primarily the result
of the coordinated work of all the Company’s person-
nel. We are grateful to all the working staff for their
conscientious and efficient work!
Fruitful cooperation with our shareholders, inves-
tors and partners contributed to the successes and
achievements of our Company!
We are convinced that the accumulated production
experience, extensive application of modern methods
to organize and manage business processes, com-
bined with the high professional qualification of the
employees will allow us to confidently continue im-
plementation of the strategic initiatives and maintain
positive dynamics of development in 2015!
R.N. Minnikhanov
President of the Republic of Tatarstan,
JSC TATNEFT’s Chairman of the Board of Directors
N.U. Maganov
JSC TATNEFT’s General Director,
Chairman of the Management Board
DEAR SHAREHOLDERS,
INVESTORS AND PARTNERS!
and pilot projects to involve Domanik deposits in the
development.
TATNEFT successfully completed the production pro-
gram in 2014 and ensured further implementation of
strategic initiatives. The volume of crude oil produced
amounted to 26.2 million tonnes. The financial and
economic indicators exceeded the planned level.
In order to provide the resource base for imple-
mentation of the strategic objectives the Company
carried out a large amount of exploration works with
application of innovative technologies providing for
enhanced replacement of hydrocarbon reserves.
The Company continued development of Ashalchin-
skoye extra-viscous oil field. The cumulative volume
of this oil production exceeded 560,000 tonnes. A
number of important technological solutions devel-
oped by the Company’s professionals were success-
fully tested. Preparations of new sites are underway,
which will allow 2-fold increase of the extra-viscous
oil production in 2015. In addition, JSC TATNEFT per-
formed a substantial amount of research guidance
Significant results were achieved in the construc-
tion of the Oil Refining and Petrochemical Plants
Complex. A combined hydrocracking installation with
production of base oils was commissioned. Putting
the installation into operation resulted in increasing
the light oil production indicator to 68% and starting
the output of new types of petroleum products.
Successful implementation of a corporate project to
develop the Company’s refining sector contributed to a
qualitative change in the revenues structure of TAT-
NEFT. The share of the revenues from the sale of high
added value petroleum products increased by 21%.
With the purpose of expanding the range of innova-
tive competitive products the enterprises of the JSC
TATNEFT’s tire manufacturing complex essentially
increased the production volume of solid steel cord
tires in the reporting year. Together with international
partners, the Company established a new facility for
retreading truck solid steel cord tires.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
OUR MISSION CONSISTS IN STRENGTHENING THE
INTERNATIONALLY RECOGNIZED POSITIONS AND ENSURING
THE SUSTAINED DEVELOPMENT OF THE COMPANY
AS ONE OF THE LARGEST RUSSIAN VERTICALLY INTEGRATED COMPANIES PRODUCING
OIL AND GAS, REFINED PRODUCTS, PETROCHEMICALS AND THERMAL AND ELECTRIC
POWER BASED ON THE EFFICIENT ASSET MANAGEMENT OF THE SHAREHOLDERS,
MANAGEMENT OF NATURAL RESOURCES AND CORPORATE SOCIAL RESPONSIBILITY.
The 2014 is the outcome of the 20-year development of the Company
reorganized in 1994 from the production association into a joint stock
company.
THE SHAREHOLDERS’ EQUITY ACCUMULATES INTERESTS OF ABOUT 45 THOUSAND
SHAREHOLDERS INCLUDING NOMINAL HOLDERS. THE SHAREHOLDERS’ GEOGRAPHY
COVERS RUSSIA (MAJORITY OF SHAREHOLDERS), AMERICA, AUSTRALIA, EUROPE AND ASIA.
Sustained growth of the company’s capitalization forms the basis for high dividend return on the invested capital by
shareholders.
According to the 2014 results the Board of Directors of JSC TATNEFT proposed the Annual General Meeting of the
Shareholders to approve the payment of dividends in the amount of 1058 % of the nominal value for the ordinary and
preferred shares (RUR 10.58 per share).
In 2013 the dividends amounted to 823 % of the nominal value for the ordinary and preferred shares (RUR 8.23 per share).
The dividend yield based on the calculation of the market value of the ordinary shares at the end of 2014 amounted to 4.13 %,
the dividend yield of the preferred shares amounted to 7.07 %.
The complete commissioning of the TANECO Complex forms the main potential for increment of the Company’s capital value.
Compensation of costs, consistent payment of debts and profit earning satisfy expectations of investors, which in turn will have
a positive impact on the dynamics of the market capitalization. Long term growth drivers of the operating profit and economic
sustainability comprise development of the retail network of filling stations, tire business and thermal electric power.
4
5
JSC TATNEFT
is a corporate
centre of the
TATNEFT Group
The corporate management system of the TATNEFT Group is aimed at ensuring the planning and coordination of all
business structures of the Group, controlling the corporate and operational risks, and in general – improving efficiency and
competitiveness pf all the business segments.
CONSISTENT STEPS OF THE COMPANY TO ACHIEVE MAXIMUM ECONOMIC EFFICIENCY OF OPERATIONS
Ensuring incremental oil
production and replacement
of reserves
l Strengthening the resource
base and expanding the
geography of production
assets
l Bituminous oilfield develop-
ment (extra-viscous oil)
and exploration of shale oil
potential
High quality consolidation
of the corporate business
structure and resource
capacity building in the
core segments
l Oil refining
l Petrochemicals production
l Thermal electric power
l Retail Distribution Network
of petroleum products
Development of its own
innovative technological
potential for all the
business-segments
Development of the Effective Asset Structure
Creation of growth points for business and operating earnings
Reinforced Financial Stability
513,4
474,9
471,5
322,1
299,8
307,6
344,6
263,2
201,7
114,6
0,8
5,5
18,5
3,6
22,1
22,1
JSC TATNEFT Capitalization in the period of 1995-2014, RUR bln
34,1
53,3
85,9
70,6
After the financial crisis of 2008
the growth of the Company
capitalization quickly rebounded
THE CAPITALIZATION OF JSC TATNEFT AT
THE 2014 YEAR-END AMOUNTED
TO RUR 513.4 BILLION
Qualitative growth of the Company’s capitalization
began in 2004 and over the course
of the 10-year period it reached 498 %.
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
STRATEGIC INITIATIVES
SUSTAINABLE
DEVELOPMENT
Shareholder
Value of JSC
TATNEFT
Company
6
7
ENSURE FINANCIAL STABILITY
AND ECONOMIC STABILITY
STABILIZE THE VOLUMES OF PROFITABLE OIL &
GAS PRODUCTION ON THE DEVELOPED LICENSE
FIELDS AND ACTIVE EXPLORATION OF NEW FIELDS
INCLUDING HIGH VISCOSITY OIL
AND HARD-TO-RECOVER OIL IN THE TERRITORY
OF THE REPUBLIC OF TATARSTAN
EXPAND THE LICENSE PORTFOLIO
OUTSIDE THE REPUBLIC OF TATARSTAN
AND RUSSIAN FEDERATION
INCREASE THE PRODUCTION AND SALES
VOLUMES OF HIGH COMPETITIVE FINISHED
PRODUCTS THROUGH DEVELOPMENT
OF REFINERIES AND PETROCHEMICAL PLANTS.
FORMULATE AND IMPLEMENT THE INNOVATIVE
ENGINEERING POLICY
ENSURE A HIGH LEVEL OF THE CORPORATE SOCIAL
AND ENVIRONMENTAL RESPONSIBILITY.
In 2014 the Company successfully achieved its objectives on
strengthening the quality and profitability of the corporate
assets, ensure a stable level of production and ensuring
replenishment of stocks, the development of its own refinery,
increase return on investment in tire production, the forma-
tion of a new value added through the production of quality
products and hydrocarbon processing efficient allocation of
resources and production potential. As a result of the year
was the implementation of all planned production volumes
and positive financial performance.
In 2014 the Company reached the maximum level of crude oil
production in the last two decades. The cumulative oil pro-
duction for the Group totalled to 26.529 mln tonnes. The pro-
ject of Extra Viscous Oil (EVO) production was successfully
implemented. The EVO production totalled 236.9 thousand
tonnes in the Ashalchinskoye oilfield in 2014, 60% increase
as compared to the last year. Overall, since the beginning the
pilot project the extra-viscous oil production totalled 562.57
thousand tonnes. In 2014 the total production of petroleum
products for the TATNEFT Group was 9.2 million tonnes. The
refining output of the TANECO Complex for the year rose by
12% to 8.5 million tonnes.
JSC TATNEFT retail network of filling station is the fourth-
largest retailer ranked after Lukoil, Rosneft and Gazpromneft.
Sales of petroleum products through the corporate network
of filling stations increased by 23.7%.
The volume of tire sales exceeded the 2013 index by 2.4%.
The share of innovative products in the total tire production
was 49.9%. To strengthen the power generation assets we
continued modernization of Nizhnekamsk CHP capacities.
The Company pays great attention to environmental activities
and social-oriented projects.
ASSETS OF THE GROUP
Exploration
& Production
Refining
& Petrochemicals
Retail Business
Tire Business
Heat & Power Energy
APPRECIATION
GROWTH DRIVERS OF OPERATIONS
High technological level of
its own refinery TANECO
Complex constructed on the
basis of international ad-
vanced proven technologies.
Vicinity of the refining
facilities near the traditional
production areas in the
territory of the Republic of
Tajikistan.
In 2014 the refinery began
supplying diesel fuel Euro-5,
base oil of II and III groups
to the market.
Potential production of
high value added products
meeting the relevant
international environmental
standards and future market
requirements.
Planned completion of the
first stage in full by 2018.
Coverage of virtually all of
the most attractive regions
of Russia, including the
Volga River basin and
Central Federal District with
growth prospects.
A favourable position for lo-
gistics of the filling stations
in the urban infrastructure
and on-route stations.
Availability of the own high
competitive diesel fuel of
TANECO.
Completion of the TANECO
complex construction will
fully provide the network of
filling stations with EURO-5
diesel fuel.
Expansion and moderniza-
tion of the retail network of
filling stations.
Achieving 97% of the refin-
ing depth
Increase of daily dispense
rate of filling stations.
Development of sales chan-
nels of high quality refined
products.
Expanding the range and
improving the quality of
non-fuel offers and tar-
geted loyalty programs.
The proximity to the supply
source of synthetic rubber.
Availability of the own
carbon black production.
Significant production
scale and high-technology
lines.
Geographical proximity
to large clusters of car
assembly plants.
Own Research and Devel-
opment Centre.
Growth in sales volumes
and increased profitability
from sales of solid metal
cord tires and Viatti pas-
senger car tires.
Increased economic
returns by launching of
individual programs to
improve the economic
efficiency of the business
segment.
Increasing the market
share.
Development of the service
centres.
High availability of hydro-
carbon resources.
Advanced technologies of
bituminous oil recovery.
Geographical proximity of
the crude oil production
centre to the major regions
of refining and sales of
crude oil and petroleum
products.
Programs of the production
efficiency improvement.
Maintaining stable oil
production levels and
enhanced oil recovery.
Expansion of the resource
base.
Extra Viscous Oil (EVO)
production in the Ashalchi
oilfield.
Implementation of the
program to explore the
potential of shale oil.
The growth of commercial
production.
Reduction of specific opera-
tional and investment costs.
Availability of own power
generation assets enable
to improve the power sup-
ply reliability of upstream
companies, refineries and
petrochemical facilities of
the Company.
Modernization of Nizh-
nekamsk CHP to provide the
increased capacity. Commis-
sioning of turbine units will
allow to increase the electric
supply and improve the
operational efficiency of the
station.
Operation of mini-CHPs will
enable to produce combined
heat and power generation
with high coefficient of fuel
utilization.
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THE COMPANY’S STATUS
The Company operates in the global fuel and energy sector as an internationally recognized public company.
The main activities are carried out in the territory of the Russian Federation and a number of business projects
are carried out in the overseas territories.
CRUDE OIL
PRODUCTION BY
TATNEFT GROUP
(MLN TONNES)
PRODUCTION OF
PETROLEUM PRODUCTS
(MLN TONNES)
SALES OF PETROLEUM
PRODUCTS THROUGH
FILLING STATIONS
(MLN TONNES)
SALES OF TIRE
PRODUCTS
(MLN PIECES)
ELECTRIC POWER
GENERATION
(MLN KW/H)
+0,4%
+12,6%
+23,7%
+2,4%
+0,7%
Strategic initiative and missions defined by the Company for the long-term perspective set forth development vectors in
terms of understanding of stage-by-stage approach in their achievement.
26,42
26,53
8,2
9,2
1,66
2,06
11,8
12,1
1323,5
1332,8
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
BUSINESS MODEL
THE COMPANY IMPLEMENTS A VERTICAL
INTEGRATION STRATEGY OF THE FULL
PRODUCTION CYCLE, INCLUDING GEOLOGY,
RESERVOIR ENGINEERING, OIL AND GAS
PRODUCTION, OIL AND GAS PROCESSING,
SALES OF CRUDE OIL AND PETROLEUM
AND GAS PRODUCTS, INCLUDING BUT NOT
LIMITED TO, THROUGH A RETAIL NETWORK,
PRODUCTION AND SALES OF PETROCHEMICAL
RAW MATERIALS AND FINISHED PRODUCTS,
HEAT-AND-POWER GENERATION, BUILDING
UP THE INNOVATIVE CAPACITY AND EFFICIENT
USING ALL TYPES OF THE CORPORATE
RESOURCES BASED ON PRINCIPLES OF
SOCIAL RESPONSIBILITY.
MANAGEMENT
METHODS
OL
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RIN
NITO
NTIV
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PLA
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IN
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B
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T
N
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M
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S
EXPLORATION AND PRODUCTION
CRUDE OIL REFINING
SALES OF OIL & PETROLEUM PRODUCTS*
PETROCHEMICALS
HEAT-AND-POWER SECTOR
*including a retail netwrok of filling stations
F
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L
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M
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A
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N
B
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RESOURCES
The total assets of JSC TATNEFT (based on RAS) as of the
end of 2014 amounted to RUR 579.4 billion, increased by
8.6% as compared to 2013.
The consolidated assets of the TATNEFT Group (based on IFRS)
as of the end of the financial year amounted to RUR 732.9 billion,
increased by 8.7% as compared to 2013. The structure of con-
solidated assets is formed by the following segments: explora-
tion and production, crude oil refining and sales of crude oil and
petroleum products, petrochemicals, the corporate segment.
ASSETS OF JSC TATNEFT
RUR BLN
ASSETS OF THE GROUP
(RUR BLN BASED ON IFRS)
+8,6%
+8,7%
533,3
579,4
674,1
732,9
2013
2014
2013
2014
ASSETS STRUCTURE OF THE TATNFET GROUP (BASED ON IFRS)
The Company consistently
strengthens its structure
of the core assets as part
of the vertical integration
development in order
to achieve an optimal
balance of core operational
segments: “Exploration and
Production”, “Crude Oil
Refining and Sales of Crude
Oil and Petroleum Products”,
“Petrochemicals” and
increase the value-added
based on hydrocarbon
resources production.
4,7%
Crude oil Refining &
Sales of crude oil &
petroleum products
5,6%
Petrochemicals
28,6%
Corporate etc.
282,1
RUR bln
40,2%
Crude oil Refining &
Sales of crude oil &
petroleum products
61,1%
Exploration &
Production
732,9
RUR bln
38,2%
Exploration &
Production
17,5%
Corporate etc.
2005
2014
4,1% Petrochemicals
Comparison over the period is established on the basis of the project on own refinery development
started in 2005 (TANECO Complex)
8
9
STRENGTHENING THE SECTORAL
POSITION IN CRUDE OIL REFINING
In 2011 with launching the 1st phase of the TANECO com-
plex the TATNEFT Company acquired the status of a full
participant in the oil refining industry in Russia.
In March 2014 after completion of the comprehensive
testing of the equipment at the TANECO Refinery Com-
plex, one of the key blocks - an integrated hydrocracking
unit was put into commercial operation. Fresh impetus to
the process of the Complex development was given by
launching of the second stage of the hydrocracking unit
with the participation of Mr. Dmitry A. Medvedev, the Rus-
sian Prime Minister on December 2, 2014 - base oils pro-
duction of the capacity of 186 thousand tonnes per year.
The pilot batches of the II and III group base oils have been
tried and tested. Thus, JSC TATNEFT has left behind most
of its competitors, who are just planning to launch their
own production of high-viscosity index oils in the coming
years. This product is used in the production of premium
oils - synthetic and semi-synthetic oils for consumers in
the private and industrial sectors.
OIL REFINING DEPTH
ON EXISTING CAPACITIES
OF TANECO COMPLEX
97,0%
74,0%
73,54%
71,5%
Average
level in
Russia
72,4%
Average
level in
Russia
EXTRACTION OF LIGHT
OIL PRODUCTS
68,0%
Average
level in
Russia
57,1%
2013
2014
In the future
2014
In 2014 the refining throughput at the TANECO Complex
grew by 12% and amounted to 8.5 million tonnes. In terms
of the utilization rate the TANECO Complex has been ranked
at the top among the refineries of the Russian Federation
and the seventh largest producer of petroleum products in
Russia (3% of total output).
Highly competitive products
Euro-5 diesel fuel (over 1 million tonnes sold in 2014) pro-
duced by TANECO on a range of indicators has no compara-
ble counterparts in Russia. The quality characteristics meet-
ing the latest international requirements are confirmed by the
licensor Chevron Lummus Global (USA). The fuel passed the
independent tests at the central laboratory of fuels and oils
performed by the KAMAZ Scienctific and Technical Centre.
The diesel fuel produced at the refinery exceeds in quality
competitors – its sulfur content is less than 3 ppm, which
is significantly below the Euro 5 threshold (no more than
10 ppm).
THE SUCCESSFUL IMPLEMENTATION OF THE
CORPORATE PROJECT ON DEVELOPMENT OF
THE DOWNSTREAM SECTOR OF THE COMPANY
FACILITATED THE QUALITY CHANGE OF THE
REVENUE STRUCTURE OF TATNEFT.
THE SHARE OF SALES PROCEEDS OF REFINED
PRODUCTS INCREASED BY 21% WITH A NEW
ADDED VALUE.
STABLE INCREMENTAL OIL PRODUCTION
OF THE COMPANY
GROWTH OF THE RATIO OF REFINED PRODUCTS AND
CRUDE OIL PRODUCTION IN THE GROUP, MLN TONNES
The Company consist-
ently provides for a steady
increase of the annual
incremental oil produc-
tion, which has totalled to
15.3% over 20 years de-
spite the fact that the main
resource base is in the late
stage of development.
+15,3%
23,002
26,53
1994
2014
Since the CDU-VDU-7 was
launched in the start-up
and adjustment mode
in 2010 the Company
increased the share of
refined products produc-
tion in the volume of oil
production for the Group
from 0.8% to 34.7%.
26,1 26,53
crude oil produc-
tion for the Group
share of refined prod-
ucts production
34,7%
0,8%
2010
2014
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
FINANCIAL POSITION
The Company closed the 2014 year with good financial
results, despite the critical instability conditions marked by
sharp fluctuations of crude oil prices and the change of the
national currency exchange rate. JSC TATNEFT Revenue
(net of VAT, excise taxes and export duties) amounted to
392.9 billion rubles in the reporting year, the net profit of
JSC TATNEFT grew by 28.5% and amounted to 82.1 billion
rubles (according to RAS). Revenue of the TATNEFT Group
amounted to 476.360 billion rubles. Net profit and EBITDA
of the Group amounted to 97.7 billion rubles and 127.7
billion rubles respectively in 2014. The Company provided
timely funding of its expenses and payments, includ-
ing capital expenditures and investments, repayment of
long-term loans and dividends. Priorities of the corporate
financial policy comprise the provision of reliable funding
sources at minimum cost with maximum efficient utilization
of working capital. The balanced policy of the Company
allows systematically to reduce the level of the borrowed
finances by TATNEFT parent company. The amount of
repayment of foreign currency loans for 2014 amounted to
USD 903.5 mln, including the full repayment of USD 550
mln loan (obtained in 2011) in June 2014 and repayment
of the balance of the syndicated loan (obtained in 2009) in
October 2014. The amount outstanding on 31 December
2014 on foreign currency loans was USD 204.6 million.
Consolidated debt on all types of loans in 2014 decreased
by 41.7% by 2013.
CREDIT RATINGS OF THE COMPANY
• Fitch upgraded the Credit Rating to the investment
• Baa3 Credit Rating assigned by Moody’s Investor
grade of “BBB-” with a stable outlook.
Services in 2013.
NET PROCEEDS
OF JSC TATNEFT
(BASED ON RAS, RUR BLN)
NET PROFIT
OF JSC TATNEFT
(BASED ON RAS, RUR BLN)
PROCEEDS
OF THE GROUP
(BASED ON IFRS, RUR BLN)
EBITDA
(BASED ON IFRS, RUR BLN)
NET PROFIT
OF THE GROUP
(BASED ON IFRS, RUR BLN)
+7,9%
+28,5%
+4,7%
+3,2%
+24,7%
363,5
392,4
63,9
82,1
454,98
476,36
123,7
127,7
78,3
97,7
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
REVENUE MIX OF THE TATNEFT GROUP (BASED ON IFRS)
The Company increases
its cash flow by improving
asset efficiency of
upstream (production),
downstream (refining
and sales) sectors
forming the current and
prospective operational
profitability and defining
the growth of the
consolidated profit.
48,0%
Crude oil Refining & Sales
of crude oil & petroleum
products
40,7%
Exploration &
Production
26,0%
Crude oil Refining &
Sales of crude oil &
petroleum products
5,4%
Petrochemicals
4,6%
Corporate etc.
64,0%
Exploration &
Production
300,4
RUR bln
476,4
RUR bln
3,7%
Corporate etc.
7,5% Petrochemicals
2005
2014
Comparison over the period is established on the basis of the project on own refinery develop-
ment started in 2005 (TANECO Complex)
10 11
MAIN AREAS
OF INVESTMENT ACTIVITIES IN 2014
The investment activity of the Company is carried out in ac-
cordance with the strategic development plans and current
priorities of decision of the production and social tasks. The
corporate investment activity is based on the principle of
ensuring the maximum investment efficiency and increased
profitability in each area of the Company’s activity.
The Investment Committee of the Company functions
under the leadership of the General Director of JSC TAT-
NEFT. The Investment Committee considers the advanced
projects and efficiency of the current investments. All pro-
jects are subject to expert examination and risk evaluation
procedures.
Financial - economic potential of the company allows you
to continue the implementation of major investment pro-
jects. The total investment of the Company in 2014 was 68
992 million rubles.
At the end of 2014, when the oil prices dropped two times,
the Company developed the anti-crisis action program,
including the priority projects ranking with maintaining the
full scale production plans, the measures to optimize the
general and administrative expenses, reduce the produc-
tion costs, increase the labour productivity, monitoring
improvement to prevent growth of suppliers prices and im-
provement of tender procedures. As a key priority for cost
reduction the Company determined the import substitution
of imported equipment by local products, which is also
related to introduction of the economic sanctions in 2014.
PRIORITY INVESTMENT PROJECTS:
l CONSOLIDATION OF THE OIL & GAS PRODUCTION AS-
SETS, INCLUDING OVERSEAS PROJECTS, DEVELOPMENT
OF EVO FIELDS
l DEVELOPMENT OF THE REFINING BUSINESS BLOCK
l DEVELOPMENT OF THE RETAIL BUSINESS
l INCREASE OF THE HEAT & POWER ENERGY CAPACITIES
Main areas of investment activities in 2014
No. Description
1.
Investments in crude oil production in the territory of the
Republic of Tatarstan
Drilling
Capital construction
Equipment not included in construction estimate-sheets
Geological engineering activities
Redemption of property, land, etc.
2.
3.
4.
Investments in crude oil production outside the
Republic of Tatarstan
Investments in oil refining
Investments of the Petroleum Chemical Complex
enterprises
5.
Investments in retail business development
6. Development of extra viscous oil fields
7.
Investments of service companies and other
enterprises
8. Funding for reconstruction of Nizhnekamsk CHP
9. Financing of the foreign projects
10.
Investments in development of the social area
TOTAL for the Company
rur mln
26 835
11 808
5 489
1 410
8 055
73
2 855
18 706
525
3 034
5 073
6 183
4 577
645
559
68 992
SOCIAL INVESTMENTS
Guided by social responsibility principles the Company substantially contributes to support the development of health,
culture, sports, social infrastructure, the condition of which affects the quality of life of employees and their families and the
entire population of activity regions.
The Company thoroughly analyzes the quantitative and qualitative aspects of their social programs. Decisions on funds allo-
cation for social projects are taken on the basis of the annual joint meetings of the Company’s management with the regional
and municipal administrations on based on the social importance of the projects. The social activities are evaluated in con-
junction with the municipal authorities, organizations and community groups interested in implementing the projects.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
MAJOR INDUSTRIAL FACTORS AFFECTING THE COMPANY’S
ACTIVITY IN 2014
TATNEFT COMPANY IS A MAJOR SUBSURFACE
USER, DEVELOPER AND SUPPLIER OF OIL AND GAS
RESOURCES, AND MANUFACTURER OF PETROCHEMICAL
PRODUCTS. THE COMPANY’S REVENUES DIRECTLY
DEPEND ON THE GLOBAL MARKET ENVIRONMENT,
PRIMARILY, ON DEMAND FOR RAW MATERIALS AND
GLOBAL CRUDE OIL PRICES ON THE INTERNATIONAL
MARKET. OTHER DETERMINANTS OF THE CORPORATE
FINANCIAL AND ECONOMIC PERFORMANCE INCLUDE
TRANSPORTATION COSTS, MARKET CONDITIONS,
REFINING COSTS, TAX BURDEN, CURRENCY
FLUCTUATIONS ETC.
The displayed external pressure of geopolitical and eco-
nomic factors at the end of 2014 can not depress the global
demand for hydrocarbons and development of the energy
sector in the foreseeable future. The analysis of the entire
set of the data and background of the world economy gives
grounds to expect redressing the supply-demand imbalance
and growth of the global crude oil prices in the medium term.
Russia increased the oil and condensate production in 2014 by
0.7% as compared with 2013, and totalled 526.7 million tonnes.
According to the Ministry of Energy data the average daily pro-
duction for the year reached a new post-soviet record of 10.578
million barrels a day, according the analysts’ comments.
The Russian oil and condensate recovery reached 220.35
million tonnes in January-May 2015, which was 1.2% higher
than the production in January-May 2014 (data of Central
Dispatching Department of the Fuel and Energy Complex).
Meanwhile the Ministry of Economic Development presup-
poses the production decline in Russia in the coming years.
As per the forecast of social and economic development
until 2018 the oil production is expected to be at the level of
526 million tonnes in 2016, 524 million tonnes - in 2017, and
possible decline down to 521 million tonnes by 2018. “The
declining oil production in Western Siberia cannot be com-
pensated by increasing the production in Eastern Siberia and
the Timano-Pechora province. The lack of the competences
required for implementation of offshore and other complex
projects under restrictions on imports of equipment and
technology has a negative impact on the dynamics of crude
oil production”, the forecast says.
Since January 2015 a big tax maneuver was introduced in
the oil industry operate aimed at stage-by-stage reduc-
tion (in 3 years) of export customs duties over the course of
three years –1.7 times for oil and 1.7-5 times for petroleum
products depending on the type of petroleum products with
a simultaneous increase in mining extraction tax – 1.7 times
for oil and 6.5 times for gas condensate. The priorities of
the Russian oil industry development defines the tasks to
involve in hard-to-recover reserves production, increase the
share of recoverable hydrocarbons in offshore fields, develop
reserves of new fields in hard-to-reach areas.
The Russian Government adopted a resolution No. 451 On
approval of oil metering rules on 16 May 2014. The regulation
will provide for obtaining reliable information on the use of
subsoil and mineral resource base including hard-to-recover
oil reserves. Since the 1 July 2014 in accordance with the
Federal Law No. 263-FZ Concerning the Introduction of
Amendments of Chapter 26 of the Tax Code of the Russian
Federation and Article 3.1 of the Federal Law Concerning
Customs Tariff, the formula approach is implemented for
calculation of Mineral Extraction Tax rate in the production of
gas condensate and natural gas.
The reduced tax burden in accordance with the Federal Law
No. 151-FZ of 27 June 2006 on differentiation of MET rates
was a favourable economic factor for growth of crude oil
production of JSC TATNEFT.
In 2014, the provision of RF Federal Law No.151-FZ on dif-
ferentiation of MET rates for mature fields of 80% and more
depletion was used for Romashkinskoye, Novo-Elkhovskoye,
Azevo-Salaushskoye, Yuzhno-Nurlatskoye oilfields and
deposits of the Kama region group (Bondyuzhskoe, Pervo-
maiskoye, Novo-Suksinskoye, Bastrykskoye, Orlovskoye),
the production on these fields amounted to 18.861 thou-
sand tonnes in 2014. In addition, the above mentioned law
provides for a zero MET rate for horizons of the extra-viscous
oil extracted from the subsoil blocks containing oil with a
viscosity above 200 mPa*s.
In 2014, zero MET rate for extra-viscous oil extraction was
applied to Ashalchinskoye, Chernoozerskoye, Vishnevo-Pol-
yanskoye, Zapadno-Tyurnyasevskoye, Studenoye, Yuzhno-
Suncheleyevskoye, Aksubaevo-Mokshinskoye, Pionerskoye,
Archangelskoye oilfields, the production on these fields
amounted to 613 thousand tonnes in 2014.
The reduced tax rate is applied for small deposits with the
Initial Recoverable Reserves less than 5 million tonnes and
depletion below or equal to 5% under Federal Law No. 258-
FZ of 21 July 2011. The crude oil production on these fields
totalled 45 thousand tons in 2014.
application of reduced rates of export customs duties for
crude oil with in-situ viscosity min. 10000 mPa*s. Application
of reduced rates of export duties and zero rate of mineral
extraction tax for the extra-viscous oil horizons stimulate
development of the EVO production programs.
From 1 January 2014 it became possible to apply a reduced
MET rate for oil production in the Korobkovsky area of Danko-
vo-Lebedyansky horizon of the Bavlinskoye oilfield (according
to Federal Law No. 213-FZ of 23 July 2013). “Oil on the site in
2014, subject to the application of reduced rate was 812 tons.
Primary crude oil processing in Russia amounted to 289
million tons in 2014, which was 5.2% higher than in 2013. The
Refining depth was 72.4%.
Under the quadripartite agreement concluded between
the Federal Antimonopoly Service of Russia (FAS), Ros-
tekhnadzor, Rosstandart and oil companies the upgrade of
oil refineries is in progress. The ongoing modernization of the
refining capacities will allow to manufacture environmentally
friendly motor fuels and to match the requirements to motor
fuel in Russia and other countries of WTO. Introduction of the
tax maneuver provides for strengthening economic incen-
tives for accelerated upgrade of oil refineries and improve-
ment of oil refining depth, i.e. 2.5 times increase of refining
margin of Russian refineries, 3% reduction of the tax burden
for conventional oil production, reduction of the tax burden
for preferential royalty fields by 5-24% as compared with the
2014 level. To control the rise in prices for petroleum prod-
ucts the law provides a mechanism to reduce rates of excise
duties on petroleum products (by 2.2 times in 3 years), as
well as tax deductions for certain market participants (petro-
chemical plants, airline companies).
As a result of the tax maneuver enactment since 2007 the oil
processing in Russia at simple configuration refineries will no
longer be profitable, which gives the companies incentives to
construct the refining units improving the processing depth.
In this regard the negative dynamics of crude oil prices
decline and limited access to foreign financing increase the
risks for implementation of projects in the Russian oil refin-
ing. The tax legislation of the Russian Federation provides
incentives to develop the production of high-quality products
by lower excise duties for motor fuels and Euro-5 diesel fuel.
In 2014, the excise duty rates for Euro-5 fuels amounted to
6,450 roubles per tonne, the Euro-4, -3 excise rates and
below – 9,916 roubles per tonne, 10,725 roubles per tonne
and 11,110 roubles per tonne, respectively.
The Russian Government passed Federal Law 239-FZ On
Customs Tariff on 3 December 2012, which provides for
In 2014, the GDP energy intensity dropped 5.6% as com-
pared to the same period in 2007. In 2014, the regulation of
12 13
rationing of electricity losses was changed by introduction
of the method of comparative analysis, which is aimed at re-
ducing electricity losses in distribution networks considered
when calculating the required gross proceeds of territorial
distribution companies by 2017 by minimum 11% as com-
pared to the same index of 2012. The “Roadmap” action plan
(referred to as “Implementation of the target model of heat
energy market”) was developed by the Ministry of Energy
and approved by the Government in 2014. The “Road Map”
is designed to provide a fundamentally new approach to the
pricing model in the heat supply sector, to create economic
incentives for efficient operation and development of district
heat supply systems.
To implement the “Road map” the Ministry of Energy devel-
oped a draft federal law “Concerning the Amendments to
the Federal Law “On Heat Supply” and other federal laws on
improvement of the systems of relations in the area of district
heat supply”. This Federal Law was enacted in December
2014. Implementation of the rules proposed by the Federal
Law will create conditions to eliminate the price distortions
and improve the district heat supply system.
The reference fuel consumption for combined thermal and
electric power supply with 25 MW or higher installed capac-
ity of power generation dropped to 319.9 g/kWh in 2014 as
compared to 323.3 g/kWh in 2013. The actual specific refer-
ence fuel consumption for thermal power supply amounted
to 161.8 kg/Gcal.
The Ministry of Energy developed the incentives to increase
the share of heat generation production at the thermal power
plants and the heat consumption with the use of the district
heat supply systems. Reduction of specific reference fuel
consumption to the level of 158.2 kg/Gcal as compared with
2013 is expected by 2018.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
RISK MANAGEMENT
14 15
Managing the TATNEFT Group
Ensuring efficiency
of business processes
Quality control of
business processes
Corporate
risks management
Key elements of the risk management
Corporate integrated risk management system
The Corporate governance is based on the strategic priori-
ties and is aimed at developing effective mechanisms to
achieve the objectives set by the shareholders, increase
the investment potential and shareholder value, ensure the
financial stability and economic growth.
The Internal audit is carried out as part of the annual plan
approved by the Board of Directors.
The internal control system for operational effectiveness of
processes, legal compliance and property security is the
focus area of the audit. The audit is performed based on
the risk-oriented approach. The report on the internal audit
results is provided to to the Company’s management and
the Audit Committee.
Subsequently, the Internal Audit Department monitors the
performance of all measures and informs the Company’s
management and the Audit Committee on the progress of
revealed shortcomings elimination.
In 2014, 11 audits were performed. In addition to this, 12 un-
scheduled internal audits were carried out on various issues
of financial and economic activities according to the orders
of the Company’s management.
In 2014, the monitoring of the planned events execution was
performed on the audit results of the 2009-2012 period. All
cases of non-fulfillment of action plans were initially brought
to the information of the management of the respective
divisions, and then – to the General Director.
Procedures of the internal audit and corporate control are
an integral part of the corporate governance system and
include targeted activities of the Board of Directors and the
Company’s management aimed at improving the risk man-
agement process and increasing the probability of achiev-
ing the goals.
The function of the corporate control is the methodo-
logical support of the management, business units of the
Company and TATNEFT Group in terms of compliance with
tax laws and accounting legislation. This feature helps to
ensure compliance with legislation and reduce the fiscal
and financial risks of the Company.
During 2014 the Corporate Control Administration prepared
150 written responses to inquiries and more than 200 oral
consultations on the financial, tax and economic issues. It
carried out 12 unscheduled audits to assess the observance
of oil metering regulations, as well as the organization of
separate oil metering in Oil & Gas Divisions of the Company
for purposes of differentiated Mineral Extraction Tax rates. The
Corporate Control Administration on a regular basis performs
the legal examination and tax analysis of the documents on
the construction project of the Complex of Refineries and Pet-
rochemical Plants in Nizhnekamsk, as well as the tax support
of the economic activity of JSC TANECO in order to minimize
tax risks. The staff of the Corporate Control Administration
participated in the audits of the structural business units and
subsidiaries of JSC TATNEFT.
Mechanisms of quality evaluation of all possible factors that can
significantly affect the performance of production and financial
economic activities of the Group, directly or indirectly impact the
current activity and strategic plans of the Company
The system of uniform corporate standards regulating the basic
processes of production and financial and economic activities
of JSC TATNEFT, structural business units and enterprises
of the Group
Risk Identification
Provision of the regulations of industrial, financial
and economic processes of the activity
Risk Elimination or Minimization
Avoidance of risks in the framework of the regulations
Monitoring of Risk Management
quality control of the corporate standards execution
identification of emerging risks in the course of business processes and implementation of new projects
assessment of personal responsibility of officials
The analysis of risk factors comprise review of all aspects of market, industry, socio-economic, political, financial, market
and other conditions of the Company, and its subsidiaries and associated companies. At the same time it takes into
account all the internal corporate factors – administrative, production, personnel, social, environmental factors. Currently,
the main production units and corporate blocks are provided with such procedures.
Risk Control
Production activity
Corporate Governance
RISK CONTROL
The Corporate risk management system aims to identify potential risks and take timely measures to eliminate or minimize them
that allows to adjust the business planning, investment and social policy. The Company’s corporate standards significantly
reduce the internal corporate risks.
CONSTANT MONITORING OF RISKS
The Company continuously monitors the macroeconomic situation and take the necessary decisions in order to reduce the negative
impact of macroeconomic changes on the operations and financial position of the Company.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
RISK ASSESSMENT
Industry Risks
Price Risk of crude oil and petroleum products
Revenue, profitability and growth of the Company are
highly dependent on the prices for crude oil and petroleum
products. World oil prices have historically been subject to
significant changes over a wide range under the influence
of various factors, including:
• international and regional supply and demand (as well
as expectations about future supply and demand) for
crude oil and petroleum products;
• international and regional economic situation;
• macroeconomic policy;
• weather conditions;
• local and foreign government regulation;
• prices and availability of alternative fuels;
• prices and availability of new technologies;
• opportunities and willingness of OPEC members (Or-
ganization of Petroleum Exporting Countries) and other
oil producing countries to establish and maintain certain
levels of production and prices;
• political and economic events in the oil producing re-
• normative acts and actions of the governments of Rus-
gions, in particular – in the Middle East;
sia, other countries and international organizations,
including export restrictions, taxes and sanctions;
• recent tensions and warfare in Iraq and related activities.
Technical risks
Exploration, development and equipment completion of
new fields, maintenance of producing wells, drilling of
new ones, and transportation of crude oil and petroleum
products: all these operations comprise a complex and
very capital-intensive process. Enhanced oil recovery also
requires additional investments. In the future, as the de-
16 17
pletion of the old fields grows, the role of such enhanced
oil recovery methods will increase. Accordingly, the costs
of material and technical base of the field development will
also increase. The Company’s opportunities to maintain
and increase oil production in the licensed areas depend
on access to technologies of oil production and enhanced
oil recovery, as well as success in their application.
Environmental Risks
Oil and gas sector is subject to a high degree of environ-
mental risk. Despite the extensive environmental meas-
ures of the Company, given the specifics of its activity,
there is a risk of penalties related to violation of environ-
mental regulations. In addition, it is expected possible
revision of the federal and regional environmental regula-
tions with a view of their further enforcement. The compa-
ny successfully implements a wide range of environmental
measures aimed at minimizing the impact of industrial
activity on the environment, and is one of the recognized
leaders in this sphere in Russia.
Legal Risks
The main activities of TATNEFT Group are carried out within
the territory of the Russian Federation. The legislation of
the Russian Federation (including tax, corporate laws and
subsoil law) is undergoing changes, some of which may
cause additional costs, diversion of resources, changes in
organization and functioning of the managing bodies of the
Company and its business subdivisions. The Company is not
a defendant in any lawsuit or claims based on the results,
the consideration of which the Company may incur liabilities
that could have a material impact on its financial position or
performance.
Country and Regional Risks
Financial Risks
The Company is registered as a taxpayer and conducts its
main business activity in the Russian Federation, including
the territory of the Republic of Tatarstan, a subject of the
Russian Federation.
The political situation in the Russian Federation and, in
particular, the Republic of Tatarstan is stable. The risks
of a possible military conflict, announcement of the state
of emergency or a major strike in the region of the Com-
pany’s main activity are rated as low. However, the Com-
pany adopted procedures which may be applied in case
of emergency to reduce the impact of this situation on the
life, health and safety of workers as well as the production
activity of the Company. The regional geographical features
of the Company’s basic activity are not characterized by
increased risk of natural disasters, which may have a signifi-
cant impact on the normal production activities. In planning
and execution of production, treatment, transportation and
storage operations of oil and gas, oil & gas products, as well
as the materials involved in the production, the Company
takes into account geographical features, including climate
peculiarities of the region of operation. The Company’s
operation region of the core business is not remote from the
viewpoint of transport and other infrastructure
In the event of negative impact on the activities of the Com-
pany, which may be caused by natural disasters such as
floods, earthquakes, mudslides, etc., the Company adopt-
ed procedures and policies aimed at the prompt elimination
of such effects. The Company established the monitoring
procedures using the modern techniques aimed at prevent-
ing the possibility of adverse effects of natural phenomena
and giving notices to the local population of the Company’s
region of activity about the possibility of such damages.
Significant changes in foreign currency exchange rates
increase the Company’s liabilities denominated in foreign
currencies. In the event of deterioration of the macroeco-
nomic situation and increase in interest rates may affect
the amount of interest expense payment on the Company’s
liabilities.
In particular, in case of borrowing in the form of bank loans
with a “floating” interest rate, raising the general level of
interest rates in the international market would increase
the amount of funds to be paid to the interest that would
adversely affect the financial condition of the Company. De-
crease in interest rates in the Russian market, other things
being equal, may reduce the effectiveness of outstanding
debts of the Company at a fixed interest rate.
Currency Risk
The Company is exposed to risks of adverse changes in
exchange rates, the main of which is the Russian ruble
fluctuations against the U.S. dollar. This is due to the fact
that a significant proportion of revenues of the Company is
denominated in U.S. dollars, while the most of its expenses
are denominated in rubles. Therefore, the strengthening of
the ruble against the dollar leads to decline in earnings of
the Company in ruble terms, and the ruble weakening, with
all other macroeconomic parameters unchanged, results in
increase of income in ruble terms. The currency structure
of the Company debt profile reflects, in general, its revenue
structure which also reduces the dependence on fluctua-
tions in exchange rates.
Effects of Inflation
It is not possible to predict the critical rate of inflation for
the Company since besides the consumer price level it is
necessary to take into account changes in the real purchas-
ing power of the ruble, the market conditions in the Russian
and international oil markets, and further tariff policy of the
government.
OVERCOMING ADVERSE SITUATIONS RELATED TO INDUSTRY RISKS
The Company conducts a comprehensive program of measures to overcome the adverse situations related to industry risks,
including continuous monitoring, analysis and prediction of the oil prices dynamics subject to corresponding adjustment of the
business operations plans and strategic development of the Company. The Company has developed and implements technical
and organizational measures that minimize the impact of technical and environmental risks.
POTENTIAL FINANCIAL RISK PROTECTION
The financial position of the Company and capacity to adapt to different market situations, enable the Company to quickly re-
spond to changing market conditions and make relevant adjustments of the business plans.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
STAKEHOLDER ENGAGEMENT
The Company permanently interacts with a wide
range of stakeholders, considering the mutually
beneficial relations with them as a crucial asset for
sustainable development. As per AA 1000 standard
definition criteria the stakeholders are organizations,
individuals or groups whose interests could be
affected by the Company’s activities.
The Company realizes that the long-term
sustainable business development is inseparable
from the social progress and sustainable
development of the whole society and makes
a significant contribution to the social and
economic development of the regions and society
as a whole. TATNEFT makes decisions based on
social, environmental and other possible effects,
which confirms its commitment to the sustainable
development.
Ensuring a high level of the corporate social
responsibility is a strategic initiative and a major
principle of the Company’s activity, which implies
transparency and ethical conduct that contributes to
sustainable development and is consistent with the
law and international standards.
Fundamentals of the stakeholder engagement:
regarding the Company’s activities;
• identification of the stakeholders;
• analysis of the stakeholders’ needs and expectations
• identification and implementation of communication and
• definition of the responsibility areas of the Company to
feedback forms for each stakeholder;
key stakeholders.
The guiding principles of the Company’s social re-
sponsibility are as follows:
ers, and other stakeholders on its activity;
• to act in accordance with the legislation;
• to be a responsible partner of the government;
• to protect rights of the shareholders;
• to appreciate and respect its employees;
• to openly inform its shareholders, employees, consum-
• to act in accordance with the highest ethical standards;
• to be intolerant to corruption and bribery;
• to use its resources with the maximum efficiency;
• to use up-to-date technological achievements;
• to ensure environmental protection;
• to cooperate with public organizations;
• to strive to make each employee feel proud of the Com-
pany they work for.
Key stakeholders are divided into two groups according to
their degree of influence on the activity of JSC TATNEFT
and the degree of the Company’s influence on their vital
activity. A group of substantial influence includes
stakeholders which can substantially influence the activity
of JSC TATNEFT or whose interests are substantially
affected by the Company’s activity. These are internal
stakeholders, shareholders and investors, consumers and
clients, business partners, and public authorities. A group
of limited influence includes public organizations,
investment analytical companies and credit rating
agencies, mass media communications, specialized
institutions of higher and intermediate vocational education
and local communities, i.e. the stakeholders whose
interests can be partially affected by the Company or which
can indirectly influence the Company.
18 19
TATNEFT Group
Internal stakeholders
Employees
Trade Union
Shareholders
& Investors
About 45,000 share-
holders
Investors
Customers & Clients
Public Authorities
Business Partners
Refineries
Federal Authorities
Suppliers
Clients of filling stations
Regional Authorities
Contractors
Customers of Petro-
chemical Complex
products
Administrations of
municipal entities of the
regions of the activity
Customers of oilfield
equipment, pipe,
cable, chemical & other
products
Non-governmental
Organizations
Federal Organizations
(Russian Union of Indus-
trialists & Entrepreneurs,
Union of Oil and Gas
Manufacturers of Rus-
sia, Russian Institute of
Directors)
Specialized Institu-
tions of higher &
intermediate voca-
tional education
Local Communities
Local community of the
regions of the activity
Medical, sports, educa-
tional, cultural institu-
tions of the regions of
the activity
Mass-media com-
munications
Federal Mass Media
Regional and Local
Mass Media
Online Media and Infor-
mation agencies
Investment Analytical
companies and Rat-
ing Agencies
Over 100 Russian
and International
Investment Analytical
companies and Rating
Agencies
e
c
n
e
u
fl
n
i
l
a
i
t
n
a
t
s
b
u
S
e
c
n
e
u
fl
n
i
d
e
t
i
m
L
i
Corporate Responsibility to Stakeholders
Shareholders
Partners
Employees
Local Communities
Customers
Dynamic growth and
development of the
Company
Operating Efficiency
Growth of the
Capitalization
Maintaining the
reputation of high-
technology and
reliable Company
Fair Competition
Timely and
precise fulfillment
of contractual
commitments
Mutually beneficial
cooperation
Ensuring a decent
standard of living
Provision of social
guarantees
Provision of individual
development
opportunities
Workplace Safety
Support of social and
economic develop-
ment of the regions of
the activity
Support development
of healthcare, educa-
tion, culture and sports
Environmentally sound
business practices
Special Corporate
Project of small and
medium-size business
development
Provision of high
quality products and
services
Continuous
improvement of the
product quality
Commitment to follow
changing requirements
of the Customers
Provision of reliable
information of the
Company’s products
The Corporate social responsibility is an integral part of the Company’s strategy. The principles of social responsibility are inte-
grated into the Company’s activities and applied in its relations with stakeholders. The social responsibility policy is implemented
in accordance with ISO 26000.
Based on the Ethical Principles
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
20 21
OPERATIONS
In 2014, the Company successfully accomplished
its goals such as resource base strengthening, oil
production growth, development of its own oil refining
capacities, expansion of its filling station chain, gaining
higher return on investments in tire production,
upgrading of generating capacities, creating a new
value added through delivery of quality petroleum
derivatives and efficient allocation of resource and
production capacities.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
22 23
Oil production for large fields in
2014 (M tonnes)
Oil Field
Romashkinskoye
Novo-Yelhovskoye
Bavlinskoye
Sabanchinskoye
Pervomaiskoye
Bonduzhskoye
2014
15 240
2 541
1 077
530
359
285
KAZAN
Bonduzhskoye
Pervomaiskoye
NABEREZHNY CHELNY
Romashkinskoye
Novo-Yelhovskoye
ALMETYEVSK
Sabanchinskoye
Bavlinskoye
OIL EXPLORATION AND PRODUCTION
RESERVES AND EXPLORATION ACTIVITIES
At the beginning of 2015, TATNEFT’s proved
hydrocarbon reserves totaled
The reserves to production ratio at the current
production level is over
MAP OF LARGE OIL FIELDS IN THE REPUBLIC OF TATARSTAN
851,5 mln.
tonnes
> 32
years
At the beginning of 2015, JSC’s proved reserves of
hydrocarbons as per the standards of Petroleum
Resources Management System (PRMS) of the Society of
Petroleum Engineers (SPE) amounted to 851.5 mln. tonnes
of oil (according to the Miller and Lents’ independent
report) with the proved reserves addition of 4.2 mln. tonnes
compared with last year.
With the current oil output the reserves life is secured
for more than thirty two years. To date, TATNEFT ranks
twenty-fist in the world in terms of proved reserves. The
Company has been steadily sustaining the reserves supply
and replacing its oil production through reserves addition
by exploration activities carried out in both conventional
operating regions and new areas utilizing the best practices
in oil prospecting and improved techniques to develop the
producing fields.
The main resource base of the Company is historically
located in the Republic of Tatarstan of the Russian
Federation. The Romashkinskoye oil field is the largest
field, which contributes the main portion to the Company’s
oil production.
In order to create a good quality diversified portfolio of
producing assets and boost oil production the Company
expands its geographic footprint while operating currently
in the conventional regions and simultaneously prospecting
and exploring for oil within the licensed areas in the
Republic of Kalmykia, the Orenburg, Samara, Ulyanovsk
Regions, and the Nenets Autonomous District. In 2014, the
TATNEFT Group reported two new field discoveries (one
was discovered in the Republic of Tatarstan and another –
in the Orenburg Region).
The Company applies the cutting-edge techniques in
exploratory activities. Thus, along with conventional
seismic data acquisition techniques oil prospective targets
are predicted by artificial intellect method, leads are
defined by field seismic and geochemical methods using
a complex parameter of oil-bearing probability (CPP).
Geochemical survey to search for oil and gas utilizes
passive hydrocarbon adsorption, low-frequency seismic
sounding (LSS), geological-geophysical technology to
optimize selection of well drilling locations (GTO LS),
electromagnetic sounding (EMS), Stratimegic new
software package for 3D seismic data processing. NMR
tomographic logging tool is used to identify shallow
reservoirs saturated with extra-viscous oil.
As part of future-oriented projects to expand the resource
base the Company has been implementing pilot operations
to develop extra-viscous oil (EVO) fields. A great deal
of exploration and appraisal activities were done in the
Ashalchinsky field in 2014. The improved techniques to
produce bituminous oil with tax preferences granted by the
Russian Federation government for extra-viscous oil filed
development give additional opportunities for the Company to
accumulate a reserved stock of crude oil producing assets.
Since 2013, TATNEFT has been implementing the program
to evaluate a potential for shale oil production. Currently,
the pilot operations are underway and the vertical well
production technology is being studied.
PRODUCTION AND RESERVES ADDITION (MM TONNES):
40
30
20
10
2
3
8
2
9
1
,
6
2
0
3
,
6
2
2
4
,
6
2
3
5
,
6
2
2011
2012
2013
2014
Oil Production for TATNEFT Group
Oil Reserves Addition for А+В+С1+С2 Cats’
0
4
1
4
KAZAKHSTAN
KAZAKHSTAN
KAZAKHSTAN
KAZAKHSTAN
KAZAKHSTAN
Dmitrovsky
Dmitrovsky
Dmitrovsky
DISTRIBUTION OF PROVED RESERVES WITHIN THE RUSSIAN FEDERATION OUTSIDE THE REPUBLIC OF TATARSTAN
Orenburg Region
Neznaikinskoye
oil field
Neznaikinskoye
oil field
REPUBLIC OF BASHKORTOSTAN
REPUBLIC OF BASHKORTOSTAN
Neznaikinskoye
Neznaikinskoye
Motorinsky
oil field
Neznaikinskoye
oil field
oil field
Motorinsky
REPUBLIC OF BASHKORTOSTAN
REPUBLIC OF BASHKORTOSTAN
Arkayevskoye oil field
REPUBLIC OF BASHKORTOSTAN
Arkayevskoye oil field
Abdulinskoye oil field
Motorinsky
Abdulinskoye oil field
Motorinsky
Motorinsky
SAMARA
REGION
SAMARA
REGION
Abdulinskoye oil field
Abdulinskoye oil field
Abdulinskoye oil field
Arkayevskoye oil field
Arkayevskoye oil field
Arkayevskoye oil field
SAMARA
REGION
SAMARA
REGION
SAMARA
REGION
Chekalinsky
Chekalinsky
Chekalinsky
ORENBURG REGION
Chekalinsky
Chekalinsky
ORENBURG REGION
Rubezhinsky
Rubezhinsky
ORENBURG REGION
ORENBURG REGION
ORENBURG REGION
Severo-Eltyshevsky
Severo-Eltyshevsky
ORENBURG
ORENBURG
Rubezhinsky
Rubezhinsky
Rubezhinsky
Severo-Eltyshevsky
Severo-Eltyshevsky
Severo-Eltyshevsky
Dmitrovsky
Dmitrovsky
ORENBURG
ORENBURG
ORENBURG
REPUBLIC OF TATARSTAN
REPUBLIC OF TATARSTAN
Cheremshansky
Cheremshansky
Ulyanovsk Region
REPUBLIC
OF CHUVASHIA
REPUBLIC
OF CHUVASHIA
Samara Region
Mindalnoye
Mindalnoye
oil field
oil field
Muskatnoye
Muskatnoye
Mindalnoye
oil field
oil field
Mindalnoye
oil field
Mindalnoye
oil field
oil field
Muskatnoye
oil field
Muskatnoye
oil field
Muskatnoye
oil field
ULYANOVSK
ULYANOVSK
REGION
REGION
ULYANOVSK
ULYANOVSK
ULYANOVSK
REGION
REGION
REGION
REPUBLIC OF TATARSTAN
REPUBLIC OF TATARSTAN
REPUBLIC OF TATARSTAN
Cheremshansky
Cheremshansky
Cheremshansky
Moiseevsky
Moiseevsky
Novo-Krasnodolskoye
oil field
Novo-Krasnodolskoye
oil field
САРАНСК
САРАНСК
Izyumovsky
Izyumovsky
Moiseevsky
Moiseevsky
Moiseevsky
Vostochno-Alexandrovsky
Vostochno-Alexandrovsky
Novo-Krasnodolskoye
oil field
САРАНСК
Novo-Krasnodolskoye
oil field
Novo-Krasnodolskoye
oil field
САРАНСК
Vostochno-Alexandrovsky
Vostochno-Alexandrovsky
Vostochno-Alexandrovsky
Izyumovsky
Izyumovsky
Izyumovsky
Zapadno-Alexandrovsky
Zapadno-Alexandrovsky
REPUBLIC
OF MORDOVIA
REPUBLIC
OF MORDOVIA
REPUBLIC
OF CHUVASHIA
REPUBLIC
REPUBLIC
OF CHUVASHIA
OF CHUVASHIA
REPUBLIC
OF MORDOVIA
REPUBLIC
REPUBLIC
OF MORDOVIA
OF MORDOVIA
САРАНСК
ULYANOVSK
ULYANOVSK
Popovkinskoye oil field
Popovkinskoye oil field
ULYANOVSK
ULYANOVSK
ULYANOVSK
Popovkinskoye oil field
North-Eastern Part
Popovkinskoye oil field
of Ulyanovsk Region
(Melekesskaya Depression)
North-Eastern Part
of Ulyanovsk Region
(Melekesskaya Depression)
Popovkinskoye oil field
PENZENSKAYA
REGION
PENZENSKAYA
REGION
ULYANOVSK
North-Eastern Part
ULYANOVSK
North-Eastern Part
of Ulyanovsk Region
North-Eastern Part
of Ulyanovsk Region
REGION
REGION
(Melekesskaya Depression)
of Ulyanovsk Region
(Melekesskaya Depression)
(Melekesskaya Depression)
ULYANOVSK
ULYANOVSK
ULYANOVSK
REGION
REGION
REGION
Zapadno-Alexandrovsky
Zapadno-Alexandrovsky
SAMARA
Zapadno-Alexandrovsky
SAMARA
REGION
REGION
SAMARA
Irgizski
Irgizski
REGION
SAMARA
REGION
SAMARA
REGION
Irgizski
Irgizski
Irgizski
ORENBURG
REGION
ORENBURG
REGION
ORENBURG
REGION
ORENBURG
REGION
ORENBURG
REGION
PENZENSKAYA
REGION
PENZENSKAYA
PENZENSKAYA
REGION
REGION
SARATOV REGION
SARATOV REGION
SARATOV REGION
SARATOV REGION
SARATOV REGION
САРАТОВСКАЯ
ОБЛАСТЬ
САРАТОВСКАЯ
ОБЛАСТЬ
САРАТОВСКАЯ
ОБЛАСТЬ
САРАТОВСКАЯ
САРАТОВСКАЯ
ОБЛАСТЬ
ОБЛАСТЬ
As at 01.01.2015
Licensed Area Count
Oil Field Count
Nenets Autonomous District
Баренцево море
Баренцево море
Republic of Kalmykia
VOLGOGRAD
REGION
VOLGOGRAD
REGION
Баренцево море
Баренцево море
Баренцево море
Yambontinsky area
Yambontinsky area
Zapadno-Efremovsky area
Zapadno-Efremovsky area
VOLGOGRAD
REGION
VOLGOGRAD
VOLGOGRAD
REGION
REGION
Khongor
oil field
Khongor
oil field
Yambontinsky area
Yambontinsky area
Yambontinsky area
Zapadno-Efremovsky area
Zapadno-Efremovsky area
Zapadno-Efremovsky area
Yambotinskoye oil field
Yambotinskoye oil field
Yambotinskoye oil field
NENETS AUTONOMOUS DISTRICT
Yambotinskoye oil field
NENETS AUTONOMOUS DISTRICT
Yambotinskoye oil field
NENETS AUTONOMOUS DISTRICT
NENETS AUTONOMOUS DISTRICT
Severo-Tibeivisskoye
oil field
NENETS AUTONOMOUS DISTRICT
Podveryusky area
Podveryusky area
Severo-Tibeivisskoye
oil field
Lyzatynski area
Lyzatynski area
Khosoltinsky area
Khosoltinsky area
Khosoltinsky area
Khosoltinsky area
Khosoltinsky area
ROSTOV
REGION
Khongor
oil field
ROSTOV
REGION
Khongor
oil field
Khongor
oil field
Dolansko-Erdniyevsky
Area
Dolansko-Erdniyevsky
Area
Exploration Performance:
ASTRAKHAN
REGION
ASTRAKHAN
REGION
- 2D CDP Method, ths. km
ROSTOV
REGION
ROSTOV
REGION
ROSTOV
REGION
Dolansko-Erdniyevsky
Dolansko-Erdniyevsky
Area
Area
Dolansko-Erdniyevsky
Area
ELISTA
ELISTA
ELISTA
ELISTA
ELISTA
REPUBLIC
REPUBLIC
OF KALMYKIA
OF KALMYKIA
REPUBLIC
REPUBLIC
OF KALMYKIA
OF KALMYKIA
REPUBLIC
OF KALMYKIA
ASTRAKHAN
REGION
ASTRAKHAN
REGION
ASTRAKHAN
REGION
- 3D CDP Method, ths. km2
- Exploratory Drilling Performance,
ASTRAKHAN
ASTRAKHAN
exploration wells,
ASTRAKHAN
ASTRAKHAN
ASTRAKHAN
Total Recoverable Reserves С1+С2:
Oil (condensate) mln. tonnes
Cekertinsky Area
Cekertinsky Area
Free Gas, bln. m3
Severo-Tibeivisskoye
Tibeivissky area
oil field
Severo-Tibeivisskoye
oil field
Severo-Tibeivisskoye
oil field
Tibeivissky area
Tibeivissky area
Tibeivissky area
Tibeivissky area
Tibeivissky area
Tibeivissky area
Tibeivissky area
Tibeivissky area
Tibeivissky area
Podveryusky area
Podveryusky area
Lyzatynski area
Podveryusky area
Vostochno-
Khayakhinsky area
Vostochno-
Khayakhinsky area
Lyzatynski area
Lyzatynski area
Vostochno-
Vostochno-
Severo-
Severo-
Khayakhinsky area
Vostochno-
Khayakhinsky area
Khayakhinsky area
Khayakhinsky area
Khayakhinsky area
Severo-
Khayakhinsky area
Severo-
Severo-
Khayakhinsky area
Khayakhinsky area
STAVROPOL
TERRITORY
STAVROPOL
TERRITORY
STAVROPOL
TERRITORY
STAVROPOL
TERRITORY
STAVROPOL
TERRITORY
Cekertinsky Area
Cekertinsky Area
REPUBLIC
OF DAGESTAN
Cekertinsky Area
REPUBLIC
OF DAGESTAN
Production Output: oil (condensate), mln. tonnes
2,317
Каспийское море
Каспийское море
Free Gas, bln. m3
0,132
REPUBLIC
OF DAGESTAN
REPUBLIC
REPUBLIC
OF DAGESTAN
OF DAGESTAN
Каспийское море
Каспийское море
Каспийское море
REPUBLIC
OF TATARSTAN
REPUBLIC
OF TATARSTAN
REPUBLIC
OF TATARSTAN
REPUBLIC
REPUBLIC
OF TATARSTAN
OF TATARSTAN
DIMITROVGRAD
DIMITROVGRAD
DIMITROVGRAD
DIMITROVGRAD
DIMITROVGRAD
TOLYATTI
TOLYATTI
SAMARA
REGION
SAMARA
REGION
TOLYATTI
TOLYATTI
TOLYATTI
SAMARA
SAMARA
REGION
SAMARA
REGION
SAMARA
SAMARA
REGION
SAMARA
SAMARA
SAMARA
33
42
18,7
1,2
92
80,430
43,324
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
DEVELOPMENT AND PRODUCTION
TATNEFT Group’ s oil output in 2014
26,529 mln. tonnes
of oil
Tertiary Recovery & Hydrodynamic EOR
contributed over
45%
Total investments in oil production within the Republic
of Tatarstan in 2014 amounted to 26.8 billion rubles,
including drilling, capital construction, workovers and well
interventions, etc. Investments in oil production outside the
Republic of Tatarstan in the year under report amounted to
RUR2.9 billion. In 2014, the oil production hit a record high
over the past two decades.
The projected incremental oil production and well production
rates (well count growth) for all investment activities within
Tatarstan beat the targets in 2014. 403 million rubles were
invested in dual completion technology for production and
injection operations with a variety of equipment modifications
and combinations of the installations, which were developed
to enhance oil recovery from reservoirs.
JSC TATNEFT’s oil output was up by 0.4% compared
with 2013. The targeted production was exceeded by 18
thousand tonnes of oil.
Oil Production Key Performance Indicators of the
Company for period from 2012 through 2014
Key Performance Indicators
Oil Production for TATNEFT
Group
Oil Production for JSC
TATNEFT
Associated Petroleum Gas
NGL Extraction and Supply
Average Daily Oil Production
Unit of
Measure
mln.
tonnes
mln.
tonnes
mln. m3
ths.
tonnes
tonnes
per day
2012
2013
2014
26,307 26,419 26,529
26,005 26,107 26,223
843,5
864,8 931,43
285,6
275,3 276,35
71052
71526
71843
Average Oil Production Rate of
Active Producing Wells
tonnes
per day
3,8
3,8
3,8
Exploratory Drilling for JSC
TATNEFT
8,5
9,3
11,5
Most of the crude oil is currently produced from six large
oil fields, such as Romashkinskoye, Novo-Elkhovskoye,
Bavlinskoye, Bonduzhskoye, Pervomaiskoye, Sabanchinskoye.
Though many of the oil fields owned by the Company are mature
JSC TATNEFT is a big success in gaining year after year overall
incremental oil production constantly improving oil recovery
techniques. The focus is made on improving the oil recovery
factors by using innovative technologies. In order to sustain and
increase the oil production the Company has been realizing
the programs to boost operating performance efficiency and
keep oil production profitable by implementing state-of-the-
art technologies and optimizing the well count. The horizontal
drilling activities along were ramped up at higher efficiency and
multistage hydrofracturing operations were expanded in 2014.
The application of the EOR techniques made it possible for
the Company to attain the additional production of 6,583.714
thousand tonnes of crude oil against the target of 5,918,874
thousand tonnes (that was 111.2% of the targeted production).
The tertiary EOR contribution in the oil production amounted to
25.11% of the overall crude oil output at year-end 2014.
In 2014, within the Republic of Tatarstan eight (8) prospects
were brought into deep drilling and another 8 structures were
prepared for deep drilling.
In 2014, JSC TATNEFT drilled thirty two (32) slim-hole wells
(SHW), of which thirty one (31) wells were brought into oil
production (oil production of 49,7 thousand tonnes). The
average production rate amounted to 10.2 tonnes per day.
The total slim-hole count made 329 wells.
In 2014, ninety five (95) horizontal wells and three (3)
multilateral wells were drilled, which totally produced 130,368
ths. tonnes of oil. Since the beginning of the activities the
number of horizontal wells reached 707 wells and the
multilateral wells totaled 107 wells.
In drilling operations the most efficient technologies to improve
well cementing quality include silicate baths placed within
productive intervals, G-grade cement, stage cementing collars.
The horizontal and multilateral well completions are highly
efficient to achieve prolific oil flow rates.
2014 JSC TATNEFT Drilling Key Performance Indicators
Performance Indicators
Total Drilling Meterage across JSC
TATNEFT
Unit of
Measure
2014
ths. m
403,4
Development Drilling across JSC TATNEFT
Exploratory Drilling across JSC TATNEFT
ths. m
ths. m
410,2
20,2
24 25
In 2014, 286 development wells were drilled and completed
(vs. 259 wells projected). 206 wells were drilled and placed
in operation with oil production rate of 12,3 tonnes per day.
Producing Well Count as at 01.01.2015
Well Category
Active Producing Wells
Inactive Producing Wells
Operating Producing Wells
Testing and Completion and Waiting on Testing
and Completion of Producing Well
Well Count
01.01.2015
20 251
2 006
22 273
16
Operations in Extra-Viscous Oil Fields
As the pilot operations in the Ashalchinskoye natural
bitumen filed were moving on, a considerable amount of
appraisal and development drilling and surface facilities
construction operations was accomplished during the year.
During the period under report more than 5 billion rubles
were spent for the project implementation.
As at 01.01.2015, 109 horizontal wells (including 53 wells in
2014) and 468 appraisal wells were drilled. 7 Cyclic-Steam
Stimulation (CSS) wells and 31 Steam Assisted Gravity
Drainage (SAGD) wells were in operation. 50 injectors were in
injection operation, including 30 steam injection wells, 2 cyclic
steam injection wells and 18 new well pairs and cyclic-steam
stimulation wells (primary heating up formation).
By the end of the year under report, the daily oil production
reached 750 tonnes. The oil production totaled 236,9
thousand tonnes in 2014.
EXTRA-VISCOUS OIL PRODUCTION (THS. TONNES):
250
200
150
100
50
0
Altogether, since
the pilot project beginning
the extra-viscous oil
production had totaled
562,6
thousand tonnes
236,9
145,6
73,3
41,5
2011
2012
2013
2014
Oil and Gas Production outside Tatarstan
In the course of 2014, 22 oil fields were operated outside
the Tatarstan Republic. The crude oil was produced from
112 wells with 108 wells in the Samara Region and 4 wells
in the Orenburg Region. In 2014, a lot of efforts were made
in the Samara region to drill new wells and install surface
facilities. 9 new wells were put on stream. The average flow
rate of newly drilled wells accounts for 6,8 tonnes per day.
In 2014, 4 structures were brought into and 2 structures
were prepared for deep drilling in the Samara Region. Also,
1 structure was developed for deep drilling in the Republic
of Kalmykia.
Oil and Gas Production
outside the Russian Federation
In 2010, the service contract was accomplished between
JSC TATNEFT and State Concern Turkmenoil for IOR and
oil production in the Goterdepe oil field in Turkmenistan.
92.4 tonnes of oil had produced since the start of the
production program under the contract. Two workover
crews performed 63 workovers in 40 wells, downhole
pumping units were run and set in 32 wells, 23 wells were
operating as a result of the well intervention programs.
The average daily additional production totaled
157 tonnes per day.
Licensing
As at 01.01.2015 JSC TATNEFT together with its 8
subsidiaries operating within Russia held 97 oil and
gas exploration and production licenses in the Russian
Federation. In Tatarstan the Company owned five
exploration area licenses for geological prospecting
and subsequent development of the discovered oil
fields on the northern slope of the South Tatar Arch in
the northeast of the Republic of Tatarstan and on the
slopes of the South Tatar Arch, on the south-eastern
slope of the North Tatar Arch, on the eastern flank of the
Melekessky Depression and one license was granted for
the Apastovsky area located in the west of the Republic
of Tatarstan for geological prospecting, exploration
and production of hydrocarbons. Outside the Russian
Federation the Company was awarded six contracts for
nine blocks to perform geological exploration in Libya
and Syria. For the time being the exploration programs
under these contracts have been suspended because
of the political situation for an indefinite period until the
situation is stabilized there.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
APPLICATION OF ADVANCED TECHNOLOGIES
AND EQUIPMENT
In the area of Exploration and Development
Drilling
Oil & Gas Production
Reservoir Maintenance Pressure
26 27
1. Reservoir characterization, modeling and simulation
for development targets based on updated estimate of
remaining reserves is the primary method to identify residual
oil reserves for mature fields, which enable with the highest
degree of accuracy to analyze and predict areas with unlocked
reserves and calculate efficiency rate of planned activities.
2. Search for hydrocarbon accumulations based on
passive adsorption principle* is focused on reducing
geological risks and improving precision of hydrocarbon
prediction. The method is based on the sedimentary-
migration theory of petroleum origin and the concept
of chemical element migration in the earth’s crust. The
economic effect is achieved through less application of
expensive detailed seismic survey techniques as well as
drilling far fewer dry-holes and unproductive wells.
3. Sidetracking engineering and practice is applied
to return into operation inactive, drowned, low producing
and fishing wells, which are impossible to rehabilitate
through other methods. In 2014, the sidetracking tools and
techniques were used to rehabilitate 56 wells.
1. The use of swellable packers made by ZAO KVART
allows to perform selective zonal isolation during well
completion operations. The technology was developed by
JSC TATNEFT jointly with ZAO KVART as a part of import
substitution with the product quality highly competitive with
the foreign equivalents. In 2014, 14 packers were installed
in 4 wells.
2. Drilling of horizontal and multilateral wells contributes
to sustaining and boosting oil production from oil fields that
predominantly contain hard-to-recover reserves. Horizontal
completions help reduce the projected well stock and
recover more oil reserves as well as improve reservoir sweep
efficiency and implement selective flooding across the
section when used as injection wells. In 2014, 92 horizontal
wells and 2 multilateral wells were brought into operation.
3. Release tool for liner installation in a bitumen well* is
used in construction of horizontal wells in the Ashalchinskoye
extra-viscous oil field. In 2014, the tool was used during
construction of 60 wells.
PROFIT FROM ACCOMPLISHEMENT OF JSC
TATNEFT NEW EQUIPMENT AND ADVANCE
TECHNOLOGY IMPLEMTNATION PLAN OVER
PERIOD OF 2005 THROUGH 2014 (THOUS. RUR)
INTELLECTUAL PROPERTIES
BY BUSINESS ACTIVITIES
1% Gathering and Transportation
6000
5000
4000
3000
2000
1000
0
4 753
4 894
4 566
4 775
4 366
4 035
2 962
2 436
1 949
5 647
5% Automation (IT)
6% EOR
22%
Workover
4%
Oil and Gas
Treatment
2% Mechanics
2% Geology
23%
Oil Field
Development
12%
Well Drilling
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
4%
Corrosion and Environment
Control
15%
Oil and Gas Production
4% Reservoir Pressure
Maintenance
1. Dual completion production operations enable
to simultaneously produce zones with variable reservoir
properties and parameters and improve economic
efficiency of individual wells and cut down drilling
operations. As at 1.01.2015, 1 527 dual completion wells
were in operation, including dual completions that were
installed in 211 wells in 2014. Since beginning of operation
of the installations the cumulative additional production for
dual completion wells had made 8 419,9 thousand tonnes
of oil with the average growth of oil production rate per well
at 3,55 tonnes per day.
2. Advanced sucker rod pump for difficult wells*
allows self-cleaning by removing salts into tubing during
plunger reciprocation. The use of the pumps makes it
possible to extend the time between repairs of complicated
oil producing wells. As at 01.01.2014, 91 pumps were in
operation.
3. Electric submersible motor with higher power
factor* enables to reduce electricity loss in downhole cable
and motor lead extension. The power energy is saved in the
amount of 8 672.4 kWh per year. In 2014, the technology
solution was installed in one well. In 2015, 74 ESP units are
planned to be equipped with downhole electric motors with
higher power factor.
1. Dual completion injection operations improve
economic viability of individual wells by bringing other
development targets or different property zones of same
reservoir on stream and reduce the amount of drilling
operations due to using a single wellbore. Dual completion
injection technology was implemented in 664 injection
wells, including 106 wells in 2014. Additional oil produced
by responding producing wells since the beginning of
implementation had amounted to
1 481.3 thousand tonnes.
2. Corrosion-resistant tubing extends tubing service life
by 2-2.5 times in injection wells. The corrosion-resistant
tubing strings were installed in 6727 wastewater and
produced water wells (89.8% of the stock), including 433
injection wells in 2014.
3. M1-X Packer is designed to protect production casing
of wells from a high pressure and corrosion damage. The
packer lowers time expenditures for workovers and well
service operations, downhole logging and injection well
tests. The M1-X packers were installed in 4578 injection
wells, including 508 injection wells in 2014. Altogether, a
variety of packer designs ensure a trouble-free operation of
65.2% of the injection well stock.
4. «RRZHN» and «1RRZHN» spring-type flow control
valves* provide economic value due to eliminating
unproductive (excess) water injection in the amount of 5.8
thousand rubles per RRZHN flow control valve (with built-in
check valve) per quarter and 3.7 thousand rubles per
1RRZHN flow control valve per quarter. 9 RRZHN spring-
type control valves (with built-in check valves) and 12
1RRZHN flow control valves were installed in 2014.
* The technology is an intellectual property of JSC TATNEFT
The TATNEFT Group incorporates Tatar Oil Research and Design Institute (TatNIPIneft), which is a leading research centers
in Russia. The research activities carried out by TatNIPIneft provide a huge scientific support in sustaining and building
up the Company’s technological capabilities in petroleum prospecting and exploration, petroleum engineering, reservoir
engineering, oil production and processing, corrosion control of oil production facilities, surface facilities and oil field
infrastructure development, well construction.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
Workovers
Oil, Gas and Water Treatment
Enhanced Oil Recovery (EOR)
1. Reservoir stimulation technology using KSK acid-
based compositions is applied for both producers and
injectors operating in sandstone and carbonate reservoirs.
The incremental oil production as compared with the
initial performance totaled about 2 tonnes per day while
stabilizing the rate of produced water at the initial level.
The technological efficiency was about 80%. In 2014 the
technology was implemented in 134 wells.
2. Workover technology using drillable packers
PR-К (Г)-146(168)Ya and PR-К (G)-102(114) creates
economic value of 73,6 thousand rubles per well job. In 2014
the technology using the PR-К (Г)-146(168)Ya packer was
implemented in 68 wells and the PR-К (G)-102(114) packers
were used in 24 wells.
3. Formation hydrofracturing technology is effective
for oil well stimulation and well injection capacity increase
through creating high-conductivity fractures in the target
rock formation to force the fluid flow into near wellbore zone.
In total, since the beginning of implementation 3252 fracs
had been performed. In 2014, 702 frac jobs were done with
40 new wells fractured immediately after drilling.
The flow rate as a result of fracturing increased by 4.7 tonnes
per day. The additional oil production amounted to more
than 9,2 mln. tonnes.
RATIONALIZATION AND INVENTION PERFORMANCE
1. Waste water circulation oil treatment without oil
preheating is used to improve the quality of oil dehydration
and desalination in the initial water separation and oil
treatment facilities. As a result, the water cut in the oil can
be reduced to 0.2-0.5%. The payback period is 1.4 years.
For the accounting period equal to the actual lifetime of the
equipment, operating cost savings will amount to 2 078.5
thousand rubles. In 2014, the technology was installed in
one initial water separation unit.
2. Oil dehydration and desalination using intensifying
devices* allows to enhance the efficiency of desalination
stages and generally stabilize oil treatment facility
operation. The attained oil dehydration and desalination
rate saves circulating fresh water as well as reduces the
fluid discharge volume, cutting down operating costs for oil
treatment. In 2014, the technology was introduced in two
oil treatment plants.
1. EOR technology to improve oil recovery from
reservoirs by pumping microgel polymer systems with
surfactants (MGS-KPS Technology)* is designed for
enhanced oil recovery through improved sweep efficiency
and redistribution of fluid flows due to reducing reservoir
permeability in the most permeable zones. In 2014, the
MGS-KPS technology was implemented in 125 wells. The
additional oil production amounted to 79 005 tonnes.
2. Technology for enhanced oil recovery using
polymer-clay composition and surfactant (PGK-M
Technology)* is recommended to be used in the wells with
injectivity over 200 m3 per day. In 2014, the technology
was implemented in 49 wells. The additional oil production
amounted to 52 599 tonnes.
3. EOR Technology to improve oil recovery through
injection of biopolymer compositions (RBK Xanthan
technology)* is designed to improve drive fluid
sweep efficiency by blocking of flushed out zones and
redistributing injected water flows across the reservoir.
In 2014, the technology was implemented in 55 wells. The
additional oil production amounted to 42 637 tonnes.
4. EOR Technology using hydrophobic (invert)
emulsion systems to improve oil recovery from flooded
heterogeneous reservoirs (MGES-M Technology)*
is designed to improve conformance control of injection
wells through selective stimulation of producing reservoirs.
In 2014, the technology was implemented in 50 injectors.
The additional oil production amounted to 32 797 tonnes.
9138,05
10000
ECONOMIC VALUE FROM
RATIONALIZATION AND
INVENTION ACTIVITY
* The technology is an intellectual property of JSC TATNEFT
20000
15000
1000
5000
10271
10454
10516
8980
11125
11562 11635
15720
6661
6865
4801,3
4894,6
5189,3
5424,3
5665,1
3847,4
2790,5
0
1339,7
1480,2
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Quantity of rationalization proposals and inventions
Economic Effect, mln roubles
RUR 9,1 BLN
RUR 8,4 BLN
from inventions
and utility
models used
5000
0
Innovative capacity growth and structure development of intangible assets involved in the Company’s core business activity
is one of the strategic corporate priorities, which are in alignment with the national policy for innovative development of the
country. The Company’s intellectual property and intangible asset management system is focused on improving innovation
activity, establishment of uniform principles of work organization for creating, accounting and optimum use and protection of
intellectual properties.
28 29
Electrochemical protection
of oilfield equipment from corrosion
1. Cathodic protection of well casing and flowlines
(splitting water lines) from external corrosion was installed
in 948 wells in 2014.
2. Sacrificial protection of inner surface of vertical
stainless steel tanks from corrosion provides in aqueous
phase at least for 90%. In 2014, the technology was
implemented in 11 vertical stainless steel tanks.
3. Cathodic protection of inner surface of vertical
stainless steel tanks from corrosion provides cathodic
protection of internal surface of the tank against corrosion at
least for 90%. In 2014, the technology was implemented in 11
vertical stainless steel tanks. The economic value amounted to
117 thousand rubles per vertical stainless steel tank.
4. Sacrificial protection of inner surface of horizontal
flow settling tanks provides corrosion protection of inner
surface of horizontal flow settling tank in an aqueous phase
at least for 90%. In 2014, the technology was implemented in
23 horizontal tanks.
5. Sacrificial protection of flowlines from soil corrosion
covered 456.7 km of pipelines in 2014.
6. Cathodic protection in-field pipelines from soil
corrosion covered 206 km of pipelines in 2014.
7. Sacrificial protection of vertical stainless steel tank
bottoms from soil corrosion implemented in 21 vertical
stainless steel tanks in 2014 with the economic effect valued
at 74 thousand rubles per the tank.
8. Metal-plastic coated pipeline installation technique*
helps maintain protective properties of pipe with internal
polymer coating, which ensures safe operation of the
pipeline. In 2014, he technique was used in construction of
103,883 km of pipelines.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
DOWNSTREAM
CRUDE OIL REFINING OPERATIONS
In 2014, the overall output of petroleum products for the
TATNEFT Group totaled 9,2 mln. tonnes. Major refining
operations were carried out at the refining facilities of the
TANECO Complex and the Elkhovsky Crude Oil Refining
Unit with continued supply of feedstock and high utiliza-
tion rate of oil refining capacities.
Oil Refining Capacityof TANECO Complex
The OJSC TANECO Oil Refinery includes the following main
process units:
• CDU-VDU-7;
• naphtha stabilization unit;
• visbreaker unit;
• integrated sulphur recovery unit consisting of:
• amine regeneration unit;
• sour water stripper;
• elemental sulphur recovery unit;
• hydrocracking unit;
• hydrogen production unit (2014);
• base oil production unit (in integrated testing mode)
В In 2014, the integrated testing operation of hydrocracking
and hydrogen production units was completed and production
of Euro 5 diesel fuel as per GOST R 52368-2005 commenced.
The Company developed its own specifications for and
brought the diesel fuel as per STO 11605031-085-2014 “Diesel
TANECO” into manufacturing production.
The start-up and commissioning operations were completed
on the vacuum gasoil (VGO) discharge rack. As a part of
integrated testing operation the third party’s VGO was started
to be taken to fully load the hydrocracking unit. More than
170,5 thousand tonnes of vacuum gasoil were accepted and
processed.
The scheme of refined product streams was improved on
the truck loading rack as well as the automation system was
modernized for flexible choice of petroleum products being
loaded. The throughput capacity increased up to 6,3 ths.
tonnes per day.
74%
oil conversion ratio yielded at
TANECO Complex’s facilities
The improved filling scheme of petroleum products in
rail car tanks with capability of simultaneous shipment of
different-type light output made it possible to increase the
rack throughput capacity by 1,0 thousand tonnes per day.
The operations are underway on pump feeding of improvers
and additives into diesel and jet fuel. The jet fuels as per GOST
10227-86 and GOST 52050-2003 were brought into produc-
tion manufacturing. In November 2014, the construction and
assembly work were accomplished, the integrated testing op-
eration of the base-oils production plant began, a pilot batch
of Group II and III base oils was tried and tested, the required
permits and approvals were obtained.
In order to load the hydrocracking unit to the maximum
capacity the pipeline was built to pump the VGO from TAIF-
NK PSC.
The Company continues to vigorously pursue the earlier
selected policy of giving preference to the Russian manu-
factures during construction of its Refinery Complex, thus,
over 75 % of the equipment utilized is made in Russia.
PETROLEUM PRODUCT OUTPUT VS CRUDE OIL
PRODUCTION TREND FOR TATNEFT GROUP,
(MLN. TONNES)
26.5
26
25.5
25
26,5
26,4
26,2
26,1
26,3
8,2
9,2
7,2
2,3
0,2
2010
2011
2012
2013
2014
Crude Oil Production for TATNEFT Group
Output of Petroleum Products
15
10
5
0
30 31
Processing of Feedstock and Production of Petroleum Products at TANECO Complex
for period from 2013 through 2014
Year
Primary petroleum feedstock for petrochemical processing
Crude oil
Gas condensates
2013
2014
Since operation start
7 622 920
8 520 904
7 618 569
8 511 288
4 351
9 617
23 594 208
23 580 239
13 968
Products derived from the feedstock:
Natural Gas Liquids (NGLs)
Straight-run gasoline
Stable natural gasoline
Diesel fuel
Middle distillates
Heating kerosene
Jet kerosene
Heating oil
Straight run kerosine-gas oil fraction
Low-viscosity marine fuel
Vacuum gas oil
Visbreaker naphtha
Light base oil
Middle-viscosity base oil
104 672
169 039
561 975
536 544
1 672 467
1 027 767
2 383 036
2 856 278
38 890
199 500
8 248
836 427
45 441
328 171
1 179 548
2 603 089
1 926 530
515 750
84 525
61 396
5 350
6 135
Marketable fuel oil (mazut)/ Visbreaker bottoms /vacuum residue
1 920 693
2 152 966
Vacuum residue
Marketable fuel oil (mazut)/ Visbreaker bottoms
Hydrocarbon gas for furnaces
Hydrogen
Sulphur
1 920 693
2 152 966
48 922
223 626
1 768
7 684
50 001
323 696
1 599 973
2 209 011
1 027 767
7 632 046
250 726
8 248
3 247 765
328 171
3 797 136
4 143 189
182 558
5 350
6 135
6 188 002
920 169
5 267 833
298 493
1 768
60 299
TANECO COMPLEX PROCESS UNIT RATED CAPACITIES
Process Unit
CDU-VDU-7
Naphtha Stabilization Unit
Visbreaker
Amine Regeneration Unit:
LPG amine scrubbing assembly
Fuel gas amine scrubbing assembly
Hydrogen-bearing gas scrubbing assembly
Elemental Sulphur Recovery Unit
Hydrocracking Unit
Hydrogen Production Unit
Base Oil Production Unit
Rated Capacity, thousand tonnes per year
7 000,0
1 101,6
2 400,0
170,5
121,6
35,9
139,4
2 900,0
99,77
250,0
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
The tail gas treatment unit was commissioned at the elemen-
tal sulphur production plant. In 2014, the commercial-grade
hydrogen sales began to third-party companies such as PJSC
Nizhnekamskneftekhim and TAIF-NK PSC.
The process flow optimization of the facilities was carried
out to improve the crude oil processing efficiency, yield a
higher output of light oil products and increase the refining
capacity. The integrated testing operation and commission-
ing of the following process units is expected to be accom-
plished in the long run, including naphtha hydrotreatment,
delayed coking, naphtha splitter, catalytic reforming, light
naphtha isomerization, heavy coker gas oil hydrotreatment,
kerosene hydrotreatment, diesel fuel hydrotreatment,
heavy residual hydroconversion pilot plant, crude oil distilla-
tion unit CDU-VDU-6.
NGDU Elkhovneft Oil Refining Facilities
Feedstock processing and production output of petro-
leum products for period from 2013 through 2014
Product Description
Crude oil accepted
Crude runs to stills
Crude return
Total oil products, including:
Diesel fuel
Total gasoline, в т.ч.:
Gasoline Regular-92
Gasoline Normal-80
Home heating oil
Kerosine-gasoil fraction
Low-viscosity marine fuel
Sulphur
Straight-run gas oil
Bitumen
2013 Actual
2014 Actual
407 649
167 371
240 278
179 306
86 787
81 539
77 988
3 551
1 869
6 763
1 950
373
25
0
405 515
164 783
240 732
67 604
75 122
72 932
2 190
9 498
0
13 886
261
12
In 2014, a vapour recovery unit and bottom loading system for
oil products were built at the Elkhovsky Oil Refining Facility.
Switching to production of the motor gasoline Regular-92
and the diesel fuel of the emission standard-5 resulted in
benefiting from a lower excise tax assessment and addi-
tional profit on petroleum product sales in 2014.
95,17%
Associated Petroleum Gas
Utilization Ratio
Gas Processing Capacity
In 2014, the associated petroleum gas was gathered in
the amount of 883,6 mln. m3, which grew by 18,8 mln.
m3 compared with 2013. The associated petroleum gas
utilization ratio was 95,17%. The associated petroleum
gas volumes delivered to the Gas Processing Plant in 2014
totaled 795 mln. m3, which rose by 21,1 mln. m3 compared
with 2013.
The Natural Gas Liquids (LNGs) at the Integrated Oil
Treatment Facility were processed in the amount of 276,5
thousand tonnes. In 2014, the sour gas processing volume
was higher with 135,4 mln. m3 of sour gas delivered for
treatment (higher 10,0 mln. m3 against 2013).
Tatneftegazpererabotka Division (UTNGP) output of
finished products over period from 2013 through 2014
Product
Stripped gas
Liquid products, total
Liquified gas, including:
Propane fraction
Isobutane fraction
Normal-butane faction
Isopentane fraction
Stable natural gasoline
Ethane
Sulphur
Nitrogen
Oxygen
Unit of
measure
mln.m3
ths. t
ths. t
ths. t
ths. t
ths. t
ths. t
ths. t
ths. t
ths. t
2013
Output
2014
Output
275,350
262,657
597,568
661,495
414,438
440,01
245,700
264,925
46,272
47,647
122,466
127,438
22,443
21,273
205,893
200,212
160,687
171,061
4,908
5,918
ths. m3
833,794
1 069,732
306,816
321,12
In 2014, the works commenced to implement the Project
for construction, upgrading and re-equipment of UTNGP’s
facilities. Currently, the raw gas compressor unit is under
reconstruction and the off-site flaring system is being built.
CRUDE
OIL DELIVERIES
PETROLEUM
PRODUCTS SALES
32 33
The crude oil produced by the Company was sold on three
end markets such as the Russian market, far abroad and
near abroad markets. The oil continues to be exported to the
far-abroad countries as a usual delivery destination where was
supplied 8 373,9 thousand tonnes of crude oil that was 33,1%
of the total oil sales across JSC TATNEFT. The major oil sup-
plies to the domestic market were intended to provide the ad-
equate feedstock for the refineries of TANECO and TAIF-NK.
JSC TATNEFT Oil Supply Distribution
/Main Crude Oil Shipping Destinations/
for period from 2012 through 2014 (thousand tonnes):
Description
Far Abroad Export
Near Abroad Export
Russian Refineries
including:
2012
2013
2014
11 759,6
11 275,4
618,1
1 053,8
8 373,9
1 279,1
13 184,7
13 408,9
15 611,9
Refinery TAIF-NK PSJC
OJSC TANECO
OJSC Moscow Oil Refinery
JSC Ryazan Oil Refining Company
JSC Slavneft-YANOS
OAO LUKOIL-NORSI
JSC Novoshakhtinsk RFP
Other supplies
5 789,0
7 000,0
5 367,0
7 674,8
6 196,5
8 395,4
50,0
99,9
79,9
99,3
64,1
2,6
81,0
23,5
-
173,4
52,7
36,4
30,0
-
42,9
549,5
396,1
1,5
In 2014, JSC TATNEFT treated and transferred to the trans-
portation system 25 617,9 thousand tonnes of hydrocarbon
resources. 25 283,8 thousand tonnes were delivered to the
consumers. Apart from its own resources the Company sold
in 2014 through the Crude Oil and Petroleum Product Depart-
ment 2 084,7 thousand tonnes of oil produced by the inde-
pendent oil companies (IOC), including export (Far Abroad
and Near Abroad) – 483,9 thsousand tonnes and domestic
market (Russian Refineries) – 1 600,8 thsousand tonnes.
In 2014, outside the Republic of Tatarstan the resources pro-
duced by the oil companies where Tatneft held interests in the
Orenburg and Samara regions were sold in the quantity of 17,5
thousand tonnes bypassing the JSC Transneft’s system.
2014 TANECO Complex Petroleum Products Sale
(thousand tonnes)
Product Description
LNGs
Straight-run gasoline
Stable natural gasoline
Visbreaker naphtha
Diesel fuel
Heating kerosene
Home heating oil
Kerosine-gasoil fraction
Low-viscosity marine fuel
Vacuum gas oil
Furnace fuel oil (mazut)
Visbreaker tar
Granulated sulphur
EXPORT
(Near
Abroad, Far
Abroad)
-
-
1615,4
60,43
174,33
2,98
-
-
218,97
516,5
1495,22
49,15
2014
Domestic
Market
168,8
804,1
197,3
46,6
2403,4
0,2
351,7
297,1
0,4
Republic of Tatarstan Petrochemical Complex Gas
Product Supplies over period from 2013 through 2014
(thousand tonnes)
Product Description
Isobutane
LNGs of UTNGP
Ethane
LNGs of OJSC TANECO
Propane
2013
21,2
6,2
160,7
104,7
11,8
2014
39,02
0
171,06
168,8
4,0
2014 Tatneftegazpererabotka
Gas Products Sale (thousand tonnes)
Product Description
Stable natural gasoline
Propane fraction
Isobutane fraction
Normal butane fraction
Liquefied gas GOST 20448-90
Liquefied gas (through AGZS* No. 274G)
Isopentane fraction
Commercial sulphur, including
EXPORT
(Near
Abroad, Far
Abroad)
Domestic
Market
198,93
138,15
80,65
93,81
-
-
12,01
-
-
-
-
9,83
39,02
-
16,06
140,28
9,4
5,85
5,76
0,09
The liquefied gas in the volume of 5.7 thousand tonnes was
supplied to the population of the Republic of Tatarstan for
household needs.
JSC TATNEFT CRUDE OIL SUPPLIES
56,2%
43,8%
66,9%
33,1%
The main volumes
were sent
to TANECO and
TAIF-NK refineries
in lumps
in flakes
2013
2014
Far Abroad Export
Domestic Supplies & Near Abroad Export
*AGZS – autogas (LPG) filling station
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
PETROCHEMICAL BUSINESS
34 35
The Petrochemical Complex of the Company consists of the
carbon black and tire manufacturers. The Complex incorpo-
rates the following enterprises: JSC Nizhnekamskshina, OOO
Nizhnekamsk Truck Tire Factory, OOO Nizhnekamsk SSC Tire
Factory, OOO TATNEFT - Neftekhimsnab, OOO KAMA Trading
House, JSC Nizhnekamsktekhuglerod, JSC Nizhnekamsk
Mechanical Plant, JSC Yarpolimermash - TATNEFT, OOO En-
ergoshinservis, OOO Kama Scientific & Technical Center. The
Company runs and manages the business segment through
OOO TATNEFT-Neftekhim Management Company.
In 2014, the Company invested 525 million rubles to de-
velop the Petrochemical Complex.
Tire business
In terms of tire output volume, the Company’s tire manu-
facturing complex has a significant share in the Russian tire
production business and supplies its tires to the domestic
automakers such KAMAZ, GAZ, AVTOVAZ as well as to the
vehicle assembling plants of Volkswagen, Fоrd and other
foreign carmakers. Every fifth car owner in Russia chooses the
tires of KAMA or KAMA EURO brands. JSC Nizhnekamskshina
completed the static imbalance line reconstruction project as
well as purchased a green tire painting machine and dynamic
imbalance machine.
Key Performance Indicators
Performance Indicators
Tire output, total, mln. pcs.
Tire sales, total, mln. Pcs
Carbon black output, ths. Tonnes
Sales revenues, bln. RUR
In 2014, the tire works of the Complex manufactured 11,64
million tires, including 745,09 thousand advanced solid steel
cord tires (SSC-tires). In 2014, 59 tire commodity items (new
products) were developed and launched into manufacturing
production, including 6 SSC-tire commodity items (new prod-
ucts). The innovative product share in the overall tire produc-
tion output accounted for 49,9%. The overall tire sales totaled
more than 12,13 million tires making 2,4% increase over 2013.
2014
11, 64
12,1
120,5
34,78
In 2014, the commodity output manufactured by the enterpris-
es of the Petrochemical Complex totaled 37.62 billion rubles.
The sales revenue amounted to 34.78 billion rubles in 2014
with 3.2% increase over 2013.
OOO KAMA Trading House is the main distributor of the petro-
chemical complex of the Company.
2014 Tire Sales across End Markets (thous. pcs.)
Carbon black production
In 2014, the carbon black was produced in the amount of
120,5 thousand tonnes, that was up 10.6% over 2013. The
sales revenues in 2014 rose by 12.3% and amounted to
3.67 billion rubles. The product range includes 14 grades of
carbon black with 6 grades manufactured as high produc-
tion volume products.
The investment program continued modernization of the
carbon black production facilities.
The products manufactured by the Nizhnekamsktekhugler-
od plant are of a high quality and competitive with the same
products of foreign manufacturers and exported to Poland,
Bulgaria, India, Indonesia, Turkey and Hungary.
The carbon black sales realized by the KAMA Trading House
amounted to 55,920 tonnes at year-end 2014. 75% of sales
accounted for exports. The geography of the carbon black
supplies expanded into 16 countries in 2014.
End Market
Russian primary market (automakers)
Russian after-market
Export
2014 г.
2,4
7,1
2,6
TIRE VOLUMES DELIVERED TO MARKETS IN 2014
78%
Domestic Supplies
Global export
supplies – 47 near
and far abroad
countries
22%
Far and near
abroad export
The integrated control center was set up to control automatic
filling stations. Thirty seven filling stations were converted to
automatic/semiautomatic operation.
The retail sales network is managed through an effective
quality control system for the petroleum products using
high-end technologies and equipment. Reconstruction of
two oil storage facilities and retrofit of another two oil
storages was completed.
In 2014, the retail sales network was being provided with a
highly competitive product such as the standard 5 diesel fuel
with improved performance. The diesel produced in Nizh-
nekamsk passed through the comprehensive tests such as
bench tests and running trials, including those run by the
central laboratory of fuels and oils at the «KAMAZ» Research
and Development Center.
The engine, which ran on the TANECO diesel fuel, as com-
pared with its rivals showed higher net engine power and
torque as well as lower fuel consumption.
The installation of vapour recovery units (VRU) at the filling
stations and tank farms of the Company made it possible to
reduce the loss of petroleum products as a result of «natural
breathing» of the tanks and significantly improve the environ-
mental situation around filling stations and tank farms. In 2014,
the revenues from sales of related products and services in
the filling stations amounted to 1, 248 billion rubles, which was
up 22% over 2013. The Company plans to further develop the
associated services, expanding its marketing offers for
additional services and customer support programs to
improve the quality of service and increase revenues.
The Company looks upon the effective means of interaction
with customers as a significant tool for improving competi-
tiveness. The automated system for customer care enables
to immediately respond to the requests thereby raising the
level of quality assurance of the Company’s retail business
operations.
The customer portal www.azs.TATNEFT.ru contains the full
information on the retail sales network of
the Company. There is a customer service hotline in place.
Moreover, there is a mobile application to get information on
the nearest filling stations, fuel prices and additional services.
Over the year under report, 3 034,2 million rubles were spent
for the investment program to develop
the TATNEFT marketing infrastructure.
Petroleum product sales through retail filling
station chain
Petroleum product sale volumes
Performance Indicators
2014 г.
tonnes
thousand RUR*
Russian Federation, including:
1 978 566
Oil products
Gas products
Ukraine, including:
Oil products
Gas products
Belarus, including:
Oil products
Gas products
Total
* including taxes
1 830 803
147 763
64 695
56 831
7 864
15 600
15 600
-
65 591
61 998
3 593
3 391
3 075
316
680, 3
680,3
-
2 058 861
69 662
JSC TATNEFT’s network of filling stations encompasses 24
regions within the Russian Federation, Belarus and Ukraine.
The TATNEFT-branded filling station chain consists of 667
facilities located in Russia and CIS with 543, 111 and 13 stations
located in Russia, Ukraine and Belarus, respectively.
In 2014, 18 new filling stations with 3 autogas (LPG) fueling
terminals and 15 autogas fueling terminals at the operating
filling stations in the Russian Federation were placed into
service. The main benefit of the LPG fuel is that the Company
produces its own feedstock at the Minnibayevsky Gas Pro-
cessing Plant. Ten filling stations were revamped. Two multi-
purpose motorway service areas of the TATNEFT filling station
network came on stream in the Voronezh region.
GROWTH TREND OF PETROLEUM PRODUCT SALES
THROUGH TATNEFT-BRANDED FILLING STATION CHAIN
(THS. TONNES )
64,7
15,6
1 978,6
1900
1600
1300
61,8
9
,
8
5
0
2
:
l
a
t
o
T
5
,
4
6
6
1
:
l
a
t
o
T
12,4
1 590,3
In Russia
In Belarus
2013
2014
In Ukraine
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
HEAT-AND-POWER ENERGY SECTOR
During the year under the report the Company continued to
develop its heat–and-power energy sector, which includes
the following enterprises: TATNEFT-Energosbyt Management
Company, Nizhnekamsk CHP and Almetyevsk Heating Net-
works, by implementing the generating capacities moderni-
zation program using effective and innovative technologies
and advanced equipment and facilities.
The long term sector development provides for power and
heat generating for the Complex of the TANECO Refinery,
Nizhnekamskshina, NZSH SSC plants as well as oil produc-
tion and other industrial facilities and utilities. With the heat
and power energy generation, including minor energy, the
Company will be able to ensure the secured and uninterrupt-
ed heat and power energy supply to its own production facili-
ties as well as external customers while reducing significantly
heat and electricity procurement costs.
Nizhnekamsk CHP
Currently, the Nizhnekamsk CHP reconstruction program with
the installation of low-grade steam turbines is moving ahead.
The Nizhnekamsk CHP reconstruction investments totaled
4577 million rubles in 2014. In December 2014, the works at
the first starting complex facilities including extension of the
main building, construction of the circulating pump station,
two natural draught cooling towers and two fan coolers were
completed. In 2014, most of the design and survey work as
well as the construction and installation operations were fin-
ished; also, the equipment was installed. The contracts were
concluded to carry out start-up and commissioning opera-
tions. JSC TATNEFT operates as a general contractor in the
reconstruction of the power boilers required for combustion of
petroleum coke from the delayed coking unit. The solid petro-
leum coke is expected to be used as a fuel for power energy
generation at the Nizhnekamsk CHP.
In 2014, the electric power was generated in the quantity of
1 332,8 mln. kWh. As compared with 2013 the total power
generation was up 0.7%. Company’s own electric power
consumption amounted to 170 mln. kWh., with 1 162,8
mln. kWh sent to the grid. In 2014, the thermal energy was
delivered in the amount of 3928 thousand Gcal. In 2014, the
achieved results by per unit indicators were good:
• the specific fuel consumption for power generation was
303.0 g/kWh, that was lower than normative standard
for 1.3 g/kWh;
• the specific fuel consumption for heat energy was
141.8 kg/Gcal, which was lower than the standard for
0.3 kg/Gcal.
Thanks to the lower specific fuel consumptions against the
normative standards 2,651 tonnes of fuel were saved in 2014.
The revenues from main product sales totaled 4 475,4 mln.
rubles. The gross revenues from heat energy sales amounted
to 2 547,3 mln. rubles. (56.9% of revenues from main product
sales), including:
• heat energy sales - 2 364,6 mln. rubles;
• heat-carrier sales - 182,7 mln. rubles
The gross revenues from the electric energy and power
sales on the wholesale electricity and power market
amounted to 1 928,1 mln. rubles. (43.1% of revenues from
main product sales), including sales of electricity pur-
chased for non-regulated contract supply, including:
• electricity sales - 1 547,2 mln. rubles
• power sales - 380,9 mln. rubles.
In 2014, Nizhnekamsk CHP delivered the steam of 13
atm-626,992 Gcal to TANECO in the amount of 393 608.1
thousand rubles with the steam of 140 atm-527,958 Gcal
amounted to 360 037.5 thousand rubles.
In 2015, the facilities of the second starting complex are
planned to be completed and in particular the low-grade
steam turbine to be put into operation and construction of
the high-voltage equipment installation to be finished.
Almetyevsk Heating Network
The heat generation amounted to 767.26 thousand Gcal at
year-end 2014. The thermal energy was sold in the volume of
648.3 thousand Gcal. In 2014, the construction and installation
and start-up works were completed to bring a mini heat-and-
power plant into operation, which enabled the Company to
use the generated electricity for its own needs.
Heat Sales for JSC Almetyevsk Heating Netwoek
(thousand Gcal)
Consumer Group
Publicly funded institutions
Population
Other
JSC TATNEFT’s enterprises
2012
94,9
2013
94,3
2014
97,8
475,5
429,6
465,2
73,7
4,2
73,0
6,1
79,2
6,1
TOTAL:
648,3
603,0
648,3
36 37
ENERGY EFFICIENCY
Improving energy efficiency is a strategic priority for the
Company aimed at reducing its operating costs and as the
result the cost of the end products.
JSC TATNEFT Energy and Resource Efficiency Pro-
gram for period up to 2020
Under the current circumstances where the natural mo-
nopolies keep on raising their tariffs for energy resources
and transportation services and where hydrocarbon lifting
cost goes up due to tightening of the subsoil use regula-
tions, the Company is making every effort to accumulate
maximum reserves for saving in all areas of its business
activity, including energy saving.
Company’s need in fuel and energy dropped
4,4%
The Company paid particular attention to the initiatives for
implementation of energy saving technologies and use of
renewable energy sources.
The TATNEFT-branded filling station network grew steadily
thanks to the advanced resource and energy saving technolo-
gies as well as the modernization of the filling stations.
42 filling stations are furnished with pellet boilers.
The corporate program of energy and resource efficiency
for the period up to 2020 provides for the focused activi-
ties to accumulate maximum reserves for savings in all
lines of business, including energy saving.
The program envisages a step-by-step reduction of the
overall fuel and energy consumption of through two-phased
implementation of the program activities. By 2020, the fuel
and energy consumption is planned to be cut down 13.5%
compared with 2007 (the program beginning year).
JSC TATNEFT Fuel and Energy Consumption
Descrption
Thermal energy, total
including industrial consumption
Boiler and furnace fuel, total
including industrial consumption
Unit of
measure
2014
Gcal
Gcal
Toe
Toe
878 583
828 849
268 470
267 982
Electric energy, total
mln. kWh
3 759,3
including industrial consumption
mln. kWh
3 743,2
The program involves 25 entities of the TATNEFT Group.
The program accomplished 646 action items, of which
270 measures were performed to save energy. In 2014,
the program actions executed for resource conservation
made it possible for the Company to bring its fuel and
energy requirement down 4.4%.
The design works commenced to put in place the auto-
mated energy accounting system at the enterprises of the
JSC TATNEFT’s Petrochemical Complex.
The savings gained from the measures focused on reduc-
ing consumption and rational use of material and natural
resources amounted to 6.1 bln. rubles at year-end 2014.
The funds were used to offset the additional costs associ-
ated with sustaining the economically viable oil production
of the Company in the context of high depletion rates of
the oil fields.
The Company’s contribution to the energy efficient pro-
duction development was awarded by the government.
Motor gasoline
Fuel diesel
GAS
tonnes
2 743,6
tonnes
1 932,4
tonnes
70,8
2014 ENERGY & RESOURCE EFFICIENCY PROGRAM
PERFORMANCE
646
measures
270
6,1
RUR bln.
saved due to efficient
use of material and
production resources
measures to save
electric power
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
ENSURING INDUSTRIAL AND ENVIRONMENTAL SAFETY
ENVIRONMENTAL CONTROL
The Company’s health, safety and environment activities
are carried out in accordance with the international envi-
ronmental standards ISO 14001: 2004 and occupational
health and safety OHSAS 18001: 2007 within the frame of
the integrated health, safety and environment management
system.
In order to comply with the requirements of the international
standard OHSAS 18001 the Company developed the JSC
TATNEFT Health, Safety and Environment Program (the
action plan) to prevent injuries, reduce risk, accidents and
contingent losses for period of 2013 to 2015.
The program is focused on protecting life and health as
well as improving working conditions, reducing accident
rate and significant industrial risks, enhancing safe opera-
tion of equipment and improving fire safety condition of the
Company’s facilities. Around 7 billion rubles are planned
to be spent to implement the activities of the Program. In
2014, the JSC TATNEFT’s divisions spent more than 3.4
billion rubles.
Main focus areas of the Health, Safety and Environment
Program (the action plan) to prevent injuries, reduce
risk, accidents and contingent losses for period
of 2013 to 2015.
Industrial Safety Management System
The JSC TATNEFT industrial safety system is organized in
accordance with the Federal Law «On industrial safety of
hazardous industrial facilities», «Rules on the organization
and implementation of industrial control for compliance with
requirements of industrial safety at hazardous industrial fa-
cilities» and other industrial safety regulations of the Russian
Federation.
The industrial control is the key element of the integrated
health, safety and environment management system. Its
aim is to prevent accidents and incidents and to ensure
preparedness of the TATNEFT’s divisions to respond to
emergencies and eliminate consequences of accidents
and incidents at hazardous industrial facilities through
implementation of complex of organizational and techni-
cal measures.
There is the Occupational Safety and Health Department
including the Industrial Safety Group functioning in JSC
TATNEFT. The Regulation on industrial control over compli-
ance with industrial safety at JSC TATNEFT’s hazardous
production facilities is in effect, which provides for the key
specialists and employees from the production and tech-
nical services and departments to implement preventive
measures.
In 2014, there was no fire in the Company.
The JSC TATNEFT environmental safety activity is carried out
in accordance with the requirements of the federal laws and
complies with all applicable environmental rules and regula-
tions taking into account the international, federal and regional
regulation requirements, internal regulatory documentation
including the JSC TATNEFT Health, Safety and Environment
Policy and the JSC TATNEFT Environmental Program for the
period from 2000 to 2015. JSC TATNEFT sticks to 15 precau-
tionary principles of the Declaration adopted by the UN Confer-
ence on Environment and Development in Rio de Janeiro on
3-4 June 1992.
The Fundamental Principles of the JSC TATNEFT Health,
Safety and Environment Policy are as follows:
working conditions and healthy environment;
• recognizing the constitutional right of people to safe
• industrial and environmental safety priority as an inte-
• energy saving and rational use of natural resources dur-
• managerial and investment decision-making based on
ing oil production operations;
gral part of national security;
multi-optional scenarios, taking into account the priori-
ties of industrial and environmental safety;
• giving priority to preventive measures over the response
actions to eliminate negative environmental impacts.
The Deputy General Director for Operations – Chief Engi-
neer of JSC TATNEFT is in charge of Company’s environ-
mental activities, which are carried out by the Corrosion and
Environmental Control Technological Department.
38
38 39
38
ENVRONMENTAL CONSERVATION SYSTEM
In 2000, the third environmental program up to 2015 was
drafted and adopted in order to sustain the state of the en-
vironment within JSC TATNEFT’s region of operations at the
normative acceptable level corresponding to self-regeneration
potentials of natural ecosystems.
JSC TATNEFT sets the following goals and objectives:
• ensuring safe working conditions, protecting health of
workers and people living in the areas of the Company’s
operations;
• improving industrial and environmental safety of hazard-
• reduction of negative impacts on the environment by
ous production facilities;
implementing new advanced technologies, equipment,
materials as well as improving process control quality;
• prevention of making of unjustified wastes in technologi-
cal processes of oil production and related operations
with environmentally safe handling of wastes and their
maximum use as a secondary raw material;
• rational use of natural resources and minimization of oil
and gas losses
Certified in 2006, the JSC TATNEFT Integrated Health,
Safety and Environment Management System (hereinaf-
ter– ISM HSE OS) successfully passed through the re-cer-
tification audit in 2012, the compliance audits in 2013 and
2014 for compliance with the international standards ISO
14001:2004 and OHSAS 18001:2007. The audit was carried
out by the specialists of ZAO Bureau Veritas Certification
Russia.
The Company uses a methodology of «sequential proce-
dures» as per the standard ISO 14001:2004, which the JSC
TATNEFT environmental management system is certified for
compliance therewith.
.
Focus Area
Decommissioning, renewal, reconstruction,
modernization of facilities, technological
equipment, technical devices and alarm
warning and protection facilities
Diagnostics, service and preventive
maintenance
Advanced and safe technology application
Construction and expansion of amenities
and other utility facilities
2014 Amount,
thous. RUR
2 505 016,2
616 196,8
48 443,7
43 021,6
COMPANY’S FIRE STATISTICS
FOR 2010 TO 2014
Item
No.
1.
2.
3.
4.
5.
6.
7.
8.
Furnishing workers with personal protective
equipment
102 677,7
1,0
Training and skills development
Industrial safety and health activity
improvement
Hazard and risk management, prevention
of injuries, reduction of accidents, risks and
contingent losses
69 680,7
876,0
23 236,9
0
2010
2011
2012
2013
2014
The TATNEFT Company has been implementing the consistent program activities to protect the environment. The environ-
mental programs such as “Ecology – 1990-1995” and “Environmental security in oil production operations in the southeast of
the Republic of Tatarstan - 1995-2000” were successfully accomplished. As a result, the ecological situation in the region was
managed to have restored to the state that had existed before the oil field development started. Currently, the Environmental
program for the period 2000 to 2015 is being put into life.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
The JSC TATNEFT industrial environmental monitoring sys-
tem is implemented in the following areas:
Use and monitoring of water bodies
Industrial Environmental Monitoring
The following sequence of procedures is established in JSC
TATNEFT in the process of environmental management:
• preparation of the original environmental management
• identification of environmental aspects for all the Com-
reporting under a uniform form;
pany’s activities under the same methodology and making
a ranked list of significant environmental aspects;
• identification of current environmental commitments and
development of measures to mitigate the impact on the
environment;
• setting target and planned environmental performance
indicators which specify the current environmental com-
mitments;
• analysis and evaluation of environmental performance;
• identification of ways and possibilities to improve environ-
mental performance and further reduce the impact on the
environment.
In order to further improve the industrial environmental
monitoring in 2014 JSC TATNEFT developed and put in
place the following standards of organization:
• Regulation on industrial control for environmental
protection (industrial environmental monitoring) in JSC
TATNEFT (STO TN 128-2014);
• Procedure for industrial control for air protection in JSC
• Regulation on water use compliance in JSC TATNEFT
TATNEFT (STO TN 129-2014);
(STO TN 132-2015).
QUANTITY OF NATURAL WATER ANALYSES
PERFORMED IN 2014.
ronment protection;
impact and environmental setting,
• taking measurements and samples related to the envi-
• maintenance of databases of sources of environmental
• processing and analysis of data obtained;
• determination of impact source conformity with environ-
• analysis and forecast of the environment conditions in
• development of the industrial environmental monitoring
mental requirements;
the region;
system in new operating areas.
The industrial environmental monitoring system provides
the following types of monitoring:
• Laboratory and instrumental monitoring of sources of
environmental impact (emissions and discharges of pol-
lutants and waste waters);
• Laboratory and instrumental monitoring of condition of
the environment components (air, surface and under-
ground waters, lands and soils, geological environ-
ment);
• A two-level supervisory control of compliance with envi-
ronmental legislation.
Biodiversity and ecosystem productivity
There is an extensive network of specially protected natural
areas (PAs) of zoological, entomological, botanical, hydro-
logical and geological profiles to save the species diversity
and productivity of ecosystems within the Company’s
operating area.
DRAINAGE WATER DISPOSAL INTO SURFACE
WATERS (THOUS. M3)
490
500
450
450
450
110 000
natural water
analyses
400
300
200
100
0
202
236
115
94
2011
2012
2013
2014
Specified standard for drainage water discharge
into surface water bodies
Drainage water volumes discharged into surface water bodies
12 322
analyses
performed by
chemical analytical
laboratory of OOO
UPTZH dlya PPD
40 41
products in dissolved and emulsified state in the major rivers
and in the vast majority of the springs did not exceed maxi-
mum permissible concentration (MPC) of harmful substances
in the fishery water bodies and sanitary-hygienic norms of
MPC. Now the concentrations of these harmful substances
are steadily lowering in the groundwaters.
The Company’s water resources are primarily supplied by a
transit flow of the Kama River. The surface waters of the Rivers
of Kichuy, Ik, Sheshma, Steppe Zai are used as secondary
water sources.
The company uses water in compliance with the Water Code
of the Russian Federation and the Federal Law «On Subsoil».
In 2014, the use of surface water bodies was carried out on
the basis of 10 water use agreements concluded with the
Ministry of Ecology and Natural Resources of the Republic of
Tatarstan, and 7 decisions on granting of surface water bodies
for use. JSC TATNEFT produced groundwater in 2014 on the
basis of 49 subsoil use licenses. By implementing EOR and
water resources rational use technologies, the amount of fresh
water intake for reservoir pressure maintenance (RPM) for the
period from 2000 to 2014 decreased by 16 mln. m3. Moreover,
100% produced water during oil production and oil treatment
operations is re-injected into reservoir.
The volume of water utilized in 2014 for JSC TATNEFT’s own
needs amounted to 28,864 mln. m3, including fresh water in
quantity of 28,274 mln. m3. The specific amount of fresh water
consumption per tonne of crude oil production amounted to
1,078 m3 (1,077 m3 in 2013).
Use and monitoring of land resources
The area of the land allotted to JSC “TATNEFT” for its
production facilities from agricultural lands and forest
resources covers 32.2 thousand hectares. The main area
is occupied by the lands with black earth soil and gray
forest soil types, which do not tend to compaction and
2010
2011
2012
2013
2014
31,2
29,6
30,0
28,7
28,9
30,8
29,2
29,7
28,1
28,3
The operating area of the Company is located within the
basin of the Kama River and its tributaries. The southern
part of the operating area adjacent to the Samara region is
confined to the basin of the Volga River (The Bolshoi Cher-
emshan River). Moreover, the Upper Permian strata contain
significant fresh groundwater reserves used by local people
as drinking water. There is a network of local observation
points to monitor water bodies in effect within the JSC
TATNEFT license areas. The observation system currently
consists of 2688 sampling points. This includes 564 obser-
vation points to monitor surface water bodies (rivers, water
reservoirs) and 2 124 observation points for underground
water bodies (springs, artesian wells, water wells).
Industrial environmental monitoring of water bodies is car-
ried out by 12 chemical analytical laboratories owned by the
structural units of the Company, as well as the laboratories of
other organizations: OOO UPTZH dlya PPD, the Federal State-
Funded Healthcare Institution “Hygienic and Epidemiological
Center in the Republic of Tatarstan”, the Federal Budgetary
Institution branches of the Centre of Laboratory Analysis and
Technical Metrology for the Volga Federal District. Water
analysis is conducted to check the following parameters,
which are typically influenced by oil production: chloride ion,
sulfate ion, total hardness, hydrocarbonates, pH, calcium,
anionic surfactants (surfactant), and crude oil and petroleum
products in dissolved and emulsified state.
The Company with the efforts of its divisions cleared, captured
and architecturally rehabilitated more than 500 spring sites
within its operating area. In 2014, for the nineteenth consecu-
tive time since 1995 JSC TATNEFT had organized and held the
annual contest “Maintaining beauty of landscaped spring sites
and improving water quality”.
Based on the results of laboratory studies, in 2014, the water
quality in major rivers within the area of the Company’s opera-
tions was stable. The content of chlorides, crude oil and oil
WATER RESOURCES USE BALANCE, mln. m3
Performance Indicators
Total water volume withdrawn for Company’s own needs, total
including fresh water withdrawal
of which water withdrawn from natural sources at own water intake facilities
29,1
26,4
27,0
2,3
2,0
Fresh (clean) water used for reservoir pressure maintenance
Fresh (clean) water used for production needs
23,1
23,4
23,0
21,6
22,2
6,8
4,7
5,7
5,7
5,8
Volume of produced and waste water recycled for reservoir pressure maintenance operations
128,3
129,7
130,4
133,2
119,0
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
The air basin was analyzed for 33 ingredients (hydrocar-
bons, hydrogen sulfide, nitrogen dioxide, carbon monoxide,
etc.) with simultaneous meteorological observations by
measuring a wind speed and direction, temperature and
relative humidity.
Gross emission of harmful substances into the atmosphere
in 2014 totaled 92 302.838 tonnes, which was 564.95
tonnes less than in 2013. This is primarily due to the 2014
planned preventive maintenance and repair works at the
facilities of the Tatneftegazpererabotka Division in a smaller
scale as compared with 2013. Specific emissions over 2014
per tonne of crude oil production amounted to 3,520 кg
(in 2013 - 3,557 kg). As a result of the implementation of
air protection measures across the Company for the last
20 years, the total emissions of pollutants into the air from
stationary sources decreased by 1.4 times.
The applied technology to capture light hydrocarbon frac-
tions (vapour recovery units) decreased carbon emissions
by more than 1.9 times compared with 1991. Currently,
the Company operates 44 vapor recovery units. All pollut-
ant emissions into the air from the Company’s stationary
sources are within the established standards of maximum
permissible emissions.
Geological Environment Monitoring
In order to monitor the dynamic state of the geological en-
vironment within the area of the Company’s operations the
geodynamic test sites are created to study the intensity of
the latest movements of the regional, zonal and local levels.
structure deterioration. Water features, air and thermal
regime of these soils are not damaged. The land protection
measures provide for using modular build rigs equipped
with tank circulation systems with three-stage mud clean-
ing systems. This helps prevent liquid spillage on the land
surface and eliminate construction of earthen pits as well
as provides reliable protection of fertile lands in the well site
area against contamination from drilling fluids and forma-
tion waters.
In order to assess the state of the soil, sampling and chemi-
cal analysis was performed to determine the man-made
pollution of the soil by oil products and anions (chlorides,
sulphates, hydrocarbonates, carbonates), cations (Ca, Mg,
K + Na), pH and total mineralization. Evaluation of the re-
sults of chemical analyzes of soil samples for pollution by oil
products, anions, cations as well as pH and total mineraliza-
tion indicates the local character of soil contamination by
oil products, as a rule, in the parking areas for the special
transport vehicles to service the wells. Outside of these
areas the excess MPCs of chlorides were not recorded.
Based on many years of soil analyses it is observed that
there is a slight tendency to alkalizing of the soil and its pH
growth. The values of sulphfate concentration in the soil
remain mostly stable.
During the year under report, the extensive work was
carried out to reduce the agricultural land allotment for
construction of oil facilities and restore the fertility of the
disturbed land, which became possible due to pad drilling
and well pad construction. Currently, in JSC TATNEFT the
land allotment area for a well covers 0.23 hectares. In 2014,
there were no land contamination cases as a result of ac-
cidents in the area of JSC TATNEFT’s operations.
In 2014, 1,643 hectares of land were reclaimed during the
construction of pipelines and other oil facilities.
Air Quality Monitoring
While monitoring the compliance with the specified stand-
ards of maximum permissible emissions of pollutants
into the atmosphere, JSC TATNEFT took the instrumental
measurements from more than 250 stationary sources of
emissions and carried out about 1100 tests in 2014. The
atmospheric air was monitored in 111 inhabited loca-
tions within the area of the Company’s operations and the
sanitary buffer zones of 221 production facilities. 12716
tests were performed to determine the current state of the
atmosphere.
42 43
During 2014 a considerable amount of efforts was made to
improve reliability of various-application pipelines and well
design. To ensure a leak-free operation of oilfield facilities
the Company applies the technologies to:
lining and paint coating application;
• protect the pipes against corrosion by polyethylene
• manufacture pipes in corrosion-resistant versions;
• construct pipelines with effective internal and external
insulation and welding joint protection.
In order to protect the air, in 2014, 23.17 km of gas pipelines
were overhauled. Under the capital construction program
10.8 km of gas pipelines were built and put into operation.
In order to protect the land, surface and underground wa-
ters 135.60 km of oil pipelines and 148.45 km of water lines
were overhauled using corrosion-resistant pipes.
45 process tanks were lined with internal protection coat-
ing, including 11 vertical stainless steel tanks were lined
with sacrificial protection, 11 vertical stock tanks – with
cathodic protection and 23 horizontal flow settling tanks
were lined with sacrificial protection against corrosion. The
cathodic protection of the tank bottom from dirt corrosion
was applied to 21 vertical tanks.
In 2014, the specific amount of polluted waste water
discharged into surface water bodies per 1 tonne of oil pro-
duction amounted to less than 0,004 m3 (less than 0,005 m3
in 2013).
Environmental Protection Measures
• Implementation of the technology to capture light
hydrocarbon fractions (vapor recovery units), released
from storage tank equipment;
unit;
• Reducing flared associated gas volumes;
• Associated petroleum gas cleaning at desulphurization
• Repair and replacement of tanks and other storage tank
equipment and anti-corrosive coating application and
equipping with electrochemical protection means;
pipelines;
lating systems;
for collection and disposal of wastes;
zation of technological process and product streams;
• Overhaul and replacement of commercial oil and gas
• Reconstruction of oil treatment facilities with the optimi-
• Construction of storm water drain at industrial facilities
• Mud pit lining and equipping rigs with waterproof circu-
• Overhaul and replacement of oil pipelines and their
• Equipping well servicing and workover crews with spe-
• Monitoring production casings of wells for integrity and
• Sealing of production casings, bringing top of cement to
• Running in additional (intermediate) casings;
• Increase lifetime of downhole equipment using protec-
surface behind surface and production casings;
cial equipment to prevent fluid spills;
sacrificial and inhibitory protection;
behind-casing crossflows;
tive coatings, M1-X packers, sacrificial protection, cor-
rosion inhibitors, cathodic protection of casing wells.
A good deal of work was accomplished in order to protect
gas pipelines against corrosion including active electro-
chemical protection, delivery of corrosion inhibitors, use of
corrosion-resistant tubulars to replace gas pipelines as well
as repair (replacement) of worn out sections.
The results of large-scale environmental measures showed that in 2014 in the area of JSC TATNEFT’s operations the level of man-
induced impact on the environment did not exceed the self-regeneration potential of the ecosystems. That was evidenced by lower
concentration of pollutants in the air and underground and surface water sources. During the year under report, within the area of
operations the Company did not let a single man-made accident happen causing environmental damage.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
Reliability improvement of oilfield equipment
Oil Spill Emergency Prevention and Response System
Lower Greenhouse Gas Emissions
To ensure stable and trouble-free operation of the production
facilities while improving their industrial and environmental
safety the Company manufactured 1 213.7 km of corrosion-
resistant pipes (metal-plastic coated steel pipe and polymer
coated steel pipe) and 5 367.5 tonnes of corrosion inhibitors
in 2014. Cathodic protection was applied to the casing of 948
wells, 625.6 km of pipelines were furnished with electrochemi-
cal protection. The diagnostic examination was done in the
amount of 3 332.9 km of pipelines.
In order to protect gas pipelines against corrosion a good
deal of work was accomplished including active electro-
chemical protection, delivery of corrosion inhibitors, use of
corrosion-resistant tubulars to replace gas pipelines as well
as repair (replacement) of worn out sections. For the pur-
pose of protection of mineral resources and fresh ground-
water the Company continues installing highly reliable M1-X
packers and corrosion-resistant tubing. During 2014 M1-X
packers were installed in 508 injection wells, and since the
beginning of installation 4578 wells have been equipped
with them, which represents 65.2% of the operating stock
of injection wells. Corrosion-resistant tubing was used in
397 injectors. Since the beginning of implementation cor-
rosion resistant tubing was installed in 6727 injection wells
used in the flood pattern, representing 89.8% of the operat-
ing wastewater well stock.
In 2014, 1,183 km of tubing with P-EP-585 internal polymer
coating were manufactured. The new pipes were coated in
the amount of 1015 km and 167 km of tubing were recoated
after operation. The experimental work and field tests are
underway to select new coatings.
Due to the ongoing JSC TATNEFT efforts to improve the
oilfield facilities reliability the failure rate in the oil gathering
system in 2014 decreased by 20% compared with 2013.
The system of prevention and response to emergency situ-
ations (ES) due to oil spills, protection of people and the
environment from the harmful impact is implemented in JSC
TATNEFT in two focus areas: complex of engineering and
organizational measures, which are aimed at enhancing the
reliability of production equipment, timely detection of oil spills
and minimizing resulting damages as well as a set of meas-
ures aimed at immediate response to this type of emergency.
In order to prevent oil pollution of surface water bodies (rivers)
and water basins (reservoirs) in the working condition of about
600 stationary oil recovery facilities, booms and bio-ponds is
maintained.
Associated Petroleum Gas Utilization
For the purpose of rational use of valuable natural resource
such as associated petroleum gas (APG) JSC TATNEFT
implemented a special “Program for associated petroleum
gas utilization at the Company’s facilities for period of 2010
to 2014”.
At year-end 2014, the associated petroleum gas utilization
efficiency amounted to 95.17%.
The total expenditures for implementation of APG utilization
projects for the period 2008-2014 amounted to more than
4.2 billion rubles. Implementation of the planned activities
will allow to sustain the APG utilization efficiency at the rate
of not less than 95% across JSC TATNEFT as well as gain
additional fuel savings and profit from gas product sales.
In 2014, JSC TATNEFT produced 931 430 thousand m3 of
APG, collected and utilized 883636 thousand m3, flared
47,793 thousand m3 (including 2,778 thousand m3 flared
during Planned Preventive Maintenance at Gas Processing
Plant of Tatneftegazpererabotka Entity).
Oilfield Equipment Reliability Improvement Measures
Measure
Corrosion inhibitors production tonnes
Manufacture of metal-plastic coated pipes and polymer-coated pipes
(without tubing), km
Corrosion protection of vertical stock tanks and horizontal flow settling tanks
with paint coatings, m2
2009
2010
2011
2012
2013
2014
5 864
7 019,6
6 048,8
6 159,6
5 934,2
5 367,5
515
773
820,48
947,5
923,9
1 213,7
10 408
9 786
30 999
22 633
25 900
27 100
Casing cathodic protection,
1 169
917
912
1 023
986
948
44 45
Ecological Security and Environment Conservation
Expenditures
The JSC TATNEFT focus areas of operational costs and invest-
ments in environmental conservation, ecological security and
rational use of natural resources include:
• protection and rational use of water resources (waste water
treatment, garbage collection from rivers, installation of
water recycling systems in industrial facilities and areas,
construction of storm water sewer systems, treatment plants,
construction of required shoreline facilities near surface
watercourses and ponds);
• air protection (installation of vapour recovery units to capture
hydrocarbon vapours from different tank vessels; associated
petroleum gas desulphurization, check and adjustment sta-
tions to reduce vehicle exhaust gas, use of multiphase pumps
to transfer gas containing fluids);
scaping);
• protection and rational use of land (land reclamation, land-
• protection and rational use of forest resources;
• waste recycling and disposal;
• conservation of subsurface wealth and rational use of mineral
resources.
JSC TATNEFT’s total investments in environmental safety
activities by all sources of funding (operational costs, in-
vestments) in 2014 amounted to 6240 million rubles includ-
ing the investments assigned for environmental protection
and rational use of natural resources in the amount of 429
million rubles.
JSC TATNEFT recognizes the need to control over green
gas emissions and intends to conduct operations so that
the environmental impact could be minimized including
those related to the global climate change.
One of the most effective and efficient ways to reduce green
gas emissions is the operation of the vapour recovery units
installed at the Company’s tank batteries.
Recycling and utilization of industrial wastes
The man-induced impact on the environment is reduced
due to the selective accumulation, collection and disposal
of wastes generated in oil production processes.
The Company established a complex system for collection
and recycling of production and consumption wastes as
well as using them as a raw material for producing marketa-
ble products. The Company owns and operates three crude
oil sludge treatment installations for processing crude oil
sludges deployed evenly throughout the oil production
operation area.
The total amount of production and consumption wastes
generated in 2014 amounted to 75.3 thousand tonnes. The
specific waste volume generated in 2014 per 1 tonne of
crude oil was at 2.87 kg (2.66 kg in 2013).
The specific amount of funds allocated by the Company to ensure ecological security and environmental protection per
1 tonne of crude oil production amounted to 238 rubles (208 rubles in 2011, 230 rubles in 2012, 246 rubles in 2013).
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
46 47
CORPORATE
MANAGEMENT
Corporate management is in line with strategic
priorities of the Company and is aimed at achieving
quality results in production and economic activity,
ensuring financial stability and economic growth,
increasing investment attractiveness and the
Company’s shareholder value in the long term.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
MANAGING THE COMPANY
48 49
Corporate Management Соde
Company’s Management System
Management Bodies
The corporate management is based on main-
taining reliable and constructive interaction with
the Company’s shareholders and investors,
partners, public authorities, regional and local
governments, research centers and industry in
general, with the social environment. Following
the standards of corporate responsibility the Com-
pany is open to the fair dialogue with all Stakeholders.
The Company is introducing management standards, which
comply with relevant international norms and recommenda-
tions in all areas of activity. The Company cooperates on a
continuous basis with the Russian Institute of Directors and
the National Corporate Governance Council.
Corporate Management Priorities:
• Providing for efficient operation of the Company, including
an increase in the value of assets and increase of the Com-
pany’s financial stability and profitability, while maintaining
a high level of social responsibility;
• Ensuring professional and ethical responsibility of mem-
bers of the Board of Directors, the Executive Directorate
executive officers and employees of the Company;
• Ensuring transparency of the Company’s activities;
• Establishing mechanisms for the prevention and settle-
• Monitoring managerial and operational risks;
• Maintaining the Company’s high business reputation.
ment of corporate conflicts;
Corporate activities of the Company are regulated by legal
standards applicable to the stock market issuers and the
TATNEFT Company’s Code of Corporate Management, which
formed in accordance with the Civil Code of the Russian Fed-
eration, Federal Law «On Joint Stock Companies» and other
legal acts of the Russian Federation, Articles of the TATNEFT
Open Joint Stock Company, Corporate Management Princi-
ples of the Organization of Economic Cooperation and Devel-
opment (OECD), the Code of Corporate Management recom-
mended by the Bank of Russia Letter No. 06-52/2463 dated
Oct. 4, 2014, addressed to joint-stock companies operating
in the territory of the Russian Federation. The Code takes into
account the international and as well as national practice in
the area of Corporate Management, as well as the Company’s
experience accumulated since incorporation.
The Code reflects all basic rules relating to standards of Cor-
porate Management, business conduct ethics and corporate
social responsibility. Of fundamental importance in the Code is
the description of mechanisms of risk management, prevent-
ing and the settling of corporate conflicts and conflicts of inter-
est. The Company is devising corporate policies, standards
and regulations on the basis of the Code, as well as relevant
designing mechanisms to enforce them.
The Company is committed to the dissemination and intro-
duction of principles, rules and procedures of the corporate
management established by the Code on the Subsidiaries and
affiliates as well as enterprises forming the TATNEFT Group of
Companies.
JSC TATNEFT is the Group’s corporate center coordinating
the activities of enterprises, which form business segments
of the Company. The status of TATNEFT Group, forms of
management and the order of interrelations between the
parent Company and the Group members is regulated by
the Provision on TATNEFT Group approved by the Board of
Directors of JSC TATNEFT.
The organizational Management of the TATNEFT Group is
bases on a single mission and priorities of development while
respecting the interests of all fair participants of the Group. In
order to ensure unified management principles and transpar-
ency of subsidiaries and affiliates activities there are appro-
priate policies and regulations elaborated at the Company
that shape mechanisms of corporate relations.
Organization of managing subsidiaries and affiliates of JSC
TATNEFT is performed follows:
• in the event of prevailing participation in the authorized
capital of the companies through the managing bodies
of a subsidiary/ when there is an appropriate statement
made in the foundation documents;
• through Management Companies, which are part of the
Group, through the concluding agreements between the
Companies and other economic entities – participants
of the Group through the transfer of the Executive Direc-
torate functions to the Managing Companies.
• other ways provided by RF legislation.
The general meeting of shareholders is the highest manag-
ing body of the Company. The general meeting of share-
holders delegates general management of Company to the
Board of Directors. The main Company’s executive official is
the General Director of JSC TATNEFT. The collegiate execu-
tive body of the Company is the Management Board headed
by the General Director. The General Director and the Man-
agement Board are accountable to the Board of Directors
and the General Meeting of Shareholders.
Powers of by the activity and responsibility areas are distrib-
uted by the members of the Board of Directors and the Man-
agement Board, including General Director Deputies. A sys-
tem of motivating senior executive staff is applied to ensure
the Company’s effective Management. Current activities
of the Company are provided by executive staff’s services,
structural divisions, as well as by authorized representatives
in the managing bodies of subsidiaries and affiliates.
The Competence of the Company’s management bodies is
regulated by the following documents:
• Articles JSC TATNEFT;
• Provision on General Shareholders Meeting;
• Provision on Board of Directors;
• Provision on Management Board;
• Provision on General Director;
• Provision on Audit Commission;
• Provision on Committees of the Board of Directors.
Results of financial-economic activity of the TATNEFT
Group are reflected in the quarterly Consolidated reporting
standards IFRS, which allows shareholders and all inter-
ested persons to objectively assess the performance of the
Group.
General supervision over financial and economic activity of the
Company is carried by the Audit Commission. According to
the information available at the Company there is no conflict of
interests the interests of the members of the Board of Direc-
tors and the Executive bodies.
CORPORATE MANAGEMENT DEVELOMENT
CORPORATE MANAGEMENT INTERNAL EVALUATION
Since its incorporation the Company has been complying with all requirements and terms of stock market regulators and corporate
institutions. Qualitative development at Corporate Management Board in the Company began in the early 2000s, when the country
became successively formed system of national corporate standards as a prerequisite for the integration of the Russian equity in
global financial and stock markets. Company focused on the best experience of corporate relations in the international and na-
tional practice. Simultaneously Company shares personal experience and participate in the development of corporate standards in
the Russian corporate environment in order to develop the most effective approaches and standards.
Since its incorporation the Company has been complying with all requirements and terms of stock market regulators and corporate
institutions. Qualitative development at Corporate Management Board in the Company began in the early 2000s, when the country
became successively formed system of national corporate standards as a prerequisite for the integration of the Russian equity in
global financial and stock markets. Company focused on the best experience of corporate relations in the international and na-
tional practice. Simultaneously Company shares personal experience and participate in the development of corporate standards in
the Russian corporate environment in order to develop the most effective approaches and standards.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
GENERAL MEEETING OF SHAREHOLDERS
JSC TATNEFT’S BOARD OF DIRECTORS
50 51
General Shareholders Meeting is the supreme managing body the Joint Stock Company in accordance with applicable legis-
lation and Articles the Joint Stock Company.
The Joint Stock Company holds the Annual General Shareholders Meeting once a year, not earlier than two months and not
later than six months after the end of the fiscal year. In addition to the Annual General Shareholders Meeting there may be
extraordinary shareholders meetings convened. The Company shall offer shareholders the information on the agenda of
General Shareholders Meeting to the extent and in time to enable them developing a substantiated private position on the
agenda items and make a decision about participation in the meeting and the manner of such participation. Each shareholder
is entitled to participate in the meeting in person or through a proxy.
At the General Shareholders Meeting the shareholders receive from the Board of Directors and Executive Bodies a detailed
any and reliable report on the ongoing corporate policy, production and economic activities, achievements and plans of the
Company. The Company’s Board of Directors shall prepare reports for the shareholders on each agenda item, reflecting the
position as well as dissenting opinions of the Board of Directors members, if any were made.
The Shareholders decide on the most important aspects of the Company’s activity. Such matters as election of the Board of
Directors members, members of the Audit Commission, approval of the Company’s Auditor Opinion, approval of the annual
report, annual accounting (financial) statements, including the Report on Financial Performance of the Company, distribution
of profits, including payment of dividends for the financial year are mandatory for consideration. The Annual General Share-
holders Meeting may decide on other matters within its competence.
At the stage of electing the Board of Directors the Company shall provide shareholders with detailed information on biogra-
phy, experience Executive Body and skills of each candidate, and shall do is best to ensure personal presence of candidates.
Decisions on the agenda items of the General Meeting of shareholders shall be made by ballot voting in the manner pre-
scribed by the law and the Joint Stock Company’s Articles. The Company shall endeavor to eliminate any doubts about the
tally of votes. For this purpose, the Company shall provide for publishing the vote results on the official website of the Compa-
ny. The meeting decisions formulation shall necessarily indicate the majority of votes for taking decisions were with indication
of special opinions. The protocol authenticity is certified by the signatures of the Meeting Chairman and the Secretary of the
meeting. The General Meeting of shareholders was held on June 27, 2014.
Decisions Taken by the General Meeting of Shareholders:
• The annual report of the Joint Stock Company for 2013 was approved.
• The meeting approved annual financial statements, including profit and loss statements (profit and loss accounts) of the
• The meeting approved the distribution of profits for the financial year.
• Decision was taken to make a payment of dividends for 2013:
Joint Stock Company for 2013.
a) preferred shares JSC TATNEFT in the amount of 823% of the nominal value of the shares;
b) ordinary shares JSC TATNEFT in the amount of 823% of the nominal value of the shares.
in accordance with the current legislation. Dividend payment to be made in cash.
• Set July 16, 2014 as the date for defining persons entitled to receive dividends. Define the term of the dividends payment
• The JSC TATNEFT’s Board of Directors was elected.
• Members of the Joint Stock Company’s Audit Commisson were elected.
• JSC “Energy Consulting/Audit” was approved as JSC TATNEFT’s Auditor for the year for the statutory audit of the annual
• Changes and additions were introduce into to the Articles of JSC TATNEFT
financial statements for 2014, prepared in accordance with Russian accounting rules.
The Board of Directors is elected by the General Meeting of Shareholders and exercises the general management of the
company in the interests of its shareholders and investors. The Board of Directors is headed by the Chairman. The Board is
composed of 15 directors, including three independent directors*. Participation of the independent members in the work of
the Board of Directors maintains a balance between the interests of different groups of shareholders and contributes to the
objectivity of the decisions taken.
* The criteria for independence have been defined by the Listing Rules of CJSC “MICEX Stock Exchange”, operating since September 06, 2014.
The Board of Directors membership did not change during the reporting period.
Activities of the JSC TATNEFT’s Board of Directors are defined by applicable law, the Company’s Articles and the Provision on
the Board of Directors.
A key function of the Board of Directors of JSC TATNEFT is to determine the strategic areas and medium-term planning of
the Company’s operation, review and approval of annual priorities, evaluation of results and the current state of the business
projects. Upon recommendation of Executive Bodies the Board of Directors considers main results of financial and economic
activities of the Company; defines a list of transactions that may have an impact on results of operations, and oversees their
execution; it ensures elaboration and adoption of a comprehensive risk management system, as well as compliance with
internal control procedures; oversees the information disclosure of the Company’s activities. The Board of Directors shall
develop and approve a transparent assessment system of both the Board of Directors as a whole, and each member of the
Board of Directors individually and the system of remuneration and reimbursement of expenses related to the execution of
relevant functions by the Board of Directors members. It defines the requirements for candidates to the Board of Directors.
There were 13 meetings of the Board of Directors held during the year.
A list of Main Issues Discussed at the Board of Directors Meetings of in 2014
ment program for 2015.
the Annual General Meeting of shareholders jn the resuts of operation for 2013.
• On the Annual General Meeting of Shareholders of JSC TATNEFT on the results of 2013.
• About candidates to the Board of Directors, Revision Commission of JSC TATNEFT and proposals on the agenda items of
• On the financial performance of JSC TATNEFT for 2013.
• On the implementation of the JSC TATNEFT’s investment program of for 2013 on core activities.
• On the implementation progress of the JSC TATNEFT’s investment program of crude oil production in 2014 and the invest-
• On the status of introducing new technologies for the development and operation of the JSC TATNEFT’s fields.
• About the plans of crude oil production and geological/technical activities JSC TATNEFT for 2015-2016.
• About the development program of extra-viscous oil.
• On the state of geological study and performance of shale oil pilot projects.
• Progress in implementing programs to improve labor productivity in the oil industry.
• On the implementation of the third phase the resource saving program in JSC TATNEFT.
• On implementing the strategy and further development of the TANECO project.
• On the strategy of product portfolio and sales of the Company’s tire manufacturing complex products.
• Progress of the Nizhnekamsk CHP-2 reconstruction.
• On the results of the consolidated financial statements under IFRS for the TATNEFT Group of Companies for 2013.
• On the organization of work on the use of technology recovery and recycling of raw materials and equipment at JSC TATNEFT
• On resutns of operation of the Internal Audit Department for 2013 and approval of the Department’s plan of operations for 2014
• On approval of the organization standard “Anti-corruption policy JSC TATNEFT named after V.D. Shashin”.
• The effectiveness of financial and economic activities of subsidiaries and affiliates of JSC TATNEFT.
• On the implementation of projects of small and medium-sized businesses taking fiberglass plant in the SEZ “Alabuga”
operation as an example.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
COMPOSITION OF THE JSC TATNEFT’S
BOARD OF DIRECTORS
52 53
Rustam N.
MINNIKHANOV
Nail U.
MAGANOV
Nail G.
IBRAGIMOV
Mariya L.
VOSKRESENSKAYA
Radik R.
GAIZATULLIN
Sushovan
GOSH
Vladimir P.
LAVUSHCHENKO
Renat Kh.
MUSLIMOV
Chairman of the Board of
Directors of JSC TATNEFT
JSC TATNEFT’s Board of
Directors’ Member
First Deputy General
Director for Production –
Chief Engineer of JSC
TATNEFT since 2000.
JSC TATNEFT’s
Management Board
Member.
JSC TATNEFT’s Board of
Directors’ Member
First Deputy General
Director for Production –
Chief Engineer of JSC
TATNEFT since 2000.
JSC TATNEFT’s
Management Board
Member.
Independent Member of
the JSC TATNEFT’S Board
of Directors
Audit Committee Member
of JSC TATNEFT’s Board
of Directors
JSC TATNEFT’s Board of
Directors’ Member
Audit Committee Member
of the JSC TATNEFT’s
Board of Directors.
Independent Member of
the JSC TATNEFT’s Board
of Directors
Chairman of the JSC
TATNEFT’s Board of
Directors Audit Committee
Member of the JSC
TATNEFT’s Board
of Directors HR and
Remuneration Committee
JSC TATNEFT’s Board of
Directors’ Member
General Director Deputy
for Economics
Chairman of the JSC
TATNEFT’s Board of Direc-
tors Information Disclosure
Committee
JSC TATNEFT’s Board of
Directors’ Member
Born in 1957.
1978 – graduated from
Kazan Agricultural
Institute, specialty –
mechanical engineer.
1986 – Institute of Soviet
Trade.
Doctor of Economics.
1996-1998 – Minister of
Finance of the Republic of
Tatarstan.
From July 1998 till
March 2010 headed
the Government of the
Republic of Tatarstan.
President of the Republic of
Tatarstan since March 2010.
Born in 1958.
Born in 1955.
Born in 1955.
Born in 1964.
Born in 1957.
Born in 1949.
1983 – graduated from
Moscow Institute of
Petrochemical and Gas
Industry n.a. I.M. Gubkin.
From July 2000 to
November 2013 – the First
Deputy General Director –
Head of Crude Oil and
Petroleum Products
Sales Department of JSC
TATNEFT.
He was appointed General
Director of JSC TATNEFT
in November 2013.
1977 – graduated from
Moscow Institute of
Petrochemical and Gas
Industry n.a. I.M. Gubkin.
Doctor of Science,
Engineering.
First Deputy General
Director for Production –
Chief Engineer of JSC
TATNEFT since 2000.
Graduated from Moscow
Financial Academy
in1977. She has A US CPA
Certificate and she is a
certified Russian Auditor.
Director of Brentcross Ltd.
since 2004.
1985 - graduated from
Kazan Agricultural Institute
specializing in “Accounting
and business analysis in
agriculture”.
Doctor of Economics.
Head of the Ministry of
Finance of the Republic of
Tatarstan since June 2002.
Graduated from the
college of Queen Maria,
London University of
Electric and Electronic
Developments and
Institute of Accountants-
Experts in England and
Wales. Managing Director
of SGI Group Ltd. since.
1972. – from Moscow
Institute of Petrochemical
and Gas Industry n.a. I.M.
Gubkin.
1984г graduated the
postgraduate course of
VNIIOENG.
Doctor of Economics.
Deputy General Director
for Economics of JSC
TATNEFT since 1997.
Born in 1934.
1957 – graduated from
Kazan State University.
Doctor of Geological and
Mineralogical Sciences.
State Consultant
to President of the
Republic of Tatarstan on
development of crude
oil and gas fields since
June 2007, Professor of
the Crude Oil and Gas
Geology Chair of Kazan
State University.
Share in the Joint Stock
Company’s authorized
capital – none.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – 0.000176.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – 0.019749.
Portion of the Joint Stock
Company’s ordinary
shares % – 0.020806.
Share in the Joint Stock
Company’s authorized
capital – none.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – none.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – none.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – 0.045465.
Portion of the Joint Stock
Company’s ordinary
shares % – 0.048194.
Share in the Joint Stock
Company’s authorized
capital – 0.057136.
Portion of the Joint Stock
Company’s ordinary
shares % – 0.060445.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
COMPOSITION OF THE JSC TATNEFT’S
BOARD OF DIRECTORS (CONT’D)
Rinat K.
SABIROV
Valery Yu.
SOROKIN
Mirgaziyan Z.
TAZIYEV
Shafagat F.
TAKHAUTDINOV
Azat K.
KHAMAEV
Rais S.
KHISAMOV
René
STEINER
JSC TATNEFT’s Board of
Directors’ Member
JSC TATNEFT’s Board of
Directors’ Member
JSC TATNEFT’s Board of
Directors’ Member
JSC TATNEFT’s Board of
Directors’ Member
JSC TATNEFT’s Board of
Directors’ Member
JSC TATNEFT’s Board of
Directors’ Member
Member of the JSC
TATNEFT’s Board of
Directors Management
Committee.
Member of the JSC
TATNEFT’s Board
of Directors HR and
Remuneration Committee
Head of NGDU
“Almetyevneft” of JSC
TATNEFT
Advisor to Chairman of the
JSC TATNEFT’s Board of
Directors
Born in 1967.
Born in 1964.
Born in 1947.
Born in1946.
1986 – graduated from
Kazan State University.
General Director of JSC
Svyazinvestneftekhim
since 2003
1972 – graduated from
Moscow Institute of Petro-
chemical and Gas Industry
n.a. I.M. Gubkin.
PhD, Engineering.JSC
TATNEFT’s Board of Direc-
tors’ Member
Head of NGDU “Alme-
tyevneft” of JSC TATNEFT
since January 2005.
1971 - graduated from
Moscow Institute of Petro-
chemical and Gas Industry
n.a. I.M. Gubkin.
Doctor of Economics.
1999 till November 2013.-
General director of JSC
TATNEFT.
Starting November 2013-
Assistant to President of
the Republic of Tatarstan
on the oil industry issues,
Advisor to Chairman of
JSC TATNEFT’s Board of
Directors.
1991– graduated from the
physics faculty of Kazan
State University.
1994 – graduated from the
postgraduate course of
Kazan State Technological
University.
1998 – had a training
course under the Presi-
dent’s program for mana-
gerial staff.
PhD, Chemical Science.
Since 2006 headed the
Division of Oil and Gas
Complex of the Cabinet of
Ministers of the Republic
of Tatarstan. In June 2010
he was appointed Assis-
tant to the President of the
Republic of Tatarstan.
Deputy General Director –
Chief Geologist of JSC
TATNEFT
Member of the JSC
TATNEFT’s Board of
Directors Management
Committee
Independent Member of
the JSC TATNEFT’s Board
of Directors.
Chairman of the JSC
TATNEFT’s Board
of Directors HR and
Remuneration Committee
Audit Committee Member
of the JSC TATNEFT’s
Board of Directors
Born in 1956.
Born in 1950.
Born in 1964.
1978 – graduated from
Moscow Institute of Petro-
chemical and Gas Industry
n.a. I.M. Gubkin.
Doctor of Geology/Miner-
alogy, Professor.
Deputy General Director –
Chief Geologist of JSC
TATNEFT since October
1997.
He has a degree in
economics and gradu-
ated from Technical High
School in Zurich in 1989.
Bachelor of Swiss Bank-
ing – Zurich, 1992. Since
2011, co-founder, Program
Director of the Private
Equity FIDES Business
Partner AG, Switzerland.
1978 – graduated from
Kazan Aviation Institute,
specialty – mechanical
engineer.
2000 – graduated from
the Law Faculty of Kazan
State University.
Appointed the First
Deputy Minister of Land
and Property Relations of
the Republic of Tatarstan
in December 2008.
Appointed Head of the
Ministry of Land and
Property Relations of the
Republic of Tatarstan in
March 2009.
Share in the Joint Stock
Company’s authorized
capital – none.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – none.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – 0,006448.
Portion of the Joint Stock
Company’s ordinary
shares % – 0,006541.
Share in the Joint Stock
Company’s authorized
capital – 0,116503.
Portion of the Joint Stock
Company’s ordinary
shares % – 0,123914.
Share in the Joint Stock
Company’s authorized
capital – none.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – 0.01876.
Portion of the Joint Stock
Company’s ordinary
shares % – 0.019746.
Share in the Joint Stock
Company’s authorized
capital – none.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
54 55
Alexander T.
YUKHIMETS
Secretary of the
JSC TATNEFT’s Board
of Directors.
Maintenance of the
JSC TATNEFT’s Board
of Directors activities.
Based on proposals
the Board of Directors’
Members the Secretary
the Board of Directors
shall prepare and submit
for approval by the Board
work plans of the Board
of Directors and perform
organizational functions for
the preparation of Board
meetings.
The competence of the
Secretary of the Board
of Directors includes the
formation, preliminary
examination and systema-
tization of materials on the
agenda of the meetings, as
well as preparation of draft
decisions.
The Secretary of the Board
of Directors shall provide
to the Board members the
information necessary for
making decisions on the
agenda.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
COMMITTEES OF THE BOARD OF DIRECTORS
Committees’ Membership
Major Functions & Areas of the Committee’s Operation
Committees’ Membership
Major Functions & Areas of the Committee’s Operation
56 57
Corporate Management Committee
Chairman
Viktor I. Gorodny – member of the Management Board of JSC
TATNEFT, Deputy General Directors – Head of Property Department
of JSC TATNEFT.
Members of the Committee:
Rais S. Khisamov – member of the Board of Directors
of JSC TATNEFT, Deputy General Director – Chief Geologist
of JSC TATNEFT;
Rinat K. Sabirov – member of the Board of Directors
of JSC TATNEFT, Assistant to President of the Republic
of Tatarstan;
Valery D. Ershov – member of the Management Board,
Head of Legal Department of JSC TATNEFT;
Rustam M. Khisamov – Head of Securities Office of the Property
Department of JSC TATNEFT:
Natalia E. Dorpeko – Corporate Consultant of JSC TATNEFT;
Vasiliy A. Mozgovoy – Assistant to General Director
of JSC TATNEFT, Corporate Finances;
Denis V. Tsovma – Deputy Head of Securities Office
of the Property Department, JSC TATNEFT
HR and Remuneration Committee
Chairman
René Frederic STEINER, Member of the JSC TATNEFT’s Board
of Directors, Independent Director, Program Director of the Private
Equity FIDES Business Partner AG, Switzerland
Members of the Committee
Sushovan Ghosh, member of the Board of Directors of JSC
TATNEFT, Managing Director of SGI Group LTD.
Rinat K. Sabirov, member of the Board of Directors of JSC
TATNEFT, Assistant to President of the Republic of Tatarstan,
member of the Corporate Management Committee, member of the
Corporate Management Committee.
The Committee initiates and provides for the organizational
improvement of corporate management procedures, adoption of
new and updating of existing corporate documents in accordance
with changes in the current legislation and the Company-wide
standards.
• Coordination of measures to ensure compliance JSC TATNEFT
with new listing rules of exchange of CJSC “MICEX Stock Ex-
change” registered by the Bank of Russia Service for Financial
Markets of February 7, 2014.
• Interaction with the stock market regulator on the corporate
• Generation of a report on corporate management and the JSC
practices process issues.
TATNEFT’s practices corporate management compliance with
the provisions of the Corporate Management Code recom-
mended by the Bank of Russia letter number 06-52 / 2463 of
April 10, 2014.
• Analysis of the Company’s annual reports compliance level
with the integrated reporting standards and elaboration of
positions for the transition for corporate reporting to the inte-
grated corporate reporting basis (together with the Committee
on Disclosure of Information).
• Preparations for the annual general meeting of shareholders
• Consideration of the Annual Report of JSC TATNEFT on the
on the results of JSC TATNEFT operation in 2014.
results of 2014.
The Committee assists the Board of Directors of JSC TATNEFT in
improving personnel policies and strengthening of mechanisms
for motivating employees and managers of the Company.
personnel development.
• Consideration of the JSC TATNEFT’s corporate system of
• Consideration of using innovative electronic simulators for
• Formulation of proposals on introduction of innovative projects
• Preparation of recommendations on the Company’s staff
training and development of JSC TATNEFT employees.
as tools for increasing productivity at JSC TATNEFT.
remuneration by the results of 2014.
Information Disclosure Committee
Chairman
Vladimir P. Lavushchenko, member of the Board of Directors,
member of the Management Board, Deputy General Director of
JSC TATNEFT for Economics.
Deputy Chairman
Viktor I. Gorodny, member of the Management Board, Deputy
General Director, Head of the Property Department of JSC TAT-
NEFT, Head of the Corporate Management Committee.
Committee Members
Evgeniy A. Tikhturov – Member of the Management Board,
Head of JSC TATNEFT’s Financial Department
Vladlen A. Voskoboynikov, member of the Management Board,
Head of Consolidated Financial Reporting Department
of JSC TATNEFT
Vasiliy A. Mozgovoy – Assistant to General Director
of JSC TATNEFT, Corporate Finances
Aleksander T. Yukhimets, member of the Management Board,
Secretary of the Board of Directors of JSC TATNEFT
Nuriya Z. Valeyeva, Head of Technical and Economic Information
and Advanced Experience Extension Office, JSC TATNEFT
Denis V. Tsovma – Securities Office Deputy Head, Property De-
partment of JSC TATNEFT
The Committee coordinates and monitors procedures to ensure
the rights of shareholders and other stakeholders in a timely and
necessary manner to fully provide information on the activities of
the Company.
• Control procedures for the timely disclosure of information:
– Essentiall facts;
– the Company’s quarterly reports;
– the Company’s Annual reports;
– Reports in accordance with RAS;
– Consolidated financial statements.
• Formation of the priorities in the information policy in order to
more fully inform stakeholders about the current activities and
prospects of the Company.
• Analysis of the Company’s annual reports level compliance with
the integrated reporting standards and elaboration of positions for
the transition for corporate reporting to the integrated corporate
reporting basis (together with the Committee on Disclosure of
Information).
• Coordination of the corporate media activities.
Audit Committee
The Committee performs direct control of financial and economic
activity of the Company.
Chairman
Sushovan Ghosh, member of the Board of Directors of JSC
TATNEFT, Independent Director. Managing Director of SGI GROUP
LTD. Member of the HR and Remuneration Committee of JSC
TATNEFT.
Committee Members
René Frederic STEINER, Member of the JSC TATNEFT’s Board
of Directors, Independent Director, Program Director of the Private
Equity FIDES Business Partner AG, Switzerland, Chairman of the
HR and Remuneration Committee.
Mariya L. Voskresenskaya, member of the Board of Directors of
JSC TATNEFT, Independent Director. Director of Brentcross Ltd.
Radik R. Gayzatullin, member of the Board of Directors, Minister
of Finance of the Republic of Tatarstan.
• Coordination of the external auditors and the Internal Audit
Department activities, as well as review of their reports on a
regular basis.
• Review and analysis of quarterly financial statements.
• Review and implementation of the independent auditors re-
• Discussions with the independent auditors and the Internal
ports on the state of internal control systems of JSC TATNEFT.
Audit Department about the scope, focus areas and the timing
of their audits.
• Checking the independence of the external auditors.
• Provide advice to the Board of Directors on the selection of
• Release of the external auditors’ financial statements in ac-
independent auditors for JSC TATNEFT (IFRS and by RAS).
cordance with IFRS.
Committees of JSC TATNEFT’s Board of Directors have been established in order to assist the Board of Directors on key is-
sues of corporate practice and improve the mechanisms of the Company’s interaction with shareholders and investors. The
Committees operate on the basis of the current legislation, the Company Articles, Provision on the Board of Directors, provi-
sions of the Committees approved by the Board of Directors. The membership of the Committees is determined by the Board
of Directors. The Company provides to the Board of Directors detailed information about the biography, experience and skills
of each candidate for membership of a Committee.
The Committees carry out their activities in close cooperation with the Board of Directors, Management Board,
Executive Directorate, Internal Audit Department, Corporate Control Department, and other Departments
and offices of the Company.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
EXECUTIVE BODIES
58 59
To ensure the management the Company’s Board of Directors forms executive bodies, stipulated by the Articles: a sole ex-
ecutive body in the person of General Director and a collegial executive body: Management Board.
List of Issues Reviewed at Meetings of the Management Board in 2014
General Director and Management Board report to the Board of Directors and the General shareholders’ meeting.
General Director
General Director ensures the implementation of General shareholders’ meeting decisions, presents to the Board of Directors
candidates for the Management Board members, distributes responsibilities among the members of the Management Board,
organizes the Management Board operation, chairs the Management Board meetings defines the Company’s organizational
structure, supervises the efficient and economical use materials, labor and financial resources and solves other issues of the
Company’s everyday activity.
Management Board
The Management Board is a collegial executive body of the Company and performs management of the Company’s everyday
activities, coordinates the work of services and divisions of the Company, makes decisions on important issues of the current
economic activity.
There is a system of powers and responsibilities of officials distribution formed at the Company’s by areas of the Company’s
activities to ensure the performance results of business segments. The powers vested are in compliance with the manage-
ment structure of the Company.
Complex’s tire factories.
and 3 for Q I, 2, 3 of 2013, 1st half and 9 months of 2014.
large-scale bottomhole zone treatment of horizontal wells.
tion of sucker rod pumps (UShGN) to the optimal operating mode.
• Crude oil production for December and twelve months of 2014
• On the JSC TATNEFT’s effectiveness of the investment program implementation in the core activities for 2013.
• Activities of JSC TATNEFT in industrial safety.
• On the current financial - economic condition of JSC TATNEFT and results of implementation of figures of Orders №1, 2
• On the implementation of crude oil/liquid production and water injection rates
• Progress in working with public authorities of the Russian Federation to amend the federal legislation.
• On execution parameters of fields’ development and the use of drilled and oil and gas wells well stock in 2013.
• On the organization of wells’ operation, taking into account their profitability.
• On bringing the process parameters (stroke length, pump rate, plunger diameter) of the works well operated with applica-
• The effectiveness of research and development and pilot operation programs in drilling, workover, waterproofing and
• Analysis of the investment projects execution on the production modernization of the JSC TATNEFT’s Petrochemical
• The state of geological exploration and the reserves’ stocks growth of the TATNEFT Group of Companies in 2013-2014.
• On the results of the productivity growth program for 2013 and the main tasks of crude oil production in 2014.
• The progress of the “TANECO”’s facilities construction and operation.
• Comparative assessment o the JSC TATNEFT‘s production divisions operation.
• On the new technological and organizational solutions in the performance of geological and technical activities.
• On the results of the productivity growth program in the oil and gas production sector by the service management companies.
• Progress in the development of heavy oil. The effectiveness of developing the extra-viscous oil Ashalchinskoye deposit.
• On the progress of getting permits of governmental authorities for construction and commissioning of completed wells.
• On the results of auditing the lean production program implementation in the oil industry in 2014.
• On the implementation of the JSC TATNEFT’s chain drives operation program.
• On the organization of the electrical loads control activities at NGDU “Almetyevneft” and NGDU “Nurlatneft”
• On the specific electricity consumption at NGDU “Prikamneft” and NGDU “Jalilneft.”
• Outcome of labor collectives’ meetings and implementation progress of the Collective Agreement for the Ist half of 2014.
• On the results of the current drilling complex revamping.
• On the formation of the JSC TATNEFT’s oil production investment program for 2015.
• Plans and R ATES of crude oil and liquid production and water injection in 2015 for oil and gas production divisions. On the
• About the plan of tree planting by structural divisions and service companies in 2014.
results of selecting a set of well interventions in the investment program.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
COMPOSITION OF THE JSC TATNEFT’S
MANAGEMENT BOARD
60 61
Nail U.
MAGANOV
Nail G.
IBRAGIMOV
Vladimir P.
LAVUSHCHENKO
Victor I.
GORODNY
Nikolay M.
GLAZKOV
Rifkat M.
RAKHMANOV
Fyodor L.
SHCHELKOV
Rustam N.
MUKHAMADEYEV
JSC TATNEFT’s Board of
Directors’ Member
First Deputy General
Director for Production –
Chief Engineer of JSC
TATNEFT since 2000.
JSC TATNEFT’s
Management Board
Member.
JSC TATNEFT’s Board of
Directors’ Member
First Deputy General
Director for Production –
Chief Engineer of JSC
TATNEFT since 2000.
JSC TATNEFT’s
Management Board
Member.
JSC TATNEFT’s Board of
Directors’ Member
General Director Deputy
for Economics
Chairman of the JSC TAT-
NEFT’s Board of Directors
Information Disclosure
Committee
Deputy General Director –
Head of Property Depart-
ment of JSC TATNEFT
Chairman of the JSC TAT-
NEFT’s Board of Directors
Management Committee
Deputy Chairman of the
JSC TATNEFT’s Board of
Directors Information Dis-
closure Committee
Deputy General Director
for Capital Construction of
JSC TATNEFT
Deputy General Director of
JSC TATNEFT well worko-
ver, drilling and recovery
enhancement
Deputy General Director of
JSC TATNEFT for General
Issues
Deputy General Director of
JSC TATNEFT for HR and
Social Development
Born in 1958.
Born in 1955.
Born in 1949.
Born in 1952.
Born in 1960.
Born in 1948.
Born in 1948.
Born in 1952.
1983 – graduated from
Moscow Institute of
Petrochemical and Gas
Industry n.a. I.M. Gubkin.
From July 2000 to
November 2013 – the First
Deputy General Director –
Head of Crude Oil and
Petroleum Products
Sales Department of JSC
TATNEFT.
He was appointed General
Director of JSC TATNEFT
in November 2013.
1977 – graduated from
Moscow Institute of
Petrochemical and Gas
Industry n.a. I.M. Gubkin.
Doctor of Science,
Engineering.
First Deputy General
Director for Production –
Chief Engineer of JSC
TATNEFT since 2000.
1972. – from Moscow
Institute of Petrochemical
and Gas Industry n.a. I.M.
Gubkin.
1984г graduated the
postgraduate course of
VNIIOENG.
Doctor of Economics.
Deputy General Director
for Economics of JSC
TATNEFT since 1997.
1978 - graduated from
Moscow Institute of
Petrochemical and Gas
Industry n.a. I.M. Gubkin.
Doctor of Economics.
Deputy General Director –
Head of JSC TATNEFT’s
Property Department since
1995 until present time.
1988 – graduated from
Kazan Construction Engi-
neering Institute.
2008-2010 – Head of
Construction Department
of JSC TATNEFT.
Deputy General Director
for Capital Construction of
JSC TATNEFT since 2010
until present time.
1970 – graduated from Ufa
Oil Institute.
Deputy General Direc-
tor of JSC TATNEFT for
well workover, drilling and
recovery enhancement
since 2010 till January 28,
2015.
1972 – graduated from
Moscow Institute of Petro-
chemical and Gas Industry
n. a. I.M. Gubkin.
Deputy General Director of
JSC TATNEFT for General
Issues since1996 until pre-
sent time.
1977 – graduated from
Moscow Institute of Petro-
chemical and Gas Industry
n.a. I.M. Gubkin.
Deputy General Director of
JSC TATNEFT for HR and
Social Development since
2001 until present time
Share in the Joint Stock
Company’s authorized
capital – 0.020604.
Portion of the Joint Stock
Company’s ordinary
shares % - 0.021678.
Share in the Joint Stock
Company’s authorized
capital – 0.029929.
Portion of the Joint Stock
Company’s ordinary
shares % - 0.031524.
Share in the Joint Stock
Company’s authorized
capital – 0.004204.
Portion of the Joint Stock
Company’s ordinary
shares % - 0.004264.
Share in the Joint Stock
Company’s authorized
capital – 0.000176.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – 0.019749.
Portion of the Joint Stock
Company’s ordinary
shares % – 0.020806.
Share in the Joint Stock
Company’s authorized
capital – 0.045465.
Portion of the Joint Stock
Company’s ordinary
shares % – 0.048194.
Share in the Joint Stock
Company’s authorized
capital – 0.000254.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – none.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – 0.020604.
Portion of the Joint Stock
Company’s ordinary
shares % – 0.021678.
Share in the Joint Stock
Company’s authorized
capital – 0.029929.
Portion of the Joint Stock
Company’s ordinary
shares % – 0.031524.
Share in the Joint Stock
Company’s authorized
capital – 0.004204.
Portion of the Joint Stock
Company’s ordinary
shares % – 0.004264.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
COMPOSITION OF THE JSC TATNEFT’S
MANAGEMENT BOARD (CONTINUED)
62 63
Iskandar G.
GARIFULLIN
Evgeniy A.
TIKHTUROV
Nurislam Z.
SYUBAEV
Valery D.
YERSHOV
Vladlen A.
VOSKOBOINIKOV
Alexander T.
YUKHIMETS
Rafael S.
NURMUKHAMETOV
Anwar V.
VAKHITOV
Chief Accountant – Head
of Accounting and Report-
ing Department of JSC
TATNEFT
Head of the JSC TAT-
NEFT’s Finance Depart-
ment
Member of the JSC TAT-
NEFT’s Board of Directors
Information Disclosure
Committee
Head of JSC TATNEFT’s
Strategic Planning Depart-
ment – Advisor to General
Director on external eco-
nomic activity and financial/
banking issues
* Member of the Manage-
ment Board since Decem-
ber 25, 2014
Head of JSC TATNEFT’s
Legal Department.
Head of JSC TATNEFT’s
Consolidated Financial
Statements Department.
Member of the JSC TAT-
NEFT’s Board of Directors
Information Disclosure
Committee
Secretary of the JSC TAT-
NEFT’s Board of Directors
Member of the JSC TAT-
NEFT’s Board of Directors
Information Disclosure
Committee
Head NGDU “Leninogor-
skneft of JSC TATNEFT.
Director of OOO “Tatneft-
Neftekhim” Management
Company.
Member of the Manage-
ment Board with April 28,
2014.
Born in 1960.
Born in 1960.
Born in 1960.
Born in 1949.
Born in 1965.
Born in 1948.
Born in 1949.
Born in 1951.
1981 – graduated from Ka-
zan Finance and Econom-
ics Institute named after
V.V. Kuibyshev.
Chief Accountant – Head
of Accounting and Report-
ing Department of JSC
TATNEFT since1997 until
present time.
В 1982 – graduated from
Moscow Institute of Man-
agement named after S.
Ordzhonikidze.
Head of JSC TATNEFT’s
Department of Finance
since 1999 until present
time.
1978 – graduated from Ka-
zan State University named
after V.I. Ulyanov-Lenin.
Head of Legal Department
of JSC TATNEFT since 2002
until present time
1982 – graduated from
Moscow Institute of
National Economy n.a. V.
Plekhanov
Head of Department of
Strategic Planning JSC
TATNEFT – Advisor to
General Director on exter-
nal economic activity and
Financial/banking issues
since 2002 until present
time -
1993 – graduated from the
Southern Alberta Institute
of Technology in Calgary.
Head of JSC TATNEFT’s
Consolidated Financial
Statements Department
since 2005 until present
time
1972 – graduated from
Moscow Institute of Petro-
chemical and Gas Industry
n.a. I.M. Gubkin.
Secretary of the JSC TAT-
NEFT’s Board of Directors
since 1995 until present
time.
1974 – graduated from the
Ufa Oil Institute.
Head of the NGDU
“Leninogorskneft” of JSC
TATNEFT since 1989 until
present time.
1980 – graduated from
Kazan Institute of Chemical
Technology.
Director of “Tatneft-
Neftekhim” Management
Company since April 2014
until present time.
Share in the Joint Stock
Company’s authorized
capital – 0.014105.
Portion of the Joint Stock
Company’s ordinary
shares % – 0.014986.
Share in the Joint Stock
Company’s authorized
capital – none.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – none.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – none.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – none.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – none.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – none.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
Share in the Joint Stock
Company’s authorized
capital – none.
Portion of the Joint Stock
Company’s ordinary
shares % – none.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
CORPORATE PRINCIPLES OF INTERACTION WITH
SHAREHOLDERS AND INVESTORS
Guaranteed equal ensuring and observance of legal rights and interests of all the the Company’s
shareholders regardless of the number of shares they own, as set out by applicable laws of the Russian Federation,
requirements and recommendations of stock markets regulators, where the shares of the Company circulate.
Continuous interaction of the Company’s management with all the shareholders in order to manage the
Company effectively and ensure its sustainable and dynamic development.
Continuous improvement of existing and development of new mechanisms and forms of interaction with
the shareholders and potential investors, which would increase efficiency and quality of interaction with the
shareholders, taking into account emergence of new shareholders and formulation of further goals by the shareholders.
Shares of JSC TATNEFT have been traded in the Russian and International stock markets for over 20 years and they are one
the most liquid instruments in the securities market.
A stable shareholder structure of JSC TATNEFT reflects the high level of the key investors’ confidence in the long-term devel-
opment of the Company.
Its ordinary and preference shares participate in the A quotation list of the first level auction in the united JSC Moscow Stock
Exchange. JSC TATNEFT shares are included in the index calculation base of RTS and MICEX, which are the main indicators
of the Russian stock market.
JSC TATNEFT Equity Holding Structure
As of December 31, 2014 according to the register of shareholders JSC TATNEFT had 44,760 shareholders. Among them the
largest owners (nominal holders) of the Company’s shares are as follows:
• Non-banking Credit Company, closed joint stock company National Settlement Depository owns 59.4831% of shares;
• Joint Stock Company Central Depository of the Republic of Tatarstan owns 30.448393% of shares.
The value of JSC TATNEFT shares amounted to:
• one ordinary share: RUR 226.55;
• one preferred share: RUR 134.60.
Dividend Policy
The company maintains a positive dividend policy increasing the level of dividend payments for several years.
In 2014, according to the results of JSC TATNEFT’s activities in 2013, the total amount of dividends for preferred and ordinary
shares amounted to 30% of the net profit or 19.155 billion rubles. The dividend rate charged per 1 share amounted to 8.23 rubles
(823% of the share face value).
According to the results of 2013 the Board of Directors recommended the annual general shareholders’ meeting to approve divi-
dends on ordinary and preferred shares in the amount of 1058% of the nominal value (10.58 rubles per share).
64 65
Corporate
Center to Work
with Securities and
Interaction with the
Shareholders
of JSC TATNEFT
Ensuring legitimate rights
of shareholders
The Company’s shareholders
possess the entirety of rights
as defined by the current
legislation and the Company’s
Articles which observance and
protection shall be ensured
by the Board of Directors
and executive bodies of the
Company. The Company
shareholders exercise their
rights and responsibilities
participating in the activities
of the Company and also on
the basis of voluntary initia-
tives aimed at improving the
management of the Company.
The actions of the sharehold-
ers must proceed from the
interests of the Company.
Execution of their duties the
by the shareholders will allow
the Company to ensure the
implementation of all the legal
rights of the shareholders.
The Company shall provide
for timely consideration of ap-
peals of the shareholders and
the timely response.
Information Policy
Dividend Policy
The shareholders are entitled
to receive information about
the Company’s activities
to the extent necessary for
them to take well-considered
and sound decisions. The
procedure for the information
disclosure is provided in ac-
cordance with the applicable
law, requirements of the stock
market and the Provision on
the Information Policy and the
Provision on the use of insider
information and the procedure
of informing on securities
transactions.
The Company strives to
ensure the most reliable and
effective methods and forms
of communication, includ-
ing advanced information
technologies application for
reaching the highest possible
quality of interaction with the
shareholders. The Company
shall provide for the share-
holders access to documents
in accordance with the current
legislation
The dividend policy of JSC
TATNEFT is based on bal-
ancing the interests of the
Company and its sharehold-
ers in accordance with the
investment attractiveness and
capitalization of the Company
in strict compliance with the
legitimate rights of the share-
holders, provided by the legis-
lation of the Russian Federa-
tion, the Articles and internal
documents JSC TATNEFT.
It is expected that the
Company will spend 30% of
the annual net profit of JSC
TATNEFT (under RAS) in, the
payment of dividends by the
results of the reporting 2014.
The decision on the amount of
dividends on ordinary and pre-
ferred shares shall be adopted
by the General shareholders’
meeting on the recommenda-
tion of the Board of Directors.
Avoidance of the Interests
Conflict
The Company’s manage-
ment system includes a set of
rules and procedures to avoid
conflicts of interest between
the Company and its share-
holders, as well as between
the shareholders, if the conflict
affects the interests of the
Company, and provides for
taking all necessary and pos-
sible measures in the event
of a conflict arising to fully
resolve it, and also creating
conditions that exclude the
conflict in the future.
The components of this sys-
tem include the identification
and resolution of all potential
common specific problems re-
lated to the rights of the share-
holders. This work is carried
out interacting with the author-
ized division and Committees
of the Board of Directors,
Internal Audit Department and
other relevant Departments of
the Company.
* The authorized division to ensure interaction with the shareholders of the Company is
the Office of Securities of the JSC TATNEFT’s Property Department.
History of Dividend’ Payment
Share type
2010
2011
2012
2013
Total dividends amount
(RUR BLN)
% of the
face value
Dividend
amount
% of the
face value
Dividend
amount
% of the
face value
Dividend
amount
% of the
face value
Dividend
amount
11.7
16.5
20.0
19.2
Ordinary shares
Preferred shares
502%
502%
5.02
5.02
708%
708%
7.08
7.08
860%
860%
8.60
8.60
823%
823%
8.23
8.23
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
INFORMATION DISCLOSURE
66 67
Register of Mandatorily Disclosed Information in 2014
Information on Major Transactions Executed by the Company in the Year Reported
The information subject to mandatory disclosure under the Russian standards (in the form of essential fact messages or information on the
data, which could have a significant impact on the value of the Company’s securities).
JSC TATNEFT did not make any major transactions in 2014.
Ser. No. Message Content
1.
2.
3.
4.
5.
6.
7.
8.
9.
Notice of the date of compiling the list of the Issuer’s registered securities or documentary
Issuer's securities holders subject to mandatory centralized custody for the purposes of
implementation (realization) of rights vested by such equity securities
Message on the procedure of access to information contained in a quarterly report.
Message about disclosure of the Company’s affiliated entities list on the Internet page.
Notice of holding the meeting of the Board of Directors (Supervisory Board) and its
agenda.
On convening and holding the general meeting of members (shareholders) of the Issuer,
as well as about the decisions taken by the general meeting of members (shareholders) of
the Issuer.
Messages about accrued and/or paid income on the issuer's securities.
Message of the Issuer’s default to the holders of the securities issued
Disclosure of Annual (interim) accounting (financial) statements of the Company.
Message on certain decisions adopted by the Board of Directors (Supervisory Board).
10.
Message on the Issuer's related party transactions
Date of disclosure
26.02.2014
14.02.2014, 14.05.2014,
14.08.2014, 14.11.2014
09.01.2014, 01.04.2014,
01 07.2014, 02.10.2014
Monthly
26.02.2014
24.09.2014
24.09.2014
28.03.2014 Annual Financial
Statements, 30.04.2014,
29.07.2014, 28.10.2014
28.01.2014, 26.02.2014,
27.03.2014, 28.04.2014,
27.05.2014, 27.06.2014,
27.06.2014, 28.08.2014,
01.10.2014, 29.10.2014,
25.11.2014, 25.12.2014,
25.11.2014
03.02.2014 (4 ntansactions),
28.02.2014, 03.12,2014
11.
12.
13.
Report on the decisions taken by the General Meeting of members (shareholders) of the
Issuer.
02.07.2014
Report on the procedure of access to information contained in the Annual Report 2013.
02.07.2014
Message about rating assignment to equity securities and (or) the issuer or about a
change in by the rating agency on the basis of the agreement concluded with the Issuer
18.06.2014
According to international standards (in the form of press releases and publication of reports in accordance with the rules of the London Stock
Exchange)
Ser. No. Message Content
Date of disclosure
14.
15.
16.
17
Publication of the annual consolidated financial statements under IFRS.
Publication of the consolidated interim condensed financial statements under IFRS
for the 1st quarter of 2014 (unaudited).
Publication of the consolidated interim condensed financial statements under IFRS
for the six months of 2014 (unaudited).
Publication of the consolidated interim condensed financial statements under IFRS
for the first nine months of 2014 (unaudited).
02.04.2014
16.06.2014
26.08.2014
28.11.2014
Information on the Related Party Transactions made by the Company in the year Reported
Transaction Approval Date: 24.12.2013.
Transaction Execution Date : 03.02.2014.
Company’s Body approving the transaction: JSC TATNEFT’s Board of Directors
Type and subject of the transaction: extension of a subordinated deposit.
The transaction content including civil rights and responsibilities, which establishment, modification or termination the transaction pursues:
interest bearing funds placement at in the bank.
Date of obligations performance under the transaction, parties and beneficiaries under the transaction, the transaction amount in money terms
and in percentage of the issuer’s assets:
Investor: JSC TATNEFT n.a. V.D. Shashin
Bank: JSC ZENIT Bank.
Signing date: 03.02.2014, deposit term: 15 (fifteen) years and three (3) months from the date of the deposit amount receipt to the deposit
account of the Bank (12.06.2024.)
The amount deposit: 2,140,000,000.00 (two billion one hundred and forty million and 00/100) rubles of the Russian Federation.
The monetary valuation of the property under the transaction: 4,234,943,348.45 rubles accounting for 0.86% of the the Company’s assets
book value as of 30.09.13.
Transaction Approval Date: 24.12.2013.
Transaction Execution Date : 03.02.2014.
Company’s Body approving the transaction: JSC TATNEFT’s Board of Directors
Type and subject of the transaction: extension of a subordinated deposit.
The transaction content including civil rights and responsibilities, which establishment, modification or termination the transaction pursues:
interest bearing funds placement at in the bank.
Date of obligations performance under the transaction, parties and beneficiaries under the transaction, the transaction amount in money
terms and in percentage of the issuer’s assets:
Investor: JSC TATNEFT n.a. V.D. Shashin
Bank: JSC ZENIT Bank.
Date of signing: 03.02.2014, repayment date: 01.02.2027.
Deposit amount: 1700,000,000.00 (one billion seven hundred million and 00/100) rubles of the Russian Federation.
The monetary valuation of the property under the transaction: 3,594,335,616.44 accounting for 0.73% of the Company’s assets book value
as of September30, 2013.
Transaction Approval Date: 24.12.2013.
Transaction Execution Date : 03.02.2014.
Company’s Body approving the transaction: JSC TATNEFT’s Board of Directors
Type and subject of the transaction: extension of a subordinated deposit.
The transaction content including civil rights and responsibilities, which establishment, modification or termination the transaction pursues:
interest bearing funds placement at in the bank.
Date of obligations performance under the transaction, parties and beneficiaries under the transaction, the transaction amount in money
terms and in percentage of the issuer’s assets:
Investor: JSC TATNEFT n.a. V.D. Shashin
Bank: JSC ZENIT Bank.
Date of signing: 03.02.2014, repayment date: 08.03.2023.
Deposit amount: 20,200,000.00 (twenty million, two hundred thousand and 00/100 US dollars) at the rate RUR 33 per 1 US dollar amounting
to 666,600,000 rubles.
The monetary valuation of the property under the transaction: 35,076,054.79 USD at the rate RUR 33 per 1 US dollar amounting to
1,157,509,808.22 rubles accounting for 0.24% of the Company’s assets book value as of September 30, 2013
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
68 69
Criteria for Determining and the Amount of Remuneration Paid to Members of Management Bodies for 2014
Remuneration to JSC TATNEFT’s Board of Directors Members is paid on the basis of “Provision on payment of remuneration
the Board of Directors and the Revision Commission Members of JSC TATNEFT”.
The remuneration of the Board of Directors Members is formed of fixed and variable parts.
The permanent part of the remuneration is defined by the Provision and indexed along with the change in tariffs and salaries
of the JSC TATNEFT’s employees.
The variable part of the remuneration of the Board of Directors Members is formed according to the following key indicators:
• ratio of the Company’s capitalization level at year-end compared with the previous year;
• ratio of expenses on dividends versus the net profit (compared with the previous year);
• the amount of the additional margin with respect to the baseline profitability.
In 2014, the Joint Stock Company paid the remuneration to the Board of Directors and the Management Board Member in the
following amount:
• short-term remuneration (wages for the period under report, taxes and other mandatory payments charged to the
respective budgets and non-budgetary funds, paid annual leave, the amount of payments under contracts of voluntary
health insurance) were transferred in favor of the Board of Directors and the Management Board Members) in the amount
of RUR 686,530 thousand;
• long-term remuneration (sum of payments under contracts of non-governmental pension provision, long-term life insur-
ance transferred by JSC TATNEFT in favor of the Board of Directors Member and the Management Board members) in the
amount of RUR 68,249 thousand.
Information about the amount of remuneration paid to the members of the Company’s management bodies is presented in
accordance with the Regulation on information disclosure by issuers of securities No. 454-P approved by the Bank of Russia
on Dec. 30, 2014 (registered in the Ministry of Justice of Russia under No. 35989 on Feb. 12, 2015).
Transaction Approval Date: 24.12.2013.
Transaction Execution Date : 03.02.2014.
Company’s Body approving the transaction: JSC TATNEFT’s Board of Directors
Type and subject of the transaction: extension of a subordinated deposit.
The transaction content including civil rights and responsibilities, which establishment, modification or termination the transaction pursues:
interest bearing funds placement at in the bank.
Date of obligations performance under the transaction, parties and beneficiaries under the transaction, the transaction amount in money
terms and in percentage of the issuer’s assets:
Investor: JSC TATNEFT n.a. V.D. Shashin
Bank: JSC ZENIT Bank.
Date of signing: 03.02.2014, repayment date: 12.03.2023.
Deposit amount 14,000,000.00 (Fourteen million and 00/100) US Dollars at the rate RUR 33 per 1 US dollar amounting to 462,000,000
rubles.
The monetary valuation of the property under the transaction: 24,322,410.96 US Dollars at the rate RUR 33 per 1 US dollar amounting to
802,639,561.64 rubles accounting for 0.16% of the Company’s assets book value as of September 30, 2013.
Transaction Approval Date: 28.01.2014.
Transaction Execution Date : 28.02.2014.
Company’s Body approving the transaction: JSC TATNEFT’s Board of Directors
Transaction type and subject: Supplementary Agreement No. 1 к Subordinated Deposit Contract No. 12-001/2013 of 15.01.2013 in
accordance with which, among other things, the terms of the mentioned Subordinated Deposit Contract change in order to conform to the
Regulations requirements of the Central Bank of the Russian Federation “On the method of determining the value of own funds (capital) of
credit institutions (“Basel III”) No. 395-P, which entered into force on 01.01.2014.
Content of the transaction, including civil rights and responsibilities for the establishment, modification or termination, which the transaction
pursues: Supplementary Agreement No. 1 to the Subordinated Deposit Contract No. 12-001/2013 of 01.15.2013. according to which JSC
TATNEFT n.a. V.D. Shashin (Depositor) and JSC Bank ZENIT (the Bank) have agreed, among other things, to modify the terms of the Treaty
in order to bring it into line with the provisions of the Central Bank of the Russian Federation “On the method of determining the value of own
funds (capital) of credit organizations (“Basel III”) No. 395-P, which entered into force on 01.01.2014.
Date of the obligations performance under the transaction, parties and beneficiaries under the transaction, the amount of the transaction in
money terms and in percentage of the issuer’s assets value:
Depositor: JSC TATNEFT n.a. V.D. Shashin
Bank: JSC ZENIT Bank,
Date of signing: 28.02.2014.
Deposit term: 15 years 1 month from the date of the deposit amount receipt to the deposit account of the Bank.
Deposit amount: 3,600,000,000.00 (three billion six hundred million and 00/100) Russian rubles.
The monetary valuation of the property under the transaction: 8,152,754,188.19 Russian rubles accounting for 1.66% of the Company’s
assets book value as of September 30, 2013.
Transaction Approval Date: 25.11.2014.
Transaction Execution Date : 02.12.2014.
Company’s Body approving the transaction: JSC TATNEFT’s Board of Directors
Type and subject of the transaction: sale and purchase of immovable property: the facility under construction - East-West Overpass.
Content of the transaction, including civil rights and responsibilities for the establishment, modification or termination of which the
transaction pursues: alienation by the Issuer of immovable property to TANECO Open Joint Stock Company with the state registration of the
facility ownership transfer.
Date of obligations performance under the transaction, parties and beneficiaries under the transaction, the transaction amount in money
terms and in percentage of the issuer’s assets: not later than January 31, 2015.
Parties to the transaction: JSC TATNEFT (Seller) and JSC TANECO (Buyer).
Transaction amount in money terms: 7,415,068,895.05 rubles.
The transaction amount as a percentage of the Issuer’s assets: 1.295% of the Company’s assets book value.
As part of the voluntary information disclosure, the Company published in 2014 on systematic and regular basis detailed information on the
current production, corporate and social activities of JSC TATNEFT and the Group of Companies. The information was provided in the format
of publications in corporate, industry and public republican and Russian mass media.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
REPORT ON COMPLIANCE WITH PRINCIPLES
AND RECOMMENDATIONS OF THE CORPORATE
MANAGEMENT CODE
Ser.
Nos.
Principle (principles) of the corporate management or a key criterion (recommendation)
1
2
Brief description of non-complying part of the princi-
ple or the key criterion
* Explanation of the key reasons, factors and circumstances by virtue of
which the principle or the key criterion is not has not been complied with
or observed in full, the description of alternative mechanisms or tools of
corporate management applied
3
I. SHAREHOLDERS' RIGHTS AND EQUALITY OF SHAREHOLDERS IN THE EXERCISING OF THEIR
RIGHTS
1.1.
The Company must ensure fair and equitable treatment of all shareholders in the implementation of the right for par-
ticipation in the management of the Company. The system and practice of corporate management shall provide for fair
treatment for all shareholders: owners of shares of one category (type), including minority (small) shareholders and
foreign shareholders, and equal treatment by the Company
1.1.1. The Company has approved an internal document that defines basic procedures
for the preparation, convening and holding of a General shareholders’ meeting
complying with recommendations of the Corporate Management Code, including
the duty of the Company:
• to inform shareholders of the General shareholders’ meeting and provide for
access to the material, including the materials and post a notice and the mate-
rials on the Internet site at least 30 days prior to the meeting holding (unless a
longer term is stipulated by the legislation of the Russian Federation);
• to disclose the date of compiling the list of persons entitled to attend the Gen-
• to provide additional information and materials to the General shareholders’
eral Meeting of Shareholders not less than 7 days before the date occurrence;
meeting on the agenda items in accordance with the recommendations of the
Corporate Management Code.
1.1.2. The Company undertakes to provide to the shareholders in the course of preparation
and holding of the General shareholders’ meeting the opportunity to put questions
about the Company’s activities to members of the Company’s management and con-
trol bodies, members of the Audit Committee, the Chief Accountant of the Company,
as well as candidates for the management and control bodies. The mentioned respon-
sibilities are enshrined in the Articles or the Company’s internal documents.
1.1.3. The Company undertakes to adhere to the principle of inadmissibility of actions that lead
to artificial redistribution of corporate control (for example, voting with “quasi” shares,
taking a decision to pay dividends on preferred shares in the situation with limited finan-
cial possibilities, taking a decision on non-payment of dividends specified in the Com-
pany’s Articles on preferred shares if there are sufficient resources for their payment).
These responsibilities are fixed in the Articles or in internal documents of the Company.
Art. 7 of JSC TATNENT”s Articles
Provision on General Shareholders’ Meeting
of JSC TATNEFT
Art. 2.2.2 of the Corporate Management
Code of JSC TATNEFT
Section 5 of the Provision on General Meeting
of JSC TATNEFT’’s Share¬holders’
Art. 7 i. 7.1 of JSC TATNEFT’s Articles
These materials are place on the JSC TAT-
NEFT’s and the information agency sites
http://www.tatneft.ru, http://dis¬closure.
skrin.ru/disclosure/1644003838
I.5.4 of the Provision on General Sharehold-
ers’ Meeting of JSC TATNEFT
These CPC recommendations
are complied with
These CPC recommendations
are complied with
1.2
Shareholders shall be given an equal and fair opportunity to participate in the Company’s profits by receiving dividends
1.2.1. The Company has approved the internal document defining the dividend policy of
the Company, relevant recommendations of the Corporate Management Code,
which specifically includes:
• procedure for determining the net profit part (for the Company constituting
consolidated financial statements the minimum part (share) of the consolidat-
ed net income) for the payment of dividends and the conditions under which
the dividends shall be declared;
• the minimum size of dividends on the Company’s shares of various categories
• duty to disclose a document defining the dividend policy of the Company on
(types);
the Company’s Internet site
These CPC recommendation
are complied with
Chapter 6 of the Corporate Management
Code of JSC TATNEFT
i. 5.4-5.10 of the Articles of the Open Joint
Stock Company TATNEFT named after V.D.
Shashin.
The principles of the dividend policy are
reflected in the annual JSC TATNEFT’s reports
published on the Company’s website and the
website of the “Screen” Information Agency
70 71
1
2
3
II. COMPANY’S BOARD OF DIRECTORS
2.1
The Board of Directors determines major strategic targets of Company’s activities in the long term, key performance indica-
tors of the Company, implements the strategic management of the Company, defines basic principles and approaches to
establishment of the social risks and internal controls management systems, supervises the activities of executive bodies
of the Company, determines the remuneration policy of the Company for the Board of Directors and the executive bodies’
members, as well as performs other key functions
2.1.1. The Board of Directors has been formed in the Company, which:
key performance indicators of Company;
• defines the main long term strategic benchmarks of the Company’s activity and
• supervises the activities of the Company’s executive bodies;
• defines the principles and approaches to the organization of risk management
• determines the Company’s policy on the remuneration of the Board of Direc-
tors, executive bodies’ members and other key executives of the Company
and internal control in the Company;
These CPC recommendation
are complied with
The Board of Directors consisting of 15 per-
sons has been formed.
Section 2 of Provision on the JSC TATNEFT’s
Board of Directors
Corporate Management Code
of JSC TATNEFT
The Board of Directors defines the main long
term strategic benchmarks of the Company’s
activity and key performance indicators of Com-
pany; supervises the activities of the Company’s
executive bodies; defines the principles and
approaches to the organization of risk manage-
ment and internal control in the Company.
i.4, 4.6 Provision on the Board of Directors
of JSC TATNEFT
2.2.
The Board of Directors shall be an effective and professional management body of the Company, capable of making
objective, independent judgments and making decisions that meet the interests of the Company and its shareholders,
Chairman of the Board of Directors shall promote the most effective implementation of the functions assigned to the
Board of Directors. The Board of Directors meetings, preparation for holding and participation in the meetings of the
Board of Directors’ Members shall ensure effective work of the Board of Directors
2.2.1. Chairman of the Board of Directors is an Independent Director or a senior Independ-
ent Director shall be defined among the elected independent directors, who shall
coordinates the work of the independent directors and interact with the Chairman of
the Board of Directors
2.2.2.
Internal documents of the Company fix procedures for preparation and holding of the
Board of Directors meetings providing the Board of Directors’ Members the opportu-
nity to adequately prepare for the meetings holding, and specifically providing for:
completed documents (papers) package for meetings in absentia;
• period of notifying the Board of Directors’ Members of the forthcoming meeting;
• deadlines for sending the documents (papers) for voting and receiving the
• channeling and recording of a written opinion on the agenda items for the
• the opportunity to debate and vote through a conference call and a video -
members of the Board of Directors, who are absent at the in-person meeting;
conference
2.2.3. The most important issues are dealt with at the meetings of the Board of Directors
held in person. The list of questions follows the recommendations of the Code of
Corporate Management
These CPC recommendation
are complied with
Art. 8.5 of the Articles,
Section 5 Provision on the Board of Directors
of JSC TATNEFT
Compiled with
Section 5 i. 5.2 Provision on the Board of
Directors of JSC TATNEFT
Compiled with
Section 5 i. 5.4 Provision on the Board of
Directors of JSC TATNEFT
These CPC recommendation
are complied with
i. 2 of the Provision on the Board of Directors
of JSC TATNEFT
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
72 73
1
2
3
1
2
3
2.3.
The Board of Directors shall include a sufficient number of independent directors
2.3.1.
Independent directors shall make up at least one-third of the elected members of
the Board of Directors
2.3.2.
Independent directors fully meet the independence criteria recommended by the
Corporate Management Code
2.3.3. The Board of Directors (Nominating Committee (HR, appointments)) assesses
the compliance of candidates for the Board of Directors Members’ independence
criteria
These CPC recommendation are partially
complied with
The Board of Directors of JSC TATNEFT in-
cludes three independent directors.
These CPC recommendation
are complied with
I. 2.3.8 of the JSC TATNEFT’s Corporate
Management Code
These CPC recommendation
are complied with
Combined with the H R and Remuneration
Committee
2.4.
Board of Directors shall set up committees for preliminary consideration of the most important issues of the Company’s
activity
2.4.1. The Board of Directors has set up the Audit Committee, consisting of independent
directors, which functions are fixed in the internal documents and comply with the
Corporate Management Code recommendations
2.4.2. The Company’s Board of Directors has established the Remuneration Committee
(can be combined with the Nominating Committee (HR, Nomination)) consisting of
independent directors whose functions correspond to the recommendations of the
Corporate Management Code
These CPC recommendation
are complied with
Audit Committee composed of three inde-
pendent directors has been set up.
The Committee’s functions are fixed by Provi-
sion on the Audit Committee of JSC TAT-
NEFT’s Board of Directors
Art. 2 Provision on the Audit Committee of
JSC TATNEFT’s Board of Directors
These CPC recommendation
are complied with
JSC TATNEFT’s Board of Directors HR and
Remuneration Committee has been set up,
which membership includes two independent
directors.
The Committee functions are fixed in the Pro-
vision on the HR and Remuneration Commit-
tee of the Board of Directors of JSC TATNEFT.
The Committee includes two independent
directors.
Art. 8. i. 8.4 of the Articles,
Art. 5, i. 5.1 of the Provision on the Board of
Directors
Art. 3 i. 3.1 of the Provision on the HR and Re-
muneration Committee of the JSC TATNEFT’s
Board of Directors of
2.4.3. The Company’s Board of Directors has established the Nominating Committee
(HR, appointments) (can be combined with the Remuneration Committee) with
most of members being independent directors, which functions correspond to the
Corporate Management Code recommendations
These CPC recommendation
are complied with
Combined with the HR and Remuneration
Committee
III. CORPORATE SECRETARY OF THE COMPANY
3.1.
Effective current interaction with shareholders, coordination of the Company’s activities for the protection of the rights
and interests of shareholders, support the effective Board of Directors’ work is ensured by the Corporate Secretary
(special structural division headed by the Corporate Secretary)
3.1.1. The Corporate Secretary is accountable to the Board of Directors, is appointed and
removed from office by the decision or with the consent of the Board of Directors
3.1.2. The Company approved an internal document that defines the rights and duties
of the Corporate Secretary (Provision on the Corporate Secretary), which content
complies with the Corporate Management Code recommendations
These CPC recommendation
are complied with
Board of Directors has appointed Secretary of
the Board of Directors.
Functions of the Corporate Secretary are dis-
tributed between the Secretary of the Board
of Directors and Securities Office, which is an
authorized division of JSC TATNEFT
These CPC recommendation are complied with
In accordance with i. 3.1.1 internal documents
are: Provision on the JSC TATNEFT’s Board of
Directors ( i. 3.10), Provision of JSC TATNEFT on
the Securities Office
IV. SYSTEM OF REMUNERATION OF THE BOARD OF DIRECTORS, EXECUTIVE BODIES’ MEMBERS
AND OTHER KEY COMPANY’S EXECUTIVES
4.1
The level of remuneration paid by the Company shall be sufficient to attract, motivate and retain individuals with competen-
cies and qualifications necessary for the Company. Remuneration payment to members of the Board of Directors, executive
bodies and other key executives of the Company shall be paid in accordance with the Remuneration policy of the Company
4.1.1. All payments, benefits and privileges granted to members of the Board of Direc-
tors, executive bodies and other key executives of the Company are regulated in
the Company
These CPC recommendation
are complied with
Art. 2.5 «Corporate Management Code of
JSC TATNEFT
4.2.
The system of the Board of Directors’ Members remuneration shall ensure convergence of the directors’ financial inter-
ests with the long-term financial interests of the shareholders
4.2.1. The Company does not apply other forms of remuneration the Board of Directors'
Members in addition to the fixed annual remuneration
4.2.2. The Company’s Board of Directors' Members are not given the opportunity to
participate in optional programs and the right to sell their Company’s shares is not
conditioned by achieving certain performance results
4.3.
The remuneration system of the executive bodies and other key executives of the Company should provide for the remu-
neration dependence on the results of the Company’s operation and their personal contribution to this result
4.3.1. The Company has introduced a program of long-term incentives for members of
executive bodies and other key employees of the Company
These CPC recommendation
are complied with
V. SYSTEM OF RISK MANAGEMENT AND INTERNAL CONTROL
5.1.
The Company should set up a well-functioning system of risk management and internal control designed to provide rea-
sonable assurance of the Company achieving its goals
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5.1.1. The Board of Directors has defined the principles and approaches to risk manage-
ment and internal control in the Company
These CPC recommendation
are complied with
Provision on the Internal Audit Depart-
ment approved by the Board of Directors of
02.02.2009. Minutes No. 4
5.1.2. The Company has established a separate structural division for risk management
and internal control
5.1.3. The Company has developed and implemented the anti-corruption policy of the
Company, defining measures aimed at the formation of the corporate culture ele-
ments, organizational structure, rules and procedures for the corruption prevention
These CPC recommendation
are complied with
5.2.
For a systematic independent evaluation of the reliability and efficiency of the risk management and internal control system
and the corporate management practices the Company shall organize the internal audit
5.2.1. There is Company is a separate structural division at the Company performing the
functions of internal audit, which is functionally subordinate to the Company’s Board of
Directors. The functions of this division comply with the of the Corporate Management
Code recommendations and specifically the functions are:
• assessment of the internal controls efficiency;
• evaluation of the risk management system efficiency;
• assessment of the corporate Management (in the absence of the Corporate Man-
agement Committee)
5.2.2. The head of the internal audit division reports to the Company’s Board of Directors, is
appointed and removed from office by the Board of Directors of the Company
5.2.3. The Company has approved a policy of the internal audit (Provision on the Internal
Audit) that defines the goals, objectives and functions of the Internal Audit
These CPC recommendation are complied with
Internal Audit Department
has been established.
General Director order: “On the establishment
of the Internal Audit Department”
i. 2 Provision on the Internal Audit Department
of JSC TATNEFT approved by the Board of
Directors
These CPC recommendation are complied with
i. 1 Provision on the Internal Audit Depart-
ment of JSC TATNEFT approved by the Board
of Directors
These CPC recommendation are complied with
i. 2 «Provision on the Internal Audit Depart-
ment of JSC TATNEFT approved by the Board
of Directors
VI. INFORMATION DISCLOSURE ABOUT THE COMPANY, COMPANY’S INFORMATION POLICY
6.1.
The Company and its activities should be transparent for shareholders, investors and other interested parties
6.1.1. The Company has approved an internal document defining the Company‘s infor-
mation policy, the relevant recommendations of the Corporate Management Code.
The Company information policy includes the following ways to interact with inves-
tors and other interested parties:
• organization of the Company’s special Internet pages for placing the answers to com-
mon questions from shareholders and investors, a regularly updated calendar of the
Company’s corporate events, as well as other useful information for shareholder and
investors;
• regular meetings of the executive bodies’ members and other key executives of the
• regular presentations (including in the form of teleconferences, web casts) and
Company with analysts;
meetings with members of the management bodies and other key executives of the
Company, including the accompanying publication of accounting (financial) state-
ments of the Company, or related to major investment projects and strategic plans of
the Company development
These CPC recommendation are complied with
Provision on Information Policy of Open Joint
Stock named after V.D. Shashin
Answers to questions from shareholders and
investors, corporate events Company, useful
information are posted on the Company’s
website;
Regular meetings with analysts are arranged.
Regular presentation press conferences of
General Director are held
6.2.2. The Company shall ensure the disclosure of information not only the Company,
but about legal entities under the Company’s control significantly important for the
Company
6.2.3. The Company discloses annual and interim (semi-annual) consolidated and individual
financial statements prepared in accordance with International Financial Report-
ing Standards (IFRS). The annual consolidated or individual financial statements are
disclosed along with the auditor’s report, while interim (semi-annual) consolidated or
individual financial statements shall be disclosed together with the report on the results
of the overview audit or the auditor’s report
6.2.4. The Company has opened a special memorandum containing plans for the Com-
pany: entities of the controlling Company. This memorandum has been compiled in
accordance with the Corporate Management Code recommendations
6.2.5. The Company provides for disclosure of detailed information on the biographical
data of the Board of Directors’ members, including information on whether they are
independent directors, and also prompt disclosure of information about for forfeit
of the independent director status by a member of the Board of Directors
1
6.1.2.
2
Implementation of the Company’s information policy is carried out by the Company’s
executive bodies. Control over proper information disclosure and compliance informa-
tion policy is performed by the Company’s Board of Directors
3
6.1.3. The Company has established procedures to ensure coordination of all services
and structural divisions of the Company related to the disclosure of information or
which activities may lead to the information disclosure
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These CPC recommendation are complied with
The authorized body for the information disclo-
sure is the Securities Office of JSC TATNEFT. In
general, the information about the Company’s
operation is provided Company’s Office of
Technical and Economic Information of JSC
TATNEFT. The Company’s information policy is
governed by the Provision on Information Policy
of JSC TATNEFT, as well as Art. 2.3 of the Cor-
porate Management Code of the Company.
The disclosure control is provided by the
Information Disclosure Committee of the JSC
TATNEFT’s Board of Directors
These CPC recommendation are complied with
There Regulations for information disclosure in
the Company, approved by General Director of
JSC TATNEFT.
There is the Information Disclosure Committee
in the Company
The information disclosure is provided by the
Securities Office of JSC TATNEFT.
The Company shall promptly disclose full, relevant and accurate information about the Company to enable informed
decision-making by shareholders and investors of the Company
6.2.
6.2.1.
If there is a significant share of foreign investors in the capital in the Company,
then parallel with the disclosure of information in Russian the disclosed informa-
tion material about the Company (including the notice of the General shareholders’
meeting, the annual report of Company) shall be provided in a foreign language,
which is common in the financial market
These CPC recommendation are complied with
The official site of TATNEFT Company is present-
ed in Russian and English versions. All relevant
information, including the notice of the General
shareholders’ meeting, the annual report of
Company, the annual report on the activities of
the Company, IFRS, essential facts are disclosed
in the Russian and the English languages.
These CPC recommendation are complied with
The Company provides disclosure of the legal
entities under its control with significant impor-
tance in the framework of a quarterly report
These CPC recommendation are complied with
The Company discloses annual and interim
(semi-annual) consolidated financial state-
ments together with the auditor report and
the interim (semiannual) and consolidated
financial statements - together with the report
on the results of the overview audit
The Company publishes strategic initiatives
and objectives approved by the Board of
Director of JSC TATNEFT
These CPC recommendation are complied with
The Company provides for disclosure of detailed
information on the biographical data of the Board
of Directors’ members, including information on
whether they are independent directors.
This information is disclosed in the annual report
and on the TATNEFT website as well as on the
website of the “Screen” information agency
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6.2.6. The Company discloses information on the capital structure in line with the recom-
These CPC recommendation are complied with
mendations of the Corporate Management Code
6.2.7. The Company Annual Report contains additional information recommended by the Cor-
These CPC recommendation are complied with
Compiled with partially
The list of issues discussed at the meetings of
the Board of Directors is discloses in the annual
report
Compiled with
Information about absence of
no conflicts of interests of the Board of Direc-
tors and executive bodies’ Members (including
the one associated with participation of these
persons in the management bodies of competi-
tors of the Company) is disclosed in the Annual
report
Compliance
Compliance
porate Management Code:
• overview of the most significant transactions, including related transactions made
• report of the Board of Directors operation (including committees of the Board of
by the Company and by the controlled entities over the last year;
Directors) for the year, containing inter alia, information on the number of in-person
(correspondence) meetings, participation of each of the Board of Directors’ Mem-
bers in the meetings, description of the most important issues and most complex
problems discussed at the meetings of the Board of Directors and the Committees
of the Board of Directors, the main recommendations that the Committees provided
for the Board of Directors;
• information about direct or indirect ownership of the Company’s shares by the
• information about the presence of a conflict of interests of the Board of Directors
Board of Directors’ Members and members of the Company’s executive bodies;
and executive bodies’ Members (including the one associated with participation of
these persons in the management bodies of competitors of the Company);
• description of the remuneration system of the Board of Directors’ members,
including the amount of individual remuneration for the year for each member of the
Board of Directors (split into basic, additional remuneration for the Chairmanship
in the Board of Directors, Chairmanship (membership) in committees of the Board
of Directors, amount of participation in the long-term incentive program, extent of
participation of each member of the Board of Directors in the optional program, if
any), reimbursement of costs associated with participation in the Board of Direc-
tors, as well as costs for liability insurance for Company Directors as members of
the management bodies;
• information about the total remuneration for the year:
a) for the group of at least five highest paid members of executive bodies and other
key executives by each type of remuneration;
b) for all members of the executive bodies and other key executives of the Com-
pany, who are covered by Company’s policy in the area of remuneration split by
each type of remuneration;
• information on remuneration for the year of the sole executive body, which he has
received or is receivable from the Company (legal entities from the group of part
of), split by each type of remuneration as for the performance of his duties as the
sole executive body, as well as on other grounds
6.3.
6.3.1.
Provision of Company information and documents at the request of shareholders should be in accordance with the prin-
ciples of fairness and not burdensome
In accordance with the information policy of the Company shareholders of the
Company possessing the same number of the Company’s voting shares shall have
equal access to the information and the Company’s documents
These CPC recommendation are complied with
Section 5
Provision on Information Policy of the Open
Joint Stock Company named after V.D.
Shashin
VII. ESSENTIAL CORPORATE ACTIONS
7.1.
The actions that significantly affect or may affect the structure of the share capital and the Company’s financial condi-
tion and, therefore, the position of shareholders (essential corporate actions) shall be carried out under fair conditions
that ensure respect for the rights and interests of shareholders and other stakeholders
7.1.1. The Company’s Articles define the list of (criteria) of transactions or other actions that
Compiled with
According to the Articles of JSC TATNEFT
and internal documents
are essential corporate actions, which consideration falls within the competence of the
Company’s Board of Directors:
• the Company’s reorganization, acquisition of 30 percent or more of the Compa-
ny’s voting shares of (takeover), increasing or decreasing the Company’s author-
ized capital, listing and delisting of the Company’s shares;
• sale transaction of shares (interest) of entities controlled by the Company, which
are of essential importance for the Company resulting in the Company’s loss of
control over such legal entities;
• transactions, including related transactions, with the Company’s assets or the
Company’s controlled entities, which cost exceeds the amount specified in the
Company Articles or which is essential to the economic activity of Company;
• establishment of the controlled by the Company legal entity, which is of impor-
• alienation of treasury “quasi” shares by the Company
tance for the Company’s activity;
7.2.
Company shall provide for such a procedure for making essential corporate actions, which would allow shareholders to
timely receive complete information on such actions, giving them the opportunity to influence execution of such actions
and ensure compliance and adequate level of their rights protection in the execution of such actions
The procedure provided internal documents
of Company.
7.2.1. The principle of equal opportunities for all Company’s shareholders in undertaking
essential corporate actions affecting the rights and legitimate interests of sharehold-
ers is provided for in the internal documents of the Company, and also there are
additional measures to protect
• rights and legitimate interests of the Company’s shareholders provided the Cor-
• involvement of an independent appraiser reputable in the market as impecca-
porate Management Code, including:
ble and experienced in the relevant field evaluation or presentation reasonable
grounds for non-involvement of the independent appraiser in determining the
value of the assets acquired or disposed of under a major related party transac-
tion;
• determining the Company’s shares price in case of acquisition and redemp-
tion by the independent appraiser reputable in the market as impeccable and
experienced in the relevant field evaluation taking into account the weighted
average share price over a reasonable period of time disregarding the effect
associated with the Company’s of a relevant transaction (disregarding changes
in the shares’ price in connection with the dissemination of information on the
Company’s execution of the relevant transaction), and without taking into ac-
count the discount for the sale of shares as part of a minority package;
• expansion of the grounds list which are the basis for acknowledging the Compa-
ny’s Board of Directors’ Members and other stipulated by the legislation persons
as interested in the Company’s transactions for the purpose of evaluating the
actual convexity of the persons concerned
Note: No other key, according to the Company’s opinion, the criteria (recommendations) of the Corporate Management Code relating to this
principle (the principle) of the corporate management do not apply.
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INTERACTION WITH STAKEHOLDERS
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Event/Activity
1
Stakeholders
Subjects and Issues Discussed
2
3
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2
3
JANUARY
January 16
Participation of the Company’s representatives
in the panel discussion “Tatarstan: creating the
future” within the Gaidar Forum
State Authorities
Business Partners • Problems and challenges facing the Republic of Tatarstan
and its further development
January 18
Press conference of JSC TATNEFT’s General
Director
Media
January 21
Participation of the JSC TATNEFT’s General
Director in the World Economic Forum in Davos
State Authorities
Business Partners
Media
January 29
Conference of the JSC TATNEFT’s labor col-
lective
State Authorities
Trade Union
Employees
Media
coming years
• Results and projects in 2013
• Plans for 2014
• The strategy of crude oil production development in the
• Activities of JSC TANECO
• Company’s plans for the development of territories out-
• Encouragement of extra-viscous oil processing
• Development of the TATNEFT’s filling stations network
• Social Projects of the Company
• Global economy situation
• Global economic and social problems
side of Tatarstan and Russia
• Company’s operation results in 2013
• Compliance with the Collective Agreement for 2013
• Changes to the Collective Agreement for 2014
• Objectives for 2014
January 31
Participation in the Company’s representatives
in the meeting of the Collegium of the Minis-
try of Ecology and Natural Resources of the
Republic of Tatarstan
State Authorities
Business Partners • Experience of JSC TATNEFT in utilization of associated
• Implementation of the of local environmental monitoring
petroleum gas (APG)
mechanism in the area of theNizhnekamsk industrial hub,
including the TANECO Refining and Petrochemical Plants
Complex
FEBRUARY
February 7
Annual Meeting of the Volga-Kama Regional
Branch of the Russian Academy of Natural
Sciences
Public Organizations
State Authorities
February 18
Joint Working trip of the Republic of Tatarstan
Leadership and the Company’s top manage-
ment to Nizhnekamsk Municipal District
State Authorities
Municipalities’ Adnin-
istrations
February 19
Working meeting of JSC TATNEFT’s General
Director with S. Donskoy, Minister of Natural
Resources and Environment
State Authorities
• Development of heavy oil and natural bitumen in fields the
• Need to improve the recovery the level of formations and
Republic of Tatarstan
reservoir fluids evaluation, promising areas of development
and oil and gas wells design, etc.
• Investments in housing, promotion of health, education,
culture and sports in the territory of the Nizhnekamsk
municipality district and the city of Nizhnekamsk
prises
• Modernization of the tire manufacturing complex Enter-
• Construction of the TANECO Refining and Petrochemical
• Results of the Company’s operations in the area of pro-
ducing hard-to-recover hydrocarbon reserves, including
bitumen and shale oil
Plants Complex
• Establishment of proving grounds for testing technologies
for the extraction of hard-to-recover hydrocarbon re-
serves from Domanik suite at the premises of TATNEFT’s
enterprises
February 21
Meeting of the JSC TATNEFT’s permanent
commission on work safety
Trade Union
Employees
State Authorities
• Operating Results for 2013 and the main activities on labor
protection, industrial and fire safety, prevention of occupa-
tional injuries and accidents in 2014
February 21
Participation of the Company’s representatives
in the session of the Municipal Nurlat District
Council
State Authorities
Municipalities’ Adnin-
istrations
Business Partners
February 26
Participation of the Company’s representatives
in the session of the Municipal Leninogorsk
District Council
February 28
Participation of the Company’s representatives
in the session of the Municipal Almetyevsk
District Council
State Authorities
Municipalities’ Adninis-
trations
Business Partners
Public Organizations
Local Communities
State Authorities
Municipalities’ Adnin-
istrations
MARCH
March 21
Meeting of JSC TATNEFT’s General Director
with N. Merkushin, Governor of the Samara
Region
State Authorities
• Results of the Nurlat municipal district social and eco-
nomic development of in 2013 and objectives for 2014
• Results of the Leninogorsk Municipal District social and
economic development of in 2013 and objectives for 2014
• Results of the Almetyevsk Municipal District social and
• the Company’s environmental programs
economic development of in 2013 and objectives for 2014
• Signing of a Supplementary Cooperation Agreement
between the Government of the Samara region and JSC
TATNEFT
velopment of new oil and gas fields in the Samara region
• Implementation of investment projects related to the de-
• Improving the rational use of associated petroleum gas
• Implementation of a coherent policy in the area of social
guarantees and employment of workers, the implementa-
tion of programs of voluntary health insurance, regional
sports and cultural projects
March 24-27
Visit of the JSC “Ozemunaygas” delegation
March 26
Participation of Company’s representatives in
the round table of the efficient energy tech-
nologies cluster in the area of oil production at
the “Skolkovo” Innovation Center
APRIL
April 14-17
Working visit of Tatarstan delegation to China
with the participation of General Director JSC
TATNEFT
Business Partners • Specifics of highly depleted fields development
• Information technologies of the Company
• Environmental protection
• Production control of industrial health and safety
• Energy Management
• Personnel training system
• Approaches of major Russian oil companies to search, se-
• Perspective areas of technological development and
Business Partners
Expert and Scientific
Communities
lection and performance of pilot testing new technologies
specific technologies developed by innovative companies
in the area of oil production
Business Partners
Investors
• Investment and economic potential of the Republic of
• Advantages of doing business in Tatarstan for investors
Tatarstan
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April 16
Company’s representatives participation in the
third international conference
“INNO-WAVE 2014”
(“Corporate innovation process: from idea to
results”)
April 16
Participation of Company’s representatives in
“Exploration and production: factors of sustain-
able development” conference, organized by
the Ministry of Natural Resources and Ecology
of the Russian Federation with expert support
of the Energy Center of the Moscow School of
Management “Skolkovo”
April 23
Participation of Company’s representatives in the
second All-Russian Congress of occupational
safety experts
Business Partners • Management of innovative projects
• Staff involvement of in innovational activity
• Efficiency assessment of innovative projects and etc.
State Authorities
Business Partners
Educational Institu-
tions
State Authorities
Public Organizations
Expert and Scientific
Communities
Educational Institu-
tions
the development
• Replenishment of mineral resources base
• Involvement of hard-to-recover hydrocarbon reserves in
• Cooperation between governmental authorities, business
representatives and experts the expert community in ad-
dressing relevant issues of the oil and gas sector
conditions
• Federal Law on the special assessment of working
• Guarantees and compensation to employees engaged
• Main Board areas of improving the regulatory frame-
• Prospects of increasing the role and responsibility of
work for occupational safety and health
in hazardous labor conditions
the labor protection expert in the overall structure of the
HSE management organization
• Problems in vocational education, scientific research
and employment of graduates of the higher educational
institutions on related with occupational health and
safety at work
April 23
Visit the Company’s operation facilities in Nizh-
nekamsk by the participants of the International
Conference “Partnership for development of
clusters” organized by the Association of innova-
tive regions of Russia with the support of Ministry
of Economic Development
Public Organizations
State Authorities
Educational Institu-
tions
Expert Communities
MAY
May 14
Participation of Company’s representatives in the
round table on the issues of sanitary cleaning,
collection and removal of debris in Almetyevsk
State Authorities
Municipalities’ Adnin-
istrations
Media
• Models of territorial innovation clusters development
• Development of Partnership of the Russian and European
regions and innovation clusters
• Work on the collecting and disposal of solid waste in.
Almetyevsk and in rural areas of the Almetyevsk district
May 16
Participation of Company’s representatives in
the VII Congress of the NGO “Society of Inven-
tors and Innovators Republic of the Republic of
Tatarstan
May 22-24
Visit the Company’s operation facilities by
deputies, members of the Russian Federation
State Duma Committee for Natural Resources,
Environment and Ecology
Public Organizations
Business Partners • Practice of license agreements registration
• Opening of innovation technology support centers at en-
terprises and organizations of the Republic of Tatarstan
State Authorities
chemical Plants Complex
• Environmental facilities the TANECO Refining and Petro-
• Engineering solutions and new capacities for production,
• Recycling of oil sludge
treatment and transportation of EVO
JUNE
June
Visit of the NGDU “Bystrinskneft” delegation of
JSC Surgutneftegaz“
June
Participation of experts from JSC TATNEFT
and JSC TANECO in an international symposi-
um on the refining and petrochemicals, organ-
ized by Chevron Lummus Global (USA)
June 2-3
Visit to the Company’s operation facilities of
the stock market analysts, representing 14
leading international and Russian investment
banks
June
Visiting the tire manufacturing enterprises of
the Company’s petrochemical complex by
Representatives of the Public Chamber of the
Republic of Tatarstan
June 5
Visit of the JSC “NK”Rosneft” delegation
June 5-7
Participation of the Company’s top manag-
ers in the VIth International economic sum-
mit of Russia and the Organization of Islamic
Cooperation (OIC) countries of the KazanSum-
mit-2014
June
Visit of the OOO “LUKOIL-PERM” delegation
Business Partners • Application of water/oil swellable ТАМ packers
Business Partners • Crude oil refining projects, their commercial success and
competitiveness
Investment
Community
• Main strategic initiatives aimed at increasing the Compa-
ny’s capitalization: maintaining crude oil production in ex-
isting fields, increasing the volume of heavy oil production
and the development of other hard-to-recover reserves,
development of the TANECO complex, the increase in
primary processing
• Activities aimed at strengthening the innovative potential
Public Organizations • Development of the scientific and industrial cluster in the
of TATNEFT
JSC TATNEFT’s petrochemical complex
Business Partners • Pace of development and long-term plans for JSC
TANECO
State Authorities
Business Partners
Investment Com-
munity
refining capacity
• Environmental activities at JSC TANECO
• Possible areas of cooperation related to the expansion of
• Food Security of the Organization of Islamic Cooperation
• Cooperation between investors, business and govern-
ments of OIC countries and Russia in solving issues of
strategic security
countries
Business Partners • Introduction of new technologies for production, treat-
ment and transportation of oil and gas
June 15-19
Participation of the Company’s top managers
of in the twenty-first World Petroleum Congress
Business Partners
Public Organizations
Expert Communities
ated petroleum gas run power plants
• Maintenance and repair of oilfield equipment
• Organization of operation and maintenance of the associ-
• Personnel management practices
• Usage of the world’s oil resources, innovative and techno-
• Investment attractiveness of oil and gas regions of Russia,
• Development of old fields using new technical solutions
• Unconventional oil and gas resources
• Improving the conversion ratio of hydrocarbons produced
including the Republic of Tatarstan
logical achievements
in Tatarstan
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June
Working visit of the Federal Agency for Subsoil
Use, headed by V. Pak, Deputy Minister of
Natural Resources and Ecology of the Russian
Federation - Head of the Federal Agency for
Subsoil Use, delegation
State Authorities
June 27
Annual General JSC TATNEFT’s shareholders’
meeting
Shareholders
JULY
July 4
Participation in the oil summit in the Republic
of Tatarstan
State Authorities
Business Partners
Municipalities’ Adnin-
istrations
July 8
Meeting with the administration of the Sar-
manovsky municipal district
Municipalities’ Adnin-
istrations
AUGUST
August
Meeting of the JSC TATNEFT’s General Direc-
tor with Head of the Almetyevsk municipal
district, public figures, residents and visitors to
Almetyevsk
Municipalities’ Adnin-
istrations
Local Communities
August 18
Meeting of the JSC TATNEFT’s Deputy General
Director Human Resources and Social Devel-
opment with residents of Aznakaevo
Municipalities’ Adnin-
istrations
Local Communities
tional hydrocarbon deposits in Tatarstan
• Implementation of the program for the study of unconven-
• Experience of the Company’s Oil and Gas Producing Divi-
• Establishment of proving grounds on search and explora-
sions in the extraction of oil from non-conventional rocks
tion of unconventional hydrocarbons in the Republic of
Tatarstan
• Advanced conversion of hydrocarbon raw materials
• Results of the Company’s activities in 2013
• Approval of the Company’s Board of Directors, annual
• Adoption of the decision on payment of dividends for 2013
report and financial statements for 2013,
• Results of JSC TATNEFT operation in the first half of 2014
• Results of small oil companies operation in Republic of
• Actualization of the “Program of development of the fuel
Tatarstan in the first half of 2014
and energy complex of the Republic of Tatarstan for 2006-
2030” on oil exploration and production
enterprises of the Republic of Tatarstan
• Introduction highly efficient oil production technologies by
• Providing quality drinking water for residents Jalil Town-
ship
tyevsk
Township
the Republic of Tatarstan
• Social support of population in the south-eastern part of
• Construction of new sewage treatment facilities in. Alme-
• Construction of the sports complex in Lower Maktama
• Repair of kindergartens
• Additional environmentally friendly public transport lines in
• Support for rural producers
• Construction of autoroads in the Aznakaevsky district.
the “Yashlek” district etc.
SEPTEMBER
September
Study tour of Rosprirodnadzor representatives
for the Republic of Tatarstan the JSC TAT-
NEFT’s wells under construction
Supervision Bodies • Technology of handling cuttings in the well construction
process
September 3-5
Participation in the Tatarstan petrochemical
forum
State Authorities
Business Partners
Public Organizations
ing industries
serves: experiences and forecasts
• Hard-to-recover and unconventional hydrocarbon re-
• Industrial ecology and safety
• Major development trends in the petrochemical and refin-
• Geodesy and geoinformation systems
• Metrological support of liquids and gas flow measurement
• Industrial automation
• Increased usage of chemical and petrochemical products
Produced in the Republic specifically in road construction
September
The working visit of the Turkmen delegation
headed by B. Khojamuhammadov, Deputy
Chairman of the Cabinet of Ministers
September 17
The delegation of Turkmenistan’s oil and gas
industry, composed of representatives of the
State-run “Turkmennebit” Corporation, “Turk-
mengeologiya” and State-run “Turkmengaz”
visit
September
Visit of the delegation composed of senior of-
ficials of the Ministry of Natural Resources and
Environment and the Ministry of Ecology and
Natural Resources to JSC TANECO
September 23-24
Conference/Seminar “Effective technologies
and equipment for production, transportation
and processing of crude oil” for oil companies,
manufacturers of tubular products and pump-
ing equipment
September 29-30
Participation of top managers headed by JSC
TATNEFT’s General Director in the XI Forum
of Interregional Cooperation of Russia and
Kazakhstan
facturing complex enterprises
of learning safe production principles
Business Partners • Organization of development of highly depleted fields
• System of occupational safety and labor protection, ways
• Personnel training system, youth policy of JSC TATNEFT
• Operation of JSC TANECO and the Company’s tire manu-
• Opportunities for closer cooperation between Turkmeni-
Business Partners • Technology and equipment applied for the control of oil
• Mobile video recording system
• Electronic document management
• Forming relationships with contractors, etc
• Environmental monitoring system functioning at the
stan and the Company
State Authorities
facilities
Company’s
Business Partners • New Technologies and Equipment of the Company
• Strategy of mutually beneficial cooperation of the TAT-
NEFT Group of Companies with the leading oil companies
in Russia
State Authorities
Business Partners
Expert Communities
• Innovations in production, transportation and processing
of hydrocarbons
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
1
2
3
1
2
3
84 85
OCTOBER
October
Visit of the “Yokogawa Electric Corporation del-
egation to NPiNHZ Complex in Nizhnekamsk
October
Meeting with attendance of representatives of
JSC TATNEFT, OOO “Tatneft-Aktiv” Southeast
Chamber of Commerce of the Republic of
Tatarstan, executive committees of municipal
districts, small and medium-sized businesses
of the south-eastern part of RT
October 22-24
Participation of Company’s representatives in
the second national oil and gas forum
NOVEMBER
November 13
Visit of the Turkmenistan delegation headed by
M. Meredov, Deputy Minister of Petroleum and
Mineral Resources, to JSC TANECO
November 16
Working visit of the National Oil Corporation of
Libya (Libyan National Oil Company delegation
November 16-21
Visit of the Kazakhstan delegation: young
professionals of JSC NC “KazMunayGas” and
affiliated service companies
November 21
Participation in the forum organized in the
framework of the IX International lean confer-
ence “Efficient processes - high performance”
Business Partners • Prospects of further cooperation in the process of the
TANECO Refining and Petrochemical Plants Complex
development
Municipalities’ Adnin-
istrations
Business Partners
Local Communities
• Promotion of Small and Medium Business development
• Purchase of goods for the needs of TATNEFT Group of
Companies
State Authorities
Expert Communities
Public Organizations
Media
industry
Russia for the next forecast period
• Preparation of the new version of the Energy Strategy of
• Long-term goals and objectives of the national oil and gas
• Improving the prediction of world hydrocarbon prices
• Modern technologies and innovations in the oil and gas
• Improved processing efficiency of raw materials
sector
Business Partners • Operation of JSC TANECO
Business Partners • Technology of dual completion and production (DCP) of
two or more layers through one well, the method of dual
injection (DI)
and colleges
• Balancer-free chain drives
• Activities of service enterprises of Tatarstan
Business Partners • Youth policy of the Company
• Interaction with school pupils and students of universities
• Production of extra-viscous oil etc.
• Implementation of methods and tools of lean production
• Role of leaders in the implementation of Lean projects
• Impact of lean production on the efficiency of production
• Specifics of inducting new products on the Lean basis of
State Authorities
Business Partners
Expert Community
systems and labor productivity
at domestic enterprises
etc.
November 24
VII report-election trade union conference of
the TATNEFT Group Companies
November 28
XV report and election conference of young
employees of JSC TATNEFT
DECEMBER
December 17
Participation of Company’s representatives in
the joint session of the Almetyevsk Municipal
District and City Council
December 26
Participation of Company’s representatives in
the joint session of the Almetyevsk Municipal
District and City Council
State Authorities
Employees
Trade Union
Educational Institu-
tions
Employees
Trade Union
State Authorities
Municipalities’ Adnin-
istrations
Business Partners
State Authorities
Municipalities’ Adnin-
istrations
December 29
Press conference of the JSC TATNEFT’s Gen-
eral Director
Media
Committee on
• Results of the Trade Union Committee activity
• Protection of social and labor and employment rights
• Operation of the JSC TATNEFT’s Occupational Safety
• Organization of feedback with the employees team
• Results of the Company’s youth organization operation
• Further course of youth policy
in 2014
and economic development for 2015 and 2016-2017
• Results of 2014, forward-looking indicators of social
• Company’s contribution to the development of the
• Modernization of Nizhnekamsk CHP
• Construction of delayed coking unit, naphtha hydrotreat-
Almetyevsk Municipal District
ing, heavy coker gas oil hydrotreating, and isomerization
and Aromatics Complex units of JSC TANECO
bility Domanik sediments or “shale oil”
• Evaluation of Results and Projects in 2014. Plans for 2015
• Crude oil production strategy for the coming years
• Project of the extra-viscous oil development
• Draft project of crude oil production from low-permea-
• Activities of JSC TANECO
• Company’s plans for the development of territories
• Social Projects of the Company
• Switchover of the Company’s charitable activities to the
outside of Tatarstan and Russia
grant system, and etc.
The Company believes that it is of the utmost importance to maintain a constructive dialogue with stakeholders, using various
forms of bilateral communications. Such a dialogue is developing consistently, improving methods of information presenta-
tion, feedback and interaction. The Company arranges press conferences and meetings with analysts on a regular basis.
The main ways of communication and interaction with stakeholders are the TATNEFT Group Internet portal, press releases, press
conferences, publications in media, Corporate Media, sending information messages (letters, information booklets and bro-
chures), consultations, negotiations, surveys, establishment of working groups and permanent acting commissions, and etc.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
AWARDS AND NOMINATIONS
PUBLIC ASSESSMENT OF THE COMPANY’S OPERATIONS IN 2014
International and All-Russian Awards/
Nominations
Winner Diploma
Contest/Rating
Organizers
The nationwide campaign "Philanthropist of
the Year"
22 professionals of the Company were
awarded
The award named after academician I.M.
Gubkin
Diplomas in the nominations "Reporting in
the area of Sustainable Development and
Environmental Management", "Environment
in the industry"
National Environmental Prize named after
V.I. Vernadsky for 2014
Honorary Prize and diploma in the nomination
"For outstanding contribution to improving
the environment in the Russian Federation"
All-Russian Ecological clean-up day "Green
Spring 2014"
XVIIth Moscow International Salon of
Invention and Innovation Technologies
"Archimedes-2014"
XVth International Specialized Exhibition
"Energy. Resource Saving"
Eight gold, seventeen silver and nine
bronze medals Regions’ Cup for the active
work on the development of invention and
rationalization in the Republic of Tatarstan
Diploma of respect and gratitude for active
participation in organizing and conducting
the Salon
Second place in the category "Equipment
and technologies, which implementation
allow reducing operating costs of fuel and
energy resources, as well as materials used,
and (or) reducing the harmful impact on the
environment throughout the life cycle"
Grand Prix in the category “Products with
new or improved characteristics”
First degree Diplomas in the category
“Enhanced oil recovery”, “Energy-saving
technologies and equipment”
Diplomas of the Ministry of Energy for the
project “Technology of dual operation of two
or more layers through one well”, “Technical
and economic simulator”: Energy Crude Oil
Production”
Diploma of the Republic of Kazakhstan’s
Ministry of Energy
XXIst International Exhibition “Oil and Gas.
Petrochemicals 2014” in the frame of the
Tatarstan
JSC “Kazan Fair” supported by President of
the Republic of Tatarstan, Government of
the Republic of Tatarstan
XIth Forum of Interregional Cooperation of
Russia and Kazakhstan with Heads of State
participation of
RF Ministry of Regional Development,
Ministry of Foreign Affairs, Ministry of
Economy and Budget Planning of the
Republic of Kazakhstan and others.
Ministry of Culture of the Russian Federation
and the Council under President of the
Russian Federation on culture and art
Interregional public organization "Scientific
and Technical Society of oil and gas industry
n.a. Academician I.M. Gubkin"
Non-governmental environmental fund named
after V.I. Vernadsky, with the support of the
State Duma Federal Assembly of the Russian
Federation, Ministry of Natural Resources and
Environment, Ministry of Energy of the Russian
Federation, Federal Service for Supervision of
Natural Resources of the Russian Academy of
Sciences
Non-governmental environmental fund
named after V.I. Vernadsky with the
support of the international "GREENLIGHT"
environmental organization and the
Interregional environmental organization
"Greenlife" etc.
Moscow city VOIR organization, OOO
"InnovEkspo" with the support of the
Department of Science, Industrial Policy and
Entrepreneurship of Moscow, Moscow City
Government, the World Intellectual Property
Organization, and etc.
Ministry of Industry and Trade of the
Republic of Tatarstan, Center for energy-
saving technologies under the Cabinet of
Ministers of the Republic of Tatarstan, Kazan
city administration, JSC “Kazan Fair”
86 87
International and All-Russian Awards/
Nominations
V.I. Gorodny, Deputy General Director for
Property - Head of the JSC TATNEFT’s
Property Department, joined the top ten
best Directors of the Russian Federation in
the area of corporate management
9 Company’s professionals were named win-
ners in the “Professional Engineers” category
(according to the results of round II)
5 professionals of the Company were awarded
the title “Professional Engineer of Russia” (ac-
cording to the results of round I)
2 Company’s professionals were awarded
the title winners in the “Engineering Art of the
Young” nomination
Contest/Rating
Organizers
XVth annual ranking of the "Top 1000
Russian Managers"
Russian Managers Association,
"Kommersant" publishing house
XVth All-Russian contest "Engineer of the
Year 2014"
Russian Union of Scientific and Engineering
Public Associations, International Union of
Scientific and Engineering Associations, the
Academy of Engineering Sciences named after
A.M. Prokhorov, the Interregional Public Fund
to promote scientific and technical progress
JSC TATNEFT was included in the TOP-10 with
the highest level of information transparency
Information transparency rating of the
Russian energy companies
Agency of Political and Economic
Communications (APEC)
The Company took the 9th place in the final
rating (of more than 700 companies)
The second annual survey of the Russian
companies corporate transparency largest
Russian Regional Network of integrated
reporting, "Da- Strategy” Group of Companies,
Downstream Technologies (JSC "Telescoping
technologies")
Department of Financial and Stock Market
of the Krasnodar Area
Contest of annual reports at the
XIIIth International Investment Forum
"Sochi-2014"
The Company has been recognized the best
in the special nomination of the Russian
Institute of Directors "Effective management
of corporate assets"
Report on sustainable development and so-
cial responsibility of JSC TATNEFT for 2013
won in the category "Best Report on Corpo-
rate Social Responsibility and Sustainable
Development of 2013."
Grand Prix of the Contest "For contribution to the
development of comprehensive and systematic
approach in the preparation of the corporate
annual reporting"
Diploma in the nomination "Oil and gas
industry companies" for the outstanding
contribution to the development of
information technologies in Russia
Partner solution in the area of personnel man-
agement on the SAP ERP HCM, platform de-
signed by experts of JSC TATNEFT and Energy
Consulting has been recognized as the best
Digital "Oil Newspaper" and "Oil and Life”
magazine of JSC TATNEFT were named among
the top 10 corporate newspapers and maga-
zines Digital "Oil newspaper" took second place
in the individual industry category "Oil and Gas
Industry Complex"
XVIIth Annual Report Contest
JSC “Moscow MICEX-RTS Exchange ", JSC
"RZB Forum
XVIIth Annual Report Contest
"Expert RA" rating agency
XIIth Annual National Award «IT-LEADER"
"The best partner solution” contest
Russian Managers Association, information re-
source IBusiness, CROC, business IT magazine
Intelligent Enterprise/RE (“Corporate systems")
and others.
Summit on the Russian localization of SAP-
2014 solutions
Rating of the industrial companies’
corporate editions in 2014
"Operations Management” Portal
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
Contest/Rating
Organizers
All-Russian forum "Health Resort-2014"
XVIIth All-Russian contest "100 best goods
of Russia"
Federation Council Committee on Social Policy
and Public Health Committee of the State Duma
on health protection, management of the affairs
of President of the Russian Federation, Govern-
ment of Moscow, Russian Academy of Sciences,
the National Medical Chamber and others.
Interregional public organization "Academy
of quality problems" with the support of
Federal Agency for Technical Regulation and
Metrology, Editing Board of "Standards and
Quality" Magazine
International and All-Russian Awards/
Nominations
Social objects of the Company were awarded
medals and diplomas in eight categories
Title of winners in the nominations “Industrial
and technology products”: (JSC “Nizh-
nekamskshina”, LLC “Nizhnekamsk SSC Tire
Factory”); and “Services”: (Medical Center
of JSC TATNEFT and the city of Almetyevsk)
Diplomas in the nominations: “Industrial and
technology products” (BMZ of JSC TAT-
NEFT, OOO “Nizhnekamsk SSC Tire Factory,
JSC TANECO); and “Services” (sanatorium
“Romashkino” of “Tatneftegazpererabotka”
Administration)
Diplomas of the Program (TANECO’s diesel)
"Russian Quality" Program
Diploma winner JSC «Nizhnekamskshina")
Xth All-Russian contest "Leader of environ-
mental activity in Russia-2014"
ANPO "Expert programs Center of the
Russian Organization for Quality"
Organizing Committee of the International
Forum "World Experience and Russian
Economy"
Contest prizewinner the in the nomination
"Best enterprise in the area of ecology and
environmental protection activities” (JSC
“Nizhnekamskshina")
Contest diploma winner (JSC
“Nizhnekamskshina”)
All-Russian contest "100 best enterprises
and organizations of Russia-2014"
International Forum "Innovation and
Development"
All-Russian contest "100 best organizations
of Russia in 2014. Ecology and
Environmentalal Management"
Federation Council and the State Duma of
the Federal Assembly of the Russian Federa-
tion, Ministry of Natural Resources, etc.
The "Best Russian Exporter 2013" prize
("KAMA" Trading House)
Vth International Exhibition "INNOPROM
2014"
Certificate and a bronze medal in the ranking
of Russian exporters (OOO "Tatneft-AZS
Center")
All-Russian contest "Exporter of the Year
2014"
Ministry of Industry and Trade of the Russian
Federation, Government of the Sverdlovsk
region
Ministry of Industry and Trade of the
Russian Federation under the patronage
of "Industrial and Commercial rating",
"Research and Information Center for
Strategic Studies" and the international
rating of Union National Business Ratings
88 89
Awards and Nominations of the Republic of
Tatarstan
Winner diploma of the in the nomination "Fuel
industry" for active participation in the implementa-
tion of the republican energy conservation program
and the achievement of high energy efficiency
economy of Republic of Tatarstan
Winner diploma in the nomination "Best printed
edition" (newspaper "Oil News")
Diploma of Merit of the Ministry of Economy of
the Republic of Tatarstan
Contest/Rating
Organizers
Republican contest "Resource
Efficiency. Energy Saving "
Republican contest among the media
to promote the implementation of the
long term target-oriented program "En-
ergy conservation and energy efficiency
increasing in the Republic of Tatarstan
for 2010-2015 and until 2020"
Review-contest for the best arrange-
ment of invention, rationalization and
patent/ licensing activities among enter-
prises, organizations and institutions of
the Republic of Tatarstan
Ministry of Industry and Trade, Energy Saving
Technologies Center at under the RT Cabinet
of Ministers, Kazan Mayor's Office, JSC
“Kazan Fair”
Ministry of Industry and Trade, Energy Saving
Technologies Center under the RT Cabinet of
Ministers, Republican Agency for Press and
Mass Communications
Society of Inventors and Innovators of the
Republic of Tatarstan
Company’s Engineering developments were
awarded 3 prizes
Republican contest "Best invention in
the Republic of Tatarstan”
23 specialist Company’s professionals have
become the contest’s laureates and prizewinners
Contest "Young Innovator and Inven-
tor of the Republic of Tatarstan-2014"
Republican contest "Best Goods and
Services of the Republic of Tatarstan”
Prizewinner title in the "Industrial and technol-
ogy products” nominations (JSC TANECO, JSC
«Nizhnekamskshina", OOO "Nizhnekamsk SSC
Tire Factory"); and "Services" (JSC TATNEFT’s and
Almetyevsk Medical Center and "Romashkino"
sanatorium of "Tatneftegazpererabotka" Administra-
tion, "Dzhalilsky” sanatorium of NGDU “Jalilneft").
Diplomas in the "Industrial and technology products”
nominations (BMZ of JSC TATNEFT) and "Services"
(JSC TATNEFT’s and Almetyevsk Medical Center)
12 projects of JSC TATNEFT were named winners
of the contest
Xth Republican contest "50 best innova-
tive ideas for the Republic of Tatarstan”
The Company’s top managers were named the
contest’s winners in the categories "For ecological
safety of production", "For arranging of safe and
healthy working conditions"
The team of JSC TATNEFT’s professionals
awarded the prize and the title "Laureate of the
State Prize of Republic of Tatarstan in the field of
science and technology"
Diploma and Cup absolute winner First place in
the category "Oil-producing and petrochemical
industry” (JSC TANECO)
First place in the category "Best TV spot" ("Time
TATNEFT") studio)
Republican public contest "Manager
of the Year"
State Prize of the Republic of Ta-
tarstan in the field of science and
technology
Republican "ECOleader" contest
Contest winner in the category "Large and
medium-sized enterprises"
Republican contest "Philanthropist of
the Year 2014"
Society of Inventors and Innovators of the
Republic of Tatarstan jointly with the Academy
of Sciences of the Republic of Tatarstan
Ministry of Industry and Trade of RT, Society
of Inventors and Innovators of Tatarstan, Youth
Union of enterprises and organizations of the
Republic of Tatarstan
Ministry of Industry and Trade, Ministry
of Agriculture and Food of the Republic
of Tatarstan, FGU "Tatarstan Center of
Standardization, Metrology and Certification”,
JSC “Kazan Fair”
Academy of Sciences of Republic of Tatarstan
jointly with the Investment and Venture Fund
of the Republic
Ministry of Economy of the Republic of
Tajikistan, the Regional Association of
Employers' and Entrepreneurs Association of
Republic of Tatarstan”
Commission under the President Republic
of Tatarstan on State Prizes of the Republic
of Tatarstan in the field of science and
technology
Ministry of Ecology and Natural Resources,
RT Cabinet of Ministers
Tatarstan, Ministry of Ecology and Natural
Resources of the Republic of Tatarstan
Republican Council on charitable activities
Republican contest "Man and Nature" Cabinet of Ministers of the Republic of
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
90 91
FINANCIAL
RESULTS
Positive financial performance resulted from
the reporting year. The financial and economic
potential of the Company allows continuing
implementation of major investment projects.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
AUDIT OPINION
TO SHAREHOLDERS OF OPEN JOINT STOCK COMPANY TATNEFT
NAMED AFTER V.D. SHASHIN ABOUT THE FINANCIAL STATEMENTS OF
OPEN JOINT STOCK COMPANY TATNEFT NAMED AFTER V.D. SHASHIN
FOR THE PERIOD FROM THE 1ST OF JANUARY
TO THE 31ST OF DECEMBER 2014
92 93
AUDIT OPINION
To Shareholders of Open Joint Stock Company TATNEFT named after V.D. Shashin
Responsibility of the Auditor
Audited Entity
Full name – Open Joint Stock Company TATNEFT named after V.D. Shashin (hereinafter referred to as the Company).
Abbreviated name – JSC TATNEFT n.a. V.D. Shashin.
State Registration Number 1021601623702.
Location: 75, Lenin Street, Almetyevsk 423450, Republic of Tatarstan, Russian Federation
Auditor
Name: ZAO ENERGY CONSULTING/Audit
State Registration Number: 1047717034640.
Location: 7 Pavlovskaya Street, Moscow 115093, Russia.
Postal address: 7 Pavlovskaya Street, Moscow 115093, Russia.
Member of NP “Institute of Professional Auditors of Russia” (IPAR)
Basic State Registration Number 10202014620.
We have audited the enclosed financial statements of the Company comprising the balance sheet as of December 31, 2014,
profit and loss statement, attachments to the balance sheet and profit and loss statement (the statement of changes in equity
and cash flow statement for the year of 2014), other attachments to the balance sheet and profit and loss statement (notes to
the accounts) for 2014.
Responsibility of the Audited Entity for the Financial Statement
The Company management is responsible for accounting and authenticity of the specified financial statements in accordance
with the accounting rules in the Russian Federation and for the internal control system necessary for preparation of financial
statements free of material misstatement due to fraud or errors.
Our responsibility is to express an opinion on authenticity of the financial statements based on our audit results. We have car-
ried out the audit in accordance with the federal auditing standards of the Russian Federation. These standards require that
we comply with relevant ethical requirements and perform the audit to obtain reasonable assurance that the financial state-
ments are free of any material misstatement.
The audit included performance of audit procedures aimed at obtaining audit evidence supporting the numerical indicators
of the financial statements and disclosure of the information contained therein. The choice of the audit procedures is the sub-
ject of our judgment, which is based on the assessment of the risk of material misstatements, made due to fraud or errors.
In assessing this risk, we considered the system of internal control, providing for compiling and authenticity of the financial
statements in order to select the relevant conditions for setting the auditing procedures, but not for the purpose of express-
ing an opinion on the effectiveness of the internal control system.
The audit also included the assessment of appropriateness of the accounting policies applied and the reasonableness of the
estimated figures received by the management of the audited entity as well as the overall assessment of the financial state-
ments presentation in general.
We believe that the audit evidence provides a reasonable basis for expressing an opinion on the authenticity of the financial
statements.
Opinion
In our opinion, the financial statements authentically present in all material respects the financial position of JSC TATNEFT
named after V.D. Shashin as of December 31, 2014, the results of its financial and business performance and cash flows for
the year 2014 in accordance with the established rules of compiling financial statements in the Russian Federation.
March 27, 2015
L.N. Antonenko
General Director
ZAO ENERGY CONSULTING/Audit
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
94 95
Indicator Description
LIABILITIES
III. CAPITAL AND RESERVES
Authorized capital (share capital, registered fund, contributions of
partners)
Repurchased shares
Revaluation of noncurrent assets
Capital surplus (without revaluation)
Reserve capital
Undistributed profit (uncovered loss)
TOTAL for Section III
IV. LONG-TERM LIABILITIES
Borrowings
Deferred tax liabilities
Estimated liabilities
Other liabilities
TOTAL for Section IV
V. SHORT-TERM LIABILITIES
Borrowings
Accounts payable
incl. suppliers and contractors
Liabilities to the state non-budgetary fund
Taxes and dues payable
Advances received
Dividends payable
Other creditors
Deferred revenues
Estimated liabilities
Other liabilities
TOTAL for Section V
BALANCE
Line Code
As of December
31, 2014
As of December
31, 2013
As of December
31, 2012
THOUSAND RUR.
1310
1320
1340
1350
1360
1370
1300
1410
1420
1430
1450
1400
1510
1520
1521
1522
1523
1524
1525
1526
1530
1540
1550
1500
1700
2 326 199
2 326 199
2 326 199
( - )
9 799 512
252 710
1 341 864
( - )
8 753 243
30 813
( - )
9 548 876
10 353
1 144 326
1 265 940
471 369 384
409 441 456
365 305 770
485 089 669
421 696 037
378 457 138
3 144 387
10 372 405
29 975 977
7 067 728
7 808 535
34 026 859
7 433 542
29 554 090
29 854 065
-
-
17 931
43 492 769
44 430 353
71 332 397
8 739 722
38 648 323
19 086 327
337 717
8 982 193
6 731 261
117 215
3 393 610
4 478
1 722 462
1 656 097
29 855 108
33 729 497
11 027 550
294 098
11 295 169
3 222 161
102 707
7 787 812
5 389
1 494 557
2 106 324
25 831 964
25 390 863
9 903 302
276 771
9 106 492
1 859 202
101 477
4 143 619
6 433
1 625 372
1 976 170
50 771 082
67 190 875
54 830 802
579 353 520
533 317 265
504 620 337
BALANCE SHEET OF JSC TATNEFT, FY 2014
Indicator Description
ASSETS
I. FIXED ASSETS
Intangible assets
Research and development results
Intangible exploration assets
Tangible exploration assets
Fixed assets
incl. incomplete capital investments
advance payments given for procurement and construction of
fixed assets
Income-bearing investments in tangible assets
Financial investments
Deferred tax assets
Other non-current assets
assets retirement obligations
TOTAL for section I
II.CURRENT ASSETS
Reserves
incl. raw materials and supplies
Work in progress costs
Finished products and goods for resale
Goods shipped
Other reserves and expenses
Value added tax on acquired assets
Accounts receivable
incl. noncurrent nondelinquent accounts receivable (that are
due beyond 12 months after the reporting date)
incl. buyers and customers
Advances paid
Other debtors
incl. current nondelinquent accounts receivable (that are due in
the next 12 months after the reporting date)
incl. buyers and customers
Advances paid
Other debtors
Financial investments (except for cash equivalents)
Cash and cash equivalents
Other current assets
TOTAL for section II
BALANCE
Line Code
As of December
31, 2014
As of December
31, 2013
As of December
31, 2012
THOUSAND RUR.
1110
1120
1130
1140
1150
1151
1152
1160
1170
1180
1190
1191
1100
1210
1211
1212
1213
1214
1215
1220
1230
1231
1232
1233
1234
1235
1236
1237
1238
1240
1250
1260
1200
1600
307 744
324 110
4 256 953
1 133 728
215 462
232 576
4 254 890
894 863
199 915
140 782
4 239 122
765 985
121 311 933
118 889 632
101 570 073
25 992 571
10 111 660
25 387 506
11 968 206
13 099 510
16 984 575
1 888 783
2 353 517
6 170 675
61 629 704
54 497 250
43 601 420
-
33 232 298
29 232 592
-
49 742 838
29 507 230
-
39 138 216
30 057 677
224 085 253
231 081 028
195 826 188
35 695 104
28 302 330
25 974 622
1 994 190
7 572 066
2 224 589
7 124 819
1 203 359
7 038 008
18 800 040
15 449 610
15 259 334
6 700 323
628 485
4 308 690
2 783 281
720 031
4 209 301
1 673 416
800 505
3 667 200
82 513 760
78 343 675
76 043 949
4 537 482
3 500 446
5 091 597
582 784
1 535 471
2 952 290
188
-
539
3 954 510
1 964 975
2 138 768
77 976 278
74 843 229
70 952 352
47 652 992
19 050 344
11 272 942
51 062 327
13 487 835
10 293 067
44 701 410
15 217 166
11 033 776
197 518 161
170 528 846
195 409 775
34 916 922
20 649 731
315 630
202 354
7 396 963
301 640
355 268 267
302 236 237
308 794 149
579 353 520
533 317 265
504 620 337
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
PROFIT AND LOSS STATEMENT FY 2014
ESSENTIAL ASPECTS OF THE ACCOUNTING POLICY AND
PRESENTATION OF FINANCIAL STATEMENTS FOR 2014
Indicator Description
LineCode
FY 2014
FY 2013
THOUSAND RUR.
Main Approaches to Preparation of Annual Financial Statements
96 97
Revenues
Cost of goods sold
Gross profit (loss)
Selling expenses
Administrative expenses
Mineral exploration and evaluation expenses
Profit (loss) on sales
Participation capital
Interest receivable
Interest payable
Other income
Other expenses
Profit (loss) before taxation
Current income tax
incl. permanent tax liabilities (assets)
Changes in deferred tax liabilities
Changes in deferred tax assets
Miscellaneous
Adjusted tax on the profit for the consolidated group of taxpayers
Net profit (loss)
INFORMATIONAL
Surplus on revaluation of fixed assets not included in the net income (loss) for the
period
Result from other operations not included in the net income (loss) for theperiod
Total profit/loss for the period
Basic earnings (loss) per share
Diluted earnings (loss) per share
2110
2120
2100
2210
2220
2230
2200
2310
2320
2330
2340
2350
2300
2410
2421
2430
2450
2460
2465
2400
2510
2520
2500
2900
2910
392 357 674
363 531 273
(273 175 758)
(228 539 354)
119 181 916
134 991 919
(27 499 377)
(37 252 177)
-
-
(2 199)
(2 026)
91 680 340
97 737 716
2 477 770
6 462 835
179 295
3 282 143
(3 307 602)
(4 337 004)
75 906 110
26 372 397
(69 161 023)
(39 749 600)
104 058 430
83 484 947
(20 643 017)
(19 712 285)
(2 395 201)
(3 390 289)
(2 563 870)
(374 993)
-
-
(611)
(117 095)
1 210 130
569 566
82 061 062
63 850 140
1 241 831
423 247
221 897
20 460
83 524 790
64 293 847
36,95
-
28,75
-
Financial accounting in the Company is performed in accordance with Federal Law No.402-FZ of December 06, 2011 “On
Accounting”, Provision on Accounting and Reporting in the Russian Federation approved by Order of the Russian Federation
Ministry of Finance No.34n dated July 29, 1998, current accounting regulations (RAS), as well as the accounting policy of
the Company. Financial statements of the Company for 2014 were prepared in compliance with mentioned Law, accounting
regulations and policy, as well as the assumption of the organization activity continuity. Annual financial statements for 2014
were compiled according to the forms developed and approved by the Company in accordance with the Order of the Ministry
of Finance No. 66n of July 02, 2010 “About formats for corporate financial statements”. The data in financial statements is
presented in thousands of rubles.
Assets and Liabilities Denominated in Foreign Currency
Accounting for assets and liabilities denominated in foreign currencies is carried out in accordance with RAS 3/2006 “Accounting of
Assets and Liabilities Denominated in Foreign Currencies”, and approved by Order No. 154n of November 27, 2006 of the Finance
Ministry of the Russian Federation.
The exchange rate difference is reflected in the accounting and financial statements for the concerned reporting period with the due
date of payment or which the financial statements were executed for.
The exchange rate difference arising from conversion of the organization’s assets and liabilities denominated in foreign currency
used for performing activities outside the Russian Federation into rubles is credited to the organization’s capital surplus.
The exchange rate difference on other activitiesis credited to financial results of the organization as other income and expenses. The
currency exchange rate gains and losses are recognized in the Profit and Loss account in the “Other income” or “Other expenses”.
For accounting business transactions in foreign currencies there was the official exchange rate applied of the foreign currency to
the ruble valid on the date of transaction. Cash on foreign currency accounts in banks and on hand, financial investments (except
shares), and settlement funds in foreign currencies (except the funds received and paid advances and pre-payment or earnest
money) are reflected in the financial statements as amounts calculated on the basis of the currency official exchange rates valid on
December 31, 2013. The currency exchange rates on this date amounted to RUR 56.2584 to USD 1.00 (RUB 32.7292 as of Decem-
ber 31, 2013; RUR 30.3727 as of December 31, 2012); RUR 44.9699 to EURO 1.00 (RUR 44.9699 as of December 31, 2013; RUR
40.2286 as of December 31, 2012).
Intangible Assets
As a part of intangible assets there are software programs for computers reflected; inventions; useful models; production
secrets (know-how); trademarks and service marks, licenses for mineral geological exploration and production, licenses for
mineral production, exploration and evaluation expenditures of mineral resources (transferred from the intangible exploration
assets after confirmation of the commercial viability of oil production in the field).
Intangible assets are reflected in the accounting records at historic cost in that reporting period when received the docu-
ments confirming the Company’s exclusive rights to the results of intellectual activity or means of individualization irrespec-
tive of intangible assets used in production, performance of works or rendering of services, for administrative purposes.
The value of intangible assets shall be repaid by the straight-line depreciation method at the rates specified on the basis of
the due date of the useful life.
Depreciation is not charged for intangible assets with an indefinite period of the useful life.
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98 99
Depreciation charging is performed through accumulation of appropriate amounts in a separate account. Deprecia-
tion on intangible assets is reflected in the accounting period, which they refer to and is charged regardless of the
organization’soperating results in the reporting period.
Intangible exploration assets as licenses for geological subsurface study are depreciated by straight-linemethod during the
period of their useful application.Depreciation costs for aforementioned targets are included in the costs of prospecting,
evaluation and exploration of mineral resources for relevant subsurface areas.
The useful life of intangible assets is annually verified for the purpose of clarification. In case of substantial change of the period
duration (by more than twenty percent) within which the asset is intended to be used, its useful life is defined. The resulting adjust-
ments are reflected in the accounting and financial reporting at the beginning of the year as changes in the estimated values.
Acquisition costs incurred for exploration and mininglicenses, as well as the costs of prospecting, evaluation and exploration
of mineral resources are not depreciated until the commercial feasibility of oil production is confirmed in the relevant license
block of mineral resources and approval of the order of commercialfield development.
Value adjustment of intangible assets of homogeneous groups is not performed.
Expenses for Research & Development, Development and Engineering Works
Expenses for the research & development, development and engineering worksare accounted in the amount of actual
expenses incurred during performance of these works.
The expenses for the research & development, development and engineering works which have produced positive
results and started to be used in the work are expensed written off as expenses of ordinary activities starting with the
month following the month when the company started the actual application of the mentioned works results in the pro-
duction manufacturing (work performance, service rendering) or for administrative needs of the organization.
Writing off the costs of each performed research & development, development and engineering workwhich have pro-
duced positive results is made during the useful life of R & D results (which should not exceed 5 years).
The commercial feasibility of oil production is considered to be confirmed at the moment of approval of the reservoir man-
agement plan in the license area of mineral resources.
The Company performs annual verification of exploration assets depreciation as of December 31 of the calendar year, as well as in
the case of cessation of their recognition when confirming commercial feasibility of oil production in the relevant license block.
For the purposes of verifying exploration assets for depreciation the aforementioned assets are categorized by mineral re-
source blocks indicated in the licenses.
Impairment loss of exploration assetsis reflected in the profit-and-loss statement in line code “Other expenses”. Furthermore
the Company applies the reversal of impairment loss to exploration assets.
The Company ceases recognition of exploration assets in relation to a certain licensed block of mineral resources when
confirming commercial feasibility of oil production in the relevant licensed block or recognizing lack of prospects of mineral
resources production in this area.
The expenses for the research & development, development and engineering workswhich have not produced positive
results are written off to the financial result as miscellaneous expenses in the reporting period.
When confirming the commercial feasibility of oil production in the licensed block of mineral resources the Company per-
forms reclassification of exploration assets:
Exploration assets
The Company considers the following to be exploration assets as a part of tangible exploration assets:
• expenses for acquisition and construction of prospecting, exploration and advance producing wells, as well as other
• expenses for acquisition and rig-up of the equipment for prospecting, exploration and advance producing operation wells.
oilfield facilities;
According to the Company the intangible exploration assets include the following types of exploration costs:
mineral resources;
• acquisition costs of licenses for geological study of subsurface, licenses for geological exploration and production of
• costs of prospecting, evaluation and exploration of mineral resources: expenses for geological, geochemical, geophysical
works, as well as expenses for acquiring geological information on the subsurface from the third parties, including state
authorities, and expenses for drilling key, appraisal and structure wells.
The Company considers the following exploration costs as expenses for regular types of activity: expenses for maintenance
of the structural divisions organized solely for or performance and coordination of works on exploration, evaluation and pros-
pecting of mineral resources, as well as expenses for maintenance and repair of tangible exploration assets.
Tangible exploration assets are depreciated by straight-line depreciation method during the period of their useful life.
Depreciation costs for targets of tangible exploratory assets are included in the costs of prospecting, evaluation and explora-
tion of mineral resources for relevant license blocks.
• tangible exploration assets are included in the category of fixed assets at residual value;
• intangible exploration assets are included in the category of intangible assets at residual value.
JSC TATNEFT writes off the exploration assets to other expenses, if they are not able to provide economic benefits in the
future.
Fixed Assets
Land plots, buildings, facilities, machinery, equipment, transport vehicles and other relevant assets of over 12 months asset
life and cost over 40,000 rubles are reflected in the fixed assets.
The Company annually revaluates fixed assets based on the current value (replacement asset value) at the end of the report-
ing period.
The fixed assets put into operation before January 1, 2002 are depreciated at uniform depreciation rates approved by Decree
No.1072 of the USSRCouncil of Ministers dated October 22, 1990 “On Uniform Depreciation Rates of Full Cost Recovery of
Fixed Assets of the USSR National Economy”; and those assets put into operation from January 1, 2002 are depreciated at
the rates calculated on the basis of useful life. The classification of fixed assets included in depreciation groups approved by
the Order No. 1 of the Government of Russian Federation dated January 01, 2002 is used as one of the information sources
about the useful life periods.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
100 101
For this purpose the following useful life periods are specified for fixed assets (put into operation starting from January 1,
2002) by depreciation groups:
1 group
2 group
3 group
4 group
5 group
6 group
7 group
8 group
9 group
10 group
13 months;
30 months;
48 months;
72 months;
96 months;
132 months;
192 months;
252 months;
312 months;
372 months.
On disposal of financial investments for which the current market value cannot be determined, their value is formed on
the basis of the assessment determined by:
• on disposal of shares or bonds - at original cost of the first-time financial investments acquisition (FIFO method);
• on disposal of bills - at original cost of each unit of financial investments accounting.
The cost of information, advisory services, valuation services and other similar services related to the disposal of finan-
cial investments made prior to the financial investments disposal are reflected in the line of “Other Current Assets”.
On disposal of financial investments, for which the current market value is not determined, their value is determined by
the organization on the basis of the last assessment.
Gains and losses of financial investments disposal are reflected in the profit and loss statement as part of other income
and expenses.
The straight line depreciation method is used for depreciation calculations.
Inventories
Depreciation is not charged on land plots and natural resources sites.
Changing the original value of fixed assets as they were included for accounting purposes is allowed in cases of completion,
retrofit, renovation, modernization, partial liquidation and revaluation of the fixed assets.
Repair expenses of fixed assets items are included at actual costs and referred to the reporting period in which they were
done.
The line of “Construction in progress” includes the costs of construction and erection works, acquisition of buildings, facili-
ties, equipment and other tangible objects of long-term use, other capital works and expenses. This line reflects the cost of
capital construction projects before their putting into operation, after which the structures are transferred into fixed assets.
“Raw Materials and Supplies” line of the balance sheet reflects raw materials, basic and auxiliary materials, purchased semi-fin-
ished products and components, fuel, packaging, spare parts, construction and other materials.
The line of the inventories also reflects the assets, which meet the conditions necessary for the recognizing them as fixed assets of
the cost no more than 40,000 rubles per unit.
The inventories are recorded at the actual cost of their acquisition with the exception of VAT and other recoverable taxes (except as
provided by the legislation of the Russian Federation). Disposal of the inventories is carried at the average cost.
The inventories, which are obsolete, wholly or partially have lost their original quality, or which current market value is decreased,
are reflected in the balance sheet less the reserve provision for impairment of the material values.
In addition to this, the “Construction in progress” line reflects the costs associated with the lease of land for construction of
future wells.
Work in progress, Finished Products, Goods and Sales Expenses
Leased fixed assets are reflected in the line of “Income-bearing Investments in Tangible Assets”.
Financial Investments
Expenditures incurred for performance of activities under the Agreement for the exploration and production sharing with
Libya during the exploration period are reflected as part of the production in progress. The plans provide that the mentioned
expenditures for petroleum operations will be offset through delivery of finished products (crude oil, liquid hydrocarbon by-
products and natural gas), which JSC TATNEFT will receive as a result of production sharing during the operational period.
Financial investments are accepted for accounting at original cost.
Finished products are reflected in the balance-sheet at the full actual production cost (including management expenses).
Financial investments defining the fair market value are reflected in the financial statements as of the end of the reporting
year at current market value by adjusting their evaluation on the previous reporting date.
In shipment of oil, petroleum products and gas products assessment is carried out by the average cost method for each
group of products.
Financial investments for which there is no definition of the fair market value are reflected in financial statements as of the
reporting date at original cost after deduction of the reserve amount formed for their depreciation.
Sales expenditures are written off to the results of the Company’s financial and economic activities without differentiating
between the sold and unsold products.
Financial investments are reflected as part of the current assets if the expected duration of their possession is less than
12 months after the reporting date. Other financial investments are included in fixed assets.
The costs of information, advisory services, valuation services and other similar services related to taking a decision
on acquisition of financial investments made prior to the acquisition of financial investments are recorded in the line of
“Other Non-Current Assets” (in case it is planned to acquire long-term investments), in the line of “Other Current Assets”
(in case it is planned to acquire short-term investments).
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
Goods Shipped
The accounting item “Goods Shipped” reflects shipped products, the title for which was not transferred to buyers.
This line also reflects the real estate property transferred to the buyer by the delivery-acceptance act before the moment of
state registration of the transfer ownership.
Accounts receivables
Indebtedness of buyers and customers is determined on the ground of prices established by contracts concluded between
the Company and buyers (customers) taking into account all discounts (extra charges). Indebtedness unrealistic to be recov-
ered is written off from the balance if it is proved to be such.
The indebtedness not paid within the time limits stipulated in contracts and not secured with respective guarantees is shown
after deduction of accrued reserves for bad debts. These reserves constitute a conservative assessment carried out by the
Company with regard to the part of debts which is likely not to be paid. The reserve is created for each doubtful debt out-
standing (depending on the financial condition (solvency) of the debtor and an estimated probability of debt repayment in
whole or in part) on the basis of the receivables inventory, made for the last day of the reporting month.
Income and expenses generated in the creation and recovery of allowance for doubtful debts in one financial year are re-
flected in the profit and loss statement in the lines “Other Income” or “Other Expenses”.
Cash and Cash Equivalents
In accordance with the regulations on accounting, “Report of Cash Flows,” approved by Order No. 11n of the Ministry of Fi-
nance of Russia dated February 02, 2011 the cash equivalents include highly liquid investments that can easily be converted
into the known in advance amount of cash and are subject to an insignificant risk of value change.
The Company refers the bank deposits placed for maximum 3 months period under the contracts the terms of which provide
for acceleration possibility to the cash equivalents.
In the Statement of Cash Flows:
• cash balances and cash equivalent balances in a foreign currency at the beginning and at the end of the reporting period are
reflected in the rubles amount, which is determined in accordance with RAS 3/2006. Differences arising in connection with
the conversion of the organization’s cash flows and cash equivalents in foreign currency exchange rates on different dates are
reflected in the cash flows statement as the impact of foreign currency exchange rate changes against the ruble.
• indirect taxes (VAT and excise duties) as part of the proceeds from buyers and customers, payments to suppliers and
contractors and payments to the budget system of the Russian Federation or reimbursement of out of it are reflected as
balanced result in the line of “Other Income” (“Other Payments”).
Authorized Capital and Capital Surplus
The authorized capital is reflected in the amount of the face value of ordinary and preferred shares purchased by the shareholders.
The surplus capital of the Company includes exchange differences arising from the conversion of the organization’s assets
and liabilities value expressed in foreign currency used to perform activities outside the Russian Federation into rubles. In
addition, the revaluation surplus of fixed assets resulting from revaluation classified in the additional capital is reflected in the
“Revaluation of Fixed Assets” line. Revaluation surplus in case of the fixed asset item disposal is transferred from the capital
surplus to the undistributed profit of the Company.
102 103
In accordance with the legislation the Company established a reserve fund in the amount to 5% of the authorized capital
formed out of net profits of the Company. The reserve fund is intended to cover the losses of the Company for bonds re-
demption and repurchase of the Company’s shares if other funds are unavailable.
In accordance with the constituent documents the Company establishes the Employee share ownership fund which is formed
out of net profits of the. Contributions to this fund are made in accordance with the methodology approved by “Regulations
on Bonus Certificates of JSC TATNEFT.
Estimated Liabilities
The Company acknowledges its estimated liability for remuneration payment based on the results of the year. The amount
of monthly payments under the estimated liability is determined based on the monthly deduction payments and the actual
expenses amount of the labor costs. Percentage of contributions under the estimated liability is calculated by the ratio of the
annual planned expenditure for the labor payment to the planned total labor costs.
Based on the Provision “Estimated Liabilities, Contingent Liabilities and Contingent Assets (RAS 8/2010)” becoming effective
the Company introduced amendments in terms of recognizing estimated liabilities to the employees for unused vacations.
The estimated liability value of unused employees’ vacation for accrual of relevant allowance is determined based on the total
number of days of the unused vacation for each employee of the average daily earnings and insurance premiums accrued on
the specified reserve.
The actual amount of the vacation allowance (including the compensation amount for unused vacation) accrued to the
employee in the accounting is ascribed due to the acknowledged amount of the estimated liability to the unused vacation
payment.
An inventory of the estimated liability for unused vacation payment is carried out as of the last day of each quarter, which
results are reflected by the estimated liability adjustments.
In accordance with the requirements of the regulations (Federal Law No. 2395 “On Subsoil”, No. 7-FZ “On Environmental
Protection” etc.), the terms of license agreements for the right to use the subsoil JSC TATNEFT recognizes in the accounting
records and financial statements the estimated liabilities on liquidation of fixed assets, as well as commitments for remedia-
tion of lands in the fields after completion of the oil and gas production.
Estimated liabilities are formed for all real estate oil & gas assets. Estimated liabilities on fixed assets retirement and restoration of
natural resources are calculated by groups of fields. The value of estimated liability is recorded at the present (discounted) value.
Accrued estimated liabilities at initial recognition, as well as the newly introduced fixed assets are included in the “Other non-
current assets”.
Accrual of interest due to the increased present value as we approach the period of performance estimated liability is re-
corded in the profit and loss statement in the line of “Interest payable”.
Adjustment of estimated liabilities on the fixed assets retirement and restoration of natural resources due to the review of core
indicators of calculation (forecast inflation rate, discount rate, discount period) is recorded in the profit and loss statement in
the line of “Other income”.
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Loans and Borrowings
Expenses
104 105
Administrative expenses are written off for production in full on a monthly basis.
Administrative expenses in the oil-and-gas production divisions are distributed between the calculation items for produc-
tion of oil, associated petroleum gas, production of other goods (works, services) on a pro rata basis to their total production
expenses net of deductions, taxes and other obligatory payments. Administrative expenses in other structural divisions are
distributed on a pro rata basis to the actual expenses of the direct labor costs.
Accounting of Profit Tax Calculations
In preparation of the financial statements the balanced (net) amounts of deferred tax asset and deferred tax liability are re-
flected in the balance sheet.
Correction of errors in the accounting and reporting
An error identified in the accounting and financial statements is recognized to be essential if the ratio of the error to the
numerical indicator of the relevant group of balance sheet items of JSC TATNEFT, or item of the financial statement of JSC
TATNEFT for the reporting period is minimum five percent. Otherwise the error is insignificant.
In accordance with RAS 15/2008 “Accounting of expenses on loans and borrowings” approved by Order No.107n of the
Ministry of Finance of Russia dated October 06, 2008 the principal amount of the loan (credit) received from the lender is ac-
counted in accordance with the terms of the loan agreement (credit agreement) in the amount of actually received monetary
assets or in cost estimate of other items stipulated by the contract.
Indebtedness under received loans and borrowings as well as accrued interest is reflected in the balance sheet line of “Bor-
rowings”.
Indebtedness under the received loans and borrowings as well as accrued interest for accounting is subdivided into short-
term indebtedness (which repayment period does not exceed 12 months under the terms of contract) and long-term indebt-
edness (the repayment period of which is over 12 months under the terms of contract).
The long-term indebtedness is transferred to short-term indebtedness at the moment when there are 365 days left before
repayment of the principal amount.
Interest on received loans and borrowings is recognized as other expenses of that period in which they were made, except for
the part to be included in the value of the investment asset.
Expenses of received loans and credits are directly attributable to acquisition and/or creation of the investment asset are
included in the cost of the asset and are repaid through depreciation except where charging of the asset depreciation is not
provided by the accounting rules.
Inclusion of expenses on received loans and borrowings in the original value of the investment asset is terminated on the
first day of the month following the month of accepting the asset for accounting as a fixed asset, intangible asset or R & D
expenses.
Sales Revenue Recognition
Revenue from sales of goods, products and service rendering (execution of works) is recognized when the products are
shipped to the buyers (services are rendered to customers).
Revenue from the sales under contracts providing for fulfillment of obligations (payment) by non-monetary assets is deter-
mined at the cost of the values received or receivable by the Company calculated on the basis of the prices which are usually
used by the Company in comparable circumstances to determine the cost of similar values.
According to hydrocarbons sales contracts the settlement documents should be mainly submitted to the buyers no later than
15 days after the month of shipment, while the price of raw materials is determined by the settlement method based on the
market quotations or it is fixed in the contract as agreed by the parties.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
IFRS CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2014
106 107
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
TATNEFT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
TATNEFT
CONSOLIDATED STATEMENTS OF PROFIT
OR LOSS AND OTHER COMPREHENSIVE INCOME
Note
31 December
2014
31 December
2013
Note
Year ended
31 December
2014
Year ended
31 December
2013
108 109
ASSETS
Cash and cash equivalents
Restricted cash
Accounts receivable, net
Short-term financial assets
Inventories
Prepaid expenses and other current assets
Prepaid income tax
Total current assets
Long-term accounts receivable, net
Long-term financial assets
Investments in associates and joint ventures
Property, plant and equipment, net
Deferred income tax assets
Other long-term assets
Total non-current assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Short-term debt and current portion of long-term debt
Accounts payable and accrued liabilities
Taxes payable
Income tax payable
Total current liabilities
Long-term debt, net of current portion
Other long-term liabilities
Decommissioning provision, net of current portion
Deferred income tax liability
Total non-current liabilities
Total liabilities
Shareholders’ equity
Preferred shares (authorized and issued at 31 December 2014 and 2013 – 147,508,500 shares;
nominal value at 31 December 2014 and 2013 – RR1.00)
Common shares (authorized and issued at 31 December 2014 and 2013 – 2,178,690,700 shares;
nominal value at 31 December 2014 and 2013 – RR1.00)
Additional paid-in capital
Accumulated other comprehensive income
Retained earnings
Less: Common shares held in treasury, at cost
(55,514,000 shares and 55,592,000 shares at 31 December 2014 and 2013, respectively)
Total Group shareholders’ equity
Non-controlling interest
Total shareholders’ equity
Total liabilities and equity
6
7
8
9
10
7
11
12
13
18
14
15
16
18
15
17
13
18
19
19
19
41,548
1,635
46,059
25,323
32,462
31,157
2,418
29,535
917
52,098
16,693
29,538
22,139
1,078
180,602
151,998
1,364
29,893
7,212
507,586
2,982
3,295
552,332
732,934
15,859
37,999
14,440
166
68,464
12,888
2,960
44,779
21,599
82,226
150,690
1,016
25,814
7,778
481,883
2,049
3,551
522,091
674,089
36,561
28,444
16,706
1,462
83,173
12,785
3,839
54,511
15,799
86,934
170,107
746
746
11,021
11,021
87,482
1,888
457,915
(3,087)
555,965
26,279
582,244
732,934
87,482
889
384,376
(3,102)
481,412
22,570
503,982
674,089
Sales and other operating revenues, net
476,360
454,983
20
(102,614)
COSTS AND OTHER DEDUCTIONS
Operating
Purchased oil and refined products
Exploration
Transportation
Selling, general and administrative
Depreciation, depletion and amortization
(Loss)/gain on disposals of property, plant and equipment, investments and impairments
Taxes other than income taxes
Maintenance of social infrastructure and transfer of social assets
Total costs and other deductions
OTHER INCOME/(EXPENSES)
Foreign exchange gain/(loss)
Interest income
Interest expense, net of amounts capitalized
(Loss)/earnings from equity investments
Other income, net
Total other income/(expenses)
Profit before income taxes
INCOME TAXES
Current income tax expense
Deferred income tax expense
Total income tax expense
Profit for the year
OTHER COMPREHENSIVE INCOME:
Items to be reclassified subsequently to profit or loss:
Foreign currency translation adjustments
Unrealized holding losses on available-for-sale securities, including share of associates,
net of tax
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) on employee benefit plans
Other comprehensive income
Total comprehensive income for the year
20
13
18
21
21
12
18
(54,478)
(2,100)
(23,209)
(43,355)
(21,121)
(1,799)
(117,060)
(4,091)
(89,634)
(50,312)
(1,839)
(30,388)
(44,123)
(19,323)
1,209
(111,336)
(4,828)
(369,827)
(350,574)
14,876
6,944
(5,482)
(313)
1,415
17,440
123,973
(21,376)
(4,920)
(26,296)
97,677
649
(270)
620
999
(438)
3,365
(6,924)
350
529
(3,118)
101,291
(21,645)
(1,302)
(22,947)
78,344
530
(43)
(324)
163
98,676
78,507
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
TATNEFT
CONSOLIDATED STATEMENTS OF PROFIT
OR LOSS AND OTHER COMPREHENSIVE INCOME (CONTINUED)
TATNEFT
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
110 111
Note
Year ended
31 December
2014
Year ended
31 December
2013
Attributable to Group shareholders
PROFIT ATTRIBUTABLE TO:
- Group shareholders
- Non-controlling interest
TOTAL COMPREHENSIVE INCOME IS ATTRIBUTABLE TO:
- Group shareholders
- Non-controlling interest
BASIC AND DILUTED NET EARNINGS PER SHARE (RR)
Common
Preferred
WEIGHTED AVERAGE SHARES OUTSTANDING (MILLIONS OF SHARES)
Common
Preferred
19
19
92,227
5,450
97,677
93,226
5,450
98,676
40.61
40.58
2,123
148
70,832
7,512
78,344
70,995
7,512
78,507
31.19
31.16
2,123
148
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Balance
at 1 January 2013
Profit for the year
Other comprehensive
(loss)/income for the year
Total comprehensive
(loss)/income for the
year
Treasury shares
- Acquisitions
- Disposals
Disposal of non-
controlling interest in
subsidiaries
Dividends declared
Balance
at 31 December 2013
Profit for the year
Other comprehensive
income for the year
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Treasury shares
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Disposal of non-
controlling interest in
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Dividends declared
Balance
at 31 December 2014
2,270,656
11,767
87,482
(3,093)
(494)
754
466 333,072 429,954
16,279 446,233
-
-
-
(49)
(175)
126
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(9)
(36)
27
-
-
-
-
-
70,832
70,832
7,512
78,344
(324)
530
(43)
-
163
-
163
(324)
530
(43)
70,832
70,995
7,512
78,507
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(9)
(36)
27
-
-
-
-
(9)
(36)
27
(237)
(237)
-
(19,528)
(19,528)
(984)
(20,512)
2,270,607
11,767
87,482
(3,102)
(818) 1,284
423 384,376
481,412
22,570 503,982
-
-
-
78
(302)
380
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
(63)
78
-
-
-
-
-
92,227
92,227
5,450
97,677
620
649
(270)
-
999
-
999
620
649
(270)
92,227
93,226
5,450
98,676
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
(63)
78
-
-
-
-
78
15
(63)
78
78
-
(18,688)
(18,688)
(1,819)
(20,507)
2,270,685
11,767
87,482 (3,087)
(198) 1,933
153
457,915 555,965
26,279 582,244
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
TATNEFT
CONSOLIDATED STATEMENT OF CASH FLOWS
112 113
OPERATING ACTIVITIES
Profit for the year
Adjustments:
Depreciation, depletion and amortization
Income tax expense
Loss/(gain) on disposals of property, plant and equipment, investments and impairments
Transfer of social assets
Effects of foreign exchange
Equity investments loss/(earnings) net of dividends received
Change in provision for impairment of financial assets
Change in fair value of trading securities
Interest income
Interest expense
Other
Changes in operational working capital, excluding cash:
Accounts receivable
Inventories
Prepaid expenses and other current assets
Trading securities
Accounts payable and accrued liabilities
Taxes payable
Notes payable
Other non-current assets
Net cash provided by operating activities before income tax and interest
Income taxes paid
Interest paid
Interest received
Net cash provided by operating activities
Year ended
31 December
2014
Year ended
31 December
2013
Year ended
31 December
2014
Year ended
31 December
2013
97,677
78,344
Additions to property, plant and equipment
(62,574)
(56,827)
INVESTING ACTIVITIES
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of investments
Purchase of investments
Purchase of certificates of deposit, net
(Issuance)/repayment of loans and notes receivable, net
Change in restricted cash
Net cash used in investing activities
FINANCING ACTIVITIES
Proceeds from issuance of debt
Repayment of debt
Dividends paid to shareholders
Dividends paid to non-controlling shareholders
Purchase of treasury shares
Proceeds from sale of treasury shares
Proceeds from issuance of shares by subsidiaries
Net cash used in financing activities
Net change in cash and cash equivalents
Effect of foreign exchange on cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
1,248
77
(117)
(7,598)
(2,176)
(718)
1,539
564
(17)
(5,034)
1,457
452
(71,858)
(57,866)
16,742
(50,501)
(18,674)
(1,819)
(37)
37
60
30,258
(53,820)
(19,526)
(984)
(27)
27
-
(54,192)
(44,072)
10,433
1,580
29,535
41,548
16,211
241
13,083
29,535
21,121
26,296
1,799
1
10,036
313
(165)
(283)
(6,944)
5,482
31
7,456
(4,054)
(9,206)
1,294
6,423
(2,094)
(2)
205
155,386
(24,012)
(1,378)
6,487
136,483
19,323
22,947
(1,209)
23
3,282
(350)
633
(351)
(3,365)
6,924
736
1,094
(1,630)
4,733
3,159
(1,659)
3,490
256
674
137,054
(19,634)
(2,636)
3,365
118,149
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
TATNEFT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Organisation
OAO Tatneft (the “Company”) and its subsidiaries (jointly referred to as “the Group”) are engaged in crude oil exploration,
development and production principally in the Republic of Tatarstan (“Tatarstan”), a republic within the Russian Federation.
The Group also engages in refining and marketing of crude oil and refined products as well as production and marketing of
petrochemicals (see Note 22).
The Company was incorporated as an open joint stock company effective 1 January 1994 (the “privatization date”) pursuant
to the approval of the State Property Management Committee of the Republic of Tatarstan (the “Government”). All assets and
liabilities previously managed by the production association Tatneft, Bugulminsky Mechanical Plant, Menzelinsky Exploratory
Drilling Department and Bavlinsky Drilling Department were transferred to the Company at their book value at the privatiza-
tion date in accordance with Decree No. 1403 on Privatization and Restructuring of Enterprises and Corporations into Joint-
Stock Companies. Such transfers were considered transfers between entities under common control at the privatization date,
and were recorded at book value.
The Group does not have an ultimate controlling party.
As of 31 December 2014 and 2013 OAO Svyazinvestneftekhim, a company wholly owned by the government of Tatarstan,
together with its subsidiary, holds approximately 36% of the Company’s voting stock. These shares were contributed to OAO
Svyazinvestneftekhim by the Ministry of Land and Property Relations of Tatarstan in 2003. Tatarstan also holds a “Golden
Share”, a special governmental right, in the Company (see Note 19). The exercise of its powers under the Golden Share ena-
bles the Tatarstan government to appoint one representative to the Board of Directors and one representative to the Revision
Committee of the Company as well as to veto certain major decisions, including those relating to changes in the share capital,
amendments to the Charter, liquidation or reorganization of the Company and “major” and “interested party” transactions as
defined under Russian law. The Golden Share currently has an indefinite term. The Tatarstan government, including through
OAO Svyazinvestneftekhim, also controls or exercises significant influence over a number of the Company’s suppliers and
contractors.
The Company is domiciled in the Russian Federation. The address of its registered office is Lenina St., 75, Almet’evsk, Tatar-
stan Republic, Russian Federation.
Note 2: Basis of presentation
The accompanying consolidated financial statements have been prepared in accordance with International Financial Report-
ing Standards (“IFRS”). The Group first adopted IFRS for the fiscal year ended 31 December 2012, with a date of transition to
IFRS on 1 January 2011.
These consolidated financial statements have been prepared on a historical cost basis, except certain financial assets and
liabilities measured at fair value.
The entities of the Group maintain their accounting records and prepare their statutory financial statements principally in accord-
ance with the Regulations on Accounting and Reporting of the Russian Federation (“RAR”). The accompanying consolidated
financial statements have been prepared from these accounting records and adjusted as necessary to comply with IFRS. The prin-
cipal differences between RAR and IFRS relate to: (1) valuation (including indexation for the effect of hyperinflation in the Russian
Federation through 2002) and depreciation of property, plant and equipment; (2) foreign currency translation; (3) deferred income
taxes; (4) valuation allowances for unrecoverable assets; (5) consolidation; (6) share based payment; (7) accounting for oil and gas
properties; (8) recognition and disclosure of guarantees, contingencies and commitments; (9) accounting for decommissioning
provision; (10) pensions and other post retirement benefits and (11) business combinations and goodwill.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas in-
114 115
volving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consoli-
dated financial statements are disclosed in Note 4.
Reclassifications. Certain reclassifications have been made to previously reported balances to conform to the current
year presentation; such reclassifications had no effect on net income profit for the year, shareholders’ equity or cash flows.
Note 3: Summary of Significant Accounting Policies
Functional and Presentation Currency. The presentation currency of the Group is the Russian rouble.
Management has determined the functional currency for each consolidated subsidiary of the Group, except for subsidiaries locat-
ed outside of the Russian Federation, is the Russian Rouble because the majority of its revenues, costs, property and equipment
purchased, debt and trade liabilities are either priced, incurred, payable or otherwise measured in Russian Roubles. Accordingly,
transactions and balances not already measured in Russian Roubles (primarily US Dollars) have been re-measured into Russian
Roubles in accordance with the relevant provisions of IAS 21 The Effects of Changes in Foreign Exchange Rates.
Under IAS 21 revenues, costs, capital and non-monetary assets and liabilities are translated at historical exchange rates pre-
vailing on the transaction dates. Monetary assets and liabilities are translated at exchange rates prevailing on the reporting
date. Exchange gains and losses arising from re-measurement of monetary assets and liabilities that are not denominated in
Russian Roubles are recognized in the profit or loss for the year.
For operations of major subsidiaries located outside of the Russian Federation, that primarily use US Dollar as the functional
currency, adjustments resulting from translating foreign functional currency assets and liabilities into Russian Roubles are
recorded in a separate component of shareholders’ equity entitled foreign currency translation adjustments. Revenues,
expenses and cash flows are translated at average exchange rates (unless this average is not a reasonable approximation of
the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the
rate on the dates of the transactions).
The official rate of exchange, as published by the Central Bank of Russia (“CBR”), of the Russian Rouble (“RR”) to the US Dol-
lar (“US $”) at 31 December 2014 and 2013 was RR 56.26 and RR 32.73 to US $, respectively. Average rate of exchange for
the years ended 31 December 2014 and 2013 were RR 38.42 and RR 31.85 per US $, respectively.
Consolidation. Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group
has the power to direct relevant activities of the investee that significantly affect their returns, exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from
the date that control ceases.
The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred
for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests
issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement. Acquisition – related costs are expensed as incurred. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.
The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis at the non-control-
ling interest’s proportionate share of the acquiree’s net assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-
date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is
recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest
measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the differ-
ence is recognised directly in the profit and loss for the year.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
116 117
Inter-company transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated.
Associates and joint ventures. Associates and joint ventures are entities over which the Group has significant influence
(directly or indirectly), but not control, generally accompanying a shareholding of between 20 and 50 percent of the voting
rights. Investments in associates and joint ventures are accounted for using the equity method of accounting and are initially
recognised at cost. Dividends received from associates and joint ventures reduce the carrying value of the investment in as-
sociates and joint ventures. Other post-acquisition changes in Group’s share of net assets of an associate and joint ventures
are recognised as follows: (i) the Group’s share of profits or losses of associates or joint ventures is recorded in the consoli-
dated profit or loss for the year as share of result of associates or joint ventures, (ii) the Group’s share of other comprehensive
income is recognised in other comprehensive income and presented separately, (iii); all other changes in the Group’s share
of the carrying value of net assets of associates or joint ventures are recognised in profit or loss within the share of result of
associates or joint ventures.
However, when the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate or
joint venture, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the associate or joint venture.
Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the
Group’s interest in the associates and joint ventures; unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred.
The Group reviews equity method investments for impairment on an annual basis, and records impairment when circum-
stances indicate that the carrying value exceeds the recoverable amount.
Current/Non-current Presentation. Group presents current and non-current assets, and current and non-current li-
abilities, as separate classifications in its Consolidated Statement of Financial Position.
Group discloses for each asset and liability line item that combines amounts expected to be recovered or settled in period no
more than 12 months after the reporting period are disclosed as current; and more than 12 months after the reporting period
as non-current.
Cash and cash equivalents. Cash represents cash on hand and in bank accounts, which can be effectively withdrawn at
any time without prior notice. Cash equivalents include highly liquid short-term investments that can be converted to a cer-
tain cash amount and mature within three months or less from the date of purchase. They are recognized based on the cost
of acquisition which approximates fair value.
Allowances are provided for estimated losses and for doubtful debts based on estimates of uncollectible amounts. These
estimates require the exercise of judgment and the use of assumptions.
The losses arising from impairment are recognized as selling, general and administrative expenses in the consolidated state-
ments of profit or loss and other comprehensive income.
Financial assets at fair value through profit or loss. A financial asset is classified at fair value through profit or loss
category if it is classified as held for trading or is designated as such upon initial recognition. Financial assets are designated
at fair value through profit or loss if the Group manages such investments and makes purchase and sale decisions based on
their fair value in accordance with the Group’s documented risk management or investment strategy. Financial assets at fair
value through profit or loss are measured at fair value, and changes therein are recognized in profit and loss for the year.
Available-for-sale financial assets. Available-for-sale financial assets are non-derivative financial assets that are
designated as available-for-sale or are not classified in any of the above categories of financial assets. Available-for-sale
financial assets include investment securities which the Group intends to hold for an indefinite period of time and which may
be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices.
Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and
foreign currency differences on available-for-sale debt instruments, are recognized in other comprehensive income and pre-
sented within equity. Unquoted equity instruments whose fair value cannot be measured reliably are carried at cost less any
impairment losses. When an investment is derecognized the cumulative gain or loss in equity is also reclassified to profit and
loss for the year.
The Group assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial
assets is impaired. Prolonged decline in the fair value of the security below its cost is considered as an indicator that the se-
curities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss (measured as the
difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously
recognized in the other comprehensive income) is recognized in the profit and loss for the year as a reclassification adjust-
ment from other comprehensive income.
Financial liabilities. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, net of directly
attributable transaction costs. The Group’s financial liabilities include trade and other payables, loans and borrowings.
Financial liabilities are recognised initially at fair value. Subsequent to initial recognition, these financial liabilities are meas-
ured at amortised cost using the effective interest method.
Restricted cash. Restricted cash represents cash deposited under letter of credit arrangements, which are restricted
under various contractual agreements. Letters of credit are used to pay contractors for materials, equipment and services
provided. Restricted balances are excluded from cash and cash equivalents for the purposes of the consolidated statements
of financial position and of the consolidated statement of cash flows and disclosed separately.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. When an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of
a new liability, and the difference in the respective carrying amounts is recognised in the profit and loss for the year.
Financial Assets. All financial assets are initially recognised when an entity becomes a party to the contract, they rec-
ognised at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction
costs. The Group‘s financial assets include cash and cash equivalents, deposits, securities, trade and other receivables,
loans issued.
Financial assets have the following categories: (a) loans and receivables; (b) available-for-sale financial assets; (c) financial
assets at fair value through profit or loss.
Loans and receivables. Loans and receivables is a category of financial assets with fixed or determinable payments that are
not quoted in an active market. Subsequent to initial recognition loans and receivables are measured at amortised cost using the
effective interest method, less any impairment losses. The accrued interest is included in the profit and losses for the year.
The Group does not use derivative financial instruments.
The Group does not offset assets and liabilities unless required or permitted to by an IFRS.
Inventories. Inventories of crude oil, refined oil products, materials and supplies, and finished goods are valued at the
lower of cost or net realizable value. Net realisable value is the estimated selling price in the ordinary course of business, less
the estimated cost of completion and selling expenses. The Group uses the weighted-average-cost method. Costs include
both direct and indirect expenditures incurred in bringing an item or product to its existing condition and location.
Prepaid expenses. Prepaid expenses include advances for purchases of products and services, insurance fees, prepay-
ments for export duties, VAT and other taxes. Prepayments are carried at cost less provision for impairment.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
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Prepayments to acquire assets are transferred to the carrying amount of the asset once the Group has obtained control of
the asset and it is probable that future economic benefits associated with the asset will flow to the Group. Prepayments for
services such as insurance, transportation and others are written off to profit or loss when the goods or services relating to
the prepayments are received.
Proved oil and gas properties include the initial estimate of the costs of dismantling and removing the item and restoring the site on
which it is located. The cost of maintenance, repairs and replacement of minor items of property are expensed when incurred with-
in operating expenses; renewals and improvements of assets are capitalised and depreciated during the remaining useful life. Cost
of replacing major parts or components of property, plant and equipment items are capitalised and the replaced part is retired.
If there is an indication that the assets, goods or services relating to a prepayment will not be received, the carrying value of the
prepayment is written down accordingly and a corresponding impairment loss is recognised in the profit or loss for the year.
Mineral extraction tax. Mineral extraction tax (MET) on crude oil is defined monthly as an amount of volume produced
per fixed tax rate (RR 493 and RR 470 per ton in 2014 and 2013, respectively) adjusted depending on the monthly average
market prices of the Urals blend and the RR/US $ exchange rate for the preceding month. The base tax rate formula for MET
is modified by benefit for fields whose depletion rate exceeds 80% of proved reserves as determined under Russian resource
classification. The Company receives a benefit of 3.5% per field for each percent of depletion in excess of the 80% threshold.
The ultimate amount of the MET on crude oil depends also on geographic location of the oil field (for certain regions zero tax rate
may be applied depending on the volume of crude oil produced and period of field development). Also a zero MET tax rate applies
to the production of highly viscous crude oil (defined as crude oil of more than 200 Megapascal second in reservoir conditions).
MET is recorded within Taxes other than income tax in the Consolidated Statements of Profit or Loss and Other Comprehen-
sive Income.
Value added tax. Value added tax (VAT) at a standard rate of 18% is payable on the difference between output VAT on sales of
goods and services and recoverable input VAT charged by suppliers. Output VAT is charged on the earliest of the dates: either the
date of the shipment of goods (works, services) or the date of advance payment by the buyer. Input VAT can be recovered when
purchased goods (works, services) are accounted for and other necessary requirements provided by the tax legislation are met.
Export of goods and rendering certain services related to exported goods are subject to 0% VAT rate upon the submission of
confirmation documents to the tax authorities.
VAT related to sales and purchases is recognized in the Consolidated Statements of Financial Position on a gross basis and
disclosed separately as Prepaid expenses and other current assets and Taxes payable.
Oil and gas exploration and development cost. Oil and gas exploration and development activities are accounted
for using the successful efforts method whereby costs of acquiring unproved and proved oil and gas property as well as costs
of drilling and equipping productive wells, including development dry holes, and related production facilities are capitalized.
Other exploration expenses, including geological and geophysical expenses and the costs of carrying and retaining undevel-
oped properties, are expensed as incurred. The costs of exploratory wells that find oil and gas reserves are capitalized as ex-
ploration and evaluation assets on a “field by field” basis pending determination of whether proved reserves have been found.
In an area requiring a major capital expenditure before production can begin, exploratory well remains capitalized if additional
exploration drilling is underway or firmly planned. Exploration costs not meeting these criteria are charged to expense.
Advances made on property, plant and equipment and construction in progress are accounted for within Construction in progress.
Long-lived assets, including proved oil and gas properties at a field level, are assessed for possible impairment in accordance with
IAS 36 Impairment of assets, which requires long-lived assets with recorded values that are not expected to be recovered through
future cash flows to be written down to their recoverable amount which is the higher of fair value less costs to sell and value-in-use.
Individual assets are grouped for impairment purposes at the lowest level for which there are identifiable cash flows that
are largely independent of the cash flows of other groups of assets - generally on a field-by-field basis for exploration and
production assets, at an entire complex level for refining assets or at a site level for service stations. Impairment losses are
recognised in the profit or loss for the year.
Impairments are reversed as applicable to the extent that the events or circumstances that triggered the original impairment
have changed. The reversal of impairment would be limited to the original carrying value less depreciation which would have
been otherwise charged had the impairment not been recorded.
Long-lived assets committed by management for disposal within one year, and meet the other criteria for held for sale, are
accounted for at the lower of amortized cost or fair value, less cost to sell. Costs of unproved oil and gas properties are evalu-
ated periodically and any impairment assessed is charged to expense.
The Group calculates depreciation expense for oil and gas proved properties using the units-of-production method for each
field based upon proved developed oil and gas reserves, except in the case of significant asset components whose useful life
differs from the lifetime of the field, in which case the straight-line method is applied.
Oil and gas licenses for exploration of unproved reserves are capitalised within property, plant and equipment; they are de-
preciated on straight-line basis over the period of each license validity.
Depreciation of all other property, plant and equipment is determined on the straight-line method based on estimated useful
lives which are as follows:
Buildings and constructions
Machinery and equipment
Years
30-50
10-35
Gains and losses on disposals of property, plant and equipment are determined by comparing proceeds, if any, with the car-
rying amount. Gains and losses are recorded in Gain/(loss) on disposals of property, plant and equipment, investments and
impairments in the Consolidated Statements of Profit or Loss and Other Comprehensive Income.
Exploration and evaluation costs are subject to technical, commercial and management review as well as review for impair-
ment at least once a year to confirm the continued intent to develop or otherwise extract value from the discovery. When
indicators of impairment are present, resulting impairment loss is measured.
Capitalisation of Borrowing Costs. Borrowing costs directly attributable to the acquisition, construction or production
of assets that necessarily take a substantial time to get ready for intended use or sale (qualifying assets) are capitalised as
part of the costs of those assets.
If subsequently commercial reserves are discovered, the carrying value, less losses from impairment of respective explora-
tion and evaluation assets, is classified as development assets. However, if no commercial reserves are discovered, such
costs are expensed after exploration and evaluation activities have been completed.
Property, Plant and Equipment. Property, plant and equipment are carried at historical cost of acquisition or construc-
tion less accumulated depreciation, depletion, amortization and impairment.
The Group capitalises borrowing costs that could have been avoided if it had not made capital expenditure on qualifying
assets. Borrowing costs capitalised are calculated at the Group’s average funding cost (the weighted average interest cost
is applied to the expenditures on the qualifying assets), except to the extent that funds are borrowed specifically for the pur-
pose of obtaining a qualifying asset. Where this occurs, actual borrowing costs incurred less any investment income on the
temporary investment of those borrowings are capitalised.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
Capitalisation of borrowing costs includes capitalising foreign exchange differences relating to borrowings to the extent that
they are regarded as an adjustment to interest costs. The gains and losses that are an adjustment to interest costs include the
interest rate differential between borrowing costs that would be incurred if the entity borrowed funds in its functional currency,
and borrowing costs actually incurred on foreign currency borrowings.
The portion of the foreign exchange movements is estimated based on interest rates on similar borrowing in the Group’s
functional currency. The foreign exchange gains and losses eligible for capitalisation are assessed on a cumulative basis.
Capitalisation of borrowing costs continues up to the date when the assets are substantially ready for their use or sale.
Employee Benefits, Post-employment and other long-term Benefits. Wages, salaries, contributions to the
social insurance funds, paid annual leave and sick leave, bonuses, and non-monetary benefits (such as health services and
kindergarten services) are accrued in the year in which the associated services are rendered by the employees of the Group.
The Group has various pension plans covering substantially all eligible employees and members of management. The pen-
sion liabilities are measured at the present value of the estimated future cash outflows using interest rates of government
securities, which have the same currency and terms to maturity approximating the terms of the related liability. Pension costs
are recognised using the projected unit credit method.
The cost of providing pensions is accrued and charged to staff expense within operating expenses in the Consolidated State-
ments of Profit or Loss and Other Comprehensive Income reflecting the cost of benefits as they are earned over the service lives of
employees.
Remeasurements of the net defined benefit liability arose as the actuarial gains or losses from changes in assumptions and from
experience adjustments with regard to post employment benefit plans are recognised immediately in other comprehensive in-
come. Actuarial gains and losses related to other long-term benefits are recognised immediately in the profit or loss for the year.
Past service costs are recognised as an expense immediately.
Plan assets are measured at fair value and are subject to certain limitations. Fair value of plan assets is based on market
prices. When no market price is available the fair value of plan assets is estimated by different valuation techniques, includ-
ing discounted expected future cash flow using a discount rate that reflects both the risk associated with the plan assets and
maturity or expected disposal date of these assets.
In the normal course of business the Group contributes to the Russian Federation State Pension Fund on behalf of its em-
ployees. Mandatory contributions to the Fund are expensed when incurred and are included within staff costs in operating
expenses.
Stock-based compensation. The Company has a share-based compensation plan (the “Plan”) for senior management
and directors of the Company. Under the provisions of the Plan, share-based bonus awards (“Awards”) are issued on an an-
nual basis to the Company’s directors and senior management as approved by the Board of Directors. Each Award provides
a cash payment at the settlement date equal to one of the Company’s common shares multiplied by the difference between
the lowest share price for the preceding three years as of the grant date and the highest share price for the preceding three
years as of each year-end. Share prices are measured based on the weighted average daily trading price as reported on the
Moscow Exchange MICEX-RTS (MOEX). Awards are subject to individual annual performance conditions and are generally
settled within 90 days after the Company’s Management Committee approval.
The liability at 31 December 2014 and 2013 is determined based on the final expected bonus payments. The Awards are recognized as
expense over the annual service period, net of forfeitures, with a corresponding liability to accounts payable and accrued liabilities.
Decommissioning provisions. The Group recognizes a liability for the fair value of legally required or constructive
decommissioning provisions associated with long-lived assets in the period in which the retirement obligations are incurred.
The Group has numerous asset removal obligations that it is required to perform under law or contract once an asset is per-
120 121
manently taken out of service. The Group’s field exploration, development, and production activities include assets related
to: well bores and related equipment and operating sites, gathering and oil processing systems, oil storage facilities and
gathering pipelines. Generally, the Group’s licenses and other operating permits require certain actions to be taken by the
Group in the abandonment of these operations. Such actions include well abandonment activities, equipment dismantle-
ment and other reclamation activities. The Group’s estimates of future abandonment costs consider present regulatory or
license requirements, as well as actual dismantling and other related costs. These liabilities are measured by the Group using
the present value of the estimated future costs of decommissioning of these assets. The discount rate is reviewed at each
reporting date and reflects current market assessments of the time value of money and the risks specific to the liability. Most
of these costs are not expected to be incurred until several years, or decades, in the future and will be funded from general
Group resources at the time of removal.
The Group capitalizes the associated decommissioning costs as part of the carrying amount of the long-lived assets.
Changes in obligation, reassessed regularly, related to new circumstances or changes in law or technology, or in the esti-
mated amount of the obligation, or in the pre-tax discount rates, are recognised as an increase or decrease of the cost of the
relevant asset to the extent of the carrying amount of the asset; the excess is recognised immediately in profit and loss.
The Group’s petrochemical, refining and marketing and distribution operations are carried out at large manufacturing facili-
ties. The nature of these operations is such that the ultimate date of decommissioning of any sites or facilities is unclear.
Current regulatory and licensing rules do not provide for liabilities related to the liquidation of such manufacturing facilities or
of retail fuel outlets. Management therefore believes that there are no legal or contractual obligations related to decommis-
sioning or other disposal of these assets.
Income Taxes. Income taxes have been provided for in the consolidated financial statements in accordance with legislation
enacted or substantively enacted by the end of the reporting period. The income tax charge comprises current tax and deferred tax
and is recognised in profit or loss for the year, except if it is recognised in other comprehensive income or directly in equity because it
relates to transactions that are also recognised, in the same or a different period, in other comprehensive income or directly in equity.
Current tax is the amount expected to be paid to, or recovered from, the taxation authorities in respect of taxable profits or
losses for the current and prior periods.
Deferred income tax is provided using the balance sheet liability method for tax loss carry forwards and temporary differ-
ences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax assets and liabilities are recognised for all deductable or taxable temporary differences, except:
• Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is
• In respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal
not a business combination and, at the time of the transaction, affects neither the accounting nor taxable profit or loss;
of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the
foreseeable future; and
• Where it is not probable that future taxable profit will be available against which the deductible temporary differences and
the carry forward of unused tax credits and unused tax losses can be utilised.
Deferred tax balances are measured at tax rates enacted or substantively enacted at the end of the reporting period, which
are expected to apply to the period when the temporary differences will reverse or the tax loss carry forwards will be utilised.
Deferred tax assets and liabilities are netted only within the individual companies of the Group.
Income tax penalties expense and income tax penalties payable are included in Taxes other than income tax in the Consoli-
dated Statements of Profit or Loss and Other Comprehensive Income and Taxes payable in the Consolidated Statement of
Financial Position, respectively. Income tax interest expense and payable are included in Interest expense in the Consolidated
Statements of Profit or Loss and Other Comprehensive Income and other accounts payable and accrued expenses in the
Consolidated Statement of Financial Position, respectively.
Share capital. Ordinary shares and non-redeemable preference shares with discretionary dividends are both classified as equity.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
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Dividends paid to shareholders are determined by the Board of directors and approved at the annual shareholders’ meeting.
Dividends are recorded as a liability and deducted from equity in the period in which they are declared and approved.
Treasury shares. Common shares of the Company owned by the Group at the reporting date are designated as treasury
shares and are recorded at cost using the weighted-average method. Gains on resale of treasury shares are credited to addi-
tional paid-in capital whereas losses are charged to additional paid-in capital to the extent that previous net gains from resale
are included therein or otherwise to retained earnings.
Earnings per share. Preference shares are not redeemable and are considered to be participating shares.
Basic and diluted earnings per share are calculated by dividing profit or loss attributable to ordinary and preference share holders
by the weighted average number of ordinary and preferred shares outstanding during the period. Profit or loss attributed to equity
holders is reduced by the amount of dividends declared in the current period for each class of shares. The remaining profit or loss is
allocated to common and preferred shares to the extent that each class may share in earnings if all the earnings for the period had
been distributed. Treasury shares are excluded from calculations. The total earnings allocated to each class of shares are deter-
mined by adding together the amount allocated for dividends and the amount allocated for a participation feature.
Revenue recognition. Revenues from the production and sale of crude oil, petroleum and petrochemical products and
other products are recognized when title has transferred and collectability is reasonably assured. Revenue is measured at the
fair value of the consideration received or receivable taking into account the amount of any discounts and other incentives.
Purchases and sales of inventory which are of a similar nature and value with the same counterparty that are entered into in
contemplation of one another are combined, considered as a single arrangement and netted against each other in the Con-
solidated Statements of Profit or Loss and Other Comprehensive Income. Revenue includes only economic benefits which
flow to the Group. Taxes and duties arising on the sale of goods to third parties do not form part of revenue.
Transportation expenses. Transportation expenses recognised in the Consolidated Statements of Profit or Loss and
Other Comprehensive Income represent all expenses incurred by the Group to transport crude oil and other products to end
customers (they may include pipeline tariffs and any additional railroad costs, handling costs, port fees, sea freight and other
costs). Compounding fees are included in Selling, General and administrative expenses.
Interest income. Interest income is recognised on a time-proportion basis using the effective interest method.
Note 4: Critical accounting estimates and judgements in applying accounting policies
The Group makes estimates and assumptions that affect the amounts recognised in the consolidated financial statements
and the carrying amounts of assets and liabilities within the next financial year. Estimates and judgements are continually
evaluated and are based on management’s experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Estimation of oil and gas reserves. Oil and gas development and production assets are depreciated on a unit-of-
production (UOP) basis for each field or group of fields with similar characteristics at a rate calculated by reference to proved
or proved developed reserves. Estimates of proved reserves are also used in the determination of whether impairments have
arisen or should be reversed. Also, exploration drilling costs are capitalized pending the results of further exploration or ap-
praisal activity, which may take several years to complete and before any related proved reserves can be booked.
Proved and proved developed reserves are estimated by reference to available geological and engineering data and only include
volumes for which access to market is assured with reasonable certainty. Estimates of oil and gas reserves are inherently imprecise,
require the application of judgment and are subject to regular revision, either upward or downward, based on new information such as
from the drilling of additional wells, observation of long-term reservoir performance under producing conditions and changes in eco-
nomic factors, including product prices, contract terms or development plans. The Group estimates its oil and gas reserves in accord-
ance with rules promulgated by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers (SPE) for proved reserves.
Changes to the Group’s estimates of proved and proved developed reserves affect prospectively the amounts of deprecia-
tion, depletion and amortization charged and, consequently, the carrying amounts of oil and gas properties. It is expected,
however, that in the normal course of business the diversity of the Group’s portfolio will limit the effect of such revisions. The
outcome of, or assessment of plans for, exploration or appraisal activity may result in the related capitalized exploration drill-
ing costs being written off in the profit and loss for the year.
Useful life of property, plant and equipment. Based on the terms included in the licenses and past experience, management
believes hydrocarbon production licenses will be extended past their current expiration dates at insignificant additional costs. As a re-
sult of the anticipated license extensions, the assets are depreciated over their useful lives beyond the end of the current license term.
Management assesses the useful life of an asset by considering the expected usage, estimated technical obsolescence,
residual value, physical wear and tear and the operating environment in which the asset is located. Differences between
such estimates and actual results may have a material impact on the amount of the carrying values of the property, plant and
equipment and may result in adjustments to future depreciation rates and expenses for the period.
Other property, plant and equipment are depreciated on a straight-line basis over their useful economic lives. Management
periodically, at the end of each reporting period, reviews the appropriateness of the assets useful economic lives and residual
values. The review is based on the current condition of the assets, the estimated period during which they will continue to
bring economic benefit to the Group and the estimated residual value.
Decommissioning provisions. Management makes provision for the future costs of decommissioning oil and gas production
facilities, wells, pipelines, and related support equipment and for site restoration based on the best estimates of future costs
and economic lives of the oil and gas assets. Estimating future decommissioning provisions is complex and requires manage-
ment to make estimates and judgments with respect to removal obligations that will occur many years in the future.
Changes in the measurement of existing obligations can result from changes in estimated timing, future costs or discount
rates used in valuation.
Management of the Group also makes certain judgements, apart from those involving estimations, in the process of apply-
ing the accounting policies. Judgements that have the most significant effect on the amounts recognised in the consolidated
financial statements and estimates that can cause a significant adjustment to the carrying amount of assets and liabilities
within the next financial year include:
The amount recognized as a provision is the best estimate of the expenditures required to settle the present obligation at the
reporting date based on current legislation in each jurisdiction where the Group‘s operating assets are located, and is also
subject to change because of revisions and changes in laws and regulations and their interpretation. As a result of the subjec-
tivity of these provisions there is uncertainty regarding both the amount and estimated timing of such costs.
• Estimation of oil and gas reserves;
• Useful life of property, plant and equipment;
• Decommissioning provisions;
• Impairment of long-lived assets;
• Consolidation.
The Group’s petrochemical, refining and marketing and distribution operations are carried out at large manufacturing facili-
ties. The nature of these operations is such that the ultimate date of decommissioning of any sites or facilities is unclear.
Current regulatory and licensing rules do not provide for liabilities related to the liquidation of such manufacturing facilities or
of retail fuel outlets. Management therefore believes that there are no legal or contractual obligations related to decommis-
sioning or other disposal of these assets.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
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Discount rate
Impact on decommissioning provision
Change in
At 31 December 2014
At 31 December 2013
+1%
-1%
(9,890)
13,103
(11,436)
15,384
Information about decommissioning provision is presented in Note 13.
Impairment of Long-lived Assets. The recoverable amounts of cash-generating units and individual assets have been
determined based on the higher of value-in-use calculations and fair values less costs to sell. These calculations require the
use of estimates and assumptions, including future oil prices, expected production volumes and refining margins appropri-
ate to the local circumstances and environment. It is reasonably possible that these assumptions may change and may then
require a material adjustment to the carrying value of the Group’s assets.
At 31 December 2014 management assessed whether there is any indication of impairment of long-lived assets. Manage-
ment believes that there is no any impairment loss that should be recognized at 31 December 2014.
Consolidation. The Company made significant judgements related to significant subsidiaries which are controlled by the
Group, even though the Group holds less than half of the voting rights of these subsidiaries.
The Company considers that the Group has control over several entities even though it has less than 50% of the voting rights.
This is because the Company has power over the investee, has rights to variable returns of the investee, and has the power to
affect variable returns.
Additional information is disclosed in Note 25.
Note 5: Adoption of New or Revised Standards and Interpretations
A number of amendments to current IFRS and new IFRIC became effective for the periods beginning on or after 1 January 2014:
• amendments regarding offsetting rules to IAS 32 Financial Instruments,
• amendments to IAS 36 Impairment of Assets, regarding additional disclosure,
• IFRIC 21 – Levies.
The amended standards and new IFRIC have no significant impact on the Group’s consolidated financial statements.
The amendments to current IFRS and annual improvements became effective for the periods beginning on or after 1 July 2014:
• Defined Benefit Plans: Employee Contributions - Amendments to IAS 19 (issued in November 2013 and effective for an-
nual periods beginning 1 July 2014). The amendment allows entities to recognise employee contributions as a reduction
in the service cost in the period in which the related employee service is rendered, instead of attributing the contributions
to the periods of service, if the amount of the employee contributions is independent of the number of years of service.
• Annual Improvements to IFRSs 2013 (issued in December 2013 and effective for annual periods beginning on or after 1 July 2014).
The amended standard and annual improvements have no significant impact on the Group’s consolidated financial statements.
Certain new standards and interpretations have been issued that are mandatory for the annual periods beginning on or after
1 January 2015 or later, and which the Group has not early adopted.
IFRS 9 Financial Instruments: Classification and Measurement (issued in July 2014 and effective for an-
nual periods beginning on or after 1 January 2018). The standard reflects all phases of the financial instruments
project and replaces all previous of IFRS 9. The standard introduces new requirements for classification and measurement,
impairment, and hedge accounting. The Group is considering the implications of the standard, the impact on the Group and
the timing of its adoption by the Group.
Amendments to IFRS 11 – Joint Arrangements (issued in May 2014 and effective for annual periods be-
ginning on or after January 1, 2016) on accounting for acquisitions of interests in joint operations. This amendment
adds new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business.
Amendments to IAS 16 – Property, Plant and Equipment and IAS 38 Intangible Assets (issued in May
2014 and effective for annual periods beginning on or after January 1, 2016) on clarification of acceptable
methods of depreciation and amortization. In this amendment the IASB has clarified that the use of revenue-based methods
to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of
an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset.
IFRS 15 – Revenue from Contracts with Customers (issued in May 2014 and effective for annual periods
beginning on or after January 1, 2017). The new standard introduces the core principle that revenue must be recog-
nized when the goods and services are transferred to the customer, at the transaction price. Any bundled goods and services
that are distinct must be separately recognized, and any discounts or rebates on the contract price must generally be allo-
cated to the separate elements. When the consideration varies for any reason, minimum amounts must be recognized if they
are not at significant risk of reversal. Costs incurred to secure contracts with customers have to be capitalized and amortized
over the period when the benefits of the contract are consumed.
Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates
and Joint ventures (issued in September 2014 and effective for annual periods beginning on or after
January 1, 2016) on the accounting for acquisitions of an interest in a joint venture. Full gain or loss will be
recognised by the investor where the non-monetary assets constitute a ‘business’. If the assets do not meet the definition of
a business, the gain or loss is recognised by the investor to the extent of the other investors’ interests. The amendments will
only apply when an investor sells or contributes assets to its associate or joint venture, not to a joint operation.
Annual Improvements to IFRSs 2014 (issued on 25 September 2014 and effective for annual periods
beginning on or after 1 January 2016). The amendments impact 4 standards.
IFRS 5 was amended to clarify that change in the manner of disposal (reclassification from «held for sale» to «held for dis-
tribution» or vice versa) does not constitute a change to a plan of sale ore distribution, and does not have to be accounted
for as such. The amendment to IFRS 7 adds guidance to help management determine whether the terms of an arrangement
to service a financial asset which has been transferred constitute continuing involvement, for the purposes of disclosures
required by IFRS 7. The amendment also clarifies that the offsetting disclosures of IFRS 7 are not specifically required for all
interim periods, unless required by IAS 34.
The amendment to IAS 19 clarifies that for post-employment benefit obligations, the decisions regarding discount rate, exist-
ence of deep market in high-quality corporate bonds, or which government bonds to use as a basis, should be based on the
currency that the liabilities are denominated in, and not the country where they arise. IAS 34 will require a cross reference
from the interim financial statements to the location of “information disclosed elsewhere in the interim financial report”.
Disclosure Initiative Amendments to IAS 1 (issued in December 2014 and effective for annual periods
on or after 1 January 2016). The Standard was amended to clarify the concept of materiality and explains that an entity
need not provide a specific disclosure required by an IFRS if the information resulting from that disclosure is not material,
even if the IFRS contains a list of specific requirements or describes them as minimum requirements. The Standard also pro-
vides new guidance on subtotals in financial statements, in particular, such subtotals (a) should be comprised of line items
made up of amounts recognised and measured in accordance with IFRS; (b) be presented and labelled in a manner that
makes the line items that constitute the subtotal clear and understandable; (c) be consistent from period to period; and (d)
not be displayed with more prominence than the subtotals and totals required by IFRS standards.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
Investment Entities: Applying the Consolidation Exception Amendment to IFRS 10, IFRS 12 and IAS 28
(issued in December 2014 and effective for annual periods on or after 1 January 2016). The Standard was
amended to clarify that an investment entity should measure at fair value through profit or loss all of its subsidiaries that are
themselves investment entities. In addition, the exemption from preparing consolidated financial statements if the entity’s ul-
timate or any intermediate parent produces consolidated financial statements available for public use was amended to clarify
that the exemption applies regardless whether the subsidiaries are consolidated or are measured at fair value through profit
or loss in accordance with IFRS 10 in such ultimate or any intermediate parent’s financial statements.
The Group is currently assessing the impact of the amendments on its consolidated financial statements.
Note 6: Cash and cash equivalents
Cash and cash equivalents comprise the following:
Cash on hand and in banks
Term deposits with original maturity of less than three months
Total cash and cash equivalents
At 31 December 2014
At 31 December 2013
8,077
33,471
41,548
8,012
21,523
29,535
As of 31 December 2014 the majority of cash and cash equivalents are held in Bank Zenit and its subsidiaries, Sberbank, Raif-
feisenbank, VTB and Ak Bars Bank. As of 31 December 2013 the majority of cash and cash equivalents are held in Bank Zenit
and its subsidiaries, Ak Bars Bank, Credit Europe Bank and Sberbank. Bank deposits represent deposits with original maturi-
ties of less than three months. The fair value of cash and term deposits approximates their carrying value.
126 127
Long-term accounts receivable:
Trade receivables
Other financial receivables
Less provision for impairment
Total long-term accounts receivable
Total financial assets within trade and other receivables
650
761
(47)
1,364
47,423
251
835
(70)
1,016
53,114
In accordance with the Group’s policies for recorded provision for impairment the Group fully provided for receivables from ChMPKP
Avto of US $334 million as of 31 December 2014 and 2013, relating to the sale of crude oil to Ukraine (Kremenchug refinery) (Note 24).
The estimated fair value of short-term and long-term accounts receivable approximates their carrying value.
Analysis by credit quality of trade and other receivables is as follows:
Not over due and not impaired
40,784
4,803
46,686
4,484
At 31 December 2014
At 31 December 2013
Trade receivables
Other financial
receivables
Trade receivables
Other financial
receivables
Past due but not impaired
- less than 90 days overdue
- 91 to 180 days overdue
- over 180 days overdue
Total past due but not impaired
1,333
246
-
1,579
-
-
19,880
19,880
(19,880)
42,363
134
40
83
257
-
-
447
447
(447)
5,060
1,652
200
-
1,852
-
-
12,110
(12,110)
48,538
48,538
19
26
47
92
-
-
517
(517)
4,576
4,576
The credit quality of cash and cash equivalents balances may be summarised as follows:
Individually determined to be impaired (gross)
Investment grade rating
Non-investment grade rating
No external rating
Total
At 31 December 2014
At 31 December 2013
Cash on hand and in
banks
Term deposits
Cash on hand and in
banks
Term deposits
287
6,486
1,304
8,077
-
33,264
207
33,471
1,056
5,026
1,930
8,012
4,825
15,537
1,161
21,523
- less than 90 days overdue
- 91 to 180 days overdue
- over 180 days overdue
Total individually impaired
Less provision for impairment
Total
Investment grade ratings classification referred to as Aaa to Baa3 for Moody’s Investment Services, as AAA to BBB- for Fitch
Rating and as AAA to BBB for Standard and Poor’s Rating, respectively.
Note 7: Accounts receivable
Short-term and long-term accounts receivable comprise the following:
Short-term accounts receivable:
Trade receivables
Other financial receivables
Less provision for impairment
Total short-term accounts receivable
At 31 December 2014
At 31 December 2013
61,591
4,748
(20,280)
46,059
60,395
4,259
(12,556)
52,098
Movements in the provision for impairment for trade and other receivables are as follows:
Provision for impairment at 1 January
(Provision for impairment)/recovery during the year
Amounts written off during the year as uncollectible
Foreign exchange loss
Change in Group structure
2014
2013
Trade receivables
Other financial
receivables
Trade receivables
Other financial
receivables
(12,110)
(4)
9
(7,813)
38
(517)
58
6
-
6
(10,637)
(850)
-
(788)
165
(567)
(13)
-
-
63
Provision for impairment at 31 December
(19,880)
(447)
(12,110)
(517)
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
128 129
At 31 December 2013
At 31 December 2013
At 31 December 2014
At 31 December 2013
Note 10: Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets are as follows:
Note 8: Short-term financial assets
Short-term financial assets comprise the following:
Loans and receivables:
Notes receivable
Other loans (net of provision for impairment of RR 50 million and
RR 18 million as of 31 December 2014 and 2013)
Certificates of deposit
Financial assets at fair value through profit or loss:
Held-for-trading
Total short-term financial assets
3,536
3,156
16,111
2,520
25,323
2,178
2,026
8,973
3,516
16,693
During the year ended 31 December 2014 purchases of certificates of deposit and cash proceeds from certificates of deposit
were RR 78,425 million and RR 71,287 million, respectively.
During the year ended 31 December 2013 purchases of certificates of deposit and cash proceeds from certificates of deposit
were RR 13,024 million and RR 8,302 million, respectively.
During the year ended 31 December 2014 cash issuance of notes receivable and other loans and cash proceeds from notes
receivable and other loans were RR 5,185 million and RR 6,485 million, respectively.
During the year ended 31 December 2013 cash issuance of notes receivable and other loans and cash proceeds from notes
receivable and other loans were RR 2,569 million and RR 5,213 million, respectively.
Prepaid export duties
VAT recoverable
Advances
Prepaid transportation expenses
Other
Prepaid expenses and other current assets
Note 11: Long-term Financial Assets
Long-term financial assets comprise the following:
Loans and receivables:
Notes receivable (net of provision for impairment of RR 318 million
as of 31 December 2014 and 2013)
Loans to employees
Other loans
Certificates of deposit
Available-for-sale investments
Total long-term financial assets
14,177
5,788
7,972
938
2,282
31,157
8,311
5,728
5,626
668
1,806
22,139
At 31 December 2014
At 31 December 2013
3,571
2,636
2,353
16,581
4,752
29,893
1,019
2,493
3,197
14,445
4,660
25,814
The estimated fair value of loans and receivables approximates their carrying value.
Financial assets at fair value through profit and loss comprise the following:
The fair value of long-term financial assets is estimated by discounting the future contractual cash outflows at the market interest rate
available to the Group at the end of the reporting period. The carrying amounts and fair values of long-term financial assets are as fol-
lows:
Held-for-trading:
Russian government debt securities
Corporate debt securities
Equity securities
Total financial assets at fair value through profit and loss
At 31 December 2014
At 31 December 2013
152
1,705
663
2,520
18
1,762
1,736
3,516
Information on trading securities issued by related parties is disclosed in Note 23.
Note 9: Inventories
Materials and supplies
Crude oil
Refined oil products
Petrochemical supplies and finished goods
Total inventories
At 31 December 2014
At 31 December 2013
10,924
8,799
7,634
5,105
32,462
11,354
5,657
6,495
6,032
29,538
Notes receivable
Loans to employees
Other loans
Certificates of deposit
Total long-term financial assets
Carrying amounts
Fair values
At 31 December
2014
At 31 December
2013
At 31 December
2014
At 31 December
2013
3,571
2,636
2,353
16,581
25,141
1,019
2,493
3,197
14,445
21,154
3,292
2,636
1,852
11,578
19,358
1,122
2,493
3,156
15,163
21,934
During the year ended 31 December 2014 purchases of long-term certificates of deposit were RR 460 million.
During the year ended 31 December 2013 purchases of long-term certificates of deposit were RR 312 million.
During the year ended 31 December 2014 cash issuance of long-term notes receivable and other loans and cash proceeds
from long-term notes receivable and other loans were RR 5,235 million and RR 1,759 million, respectively.
During the year ended 31 December 2013 cash issuance of long-term notes receivable and other loans and cash proceeds
from long-term notes receivable and other loans were RR 2,582 million and RR 1,395 million, respectively.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
130 131
Note 12: Investments in associates and joint ventures
Note 13: Property, Plant and Equipment
Investments in associates and joint ventures comprise the following:
Name of an investee
Ownership percentage at
31 December
Net book value as 31 December
Group’s share of profit/
(loss) for
2014
2013
2014
2013
2014
2013
Cost
Oil and gas
properties
Buildings and
constructions
Machinery and
equipment
Construc-tion in
progress
Total
Associates and joint ventures:
Bank Zenit
Other
Total
25
20-75
25
20-75
7,131
81
7,212
6,984
794
7,778
402
(715)
(313)
555
(205)
350
The country of incorporation or registration is also their principal place of business. For all major associates and joint ventures
the country of incorporation is the Russian Federation.
The table below summarises the movements in the carrying amount of the Group’s investment in associates and joint ven-
tures:
Net book value at 1 January
Share of result of associates and joint ventures
Share of other comprehensive loss of associates and joint ventures
Reclassification on loss of control/disposal of associates (reclassification on obtaining control)
Others
Net book value at 31 December
2014
7,778
(313)
(270)
(14)
31
7,212
2013
6,711
350
(21)
801
(63)
7,778
As of 31 December 2012
322,629
148,170
108,216
Additions
Disposals
Changes in Group structure
Transfers
Changes in decommissioning
provision
163
(1,990)
-
21,674
(1,751)
1
(596)
(1,574)
7,769
-
1
(1,078)
(2,193)
13,568
-
92,166
59,730
(1,835)
(241)
(43,011)
-
671,181
59,895
(5,499)
(4,008)
-
(1,751)
As of 31 December 2013
340,725
153,770
118,514
106,809
719,818
Depreciation, depletion and
amortisation
As of 31 December 2012
Depreciation charge
Disposals
Changes in Group structure
As of 31 December 2013
Net book value
As of 31 December 2012
As of 31 December 2013
Cost
151,723
8,437
(1,633)
-
20,477
3,898
(355)
(361)
158,527
23,659
50,078
7,164
(1,045)
(448)
55,749
-
-
-
-
-
222,278
19,499
(3,033)
(809)
237,935
170,906
182,198
127,693
130,111
58,138
62,765
92,166
106,809
448,903
481,883
The condensed financial information of the Group’s equity basis investments is as follows:
As of 31 December 2013
340,725
153,770
118,514
106,809
Sales/interest income
Net income
Total assets
Total liabilities
Year ended 31 December 2014
Year ended 31 December 2013
Bank Zenit
26,617
1,636
335,097
305,447
Other
6,513
(722)
6,406
6,074
Bank Zenit
23,425
2,258
299,856
270,685
Other
3,107
(473)
7,736
7,060
Additions
Disposals
Changes in Group structure
Transfers
Changes in decommissioning
provision
38
(3,199)
-
23,882
(12,988)
-
(1,723)
(6)
27,525
-
825
(1,355)
(2)
26,615
-
64,912
(3,313)
(7)
(78,022)
719,818
65,775
(9,590)
(15)
-
-
(12,988)
As of 31 December 2014
348,458
179,566
144,597
90,379
763,000
Depreciation, depletion and
amortisation
As of 31 December 2013
158,527
23,659
Depreciation charge
Disposals
Changes in Group structure
As of 31 December 2014
Net book value
As of 31 December 2013
As of 31 December 2014
8,928
(2,975)
-
4,570
(309)
(2)
55,749
8,394
(1,127)
-
164,480
27,918
63,016
-
-
-
-
-
237,935
21,892
(4,411)
(2)
255,414
182,198
183,978
130,111
151,648
62,765
81,581
106,809
90,379
481,883
507,586
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
132 133
For the years ended 31 December 2014 and 2013 the Group recorded RR 683 million and RR 1,248 million of capitalized bor-
rowing cost as property, plant and equipment additions, respectively. The capitalisation rate was 3.5% (2013: 3.5%).
Included within construction in progress are advances for construction of RR 11,841 million and RR 14,716 million at 31 De-
cember 2014 and 2013, respectively.
As stated in Note 3, the Group calculates depreciation, depletion and amortization for oil and gas properties using the units-of-pro-
duction method over proved or proved developed oil and gas reserves depending on the nature of the costs involved. The proved
or proved developed reserves used in the units-of-production method assume the extension of the Group’s production license
beyond their current expiration dates until the end of the economic lives of the fields as discussed below in further detail.
The Group’s oil and gas fields are located principally on the territory of Tatarstan. The Group obtains licenses from the gov-
ernmental authorities to explore and produce oil and gas from these fields. The Group’s existing production licenses for its
major fields expire, after their recent extension, between 2026 and 2038, with other production licenses expiring between
2018 and 2044. The economic lives of many of the Group’s licensed fields extend beyond these dates. Under Russian law,
the Group is entitled to renew the licenses to the end of the economic lives of the fields, provided certain conditions are met.
Article 10 of the Subsoil Law provides that a license to use a field “shall be” extended at its scheduled termination at the initia-
tive of the subsoil user if necessary to finish production in the field, provided that there are no violations of the conditions of
the license. The legislative history of Article 10 indicates that the term “shall” replaced the term “may” in August 2004, clarify-
ing that the subsoil user has the right to extend the license term so long as it has not violated the conditions of the license.
In August 2006, the term of the Group’s license to produce oil and gas from the Group’s largest field, Romashkinskoye, was
extended through 2038. And the license to produce oil and gas from the Group’s second largest field, Novo-Elkhovskoe, was
extended through 2026. The Group’s right to extend licenses is, however, dependent on the Group continuing to comply with
the terms of the licenses, and management has the ability and intent to do so.
Management plans to request the extension of the licenses that have not yet been extended. The Group’s current produc-
tion plans are based on the assumption, which management considers to be reasonably certain, that the Group will be able to
extend all existing licenses.
Social assets. During the years ended 31 December 2014 and 2013 the Group transferred social assets with a net book
value of RR 1 million and RR 23 million, respectively, to local authorities. At 31 December 2014 and 2013 the Group held social
assets with a net book value of RR 5,442 million and RR 5,276 million, respectively, all of which were constructed after the
privatization date.
The social assets comprise mainly dormitories, hotels, gyms and other facilities. The Group may transfer some of these social
assets to local authorities in the future, but does not expect these to be significant. The Group incurred social infrastructure
expenses of RR 4,090 million and RR 4,805 million for the years ended 31 December 2014 and 2013, respectively, for mainte-
nance that mainly relates to housing, schools and cultural buildings.
Decommissioning provisions.
The following tables summarize the Group’s decommissioning provisions and decommissioning costs activities:
Balance, beginning of period
Unwinding discount
New obligations
Release of existing obligations
Changes in estimates
Balance, end of period
Less: current portion of decommissioning provisions (Note 16)
Long-term balance, end of period
2014
55,037
4,397
328
(708)
(13,316)
45,738
(959)
44,779
2013
52,450
4,503
350
(166)
(2,100)
55,037
(526)
54,511
In 2014 the Group recorded the change in estimate for oil and gas properties decommissioning due to the change in discount
rate and expected long-term inflation rate.
Key assumptions used for evaluation of decommissioning provision were as follows:
These plans have been designed on the basis that the Group will be producing crude oil through the economic lives of the
fields and not with a view to exploiting the Group’s reserves to maximum effect only through the license expiration dates.
Discount rate
Inflation rate
Management is reasonably certain that the Group will be allowed to produce oil from the Group’s reserves after the expiration
of existing production licenses and until the end of the economic lives of the fields. “Reasonable certainty” is the applicable
standard for defining proved reserves under the SEC’s Regulation S-X, Rule 4-10.
Exploration and evaluation assets included in Oil and Gas assets above, net book value:
At 1 January 2013
Additions
Reclassification to development assets
Charged to expense
At 31 December 2013
Additions
Reclassification to development assets
Charged to expense
At 31 December 2014
11,285
1,363
(351)
(67)
12,230
904
(823)
(988)
11,323
For the years ended 31 December 2014 and 2013, operating and investing cash flows used for exploration and evaluation
activities amounted to RR 2,100 million and RR 904 million and RR 1,839 million and RR 1,363 million, respectively.
Note 14: Other long-term assets
Other long-term assets are as follows:
Prepaid computer programs
Prepaid license agreements
Other long-term assets
Total other long-term assets
At 31 December 2014
At 31 December 2013
11.67%
7.75%
7.99%
4.70%
At 31 December 2014
At 31 December 2013
1,985
90
1,220
3,295
2,347
124
1,080
3,551
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
134 135
Note 15: Debt
Short-term debt
Foreign currency denominated debt
Current portion of long-term debt
Other foreign currency denominated debt
Rouble denominated debt
Current portion of long-term debt
Other rouble denominated debt
Total short-term debt
Long-term debt
Foreign currency denominated debt
US $2.0 bln 2010 credit facility
US $1.5 bln 2009 credit facility
US $550 mln 2011 credit facility
US $75 mln 2011 credit facility
US $144.5 mln 2011 credit facility
EUR 55 mln 2013 credit facility
Other foreign currency denominated debt
Rouble denominated debt
Other rouble denominated debt
Total long-term debt
Less: current portion of long-term debt
Total long-term debt, net of current portion
At 31 December 2014
At 31 December 2013
11,887
382
75
3,515
15,859
10,779
-
-
2,573
4,273
3,521
2,830
874
24,850
(11,962)
12,888
31,595
-
36
4,930
36,561
14,771
2,328
17,961
1,529
2,762
2,018
2,122
925
44,416
(31,631)
12,785
Foreign currency debts are primarily denominated in US Dollars.
Long-term debt had the following maturity profile (based on the discounted contractual cash flows):
Due for repayment:
Between one and two years
Between two and five years
After five years
Total long-term debt, net of current portion
At 31 December 2014
At 31 December 2013
2,848
5,021
5,019
12,888
5,535
3,554
3,696
12,785
The Group does not apply hedge accounting and has not entered into any hedging arrangements in respect of its foreign cur-
rency obligations or interest rate exposures.
Short-term Russian Rouble denominated debt. Russian Rouble denominated short-term debt is primarily com-
prised of loans with Russian banks. Short-term Rouble denominated loans of RR 3,515 million and RR 4,930 million bear con-
tractual interest rates of 8% to 14.85% per annum as of 31 December 2014 and 1.1% to 8.75% per annum as of 31 December
2013.
Long-term foreign currency denominated debt. In October 2009, the Company entered into a dual (3 and 5 year)
tranches secured syndicated pre-export facility for up to US $1.5 billion arranged by WestLB AG, Bayerische Hypo-und Ver-
einsbank AG, ABN AMRO Bank N.V., OJSC Gazprombank, Bank of Moscow and Nordea Bank. This credit facility is collateral-
ized with the contractual rights and receivables under an oil export contract between Tatneft and Tavit B.V. under which Tat-
neft supplies no less than 360,000 metric tons of oil and refined products in a calendar quarter. The loan agreement requires
compliance with certain financial covenants including, but not limited to, minimum levels of consolidated tangible net worth
and interest coverage ratios. The 3-year tranche was fully repaid. The 5-year tranche bore interest at LIBOR plus 4.10%. The
loan was fully repaid in October 2014.
In June 2010, the Company entered into a triple (3, 5 and 7 year) tranches secured credit facility for up to US $2 billion ar-
ranged by Barclays Bank PLS, BNP Paribas (Suisse) SA, Bank of Moscow, Bank of Tokyo-Mitsubishi UFJ LTD, Citibank N.A.,
Commerzbank Aktiengesellschaft, ING Bank N.V., Natixis SA, Nordea Bank, The Royal Bank of Scotland N.V., Sberbank,
Société Générale, Sumitomo Mitsui Finance Dublin LTD, Unicredit Bank AG, VTB Bank and WestLB AG. The loan is collateral-
ized with the contractual rights and receivables under an export contract between Tatneft and Tatneft Europe AG under which
Tatneft supplies no less than 750,000 metric tons of oil in a calendar quarter. The loan agreement requires compliance with
certain financial covenants including, but not limited to, minimum levels of consolidated tangible net worth and interest cov-
erage ratios. The 3-year tranche was fully repaid. The 5-year tranche has the margin of LIBOR plus 3.40%, while the 7-year
tranche bears the interest of LIBOR plus 5%.
In June 2011, the Company entered into a US $550 million unsecured financing with a fixed rate of 3.50% per annum with
bullet repayment in three years. The loan was arranged by BNP Paribas (Suisse) SA, The Bank of Tokyo Mitsubishi UFJ LTD.,
Commerzbank Aktiengesellschaft, ING Bank N.V., Natixis, Open Joint Stock Company Nordea Bank, Sumitomo Mitsui Bank-
ing Corporation and WestLB AG London Branch. The loan agreement required compliance with certain financial covenants
including, but not limited to, minimum levels of consolidated tangible net worth and interest coverage ratios. The loan was
fully repaid in June 2014.
In November 2011, TANECO entered into a US $75 million credit facility with equal semi-annual repayments during ten years.
The loan was arranged by Nordea Bank AB (Publ), Société Générale and Sumitomo Mitsui Banking Corporation Europe Lim-
ited. The loan bears interest at LIBOR plus 1.1% per annum. The loan agreement requires compliance with certain financial
covenants including, but not limited to, minimum levels of consolidated tangible net worth and interest coverage ratios.
In November 2011, TANECO entered into a US $144.5 million credit facility with equal semi-annual repayments during ten
years with the first repayment date on 15 May, 2014. The loan was arranged by Société Générale, Sumitomo Mitsui Banking
Corporation Europe Limited and the Bank of Tokyo-Mitsubishi UFJ LTD. The loan bears interest at LIBOR plus 1.25% per an-
num. The loan agreement requires compliance with certain financial covenants including, but not limited to, minimum levels
of consolidated tangible net worth and interest coverage ratios.
In May 2013, TANECO entered into a EUR 55 million credit facility with equal semi-annual repayment during ten years. The
loan was arranged by The Royal Bank of Scotland plc and Sumitomo Mitsui Banking Corporation Europe Limited. The loan
bears interest at LIBOR plus 1.5% per annum. The loan agreement requires compliance with certain financial covenants
including, but not limited to, minimum levels of consolidated tangible net worth and interest coverage ratios.
Management believes that for the year ended 31 December 2014 and 2013 the Group was in compliance with all covenants
required by the above loan agreements.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
The carrying amounts and fair-values of long-term debt are as follows:
Pension liabilities
136 137
US$ denominated fixed rate
US$ denominated floating rate
EUR denominated floating rate
RR denominated fixed rate
Total long-term debt
Carrying amounts
Fair values
At 31 December
2014
At 31 December
2013
At 31 December
2014
At 31 December
2013
2,830
17,625
3,521
874
24,850
20,083
21,390
2,018
925
44,416
2,830
13,910
2,015
874
19,629
20,083
21,390
2,018
925
44,416
The fair value of long-term debts was determined based on future cash flows discounted at the market interest rate available
to the Group at the end of the reporting period.
Note 16: Accounts payable and accrued liabilities
Trade payables
Dividends payable
Other payables
Total financial liabilities within trade and other payables
Salaries and wages payable
Advances received from customers
Current portion of decommissioning provisions (Note 13)
Other accounts payable and accrued liabilities
Total non-financial liabilities
Accounts payable and accrued liabilities
At 31 December 2014
At 31 December 2013
17,269
117
1,347
18,733
4,187
6,883
959
7,237
19,266
37,999
14,260
103
980
15,343
4,109
1,045
526
7,421
13,101
28,444
The fair value of each class of financial liabilities included in short-term trade and other payables at 31 December 2014 and
2013 approximates their carrying value.
Note 17: Other long-term liabilities
Other long-term liabilities are as follows:
Pension liability
Other long-term liabilities
Total other long-term liabilities
The Group has various pension plans covering substantially all eligible employees and members of management. The
amount of contributions, frequency of benefit payments and other conditions of these plans are regulated by the “Statement
of Organization of Non-Governmental Pension Benefits for OAO Tatneft Employees” and the contracts concluded between
the Company or its subsidiaries, management, and the non-profit organization “National Non-Governmental Pension Fund”.
In accordance with these contracts the Group is committed to make certain contributions on behalf of all employees and
guarantees a minimum benefit upon retirement. Contributions or benefits are generally based upon grade and years until of-
ficial retirement age (age 60 for men and 55 for women), and in the case of management are based upon years of service. In
accordance with the provisions of collective agreements concluded on an annual basis between the Company or its subsidi-
aries and their employees, the Group is obligated to pay certain post-employment benefits, the amounts of which are gener-
ally based on salary grade and years of service at the time of retirement.
Principal actuarial assumptions are as follows:
Discount rate
Rate of increase in salary levels
Actuarial rate of NPF
Statutory insurance contributions rate
At 31 December 2014
At 31 December 2013
12.75%
7.5%
3.0%
30.47%
8.0%
7.2%
3.0%
30.85%
Management has assessed that reasonable changes in the principal significant actuarial assumptions will not have a signifi-
cant impact on the consolidated statements of profit of loss and other comprehensive income or the liability recognized in the
consolidated statement of financial position.
Amounts recognized in the consolidated statement of financial position:
At 31 December 2014
At 31 December 2013
Present value of defined benefit obligation
Less: Fair value of plan assets
Net defined benefit liability
Change in the defined benefit obligation amount:
Defined benefit obligation at beginning year
Effect of exchange rate changes
Current service cost
Interest cost
Benefits paid
4,379
(1,630)
2,749
2014
5,598
50
189
448
(531)
(1,510)
30
56
101
(52)
5,598
(1,830)
3,768
2013
5,441
8
181
392
(487)
58
6
(3)
-
2
At 31 December 2014
At 31 December 2013
Remeasurement (gains)/losses:
2,749
211
2,960
3,768
71
3,839
Actuarial (gains)/losses arising from changes in financial assumptions
Actuarial losses arising from changes in demographic assumptions
Actuarial losses/(gains) - Experience
Past service cost
Other
Defined benefit obligation at the end of the year
4,379
5,598
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
138 139
The amounts recognized in profit or loss are as follows:
Service cost
Net interest expense
Remeasurement (gains)/losses:
Actuarial (gain)/losses arising from changes in financial assumptions
Actuarial losses arising from changes in demographic assumptions
Actuarial gains – Experience
Other
Total included in ‘employee benefits expense’
The amounts recognized in other comprehensive income are as follows:
Remeasurement (gains)/losses:
Actuarial (gains)/losses arising from changes in financial assumptions
Actuarial losses arising from changes in demographic assumptions
Actuarial losses – Experience
Effect of exchange rate changes
Total included in other comprehensive income
Reconciliation of the opening and closing balances of plan assets’ fair value:
Plan assets at beginning of year
Interest income
Contributions
Benefits paid
Actuarial loss
Other
Plan assets at year end
2014
272
301
(323)
10
(100)
(52)
108
2014
(845)
20
155
50
(620)
2014
1,830
146
229
(232)
(342)
(1)
1,630
2013
181
261
17
2
(91)
2
372
2013
224
4
88
8
324
2013
1,819
131
230
(167)
(183)
-
1,830
The annual contributions made by the Group are managed by the Fund. The primary investment objectives of the Fund are to
achieve the highest rate of total return within prudent levels of risk and liquidity, to diversify and mitigate potential downside
risk associated with the investments, and to provide adequate liquidity for benefit payments and portfolio management.
Plan assets structure:
Russian corporate bonds and equity securities of Russian issuers
Russian government and regions bonds
Bank deposits
Foreign government securities
Other
Total plan assets
At 31 December 2014
At 31 December 2013
34.61%
8.51%
33.84%
10.11%
12.93%
100%
51.74%
11.61%
33.12%
-
3.53%
100%
Expected contributions to be paid during the next annual reporting period are RR 547 million.
Note 18: Taxes
Income tax expense comprises the following:
Current income tax expense
Deferred income tax expense
Income tax expense for the year
Year ended 31
December 2014
(21,376)
(4,920)
Year ended 31
December 2013
(21,645)
(1,302)
(26,296)
(22,947)
Presented below is reconciliation between the provision for income taxes and taxes determined by applying the statutory tax
rate 20% (for the year ended 31 December 2013: 20%) to income before income taxes:
Profit before income taxes and non-controlling interest
Theoretical income tax expense at statutory rate
Increase due to:
Non-deductible expenses, net
Other
Income tax expense
Year ended
31 December 2014
Year ended
31 December 2013
123,973
(24,795)
(2,545)
1,044
(26,296)
101,291
(20,258)
(2,689)
-
(22,947)
No provision has been made for additional income taxes on RR 24,311 million of undistributed earnings of certain subsidiar-
ies. These earnings have been and will continue to be reinvested. These earnings could become subject to additional tax of
approximately RR 1,550 million if they were remitted as dividends.
Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized
for financial reporting purposes and such amounts recognized for statutory tax purposes. Deferred tax assets (liabilities) are
comprised of the following:
At 31 December 2014
At 31 December 2013
Tax loss carry forward
Decommissioning provision
Other
Deferred income tax assets
Property, plant and equipment
Inventories
Accounts receivable
Long-term investments
Undistributed Earnings
Other liabilities
Deferred income tax liabilities
Net deferred tax liability
4,508
8,956
778
14,242
(27,458)
(2,370)
(319)
(94)
-
(2,618)
(32,859)
(18,617)
3,824
11,007
624
15,455
(24,146)
(1,847)
(152)
(95)
(1,044)
(1,921)
(29,205)
(13,750)
Deferred income taxes are reflected in the consolidated statement of financial position as follows:
Deferred income tax asset
Deferred income tax liability
Net deferred tax liability
At 31 December 2014
At 31 December 2013
2,982
(21,599)
(18,617)
2,049
(15,799)
(13,750)
Deferred tax assets are recognized for the carry-forward of unused tax losses and unused tax credits to the extent that it is prob-
able that taxable profits will be available against which the unused tax losses/credits can be utilized.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
140 141
Tax losses carry forward. At 31 December 2014, the Group had recognized deferred income tax assets of RR 4,508 million
(RR 3,824 million at 31 December 2013) in respect of unused tax loss carry forwards of RR 22,541 million (RR 19,119 million at 31
December 2013). Tax losses can be carried forward for relief against taxable profits for 10 years after they are incurred, subject
to certain limitations. In determining future taxable profits and the amount of tax benefits that are probable in the future manage-
ment makes judgments including expectations regarding the Group’s ability to generate sufficient future taxable income and the
projected time period over which deferred tax benefits will be realized.
Rights attributable to preferred shares. Unless a different amount is approved at the annual shareholders meeting, pre-
ferred shares earn dividends equal to their nominal value. The amount of a dividend for a preferred share may not be less than the
amount of a dividend for a common share. Preferred shareholders may vote at meetings only on the following decisions:
• the amendment of the dividends payable per preferred share;
• the issuance of additional shares with rights greater than the current rights of preferred shareholders; and
• the liquidation or reorganization of the Company.
The Group doesn’t have any unrecognised potential deferred tax assets in respect of deductible temporary differences.
The decisions listed above can be made only if approved by 75% of preferred shareholders.
The Group is subject to a number of taxes other than income taxes, which are detailed as follows:
Mineral extraction tax
Property tax
Penalties and interest
Other
Total taxes other than income taxes
Year ended 31
December 2014
Year ended 31
December 2013
110,416
5,161
53
1,430
117,060
105,302
4,518
40
1,476
111,336
For mineral extraction tax for fields whose depletion rate exceeds a certain threshold the Group received a benefit of approxi-
mately RR 29.7 billion and RR 24.4 billion for the years ended 31 December 2014 and 2013, respectively.
At 31 December 2014 and 2013 taxes payable were as follows:
Mineral extraction tax
Value Added Tax on goods sold
Export duties
Property tax
Other
Total taxes payable
Note 19: Shareholders’ equity
At 31 December 2014
At 31 December 2013
7,300
2,694
596
1,419
2,431
9,485
2,205
1,765
1,195
2,056
14,440
16,706
Authorized share capital. At 31 December 2014 the authorized share capital consists of 2,178,690,700 voting common
shares and 147,508,500 non-voting preferred shares; both classes of shares have a nominal value of RR 1.00 per share. The
nominal value of authorised share capital differs from its carrying value due to effect of the hyperinflation of capital contribu-
tions made before 2003.
Golden share. OAO Svyazinvestneftekhim, a company wholly owned by the government of Tatarstan, as of 31 December
2014 holds approximately 33.59% of the Company’s capital stock (approximately 36% of voting stock). These shares were
contributed to Svyazinvestneftekhim by the Ministry of Land and Property Relations of Tatarstan in 2003. Tatarstan also
holds a “Golden Share” – a special governmental right – in the Company. The exercise of its powers under the Golden Share
enables the Tatarstan government to appoint one representative to the Board of Directors and Revision Commission of the
Company and to veto certain major decisions, including those relating to changes in the share capital, amendments to the
Charter, liquidation or reorganization and “major” and “interested party” transactions as defined under Russian law.
The Golden Share currently has an indefinite term. The Tatarstan government also controls or exercises significant influence
over a number of the Company’s suppliers, contractors and customers (see also Note 1).
Holders of preferred shares acquire the same voting rights as holders of common shares in the event that dividends are either
not declared, or declared but not paid, on preferred shares. On liquidation, the shareholders are entitled to receive a distribu-
tion of net assets. Under Russian Joint Stock Companies Law and the Company’s charter in case of liquidation, preferred
shareholders have priority over shareholders holding common shares to be paid declared but unpaid dividends on preferred
shares and the liquidation value of preferred shares, if any.
Amounts available for distribution to shareholders. Amounts available for distribution to shareholders are based on the
Company’s non-consolidated statutory accounts prepared in accordance with RAR, which differ significantly from IFRS (see Note
2). The statutory accounts are the basis for profit distribution and other appropriations. Russian legislation identifies the basis of
distribution as the current period net profit calculated in accordance with RAR. However, this legislation and other statutory laws
and regulations dealing with distribution rights are open to legal interpretation. For the years ended 31 December 2014 and 2013,
the Company had a statutory current profit of RR 82,061 million and RR 63,850 million, respectively.
In June 2014 the shareholders of the Company approved the payment of dividends for the year ended 31 December 2013 in
amount of RR 8.23 per preference and ordinary share. In June 2013 the shareholders of the Company approved the payment
of dividends for the year ended 31 December 2012 in amount of RR 8.6 per preference and ordinary share.
Earnings per share. Preference shares are not redeemable and are considered to be participating shares. Basic and diluted
earnings per share are calculated by dividing profit or loss attributable to ordinary and preference shareholders by the weighted av-
erage number of ordinary and preferred shares outstanding during the period. Profit or loss attributed to equity holders is reduced
by the amount of dividends declared in the current period for each class of shares. The remaining profit or loss is allocated to com-
mon and preferred shares to the extent that each class may share in earnings if all the earnings for the period had been distributed.
Treasury shares are excluded from calculations. The total earnings allocated to each class of shares are determined by adding
together the amount allocated for dividends and the amount allocated for a participation feature.
Profit attributable to Group shareholders
Common share dividends
Preferred share dividends
Income available to common and preferred shareholders, net of dividends
Basic and diluted:
Weighted average number of shares outstanding (millions of shares):
Common
Preferred
Combined weighted average number of common and preferred shares outstanding
Basic and diluted earnings per share (RR)
Common
Preferred
Year ended 31
December 2014
92,227
(17,474)
(1,214)
73,539
Year ended 31
December2013
70,832
(18,260)
(1,268)
51,304
2,123
148
2,271
40.61
40.58
2,123
148
2,271
31.19
31.16
Non-controlling interest. Non-controlling interest is adjusted by dividends paid by the Group’s subsidiaries amounting
to RR 1,819 million and RR 984 million at 31 December 2014 and 2013, respectively.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
Note 20: Employee benefit expenses
Note 22: Segment information
142 143
Wages and salaries
Statutory insurance contributions
Bonus certificates granted to directors and employees
Pension costs – defined benefit plans (Note 17)
Other employee benefits
Total employee benefit expense
Year ended 31
December 2014
Year ended 31
December 2013
35,144
10,197
1,235
108
2,467
49,151
32,479
9,045
1,038
372
2,655
45,589
Employee benefit expenses are included in operating expenses, selling, general and administrative expenses and Mainte-
nance of social infrastructure and transfer of social assets and other expenses in the Consolidated Statements of Profit or
Loss and Other Comprehensive Income.
Note 21: Interest income and interest expense
Interest income comprises the following:
Interest income from loans and receivables
Unwinding of the present value discount of long-term financial assets
Total interest income
Interest expense comprises the following:
Bank loans
RR denominated non-convertible bonds
Unwinding of the present value discount of decommissioning provision
Unwinding of the present value discount of long-term financial assets and liabilities
Total interest expense
Less capitalised interest costs
Total interest costs recognised in profit or loss
Year ended 31
December 2014
Year ended 31
December 2013
6,852
92
6,944
3,315
50
3,365
Year ended 31
December 2014
Year ended 31
December 2013
1,660
-
4,123
45
5,828
(346)
5,482
2,204
261
4,494
590
7,549
(625)
6,924
Operating segments are components that engage in business activities that may earn revenues or incur expenses, whose
operating results are regularly reviewed by the Board of Directors and the Management Committee and for which discrete
financial information is available.
Segments whose revenue, result or assets are ten percent or more of all the segments are reported separately.
The Group’s business activities are conducted predominantly through three main operating segments:
consist of transfer of crude oil to refinery and other goods and services provided to other operating segments,
• Exploration and production consists of exploration, development, extraction and sale of own crude oil. Intersegment sales
• Refining and marketing comprises purchases and sales of crude oil and refined products from third parties, own refining
• Petrochemical products include production and sales of tires and petrochemical raw materials and refined products,
activities and retailing operations,
which are used in production of tires.
Other sales include revenues from ancillary services provided by the specialized subdivisions and subsidiaries of the Group,
such as sales of oilfield equipment and drilling services provided to other companies in Tatarstan, revenues from the sale of
auxiliary petrochemical related services and materials as well as other business activities, which do not constitute reportable
business segments.
The Group evaluates performance of its reportable operating segments and allocates resources based on segment earn-
ings, defined as profit before income taxes and non-controlling interest not including interest income, expense, and earnings
from equity investments, other income (expenses) and foreign exchange loss or gain. Intersegment sales are at prices that
approximate market. Group financing (including interest expense and interest income) and income taxes are managed on a
Group basis and are not allocated to operating segments.
For the year ended 31 December 2014, revenues of RR 61,719 million or 13% of the Group’s total sales and operating rev-
enues is derived from one external customer.
For the year ended 31 December 2013, revenues of RR 88,807 million or 20% and RR 51,424 million or 11% of the Group’s
total sales and operating revenues are derived from two external customers, respectively.
These revenues represent sales of crude oil and are attributable to the exploration and production segment and refining and
marketing segment.
Management does not believe the Group is dependent on any particular customer.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
Segment sales and other operating revenues. Reportable operating segment sales and other operating revenues
are stated in the following table:
Exploration and production
Domestic own crude oil
CIS own crude oil
Non-CIS own crude oil
Other
Intersegment sales
Year ended 31
December 2014
Year ended 31
December 2013
75,601
8,825
105,411
4,263
107,869
57,262
7,057
137,495
4,300
90,628
Total exploration and production
301,969
296,742
Refining and marketing
Domestic sales
Crude oil purchased for resale
Refined products
Total Domestic sales
CIS sales
Refined products
Total CIS sales(1)
Non-CIS sales
Crude oil purchased for resale
Refined products
Total non-CIS sales(2)
Other
Intersegment sales
Total refining and marketing
Petrochemicals
Tires – domestic sales
Tires – CIS sales
Tires – non-CIS sales
Petrochemical products and other
Intersegment sales
Total petrochemicals
Total segment sales
Corporate and other sales
Elimination of intersegment sales
Total sales and other operating revenues
12,218
126,967
139,185
12,087
12,087
10,083
62,329
72,412
5,105
3,399
394
98,623
99,017
7,176
7,176
14,999
73,542
88,541
3,496
3,487
232,188
201,717
25,027
6,579
1,486
2,794
933
36,819
570,976
17,585
(112,201)
476,360
24,395
6,714
1,321
2,359
846
35,635
534,094
15,850
(94,961)
454,983
144 145
Year ended 31
December 2014
Year ended 31
December 2013
90,778
21,046
320
112,144
(5,611)
17,440
123,973
92,746
16,321
338
109,405
(4,996)
(3,118)
101,291
At 31 December 2014
At 31 December 2013
280,081
294,658
30,094
128,101
732,934
281,384
259,879
29,830
102,996
674,089
Segment earnings.
Segment earnings
Exploration and production
Refining and marketing
Petrochemicals
Total segment earnings
Corporate and other
Other income/(expenses)
Profit before income tax
Segment assets.
Assets
Exploration and production
Refining and marketing
Petrochemicals
Corporate and other
Total assets
As of 31 December 2014 and 2013 corporate and other segment comprised RR 7,212 million and RR 7,778 million, respec-
tively, investments in associates and joint ventures.
The Group’s assets and operations are primarily located and conducted in the Russian Federation.
Segment depreciation, depletion and amortisation and additions to property, plant and equipment.
Depreciation, depletion and amortization
Exploration and production
Refining and marketing
Petrochemicals
Corporate and other
Total segment depreciation, depletion and amortization
Additions to property, plant and equipment
Exploration and production
Refining and marketing
Petrochemicals
Corporate and other
Total additions to property, plant and equipment
Year ended
31 December 2014
Year ended
31 December 2013
11,633
5,516
1,741
2,231
21,121
12,186
32,633
1,254
6,714
52,787
11,424
4,203
1,682
2,014
19,323
25,696
23,791
942
7,715
58,144
(1) – CIS is an abbreviation for Commonwealth of Independent States (excluding the Russian Federation).
(2) – Non-CIS sales of crude oil and refined products are mainly made to Germany, Switzerland, Netherlands, United Kingdom based traders
and Poland based refineries.
For the years ended 31 December 2014 and 2013 additions to property, plant and equipment of exploration and production
segment include a reduction of RR 12,988 million and RR 1,751 million, respectively, associated with changes in the decom-
missioning provision.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
146 147
Note 23: Related party transactions
At 31 December 2014 and 2013 the outstanding balances with related parties were as follows:
At 31 December 2014
At 31 December 2013
Parties are generally considered to be related if the parties are under common control or if one party has the ability to control
the other party or can exercise significant influence or joint control over the other party in making financial and operational
decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship,
not merely the legal form.
Transactions are entered into in the normal course of business with affiliates, joint ventures, government related companies,
key management personnel and other related parties. These transactions include sales of crude oil and refined products,
purchases of electricity and banking transactions.
Associates, joint ventures and other related parties
The amounts of transactions for each year and the outstanding balances at each year end with affiliates and other related
parties are as follows:
Revenues and income
Sales of refined products
Other sales
Costs and expenses
Purchases of crude oil
Other services
Other purchases
Year ended 31
December 2014
Year ended 31
December 2013
15
324
148
527
1,644
15
226
124
629
1,105
For the years ended 31 December 2014 and 2013, the Group sold crude oil on a commission basis from related parties for RR
148 million and RR 124 million, respectively.
For the year ended 31 December 2014 and 2013 the Group has entered into transactions with related parties for purchases of
equipment in the amount of RR 0 million and RR 1,986 million, respectively, which is included in our property, plant and equip-
ment.
Assets
Cash and cash equivalents
Restricted cash
Accounts receivable
Notes receivable
Short-term certificates of deposit
Trading securities
Loans receivable
Prepaid expenses and other current assets
Due from related parties short-term
Long-term accounts receivable
Long-term certificates of deposit
Long-term loans receivable
Due from related parties long-term
Liabilities
Accounts payable and accrued liabilities
Short-term debt
Due to related parties short-term
Long-term debt
Due to related parties long-term
6,258
1,554
421
3,459
4,394
176
515
189
11,342
912
332
2,164
4,300
7
310
107
16,966
19,474
6
16,006
4,974
20,986
(162)
(1,991)
(2,153)
(66)
(66)
-
14,341
2,366
16,707
(503)
(2,130)
(2,633)
(23)
(23)
As of 31 December 2014 and 2013, the Group had RR 7,719 million and RR 3,879 million, respectively, in loans and notes
receivable due from Bank Zenit or its wholly-owned subsidiary Bank Devon Credit. These loans and notes mature between
2015 and 2022, bearing interest between 2.48% and 8.5%. As of 31 December 2014 and 2013, the Group has short and long-
term certificates of deposit of RR 20,400 million and RR 18,641 million, respectively, held with Bank Zenit or its wholly-owned
subsidiary Bank Devon Credit.
In March 2009 the Group placed a long-term deposit with Bank Zenit for RR 2,140 million payable in 10 years bearing interest
10.85%. In February 2014 an additional agreement was signed, as result of which this deposit will be payable in 15 years with
a new interest rate of 9.35% per annum.
The Group entered into a subordinated deposit agreement with Bank Zenit in January 2013 in the amount of RR 3,600 million
payable in 10 years bearing interest of 9% per annum. In February 2014 an additional agreement was signed, as result of
which this deposit will be payable in 15 years without a change of interest rate.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
148 149
Russian Government bodies and state organizations
The amounts of transactions for each year with Government bodies and state organizations are as follows:
Capital commitments. As of 31 December 2014 and 2013 the Group has outstanding capital commitments of approxi-
mately RR 36,977 million and RR 23,180 million, respectively, for the construction of the TANECO refinery complex. These
commitments are expected to be paid between 2015 and 2017.
Sales of crude oil
Sales of refined products
Other sales
Purchases of refined products
Purchases of electricity
Purchases of transportation services
Other services
Other purchases
Year ended 31
December 2014
Year ended 31
December 2013
1,292
2,841
330
18,821
11,037
15,061
3,287
204
-
1,848
304
8,771
10,115
22,489
4,067
136
Compensation to key management personnel
As of 31 December 2014 and 2013 total remuneration, including pension cost, for key management personnel was RR 1,582
million and RR 1,625 million, respectively.
For the year ended 31 December 2014, the Company issued 9,264,850 Awards to senior management and directors, all of
which are expected to be settled at a price of RR 133.28 per Award. Final settlement is subject to approval at the Company’s
Management Committee meeting in July-September 2015. For the year ended 31 December 2013, the Company issued
10,138,230 Awards to senior management and directors, all of which are expected to be settled at a price of RR 102.4 per
Award. The amount of related compensation expense recognized in Selling, General and administrative expenses of the Con-
solidated Statements of Profit or Loss and Other Comprehensive Income for the years ended 31 December 2014 and 2013
was RR 1,235 million and RR 1,038 million, respectively.
Note 24: Contingencies and commitments
Operating Environment of the Group
The Russian Federation displays certain characteristics of an emerging market. Its economy is particularly sensitive to oil and
gas prices. Tax, currency and customs legislation is sometimes subject to varying interpretations and contributes to the chal-
lenges faced by companies operating in the Russian Federation.
During 2014 the Russian economy was negatively impacted by a decline in oil prices and ongoing political tensions.
The ongoing uncertainty and volatility of the financial markets and other risks could have significant negative effects on the
Russian financial and corporate sectors. Management determined provisions for impairment by considering the economic
situation and outlook at the end of the reporting period.
These events may have a further significant impact on the Group’s future operations and financial position, the effect of which
is difficult to predict.
The future economic development of the Russian Federation is dependent upon external factors and internal measures
undertaken by the government to sustain growth, and to change the tax, legal and regulatory environment. Management be-
lieves it is taking all necessary measures to support the sustainability and development of the Group’s business in the current
business and economic environment.
Management believes the Group’s current and long-term capital expenditures program can be funded through cash flows
generated from existing operations as well as lines of credit available to the Company. The TANECO refinery project has been
funded from the Company’s cash flow with the support of the bank facilities (Note 15). Management believes the Company
has the ability to obtain syndicated loans and other financings as needed to continue funding the TANECO refinery project,
refinance any maturing debts as well as finance business acquisitions and other transactions that may arise in the future.
Taxation. Russian tax and customs legislation is subject to varying interpretations, and changes, which can occur frequent-
ly. Management’s interpretation of such legislation as applied to the transactions and activity of the Group may be challenged
by the relevant authorities. The Russian tax authorities may be taking a more assertive position in their interpretation of the
legislation and assessments, and it is possible that transactions and activities that have not been challenged in the past may
be challenged.
Tax authorities have completed the tax review of the Company’s consolidated taxpayers group for the 2012. The results of this
review did not have a material effect on the Group’s results of operations or cash flows.
Amended Russian transfer pricing legislation took effect from 1 January 2012. The transfer pricing rules appear to be more
technically elaborate and, to a certain extent, better aligned with the international transfer pricing principles developed by the
Organisation for Economic Cooperation and Development (OECD). The legislation provides the possibility for tax authorities
to make transfer pricing adjustments and impose additional tax liabilities in respect of controlled transactions (transactions
with related parties and some types of transactions with unrelated parties), provided that the transaction price is not arm’s
length.
Management believes that its pricing policy is arm’s length and it has implemented internal processes to be in compliance
with the new transfer pricing legislation.
Given that the practice of implementation of the new Russian transfer pricing rules has not yet developed, the impact of any
challenge of the Group’s transfer prices cannot be reliably estimated; however, it may be significant to the financial conditions
and/or the overall operations of the Group.
Environmental contingencies. The Group, through its predecessor entities, has operated in Tatarstan for many years
without developed environmental laws, regulations and the Group’s policies. Environmental regulations and their enforce-
ment are currently being considered in the Russian Federation and the Group is monitoring its potential obligations related
thereto. The outcome of environmental liabilities under proposed or any future environmental legislation cannot reasonably
be estimated at present, but could be material. Under existing legislation, however, management believes that there are no
probable liabilities, which would have a material adverse effect on the operating results or financial position of the Group.
Legal contingencies. The Group is subject to various lawsuits and claims arising in the ordinary course of business. The
outcomes of such contingencies, lawsuits or other proceedings cannot be determined at present. In the case of all known
contingencies the Group accrues a liability when the loss is probable and the amount is reasonably estimable. Based on
currently available information, management believes that it is remote that future costs related to known contingent liability
exposures would have a material adverse impact on the Group’s consolidated financial statements.
Social commitments. The Group contributes significantly to the maintenance of local infrastructure and the welfare of
its employees within Tatarstan, which includes contributions towards the construction, development and maintenance of
housing, hospitals and transport services, recreation and other social needs. Such funding is periodically determined by the
Board of Directors after consultation with governmental authorities and recorded as expenditures when incurred.
Guarantees. The Group has no outstanding guarantees at 31 December 2014 and 2013.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
Transportation of crude oil. The Group benefits from the blending of its crude oil in the Transneft pipeline system since the
Group’s crude oil production is generally of a lower quality than that produced by some other regions of the Russian Federation
(mainly Western Siberia) which supply through the same pipeline system. There is currently no equalization scheme for differences
in crude oil quality within the Transneft pipeline system and the implementation of any such scheme is not determinable at present.
However, if this practice were to change, the Group’s business could be materially and adversely affected.
Ukrtatnafta. In May 2008, Tatneft commenced international arbitration against Ukraine on the basis of the agreement be-
tween the Government of the Russian Federation and the Cabinet of Ministries of Ukraine on the Encouragement and Mutual
Protection of Investments of November 27, 1998 (“Russia-Ukraine BIT”) in connection with the forcible takeover of Ukrtatnaf-
ta and seizure of shares of the Group in Ukrtatnafta. In July 2014 the arbitral tribunal issued the award holding Ukraine liable
for violation of the Russia-Ukraine BIT and required Ukraine to pay Tatneft US$ 112 million plus interest.
Libya. As a result of the political situation in Libya, in February 2011 the Group had to entirely suspend its operations in that
country and evacuate all its personnel. In February 2013 the Group started the process of resuming its activities in Libya,
including the return of its personnel to a branch in Tripoli and recommencement of some exploration activities. Due to the
deterioration of security situation in Libya in the second half of 2014 the Group had to suspend all of its operations and an-
nounced a force-majeure under the Exploration and Production Sharing Agreements, acknowledged by the National Oil Com-
pany, which is continuing as of the date of this report. The Group is constantly monitoring the security and political situation in
Libya, and plans to resume its operations once the conditions permit to do so.
As of 31 December 2014 the Group had approximately RR 5,731 million of assets associated with its Libyan operations of
which RR 5,503 million is related to capitalized exploration costs, RR 210 million of inventories and RR 18 million of cash. As of
31 December 2013 the company had approximately RR 5,673 million of assets associated with its Libyan operations of which
RR 5,455 million is related to capitalized exploration costs, RR 210 million of inventories and RR 8 million of cash.
150 151
Note 25: Principal subsidiaries
Set out below are the Group’s principal subsidiaries at 31 December 2014. Unless otherwise stated, the subsidiaries as listed
below have share capital consisting solely of ordinary shares, which are held directly by the Group and the proportion of
ownership interests held equals to the voting rights held by Group. The country of incorporation or registration is also their
principal place of business. For all principal subsidiaries the country of incorporation is the Russian Federation, except for
Tatneft Europe AG, which is incorporated in Switzerland.
Name of entity
Principal activity
At 31 December 2014
At 31 December 2013
Tatneft Europe AG
Taneco OAO
TMS group OOO
Burenie OOO
Nizhnekamskshina OAO
Nizhnekamskiy zavod shin CMK
OOO
Export oil sales
Oil refinery
Oil lifting services
Drilling services
Tires production
Tires production
Trade House Kama OOO
Tires sales
Tatneft AZS-Centr OOO
Oil products sales
Tatneft AZS-Zapad OOO
Oil products sales
% of
ownership
Interest held
by the Group
% of
ownership
Interest held
by the NCI
% of
ownership
Interest held
by the Group
% of ownership
Interest held by
the NCI
100
91
-
-
58
100
100
100
100
-
9
100
100
42
-
-
-
-
100
91
-
-
61
100
100
100
100
-
9
100
100
39
-
-
-
-
The total non-controlling interest for the year ended 31 December 2014 is RR 5,450 million, of which RR 1,560 million is attributed
to TMS group OOO and Burenie OOO. The total non-controlling interest for the year ended 31 December 2013 is RR 7,512 million,
of which RR 3,167 million is attributed to TMS group OOO and Burenie OOO. As of 31 December 2014 and 2013 accumulated non-
controlling interest in TMS group OOO and Burenie OOO was RR 9,527 million and RR 8,571 million, respectively.
The summarised financial information relating to the subsidiaries with material non-controlling interest was as follows:
Current assets
Non-current
assets
Current liabilities
Non-current
liabilities
Revenue
Profit/
Year ended 31 December 2014
Taneco OAO
TMS group OOO
Nizhnekamskshina OAO
Burenie OOO
Total
Year ended 31 December 2013
Taneco OAO
TMS group OOO
Nizhnekamskshina OAO
Burenie OOO
Total
14,628
1,380
963
456
183,403
29,344
3,276
970
179,424
1,450
4,935
1,426
13,352
4,902
504
-
37,488
26,866
13,596
14,472
6,786
2,012
(131)
(113)
17,427
216,993
187,235
18,758
92,422
8,554
8,920
380
2,500
499
144,521
28,302
2,891
797
148,193
1,384
5,692
1,144
6,779
4,225
751
1
20,620
23,862
16,256
14,943
12,299
176,511
156,413
11,756
75,681
3,607
2,060
218
1,329
7,214
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152 153
Note 26: Financial risk management
Financial risk management objectives and policies.
The accounting policies for financial instruments, as described in Note 3, have been applied to the financial statements line
items below:
Note
At 31 December 2014
At 31 December 2013
Financial assets
Current
Cash and cash equivalents
Restricted cash
Accounts receivable
Short-term financial assets
Non-current
Long-term accounts receivable
Long-term financial assets
Total financial assets
Financial liabilities
Current
Trade and other payable
Short-term debt and current portion of long-term debt
Non-current
Long-term debt, net of current portion
Total financial liabilities
6
7
8
11
16
15
15
41,548
1,635
46,059
25,323
1,364
29,893
145,822
(18,733)
(15,859)
(12,888)
(47,480)
29,535
917
52,098
16,693
1,016
25,814
126,073
(15,343)
(36,561)
(12,785)
(64,689)
The Group‘s activities expose it to a variety of financial risks: market risk (including foreign currency risk, interest rate risk and
commodity price risk), credit risk and liquidity risk. The Group‘s overall risk management program focuses on the unpredict-
ability of financial markets and seeks to minimize potential adverse effects on the Group‘s financial performance. The Group
has introduced a risk management system and developed a number of procedures to measure, assess and monitor risks and
select the relevant risk management techniques.
Market risk
Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future perfor-
mance of a business.
The Group takes on exposure to market risks. Market risks arise from open positions in (a) foreign currencies, (b) interest
rate risk and (c) commodity price risk.
a) Currency risk
The Group operates internationally and is exposed to currency risk arising from various currency exposures primarily with
respect to the US dollar and the Euro. Foreign exchange risk arises from assets, liabilities, commercial transactions and
financing denominated in foreign currencies.
The table below summarises the Group’s exposure to foreign currency exchange rate risk at the end of the reporting period:
At 31 December 2014
Financial assets
Current
Cash and cash equivalents
Restricted cash
Accounts receivable
Short-term financial assets
Non-current
Long-term accounts receivable
Long-term financial assets
Total financial assets
Financial liabilities
Current
Trade and other payable
Short-term debt and current portion of long-term debt
Non-current
Long-term debt, net of current portion
Total financial liabilities
At 31 December 2013
Financial assets
Current
Cash and cash equivalents
Restricted cash
Accounts receivable
Short-term financial assets
Non-current
Long-term accounts receivable
Long-term financial assets
Total financial assets
Financial liabilities
Current
Trade and other payable
Short-term debt and current portion of long-term debt
Non-current
Long-term debt, net of current portion
Total financial liabilities
Russian
Rouble
US dollar
Other
Total
37,686
-
34,974
22,184
1,364
24,381
120,589
3,778
127
10,242
3,139
-
5,512
22,798
84
1,508
843
-
-
-
41,548
1,635
46,059
25,323
1,364
29,893
2,435
145,822
(15,964)
(3,590)
(1,661)
(11,484)
(799)
(20,353)
(8,971)
(22,116)
(1,108)
(785)
(3,118)
(5,011)
(18,733)
(15,859)
(12,888)
(47,480)
Russian
Rouble
26,121
20
24,443
13,934
1,016
22,305
87,839
US dollar
Other
Total
3,346
106
25,841
2,759
-
3,509
35,561
68
791
1,814
-
-
-
29,535
917
52,098
16,693
1,016
25,814
2,673
126,073
(13,450)
(4,966)
(1,798)
(31,387)
(95)
(208)
(15,343)
(36,561)
(890)
(19,306)
(10,086)
(43,271)
(1,809)
(2,112)
(12,785)
(64,689)
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014(IN MILLIONS OF RUSSIAN ROUBLES)(IN MILLIONS OF RUSSIAN ROUBLES)
154 155
Effect on pre-tax profit
US $/RR loss
US $/RR gain
b) Interest rate risk.
Increase/decrease in
exchange rate
Year ended
31 December 2014
Year ended
31 December 2013
+10%
-10%
(68)
68
(771)
771
The majority of the Group’s borrowings is at variable interest rates (linked to the LIBOR rate). To mitigate the risk of significant
changes in the LIBOR rate, the Group’s treasury function performs periodic analysis of the interest rate environment. The
Group does not have a formal policy of determining how much of the Group’s exposure should be to fixed or variable rates.
However, the Group performs periodic analysis of the current interest rate environment and depending on that analysis at
the time of raising new debts management makes decisions whether to obtain financing on fixed-rate or variable-rate basis
would be more beneficial to the Group over the expected period until maturity.
Effect on pre-tax profit
Increase by 100 basis points
Decrease by 100 basis points*
* - floating rate decrease capped at zero.
Year ended 31
December 2014
Year ended 31
December 2013
(264)
50
(372)
25
The sensitivity analysis is limited only to variable rate loans and borrowings and is conducted with all other variables held constant.
The analysis is prepared assuming the amount of variable rate liability outstanding at the reporting date was outstanding for the
whole year. Interest rate on variable rate loans and borrowings will effectively change throughout the year in response to fluctua-
tions in market interest rates.
The impact measured through the sensitivity analysis does not take into account other potential changes in economic conditions,
which may accompany the relevant changes in market interest rates.
c) Commodity price risk
Commodity price risk is the risk or uncertainty arising from possible movements in prices for crude oil and related products, and
their impact on the Group’s future performance and results of the Group’s operations. A decline in the prices could result in a
decrease in net income and cash flows. The Group’s overall strategy in production and sales of crude oil and related products is
centrally managed. Substantially all the Group’s crude oil export sales to Europe are sold under long-term contracts.
Credit risks related to accounts receivable are systematically monitored taking into account the customer’s financial position,
past experience and other factors. Management systematically reviews ageing analysis of receivables and uses this informa-
tion for calculation of provision for impairment. A significant portion of the Group’s accounts receivable is due from domestic
and export trading companies. The Group does not always require collateral to limit the exposure to loss; however, in most
cases letters of credit and prepayments are used, especially with respect to accounts receivables from non-CIS sales of
crude oil. The Group operates with various customers and a substantial part of its sales relate to major customers. Although
collection of accounts receivable could be influenced by economic factors affecting these customers, management believes
there is no significant risk of loss to the Group beyond the provisions already recorded.
The Company performs an ongoing assessment and monitoring of the risk of default.
In addition, as part of its cash management and credit risk function, the Company regularly evaluates the creditworthiness of
financial and banking institutions where it deposits cash.
The Group deposits available cash mostly with financial institutions in the Russian Federation. To manage this credit risk, the
Group allocates its available cash to a variety of Russian banks. Management periodically reviews the credit worthiness of the
banks in which it deposits cash. As of 31 December 2014 and 2013 the majority of loans and receivables (Note 8, Note 11) are
held in Bank Zenit which is related party to the Group (Note 23) and other non-investment grade entities with credit rating not
less than BB- according to Standard and Poor’s.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach
to managing liquidity is to ensure that it will always have sufficient liquidity to meet its liabilities when due, under both normal
and stressed conditions, without incurring unacceptable losses or risking damage to the Group‘s reputation. In managing its
liquidity risk, the Group maintains adequate cash reserves and debt facilities, continuously monitors forecast and actual cash
flows and matches the maturity profiles of financial assets and liabilities.
The Group prepares various financial plans (monthly, quarterly and annually) which ensures that the Group has
sufficient cash on demand to meet expected operational expenses, financial obligations and investing activities for a period
of 30 days or more. To fund cash requirements of a more permanent nature, the Group will normally raise long-term debt in
available international and domestic markets.
All of the Group’s financial liabilities represent non-derivative financial instruments.
The Group assesses on a regular basis potential scenarios for future fluctuation in commodity prices and their impacts on opera-
tional and investment decisions.
The following tables summarise the maturity profile of the Group‘s financial liabilities based on contractual undiscounted pay-
ments, including interest payments:
However, in the current environment management estimates may materially differ from actual future impact on the Group’s
financial position. Actual results, and the impact on the Group’s operations and financial position, may differ from management’s
estimates of potential scenarios.
Credit risk
Credit risk refers to the risk exposure that a potential financial loss to the Group may occur if a counterparty defaults on its
contractual obligations. The Group’s exposure to credit risk is limited to the carrying amount of financial assets recognized in
the Consolidated Statement of Financial Position.
Credit risk arises from cash and cash equivalents, certificates of deposits, loans and notes receivables, as well as credit ex-
posures to customers including outstanding trade and other receivables.
At 31 December 2014
Short-term debt, current portion of long-term and long-
term debt
Less than
1 year
Between
1 and 2 years
Between
2 and 5 years
Over 5 years
Total
16,662
3,465
5,869
5,496
31,492
Trade and other payable
18,733
-
-
-
18,733
At 31 December 2013
Short-term debt, current portion of long-term and long-
term debt
Less than
1 year
Between
1 and 2 years
Between
2 and 5 years
Over 5 years
Total
37,971
6,174
4,506
4,271
52,922
Trade and other payable
15,343
-
-
-
15,343
As the amounts included in the table are contractual undiscounted cash flows which include future interest payments, these
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amounts will not reconcile to the amounts disclosed in the consolidated statement of financial position for borrowings.
Fair value hierarchy
Fair values. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction
between market participants at the measurement date. The estimated fair values of financial instruments are determined with
reference to various market information and other valuation techniques as considered appropriate.
The different levels of fair value hierarchy have been defined as follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to assess at
the measurement date. For the Group, Level 1 inputs include held-for-trading financial assets that are actively traded on the
Russian domestic markets.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly. For the Group, Level 2 inputs include observable market value measures applied to available for sale securities.
Level 3 – Unobservable inputs for the asset or liability. These inputs reflect the Company‘s own assumptions about the as-
sumptions a market participant would use in pricing the asset or liability.
Recurring fair value measurements
The levels in the fair value hierarchy into which the recurring fair value measurements are categorised are as follows:
At 31 December 2014
At 31 December 2013
Level 1
Level 2
Level 3
Held-for-trading investments
Available-for-sale investments
Total
1,160
-
1,160
-
1,360
4,752
4,752
-
1,360
Total
carrying
value
2,520
4,752
7,272
Level 1
Level 2
Level 3
2,522
-
2,522
-
4,660
4,660
994
-
994
Total
carrying
value
3,516
4,660
8,176
The description of valuation technique and description of inputs used in the fair value measurement for Level 2 measure-
ments at 31 December 2014:
Fair value
Valuation technique
Inputs used
Available-for-sale investments
Total
4,752
4,752
Quoted prices for similar investments in
active markets, net assets valuation
Publicly available information
Available-for-sale financial assets, comprise of RR 3,585 million (11.7%) AK Bars Bank shares which are not quoted in any
Stock Exchange and the fair value are measured on AK Bars Bank Group per IFRS Financial Statements (Net assets value)
and other publicly available information.
There were no changes in valuation technique for Level 2 and Level 3 recurring fair value measurements during the year
ended 31 December 2014 (2013: none).
There have been no transfers between Level 1, Level 2 and Level 3 during the period.
156 157
Assets and liabilities not measured at fair value but for which fair value is disclosed
Fair values analysed by level in the fair value hierarchy and carrying value of assets and liabilities not measured at fair value
are as follows:
At 31 December 2014
At 31 December 2013
Level 1
Level 2
Level 3
Total
carrying
value
Level 1
Level 2
Level 3
Assets
Cash and cash
equivalents
Restricted cash
Accounts receivable
Financial assets
Total assets
Liabilities
Debt
Trade and other
payable
Total liabilities
41,548
1,635
-
-
43,183
-
-
-
-
-
-
-
-
-
-
-
-
-
47,423
42,162
41,548
29,535
1,635
47,423
47,944
917
-
-
89,585
138,550
30,452
(23,526)
(28,747)
(18,733)
(18,733)
(42,259)
(47,480)
-
-
-
-
-
-
-
-
-
-
-
Total
carrying
value
29,535
917
53,114
34,332
-
-
53,114
35,112
88,226
117,898
(49,346)
(49,346)
(15,343)
(15,343)
(64,689)
(64,689)
The fair values in Level 3 of fair value hierarchy were estimated using the discounted cash flows valuation technique. The fair
value of unquoted fixed and floating interest rate instruments was estimated based on estimated future cash flows expected
to be received discounted at current interest rates for new instruments with similar credit risk and remaining maturity.
Management of Capital
The primary objective of the Group‘s capital management is to ensure that it maintains a strong credit rating and healthy capi-
tal ratios in order to support its business and increase shareholder value. The Group manages its capital structure and makes
adjustments to it, in light of changes in economic conditions.
The Group considers equity and debt to be the principal elements of capital management. In order to maintain or adjust the
capital structure, the Group may adjust the dividend payment to shareholders, revise its investment program, attract new or
settle existing debt or sell certain non-core businesses.
The Group monitors capital on the basis of its gearing ratio.
Description
Consolidated total borrowings:
Short-term debt and current portion of long-term debt
Long-term debt, net of current portion
Notes payable
Consolidated shareholders’ equity
Debt to capital employed ratio, % (Consolidated total borrowings / Consolidated
shareholders’ equity)
Year ended 31
December 2014
Year ended 31
December 2013
29,006
15,859
12,888
259
555,965
5%
49,607
36,561
12,785
261
481,412
10%
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158 159
SOCIAL
RESPONSIBILITY
Corporate social responsibility is integrated into the
Company’s operations and is a voluntary initiative,
based on the awareness of business’s role in the state’s
social and economic stability strengthening.
The Company implements special programs to support
health, education, culture and sports
The priority for 2014 was to increase the efficiency of the
Company’s human resources usage, and to develop
work experience exchange and personnel training
system.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
HR MANAGEMENT
HR Management Policy
Personnel Motivation
JSC TATNEFT’s employees are the main asset and the key
factor of stable development in the Company. Therefore,
TATNEFT gives special attention to educational and profes-
sional growth of the personnel, attracting and retaining high-
ly-skilled specialists, training of prospective young people.
JSC TATNEFT considers wages as a component of an in-
tegrated system for employees’ material and non-material
incentives, which allows the Company to maintain high
competitiveness, attracting and retaining qualified and
motivated employees.
Main objectives, principles and approaches in HR Manage-
ment, as well as the Company’s values towards employees,
are defined in the HR Management Policy of JSC TATNEFT.
HR Management Policy is the Company’s fundamental
document in the field of human resource management,
which is consistently, fulfilled corporate standards, regulating
certification of the personnel, work with the candidate pool,
procedure of rewarding, etc.
Corporate HR Management Policy establishes the order of
personnel hiring, opportunities for professional and career
growth of the employees, proved program of material and
non-material reward of the employees, and social support.
In 2014, the average number of employees in JSC TATNEFT
was 20,502 people. The aggregate number of employees in
TATNEFT Group is approximately 77 thousand people (at the
enterprises consolidated in the report in compliance with the
IFRS standard).
The Company hired 3,144 people in 2014. That makes 15,3%
of average number of employees. Stuff turnover in JSC
TATNEFT figured up to 4,7% in the reporting year, and this
number doesn’t exceed average number in the industry.
Unified hiring procedure was established in JSC Tatneft.
Preference in filling vacancies is given to the Company’s em-
ployees whose characteristics perfectly meet the imposed
requirements. When hiring employees, preference is given to
local residents having appropriate qualification and practical
experience in the field of the Company’s activity. The share
of top managers from local population in the basic regions of
the Company’s activity makes up about 100%.
Main principles of the Company’s wages policy are the fol-
lowing:
• linkage with work results and goal achievement;
• fairness and transparency;
• ensuring competitiveness of wages.
Wages system is focused on employees’ motivation for
qualitative and productive labor, and defined by:
employee;
• importance and complexity of objectives achieved by an
• work results of a structural subdivision and the Com-
• individual work results of an employee;
• professional qualification level and certification results
pany as a whole;
of an employee.
Indicators helping when making decisions on wages in-
creases are the following:
• consumer price index (inflation rate);
• minimum wage in the country;
• minimum consumer budget in the region;
• rate of remuneration in other companies of the industry;
• increase in labor productivity in the Company.
Main income of the employees consists of the wage and
social package. Wage includes base (constant) part, ac-
cording to the scale of wages, and bonus (variable) part.
Social package provides employees with relevant value of
medical and other social guarantees.
Structure of JSC TATNEFT Employees’ Income in 2014
Index
Wage share, incl.:
constant component
variable component
Social payments share
Values
89%
60%
40%
11%
160 161
JSC TATNEFT PERSONNEL
WAGES FUND (RUR MILLIONS)
AVERAGE MONTHLY SALARY (THOU. RUR)
10 551
9 546
11 725
12
8
4
0
42,3
37,6
47,7
60
40
20
0
2012
2013
2014
2012
2013
2014
GENDER BALANCE DYNAMICS IN MANAGERIAL BODIES OF
THE COMPANY (%)
REGIONAL DISTRIBUTION OF STAFF
17,5
82,5
17,6
17,7
82,4
82,3
2012
2013
2014
women
men
0,2%
Republic of
Turkmenistan
0,1%
Others
(Libya, Urkaine)
99,7%
Russian
Federation
EMPLOYEES HIRING ACCORDING TO AGE (PPL.)
EMPLOYEES HIRING ACCORDING TO GENDER
64,8% (2036 ppl.)
under 30
26,0% (818 ppl.)
31-50
9,2% (290 ppl.)
over 50
50,3% (1563 ppl.)
men
49,7% (1581 ppl.)
women
STAFF TURNOVER
ACCORDING TO AGE (%)
STAFF STRUCTURE
ACCORDING TO AGE (%)
STAFF TURNOVER
ACCORDING TO GENDER
(%)
STAFF STRUCTURE
ACCORDING TO GENDER
(%)
9,3
6,6
5,4
23,3
51,4
25,2
24,2
24,3
50,7
51,4
5,4
25,1
24,3
39,3
39,4
39,2
3,2
60,7
60,6
60,8
2012
2013
2014
men
women
2012
2013
2014
under 30
31-50
over 50
men
women
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
162 163
Personnel Training and Development
Corporate e-University
Career Center for Students
Personnel Certification
The Company is focused on creation of an integrated sys-
tem for continuous education aimed at constant improve-
ment and development of employees, experts, middle and
top managers. Employees’ training is carried out in the
corporate personnel training center in 286 occupations,
from drilling to filling station servicing.
Training and skill improvement of specialists are carried
out in specialized educational establishments of the region
and the Russian Federation. Over a number of years, the
Company’s specialist participate in the Program on Training
of Managerial Human Resources for National Economic
Enterprises of the Russian Federation (“President Pro-
gram”). 150 finished their learning in the period between
1998-2014. In 2014, 75 chiefs of main production work-
shops in oil and gas production boards passed education
under international module program “Chief of oil and gas
production workshop” of Oil and Gas Business Institute.
45 managers and specialists of oil and gas drilling services
and supervising services passed their education on “Wells
drilling and completion” program. The Institute has also
developed module educational program “Young leader of
oil and gas company” for young specialists and winners of
science and practice conferences organized by TATNEFT
and Lukoil companies. There are 15 young specialists of
JSC TATNEFT oil and gas production board among the
program participants.
84 managers took part in the seminars on lean manufac-
turing in August 2014. After considering the results of the
seminars, its participants initiated over 100 projects on
reducing of all kinds of losses, improvement of conducted
works quality, costs optimization and income increasing.
In 2014, vocational training and skill improvement courses
were taken by 15,300 employees of the Company (72.4%
of personnel listing). This number includes 8,116 workers,
4,135 managers, 3,049 specialists and office employees.
Over RUR 129 million was allocated for this purpose. Aver-
age number of hours of education for each JSC TATNEFT
employee amounted to 74,9 hours in 2014.
The Company continues developing Corporate e-University
founded in 2011 (www.ec-univer.ru). It is an innovative
educational resource facilitating continuous professional
development of specialists using advanced educational
forms and technologies.
Main objectives of Corporate e-University include intellec-
tual and professional development of employees, identifi-
cation and selection of talented specialists into the Com-
pany’s candidate pool, cooperation with higher educational
establishments in the field of distance training of would-be
specialists of the Company, professional adaptation of
young specialists, work with schoolchildren on professional
orientation.
The main advantage of Corporate e-University is its strict
adherence to the Company’s goals. Due to the fact that
theoretical, practical and training courses are developed by
the Company’s leading specialists, students of Corporate
e-University study in accordance with the development
strategy of JSC TATNEFT. Nowadays Corporate e-University
continues developing and increasing educational basis. At
the moment, Corporate e-University offers over 20 educa-
tional courses, training and case studies. Over 18.5 thou-
sand people underwent training in the university in 2012.
It’s planned to update courses and trainings bank of Cor-
porate e-University in according with the applications of the
Company’s employees in 2015. The other project, which
the Company os going to carry out in 2015, is the organi-
zation of specialized courses and trainings for the OJSC
TANECO in order to organize developmental teaching of its
employees.
Corporate e-University’s Projects in 2014
• Course for young specialists
• Course for modern managers
• Special purpose courses
• Training and simulators
• Corporate e-University for school children
Project of Career Center for Students (www.sbt-univer.ru),
started in 2014, continued its development as a part of Cor-
porate e-University. In 2014, 39,438 people visited Career
Center website, 1,589 applicant registered, including 909
graduates of higher educational establishments. 42 em-
ployer posted 152 vacancies.
Issues of Personnel Certification in the Company are regu-
lated by Personnel Certification Standard of JSC TATNEFT.
The Standard establishes a unified personnel certification
procedure in all subdivisions of the Company and is recom-
mended for application in affiliate and subsidiary compa-
nies.
Crowdsourcing Diploma Project
In 2014 web-portal JSC TATNEFT’s Business Ideas Auction
launched new project called Crowdsourcing Diploma. The
project works on the following principle: graduate student
publishes his final work and the information on issue, stud-
ied in his work. The Company’s experts carry out online-
examination of the work, assess timeliness of the topic,
effectiveness of the idea on problem solution proposed by
student, and propose alternative ways of its solution.
19 final projects of students of Economics and Manage-
ment Faculty of AGNI were chosen for the technology
approbation in 2014. During 3 weeks of Crowdsourcing
Diploma Project work over 200 experts of the Company
participated in it as the experts and consultants, and they
proposed over 500 ideas and comments, which helped
students to improve quality level of their final projects.
Online Defense of Final Projects
In order to enhance quality of training of young special-
ists and to reinforce cooperation between enterprises and
higher educational establishments, a systematic work with
graduating students on preparation of their final projects
was organized.
In 2014, graduating students of Kazan (Privolzhsk) Federal
University majoring in geology, computing mathematics and
cybernetics, and graduating students of Almetyevsk State
Oil Institute majoring in different subjects participated in
the project. In the reporting year, 77 graduating students
participated in online defense of their final projects.
Personnel certification is an integral part of the HR manage-
ment system directed at implementation of the corporate
strategy and performed in compliance with the Labor Code
of the Russian Federation and relevant regulatory docu-
ments.
The purpose of personnel certification is to check cor-
respondence of employees’ competence to their position
and skill requirements, as well as to assess opportunities to
their further career promotion.
Obligation to undergo certification lies on managers, spe-
cialists and office employees of the Company (making up
about 33% of personnel capacity).
Outreach of Young People
Work with young people in JSC TATNEFT is carried out
along several main lines: professional and labor fulfilment,
social protection, creative fulfilment, cooperation in the
informational field, development of tolerance and civil posi-
tion of the Company’s young employees.
The activity of the Central Council of Young Specialists acts
to raise level of production and creative activity of the Com-
pany’s young experts.
In order to involve young employees in the Company’s in-
novative activity, the Central Council of Young Specialists
annually holds seminars on innovation and invention.
The Company has couching system for the purposes of
systematic and focused work with every young worker or
expert early hired by the Company during one year. The
final aim of couching process is to make young specialist
full member of the industrial collective.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
164 165
Cooperation with the Trade Union
The interregional trade union of JSC TATNEFT unites 158
primary trade unions, 664 shop trade unions and 2,774
professional groups. 99,7% of the Company’s employees
are members of the trade union.
One of the primary approaches to regulation of labor agree-
ments is cooperation of the trade union with the Company’s
administration on implementation of coordinated policy in
the sphere of labor relations based on the principle of social
partnership. The Collective Agreement, annually concluded
to embrace all employees of the Company, serves as the
basis for such cooperation.
Each employee has the right and the opportunity to partici-
pate in formation of the Collective Agreement by sending
proposals to the trade union organization. A conciliation
commission including representatives of the management
of JSC TATNEFT and the trade union committee reviews
each proposal.
The trade union representatives participate in reviewing
of all social-and-labor issues relevant to employees, from
restructuring to changes in the field of wages and working
hours. 9 commissions were created for goal-oriented con-
trol over fulfillment of the liabilities stipulated in the Collec-
tive Agreement:
trade union members;
• commission for social and economic protection of the
• legal protection commission;
• workplace protection commission;
• mass organization commission;
• young people’s affairs commission;
• commission for labor and World War II veterans;
• culture, sports and health commission;
• housing and public services commission;
• public catering control commission.
In 2014, the trade union committee held 11 sessions, where
different issues related to protection of interests of the trade
union members were reviewed, including issues related to
strengthening of labor discipline, arrangement of hot meals
catering, arrangement of summer holidays for the employ-
ees’ children etc. The trade union committee in cooperation
with the Company’s representatives participates in elabora-
tion, discussion and implementation of proposals aimed at
reduction of occupational injuries and disease rates.
In order to ensure public control in the field of workplace
protection, 892 workplace protection agents were elected
in primary trade unions of structural subdivisions of JSC
TATNEFT (for more information see Health Protection and
Occupational Safety). In 2014, the trade union’s personnel
actively participated in meeting and seminars organized
by the Trade Union Federation of the Republic of Tatarstan,
Russian Federation of Independent Trade Unions, Russian
Council of Oil, Gas and Construction Worker’s Union and
International Confederation of Trade Unions.
The Company has a “mobile legal advice office” providing
consultations and support on legal issues. In 2014, 134
people received legal assistance. Apart from the office,
work with letters and notes from the trade union members
was continued. 28 applications were overviewed, including
applications related to the payment under the Collective
Agreement, payment of year-end bonus, prosecution etc.
Over 200 members of the trade union obtained explana-
tions and consultations in 2014. Specialists of the trade
union committee of JSC TATNEFT continue to meet the
trade union members regarding different issues related to
protection of their rights and interests, 159 people were met
in the reporting year. The trade union committee has trust
line, which received 113 calls from the trade union members
in 2014. Consultations and practical assistance with all is-
sues and notes was provided for the trade union members.
Information on cooperation of the administration and the
trade union committee of JSC TATNEFT is regularly re-
ported to personnel at meetings and conferences, covered
in federal, republican, regional and corporate mass-media.
Tribuna is information bulletin issued by the trade union
monthly.
JSC TATNEFT creates conditions necessary for operation of
the trade union, providing free offices, equipment, vehicles,
communication facilities and services, personal computers
and other hardware.
Employees representing the trade union bodies obtain all
social benefits stipulated for employees of JSC TATNEFT.
The Company holds seminars on issues connected with
employees’ rights protection for the members of the trade
union on a regular basis. In the reporting year, the Company
held 14 seminars, and 1,200 employees completed their
trainings at these seminars.
.
Business Ethics
Human Rights
Reputation of JSC TATNEFT, as a responsible public com-
pany, strictly following high standards of business ethics, is
the important key to its success.
The employees must be guided only by the Company’s in-
terests when taking decisions on any issues connected with
the Company’s activity. The employees use assets of the
Company only for its further development and don’t look for
self-profit.
The Company’s employees can perform own duties and
take important decisions only in case they have high
enough proficiency level.
The Company’s employees always have to act in compli-
ance with the effective legislation, and understand legal
acts which regulate their professional activity, as well as in
compliance with inner corporate regulations.
The employees have to avoid conflicts of interests, which
may arise in case if employee pushes not the Company’s,
but personal advantages while executing production tasks.
Decisions made in case of conflict of interests may reflect
upon an employee’s and the Company’s reputation, so they
are unacceptable.
The employees have to follow affirmative professional ap-
proach and generally accepted rules of behavior in their
relationship between managers and subordinates, with
business partners, consumers, representatives of govern-
ment institutions, and other parties.
Delivery and receipt of funds by the Company’s employees,
as well as receipt of presents and providing of services in
order to affect on the decisions connected with the Com-
pany’s activity are unacceptable.
The Company’s employees avoid participating in activities
which:
• are not compliant with activity of the Company;
• conflict with the Company’s interests;
• can give a rise to doubt in the Company’s honesty and
confidence
The activity of JSC TATNEFR is based on recognition and
observance of human rights. The Company observes all
labor and employment right of its employees stipulated by
the International Labor Organization (ILO) and Russian leg-
islation. The Company respect right to form unions and the
right to hold collective bargaining. In JSC TATNEFT these
right are exercised by cooperation between employees and
the trade union organization, and during formation of the
Collective Agreement (for more information see Coopera-
tion with the Trade Union).
The Company does not exploit forced or compulsory
labor. Moreover the Collective Agreement of JSC TATNEFT
stipulates the employee’s right to refuse unsafe work, in
case of faulty equipment or conditions which can cause
emergency situations, with retention of the employee’s
position and average monthly income. The Company
provides equal opportunities to all employees regardless
of gender, age, ethnicity or religion. Employee’s personal
qualities determined by knowledge, experience and skills
matter the most for making decisions on employment, posi-
tion agreement training and employment termination. The
Company enforces the principle of equal remuneration for
men and women for the work of equal value. The principle
is exercised by use of a unified wages tariff schedule for all
employee categories regardless of gender.
The Company respects family obligations of its employees
and establishes working hours in strict compliance with
employment legislation of the Russian Federation, provides
parental leaves, social leaves in case of marriage registra-
tion, child birth and other benefits and protection assisting
achievement of the balance between work and private life.
The Company observes requirements of the Labor Code of
the Russian Federation and the ILO Convention, which pro-
hibit exploitation of juvenile labor at works with harmful and/
or hazardous conditions. Moreover, JSC TATNEFT does not
carry out any activities exploiting child labor. The Company
regularly monitors observance of its employees’ rights,
takes measures to prevent possible violations of rights. The
Committee on legal protection of Trade Union members
conducted inspections on labor legislation compliance by
the Company’s subdivisions in the reporting year. In 2014,
there were no claims or cases known to the public arising
from violation of human rights or discrimination of the Com-
pany’s employees.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
166 167
Social Benefits and Protection
Voluntary Medical Insurrance
Arrangement of Therapeutic-Resort Activities for
Employees
Non-governmental Pension Provision
JSC TATNEFT takes care of well-being and social security of
its employees and their families. The Company provides its
employees with a package of social benefits and protection.
Obligations on their fulfillment are stipulated in the Collective
Agreement annually concluded between JSC TATNEFT and
the staff including all employees of the Company.
The Collective Agreement stipulates:
• employees’ benefits and guarantees;
• social protection of young employees;
• support of veterans and pensioners.
Structure of social benefits and protection is stipulated by
the Collective Agreement Standard of the TATNEFT Group
which is advisory for all enterprises of the Group.
In 2014, the Company increased the size of financial aid
for women taking care of minor children aged 1,5-3; for
families of late employees to cover funeral-related expen-
ditures; for retiring employees; for employees celebrat-
ing their anniversaries; for employees in connection with
provision of annual paid leave. Besides that the Company
increased size of financial aid for multi-child families, lone-
parent families, orphaned children and children whose
parents died as a result of occupational accident.
The amount of payment to the employees and pension-
ers under the Collective Agreement in 2014 amounted to
RUR 329 million; the total amount of funds allocated to the
implementation of social programs on the social support
of employees and pensioners amounted more than RUR
1,5 billion.
Since 1997 JSC TATNEFT has been implementing the volun-
tary medical insurance program which gives employees an
opportunity for high-quality medical services and therapeutic-
resort treatment, if needed. In 2014, the total number of
insured employees made up 21,461 people, RUR 224.7 million
was allocated for the program implementation. In order to re-
duce the rate of infectious diseases, seasonal immunoprophy-
laxis was held within the framework of the program (vaccina-
tion against seasonal flu and tick-borne encephalitis).
Housing Policy
Providing employees with support in housing improvement
is one of important lines of social policy in JSC TATNEFT.
Eight residential houses were commissioned in 2014 in
Almetyevsk, Dzhalil, Leninogorsk, Nizhnekamsk for the
TATNEFT Group employees under the social mortgage
program. Company employees were provided with 1,010
apartments with total area of 67.9 thousand m2. In 2015,
the Company will continue constructing houses under the
social mortgage program in almost all cities at the south-
east of the Republic, in which the Company operates. In
order to support employees participating in the social
mortgage program, the Company provides a non-recur-
rent interest-free loan for 10 years meant for the first mort-
gage installment. It amounts to 15 to 30% of the housing
price. Repayment of this loan from the Company’s profit
is possible, if the mortgagor is employed by JSC TAT-
NEFT. In 2014, the funds loaned to employees of structural
subdivisions amounted to RUR 147.8 million in total. For
the purpose of social support for young people, 30% of
apartments commissioned under the mortgage program
are allocated to young families.
A system of personnel’s non-material incentives, including Russian, republican and corporate awards, is another motivating factor.
The best employees’ photos are placed on the Board of Honor.
Through opinion polls, the Company studies needs and expectations of its workers, and their satisfaction with working conditions.
Giving such attention helps to provide for the most complete involvement and the strongest motivation of employees.
Structural subdivisions and affiliates of JSC TATNEFT have 11
health-resorts on their balance sheets. 3,700 employees of the
Company improved their health in therapeutic-and-recreation
establishments during the year, including health-resorts of JSC
TATNEFT visited by 3,300 people. In 2014, RUR 6,3 million was
allocated to the organization of therapeutic-resort recreation
for employees of JSC TATNEFT’s structural subdivisions and
their children (“Mother and child”).
Arrangement of Health-Improving
Activities for Children
Within the bounds of maternity and childhood protection
program, the Company annually arranges health-improving
activities for employees’ children at thirteen recreation
camps with the capacity of 2289 beds. All recreation camps
offer cozy and modern blocks, gyms, playgrounds, swim-
ming pools, proper equipment and assistance of well-
trained staff. During 2014, recreation camps were visited
by 9,038 children of employees. JSC TATNEFT annually
provides recreation opportunities for children whose par-
ents are employed by state-budgeted organizations and
compensates half of the recreation package price. 300
children whose parents are employed by state-budgeted
organizations had this opportunity in 2014.
Involvement of Employees
in Sports and Healthy Lifestyle
Due to favorable conditions created in the Company, sports
has become an inherent part of oilmen’s everyday life. Mod-
ern ice palaces and sports complexes were built in every city
of the oil region. During summer time, the Company offers
its employees an opportunity to have active rest together
with their families at recreation centers located on banks of
the Kama and Karabash Reservoir. Over 17 thousand people
spent their vacations at summer camps in 2012.
The XXVII Corporate Spartakiad of JSC TATNEFT was held
in 2014. During the year, competitions in 10 different sports
- table tennis, alpine skiing, cross-country skiing, volleyball
(for women and men), futsal, swimming, kurash wrestling,
rope pulling and triathlon - were held. RUR 7.4 million was
allocated for the arrangement of the Spartakiad in 2014.
For the purpose of social support for retiring employees,
the Company has been implementing a non-governmental
pension provision program since 1997. The program pro-
vides employees with an opportunity to form their pension
capital on a parity basis securing respectable level of living at
the advanced age. Provisions “On non-governmental pen-
sion provision” stipulates rules, criteria and procedures for
non-governmental pension granting, as well as three main
pension schemes. In 2014, the number of the JSC TATNEFT
employees that joined the non-governmental pension provi-
sion program amounted to 9,256 people. About 9 thousand
retired people receive additional non-governmental pension.
In the reporting year Company allocated RUR 188 million for
non-governmental pension provision. The Company performs
regular communication and explanatory work on terms of the
corporate pension program as well as on rules of involvement.
Information is published at the Internet portal of the TATNEFT
Group. Every employee of the Company gets annual reports
on the pension account status. Main partner of JSC TATNEFT
in implementation of the corporate pension program is the
National Non-Governmental Pension Fund (NNPF) – one of
the biggest Russian cross-industry NPFs (among the top ten
of more than 150 Russian non-governmental pension funds)
Support for Non-working Pensioners
Non-working pensioners who worked in JSC TATNEFT for
at least 10 years and retired before the foundation of the
National Non-Governmental Pension Fund are quarterly
supported by the Company with extra financial aid to their
government pensions. There are veteran committees
established in subdivisions of JSC TATNEFT that continu-
ously support pensioners together with the administration
and the trade union committee. When it is necessary, the
Company covers pensioners’ medical and surgery bills,
therapeutic-resort treatment and provides aid for housing
renovation and replacement of household appliances. In
2014, RUR 16.9 million was allocated to health improvement
of non-working pensioners in health-resorts. Financial aid is
provide on holiday and anniversaries.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
An important role in the sickness rate reduction is played
by preemployment and routine medical examinations of
employees performing physically-challenging works, works
with harmful hazardous working conditions, as well as
works connected with transport traffic. 17,494 employees
passed medical examination in 2014, RUR 34.6 million was
allocated for that purpose. The Collective Agreement of
JSC TATNEFT makes provision for female medical examina-
tions, RUR 4.7 million was allocated to medical examination
of 3,966 women in 2014.
No cases of occupational diseases were revealed among
employees of JSC TATNEFT in 2014.
Supply of Protective Means
One of high-priority managerial lines of the Company’s
activity on creation of healthy and safe working conditions
is supplying employees with necessary workwear and other
individual protective means. When working in harmful, haz-
ardous or extreme temperature conditions, or conditions
connected with contamination, employees are provided
with certified workwear, footwear and other individual
protective means, as well as detergents and disinfectants
according to the existing standards.
In 2014, RUR 102,677.7 thousand was allocated to provid-
ing employees with the individual protective means.
Health Protection and Occupational Safety
Creation of safe working conditions is a key priority of the
Company’s social responsibility program.
Taking into consideration the priority of employees’ life and
health as compared to results of production activity, the
Company strives to reduce any risks at workplaces, to prevent
industrial accidents and to achieve a higher level of industrial
safety and workplace protection. These objectives are imple-
mented through an integrated management system for indus-
trial safety, labor and environmental protection certified for
compliance according to the requirements of ISO 14001:2004
and OHSAS 18001:2007. In accordance with international
standard OHSAS 18001 the Company developed “Program
(Plan of Works) in the field of industrial safety and workplace
protection for injuries prevention, accident risk reducing and
unscheduled losses for 2013-2015” (p.38 herein).
Employees’ Health Protection
Employees’ health protection is ensured due to functioning
of a complex medical care system, industrial injury and oc-
cupational disease prevention, as well as extensive atten-
tion given to healthy life-style fostered among employees.
This system includes the following elements:
• employees’ sickness rate record and analysis;
• monitoring of labor and rest conditions;
• regular medical examinations;
• implementation of preventive health care programs in-
• control over canteen and personnel facility conditions;
• physical training and recreation activity;
• promotion of healthy lifestyle.
cluding vaccination and therapeutic-resort treatment;
Great attention is given to sanitary conditions. Permanent
subdivision committees check technical conditions, provi-
sion with furniture and aesthetic state of personnel facilities
according to approved schedules.
Dynamics of Industrial Accidents in 2012-2014 According to Gender
Year
Accidents number
Including lethal effects
Total
men
women
Total
men
women
2012
2013
2014
4
1
2
3
1
1
1
0
1
1
0
0
1
0
0
0
0
0
Incident
frequency
factor
0,19
0,05
0,10
168 169
Workplace Protection Committee
Workplace Protection Agreement
Workplace Protection Committee has been functioning
in JSC TATNEFT since 1997, comprising on parity basis
representatives of the employer and the trade union com-
mittee. The Committee consists of 10 people.
The Committee’s main objectives include control over
working conditions and occupational safety, provision of
employees with individual protective means, arrangement
of compensation payments for working in harmful or haz-
ardous conditions; appraisal of potential risk to employ-
ees’ health and working out of measures on preventing
industrial injuries and occupational diseases.
There are workplace protection committees in 16 struc-
tural subdivisions o JSC TATNEFT, which consist on a
parity basis of the employer’s representatives, as well as
representatives of primary trade unions. In 2014, work-
place protection committees considered 137 issues on the
meetings.
For the purposes of public control in the field of workplace
protection in the primary trade unions of JSC TATNEFT’s
structural subdivisions, 892 labor protection agents are
elected and carry out their duties. In 2014, labor protec-
tion agents conducted over 50 thousand inspections of
work conditions state.
In order to help labor protection agents Guideline on
Carrying Out Public Control of Workplace Protection was
developed. In addition to that, the Company approved
Provision on labor protection agents of JSC TATNEFT
Trade Union, developed and manufactured distinctive sign
for Labor protection agents of JSC TATNEFT Trade Union.
Year over year the Company organizes “The best labor
agent of JSCT TATNEFT” contest. Contest winners suc-
cessfully represent JSC TATNEFT Trade Union at the
republic and industry contests.
In order to improve healthy and safe working conditions at
production facilities, in accordance with the Labor Code of
the Russian Federation and recommendations on planning
of workplace protection measures (appendix to the decree
of Ministry of Labor No.11 dd. 27.02.95) in departments of
JSC TATNEFT, the employer and the trade union organiza-
tion annually conclude Workplace Protection Agreements.
These Agreements are attached to the Collective Agree-
ment of JSC TATNEFT in the form of appendix. Therein,
workplace protection measures, time lines, cost of works,
persons responsible for the measure execution, as well as
the number of employees whose working conditions are
being improved and the number of employees released
from physically-challenging works, are recorded.
Systematic work is executed by the Company on assess-
ment of workplaces according to working conditions with
further certification of works according to workplace pro-
tection. As of today, 12 structural subdivisions of the Com-
pany received certificates verifying conformity of works with
workplace protection requirements. 93.6% of workplaces
in the Company have been assessed to date. Number of
employees occupying assessed workplaces amounted to
18,930 people. Employees having high risk of occupational
illness, i.e. working on workplace with 3.1, 3.2, 3.3 and 3.4
hazard classes according to harmfulness and hazard of
manufacturing variables and work process, are provided
with all guarantees and amends prescribed with Labor
Code of the Russian Federation.
In 2014, funds allocated to workplace protection per capita
amounted to RUR 17,851. Total amount of funds allocated
to workplace protection measures amounted to RUR 366
million in 2014.
Dynamics of Expenses for Labor Safety, Including
Expenses Per Capita
Year
2010
2011
2012
2013
2014
Funds spent on labor safety RUR
thous.
Funds spent on events on labor
safety per capita, RUR
207 121,2
265 780,4
319 827,3
329 659,0
365 824,6
9 727
12 635
15 122
15 863
17 851
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
SOCIAL INVESTMENT
Goals and Priorities of the Social Policy in the Activity Regions
Registry of Corporate Social Projects for 2014
The Company develops and implements social programs relying on the following principles:
Openness
Consistency
Significance
Efficiency
Social programs are of
regular and systematic
character.
The Company strives
for development and
implementation of
social programs on
the basis of dialog and
collaboration with the
concerned parties.
The Company as-
pires to make social
programs targeted
as much as possible,
timely and corre-
sponding to vital de-
mands of the society.
Funds spent on
implementation of
the programs must
sensibly help in solving
problems. Results of
the programs are liable
to regular assessment
and record.
The Company aspires to make its social programs to targeted as much as possible and corresponding to vital demands of the
society. Target groups of the social programs developed by JSC TATNEFT are children and young people, veterans, those in
need of medical care and rehabilitation, as well as other socially vulnerable population groups.
Target Audiences of the Company’s Social Programs
Program on infrastructure development in cities and settlements
Program on health care support in the southeast of the Republic of Tatarstan
Program on development of popular sports and physical culture in the oil region of the
Republic of Tatarstan
Program on hockey development in the southeast of the Republic of Tatarstan
Program on social support for population of districts of the Republic of Tatarstan
Program on education support
Program on culture support
Program on spiritual revival
Program on agricultural development
Program on workplace creation
groups
• Residents of the activity regions
• The Company’s employees
• Children
• Adults
• Coaches
• The Company’s employees
• Orphaned children
• Handicapped people
• Veterans
• Other socially vulnerable population
• Schoolchildren
• Students
• Teachers, professors
• Theaters
• Museums
• Libraries
• Cultural establishments
• Mosques
• Churches
• Residents of the activity regions
• Residents of rural areas
• Unemployed
• Graduates of higher educational
establishments and other educational
establishments
In 2014, the Company allocated RUR 2,5 billion on implementation of social programs.
170 171
Places of implementation
3
Almetyevsk, Bavly, Bugulma,
Nizhnekamsk, Sarmanovo,
Cheremshan districts
Lines of Social
Investments
Projects
1
2
Repair of urban streets and roads
Program on
infrastructure
development
in cities and
settlements
Program on
development of
popular sports
and physical
culture in oil
region of the
Republic of
Tatarstan
Program
on hockey
development in
the southeast of
the republic
Program
on housing
improvement
Program on skill
improvement and
development of
the Company’s
personnel
Program on social
insurance of
employees of JSC
TATNEFT
Improvement of urban quarters and territories of local administration boards Almetyevsk, Yelabuga, Leninogorsk,
Overhaul of water conduits
Renovation of the pond cascade
Overhaul of residential houses’ roofs
Holding of the Spartakiad of JSC TATNEFT
Karabash (Bugulma district)
oil region of the Republic of Tatarstan
Almetyevsk
Nurlat
oil region of the Republic of Tatarstan
Organization and holding of physical culture and recreational events
oil region of the Republic of Tatarstan
Purchasing of minibus for transporting sports teams of Youth Sports School №2 Dzhalil (Sarmanovo district)
Chess and checks development
Support for the Federation of Greko-Roman Wrestling “Tushe”, Volleyball
Federation and Boxing Federation of the southeast of the Tatarstan Republic
Participation in holding kurash wrestling competitions
Purchasing of parachute system for ANO “Almetyevsk Aeroclub”
End of construction of a sports center with tennis courts
Installation and renovation of hockey rinks
Overhaul of Sports Palace “Jubileyny”
Installation of observation systems in 30 Ice Palaces
Almetyevsk
Almetyevsk
Almetyevsk
Almetyevsk
Leninogorsk
oil region of the Republic of Tatarstan
oil region of the Republic of Tatarstan
oil region of the Republic of Tatarstan
Purchasing of hockey equipment for the municipal entities
oil region of the Republic of Tatarstan
Remuneration for coaches
oil region of the Republic of Tatarstan
Remuneration for hockey team “Neftyanik”
Almetyevsk district
Participation in a republican social mortgage program
oil region of the Republic of Tatarstan
Furnishing of apartments acquired by social mortgage
oil region of the Republic of Tatarstan
Provision of loans for employees to cover the first installment under the
social mortgage program
oil region of the Republic of Tatarstan
Training and skill improvement of the personnel
oil region of the Republic of Tatarstan
Science and practice conference for young employees
oil region of the Republic of Tatarstan
Work with the candidate pool
Work with target groups
Young people’s policy
Personnel certification
Voluntary medical insurance
oil region of the Republic of Tatarstan
oil region of the Republic of Tatarstan
oil region of the Republic of Tatarstan
oil region of the Republic of Tatarstan
oil region of the Republic of Tatarstan
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
172 173
1
2
Program on
education support
Construction of general school No.2
Renovation of general schools
Purchasing of sports uniform, sports equipment and hockey equipment for
the schools
3
Leninogorsk
Almetyesvsk, Aznakaevo, Aksubaevo,
Mendeleevsk, Menzelinsk,
Cheremshan, Sarmanovo districts
oil region of the Republic of Tatarstan
Payment of anniversary scholarships to the students of AGNI, APT, LNT,
BMT
Almetyevsk, Leninogorsk, Bugulma
Coverage of transportation expenditures of students of Almetyevsk State Oil
Institute
Almetyevsk
Purchasing of 3D-printers for general schools equipping
oil region of the Republic of Tatarstan
Overhaul of B-206 lecture hall and its equipping
Overhaul of Almetyevsk Polytechnic College
Purchasing of the instructional replicas of the weapon and military uniform
for Almetyevsk Polytechnic College
Overhaul of the front of gymnastic hall in Almetyevsk Physical Education
College
Overhaul of the sports hall and events hall in Almetyevsk State Institute of
Municipal Services
Overhaul of Bugulma Machine Building College
Overhaul of Leninogorsk Oil College
Overhaul of Child School of Arts
Purchasing of musical instruments for Almetyevsk Music College named
after F.Z.Yarullin
Purchasing of musical instruments for Leninogorsk Music School named
after N.M.Kydashev
Program on
spiritual revival
Payment for public services of Central Mosque named after Rizaeddin
Fakhreddin
Almetyevsk
Almetyevsk
Almetyevsk
Almetyevsk
Almetyevsk
Bugulma
Leninogorsk
Bavly
Almetyevsk
Leninogorsk
Almetyevsk
Construction of building for Diocesan Administration of Almetyevsk Diocese
of Russian Orthodox Church
Almetyevsk
Renovation of the temple in Novaya Mikhaylovka village
Almetyevsk district
Financial aid for construction of a mosque
Financial aid for reconstruction of “Rizvan” mosque
Financial aid for the Saints Peter and Paul Cathedral’s curacy
Financial aid for the curacy of Saint Xenia of Saint-Petersburg
Nurlat
Kazan
Almetyevsk
Kazan
Collective agreement
oil region of the Republic of Tatarstan
Program on non-governmental pension provision
Targeted support for retired people
Therapeutic-resort recreation
oil region of the Republic of Tatarstan
oil region of the Republic of Tatarstan
oil region of the Republic of Tatarstan
Financial aid for veterans, widows, homefront workers
oil region of the Republic of Tatarstan
Holding of festive events dedicated to Victory Day
Solving of housing problems of veterans
oil region of the Republic of Tatarstan
oil region of the Republic of Tatarstan
Asphalting of roads to the houses of veterans of the Great Patriotic War
Urussu settlement (Yutaza district)
Program on
social protection
provided for the
personnel
Program on
support for
veterans of the
Great Patriotic
War and labor of
JSC TATNEFT
1
2
Program on
culture support
Holding of festive events
Holding of young people’s events
Holding of cultural events
3
oil region of the Republic of Tatarstan
oil region of the Republic of Tatarstan
oil region of the Republic of Tatarstan
Repair of the monument in honor of the production of 3rd billion ton of oil in
the Republic of Tatarstan
Almetyevsk
Reconstruction of “Iske Elmet” district Culture House
Almetyevsk
Reconditioning of the Great Patriotic War soldiers’ monuments under
preparation for 70th anniversary of the Victory in the Great Patriotic War
oil region of the Republic of Tatarstan
Purchasing of artificial central X-mas tree with the decoration
Dzhalil (Sarmanovo district)
Overhaul of Culture Houses and cinemas
Almetyevsk, Aksubaevo, Sarmanovo,
Cheremshan districts
Overhaul of the «Youngs’ Center» building’s face
Almetyevsk
Manufacturing and renovation of the monuments and steles
Bavly and Leninogorsk districts, Kazan
Renovation of the squares, alleys and parks
Reconstruction of the fountains
Aznakaevo, Leninogorsk
Bavly, Leninogorsk
Equipping of museums with the necessary facilities and exhibits
Kazan
Equipping of village Culture Houses with the furniture
Cheremshan district
Program on health
care support in
the southeast of
the republic
Overhaul of bacteriological laboratory in infectious disease ward of
Almetyevsk Central District Hospital
Overhaul of TB dispensary
Overhaul of psychoneurologic dispensary
Construction of medical and obstetric center (FAP) in the “Ursala”
neighborhood
Almetyevsk
Almetyevsk
Almetyevsk
Almetyevsk
Site improvement and purchasing of equipment for the medical and obstreic
centers in Ersubaykino settlement and Minnibaevo station
Almetyevsk district
Overhaul of district hospitals and polyclinics
Almetyevsk, Bugulma, Bavly,
Sarmanovo districts
Purchasing of medical equipment for central district hospitals
Zainsk and Sarmanovo districts
Purchasing of medical uniform and operating room drapes for the hospitals Naberezhnye Chelny, Kazan, oil region of
Financial aid for carrying out stenting and coronarography surgeries in
Regional medical-diagnostic center of Medical Sanitary Station of JSC
TATNEFT and Almetyevsk
the Republic of Tatarstan
Almetyevsk
Equipping of Regional medical-diagnostic center of Medical Sanitary Station of
JSC TATNEFT and Almetyevsk with the modern equipment
Almetyevsk
Provision of employees with workwear
Assessment of workplaces
oil region of the Republic of Tatarstan
oil region of the Republic of Tatarstan
Creation of new prospective productions of goods and services
oil region of the Republic of Tatarstan
Purchasing of agricultural equipment, agriculture development, reduction of
fuel prices
oil region of the Republic of Tatarstan
Repair of “Case” harvesters
Almetyevsk district
Purchasing of feed stuff, seeds, mineral fertilizers and breeding stock
Aznakaevo and Almetyevsk districts
Program on
occupational
safety
Program on
workplace
creation
Program on
agriculture
development
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
SOCIAL BENEFITS UNDER THE COLLECTIVE AGREEMENT
174 175
1
2
Program on
maternity and
child welfare
Overhaul of kindergartens
Equipping of kindergartens
3
Aznakaevo, Almetyevsk, Sarmanovo
districts
Cheremshan, Zainsk district
Construction of “Childhood Planet” kindergarten in the “Yashlek” neighborhood Almetyevsk
Construction of a kindergarten for 100 places
Shugurovo settlement (Leninogorsk
district)
Land improvement of the kindergarten No.14
Leninogorsk
Arrangement of recreation for children in children’s recreation camps
oil region of the Republic of Tatarstan
Recreation for children, whose parents are employed by state-budgeted
organizations, in recreation camps
Organization of therapeutic-resort recreation for employees and their
children (“Mother and child”)
oil region of the Republic of Tatarstan
oil region of the Republic of Tatarstan
Employees’ benefits and guarantees
Financial aid for female employees having parental leave and caring for children aged under 3 years
Financial aid at child birth or adoption of a child under 14
Granting a three-day paid vacation to an employee (father) at the release of a baby from the maternity hospital with retention of his average
monthly income
Financial aid in the event of death of an employee’s close relatives
Financial aid for the family of a late employee to cover funeral-related expenditures
Financial aid for orphaned children under 18 who lost both parents, if one of them was employed in JSC TATNEFT
Financial aid for multi-child families
Financial aid for an employee having dependent disabled children under 18
Financial aid upon retirement
One-time payment in connection with the provision of annual paid leave
Participation in campaign “Help to get prepared for school”
Almetyevsk district
Granting at least two hours off weekly or one day off monthly to an employee having children under 16 (disabled children under 18)
oil region of the Republic of Tatarstan
Financial aid for an orphaned child under 18 whose parents (or one of them) died in the line of duty at JSC TATNEFT
Program on
social support for
the population
of districts of
the Republic of
Tatarstan
Equipping of orphanages and boarding schools with the simulators for
conducting training on road traffic regulations
Financial aid for the Societies of Disabled and Blind Associations for
conducting statutory activity
Methods for Com-
munication and
Cooperation with the
Young People
Almetyevsk and Bugulma districts
Corporate mass media
Website of JSC TATNEFT
Website of JSC TATNEF for
the corporate users
Annual report and election
conference
COMMUNICATION
INTERACTION
Corporate
e-University
Research
and practice
seminars and
conferences
Professional
skills compe-
tition
Production
management
school
Contests and
festival of
young peo-
ple’s creativity
KVN
Sports com-
petitions
FEEDBACK
Meetings with the
manager
“Public office for the
young people”
Focus groups
Crowdsourcing
polls
Social monitoring
“Young oilmen: What
life do they live?
What do they strive
for?”
Financial aid for single-parent families
Financial aid for an employee in connection with anniversary celebration
Funds allocation:
– for buying New Year presents for children of the JSC TATNEFT employees
– for women on International Women’s Day
Financial aid for family having twins or triples
Benefits for young employees
Interest-free loan for furniture acquisition
Financial aid for an employee dismissed for military service in the Armed Forces of the Russian Federation after their return to the same
workplace
Financial aid for the first marriage
Benefits for pensioners and veterans
Financial aid on Victory Day for the Great Patriotic War participants, widows and homefront workers
Quarterly financial aid for non-working pensioners who used to work in the system of JSC TATNEFT for at least 10 years and retired before
the foundation of the National Private Pension Fund
Providing employees who worked in JSC TATNEFT for at least 10 years with an opportunity of early retirement at the Company’s expense
with retention of the Company's benefits and guarantees for pensioners
Financial aid in the event of death of a pensioner’s close relatives
Financial aid for the family of a late pensioner to cover funeral-related expenditures
Financial aid for pensioners in connection with anniversary celebration
Funds allocation:
– on Elderly People’s Day
– for women on International Women’s Day
– on International Disabled People’s Day
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY
176 177
SOCIAL ASPECT OF THE COMPANY’S ACTIVITY
Development of Infrastructure in Cities and
Settlements
JSC TATNEFT gives great attention to infrastructure devel-
opment in cities and settlements of the activity regions.
The total sum of financial aid provided by the Company to
educational establishments of higher vocational educa-
tion in 2014 amounted to RUR 29,096 thousand, and RUR
76,355 thousand to educational establishments of second-
ary vocational education.
We are very grateful to the oil workers.
Schools, sport facilities, establishment
of additional education, kindergartens,
hospitals, culture buildings – the entire social
complex in Dzhalil was overhauled by efforts
of our oil producers. And repair of the water lines is
the extension of good deeds, which have been realized at the
expense of TATNEFT for years.
Support for Gifted Children and Teenagers
“Gifted children” Foundation
Since 2004, JSC TATNEFT has implemented the program
on gifted children support through a specially created foun-
dation “Gifted Children”.
Nafis Zakirov,
Head of Sarman municipal district
It is one of the founders of regional conference “Schoolchil-
dren to science of the 21st century”.
Support for Education
JSC TATNEFT annually allocates significant amount of funds
to construction, reconstruction, repair, provision of material
and technical facilities of preschool and general educational
establishments, art and music schools, secondary special and
higher educational establishments.
Oil worker’s support gives our children a
chance to participate in the competitions
outside the republic and to win, as well as to share
experiences with the strongest masters.
Nail Badykshanov,
Head of Almetyevsk Station of Young Technicians
160 children aged from 10 to 17 study in the school. In
the new academic year, they met updated school. The
roof was changed, linoleum was laid in the
workshops, as well as tile on the first floor.
The school, which will soon celebrate its
35th anniversary, has changed and became
younger. We are grateful for all this to the oil workers, as
well as the administration of our district and republic.
Gulzira Gilmutdinova,
Director of MBOU DOD «Dzhalil Child Art School»
Collaboration with Higher and Secondary Education-
al Establishments
In order to attract young workers of the most demanded
professions, JSC TATNEFT in cooperation with the leading
higher educational establishments of the Republic of Tatar-
stan has organized apprenticeship training of the specialist
by means of the federal and republic budgets.
In 2014, 1,117 students passed onsite training and 509
students passed pre-graduation training at the Company’s
enterprises.
Foundation for Spiritual Revival “Rukhiyat”
Support for talented children in the field of culture is
carried out by foundation for spiritual revival “Rukhiyat”
founded in 1997.
Special place in the activity of “Rukhiyat” foundation is held
by the children creativity festival “Land of Singing Nightin-
gales”, which held since 1998.
In the summer of 2014, in the park of “60th anniversary of
Tatarstan oil” (in Almetyevsk) concerts of “Land of Sing-
ing Nightingales” festival’s graduates and scholars were
held. It was made as the part of the special project called
“Hello! This is us!”. Prior to the Oilman’s Day concert of the
festival’s awardees was held. Over 200 children from the 7
districts of Tatarstan’s oil region participated in it.
Support of Popular Sports and Healthy Lifestyle
Health promotion of employees and people living in the activ-
ity regions, fostering a healthy lifestyle through participation
in physical culture and sports are considered to be the main
objectives of JSC TATNEFT in the course of implementation of
the popular sports and healthy lifestyle development program.
The Company gives special attention to regular engagement
of children and teenagers in sports, providing a long-term and
firm basis for bringing up a healthy generation.
Support for Health Care
Assisting health care development in the activity region, the
Company annually allocates funds to construction, repair
and enhancement of material and technical facilities in
medical establishments.
In the new ambulance we will be able to
provide first medical aid. It’s equipped with
the modern equipment and all the necessities.
We want to express our deep gratitude to TATNEFT, because
we know, that not everybody is able to construct such high-
level medical establishment in such a short term. It is certainly
a great gift to the people of Ursala.
authors among them. Books published by the foundation are
freely transferred to the libraries of republic, educational es-
tablishments, museums, as well as to another Russia regions.
7 books with a total circulation of 11.2 thousand copies were
published in 2014.
Social Support
Rendering social support for the most vulnerable social groups
is a line of the Company’s social activity.
Over a number of years, the Company has been providing aid
and support for orphanages and boarding houses, special
schools and boarding houses for older and disabled people in
Almetyevsk and Bugulma districts.
On behalf of the Board and the Executive
Committee of Leninogorsk municipal district,
I express deep gratitude to the general
director of JSC TATNEFT Mr. Nail Ulfatovich
Maganov and to whole personnel of JSC
TATNEFT for the support provided to the children from
families being in reduced circumstances under charitable
action “Help to get ready for a school”. Through your support,
50 pupils of Leninogorsk district have received school packs
prior to the beginning of the new academic year.
Azat Agliullin
General practice doctor in the ambulance
of Almetyevsk’s “Ursala” neighbourhood
Ryagat Khusainov,
Head of Leninogorsk municipal district,
mayor of Leninogorsk.
Support for Culture
Plans for 2015
JSC TATNEFT executes great work on support for and devel-
opment of culture and arts, restoration and consolidation of
national and cultural traditions of all peoples populating the
Republic of Tatarstan.
During its activity, the foundation has published over 1800
books with a total circulation of more than 320 thousand cop-
ies. There are scientific and bibliographic publications, writ-
ings of famous Tatar poets and writers, works of the young
We want express our deep gratitude to oil workers for
supporting of the culture and such huge projects. We
hope that “Iske Elmet” will make a comeback
after the overhaul, and will become the most
demanded culture and leisure center for the
people of Old Almetyevsk.
Chulpan Gazymova,
Director of “Iske Elmet” Culture House
In 2015, works on development of infrastructure in cities
and settlements of the oil region of the Republic of Tatar-
stan will be continued. It’s planned to finance construction
and restoration of number of sport facilities and schools.
Financial aid as a part of celebrating 70th anniversary of
Victory in the Great Patriotic War, financial aid for Alme-
tyevsk Centre of Rehabilitation of Disabled People “Vet-
eran”, as well as financial aid for the Councils of Veterans
in the cities of oil region of the Republic of Tatarstan for
organizing anniversary events are prescribed. Construction
and installation works in the Victory Park and renovation of
the monument at the Victory Square will be finished in Azna-
kaevo. JSC TATNEFT will start carrying out huge project on
creating of green areas, parks and alleys in the regions of
activity in the framework of Parks and Squares Year in the
Republic of Tatarstan.
There is complete information on social-directed programs of the Company at
www.TATNEFT.ru.
JSC TATNEFT ANNUAL REPORT 2014
CORPORATE STANDARDS AND REGULATION FOR
INTERACTION WITH CONCERNED PARTIES
Concerned Parties
Regulatory Documents
1
2
Shareholders
Bylaws of JSC TATNEFT named after V.D.Shashin
1
Employees
Provisions on TATNEFT Group. “Holding” Chapter.
Corporate management code of JSC TATNEFT
Provisions on the General Meeting of Shareholders of JSC TATNEFT
Provisions on the Board of Directors of JSC TATNEFT
Provisions on the committees under the Board of Directors of JSC TATNEFT
Regulation on the development and update of Corporate strategy of TATNEFT Group
Provisions on the information policy of JSC TATNEFT
Regulation on the disclosure and provision of information on activities performed by the Company and the TATNEFT
Group
Provisions on the Internet portal of the TATNEFT Group
Regulation on the information content of the Internet portal of the TATNEFT Group
Provisions on the use of insider information and on the procedure for security transaction information distribution
Corporate standard Anti-Corruption Policy of JSC TATNEFT named after V.D.Shashin*
Veterans and
Pensioners
Employees
Corporate culture code of JSC TATNEFT
HR management policy of JSC TATNEFT
Standard for the Collective Agreement of JSC TATNEFT
Standard for personnel hiring and transfer to another job
Standard for personnel dismissal
Standard for personnel adaptation
Provisions on coaching
Standard for working with the candidate pool
Standard for personnel certification
Standard for personnel training and development*
Standard for labor discipline in JSC TATNEFT
Standard for personnel rewarding
Standard for business trips of JSC TATNEFT’s employees
Standard for corporate culture management in JSC TATNEFT
Standard for the provision of information on candidates (internal and external) for vacant positions in JSC
TATNEFT
Rules of internal work order for employees of JSC TATNEFT
Regulation on the preparation and holding of the JSC TATNEFT employee conferences
Provisions on the insurance of employees of JSC TATNEFT against industrial accidents
Provisions on the arrangement of therapeutic-resort activities for employees of the TATNEFT Group
Policy of JSC TATNEFT in the field of industrial safety, labor and environmental protection
Provisions on the system of industrial safety management in JSC TATNEFT
Programs and lections of the induction training for employees and experts being hired by structural subdivisions
and affiliates of JSC TATNEFT*
Provisions on production control over observance of sanitary rules in JSC TATNEFT
System for the assurance of industrial safety in JSC TATNEFT
178 179
2
Provisions on production control over compliance with industrial safety requirements at the JSC TATNEFT hazardous
production facilities*
Provisions on the arrangement of training for employees of JSC TATNEFT on workplace protection and industrial
safety
Procedure for the arrangement of preemployment and routine medical examinations of employees involved in heavy
and harmful works, as well as works with harmful and/or hazardous production factors, in JSC TATNEFT
System of JSC TATNEFT employees’ personal responsibility for occupational safety
Provisions on non-recurrent loans provided for employees of JSC TATNEFT to cover initial installments for housing
bought through the social mortgage system of the Republic of Tatarstan
Provisions on the allocation of loans for private housing constructing or participation in joint housing construction
(with other entities involved in housing constructing)
Corporate code of JSCT TATNEFT. “Disciplinary and Financial Responsibility for the Violations In the Field of
Finances” chapter*
Corporate standard Anti-Corruption Policy of JSC TATNEFT named after V.D.Shashin*
Standard for the collective agreement of JSC TATNEFT
Provisions on the arrangement of non-governmental pension provision for employees of JSC TATNEFT
Provisions on the arrangement of therapeutic-resort activities for non-working pensioners and disabled workers at
the expense of JSC TATNEFT
Trade Union
Standard for the collective agreement of JSC TATNEFT
Corporate project of targeted support for pensioners of JSC TATNEFT
Provisions on the workplace protection committee of JSC TATNEFT
Workplace protection agreement
Business Partners
Corporate management code of JSC TATNEFT
Provisions on the procedure for registration of suppliers of goods/works/services in JSC TATNEFT
Regulation on the logistics of structural subdivisions and affiliates of JSC TATNEFT
Provisions on the organization of contractual work in JSC TATNEFT*
Provisions on the organization of goods purchasing using electronic trading platform
Regulation on work in “Trading Procurement Platform” system of JSC TATNEFT
Corporate standard on the accreditation order for prospective suppliers when organizing goods purchasing using
electronic trading platform
Provisions on the order of the Company’s subdivisions interaction on handling of complaints received by the
Hotline of JSC TATNEFT’s trading procurement platform
Provisions on the organization, execution, and automated record keeping of claim-related work in JSC TATNEFT
Regulation on the organization of goods purchasing from the companies manufacturing unique (custom-made)
goods (monopolist manufacturers)
Provisions on the safe execution of works performed by third parties at the JSC TATNEFT facilities
Corporate standard “Requirements on environmental safety for the organizations involved in providing works and
services at JSC TATNEFT’s facilities”
Standard for the interaction of JSC TATNEFT with external service providers during service rendering
Standard of the investment and technical policy of JSC TATNEFT for diversification and quality enhancement of oil
services
Provisions on the block of oil services provided by JSC TATNEFT
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
1
2
Regulation on the introduction of changes and approving of changes introduced in the layout of production facilities,
defining limits of liability sharing between service providers and structural subdivisions under the process of service
providing for JSC TATNEFT
Regulation on interaction during the creation of investment programs by service providers necessary for the JSC
TATNEFT production program implementation
Standard for the creation of JSC TATNEFT presentation materials distributed among business partners and investors
Provisions on the JSC TATNEFT information technology department
Corporate standard on the organization of equipment purchasing
Tendering guidelines for the procurement of goods and materials, supplementary to the provisions on tenders for
the submission of goods supply, work performance, and service rendering orders according to the needs of JSC
TATNEFT
Regulation on the interaction of enterprises within the TATNEFT Group concerning the sales of goods via OOO TTD
TATNEFT
Regulation on pretender and posttender activities concerning goods supply, work performance, and service
rendering according to the needs of JSC TATNEFT
Corporate standard on order of collecting and accounting of the data related to negative history of the relationship
with the suppliers
Management of the results of intellectual activity
Provisions on the marketing assessment of materials and equipment with regard to the JSC TATNEFT logistics
Consumers
Temporary instructions for control and preservation of oil products
Rules of JSC TATNEFT’s trade practice in respect of diesel fuel realization in the Russian Federation*
Rules for service rendering at filling stations
Standard for production control over products and manufacturing processes
Standard for final inspection and product testing
Procedure for reviewing of claims and requests submitted by tire product consumers
Procedure for the collection and processing of information on consumer satisfaction
Provisions on the TATNEFT trademark and its use
Local Communities
Agreements with municipal administrations of the cities and settlements in activity regions
Provisions on work with boarding schools graduates and orphaned students of establishments of specialized
education
Provisions on the information policy of JSC TATNEFT
Regulation on the disclosure and provision of information on activities performed by the Company and the TATNEFT
Group
Specialized corporate project of JSC TATNEFT aimed at the support for small and medium-sized business
development in the Republic of Tatarstan
Policy of JSC TATNEFT in the field of industrial safety, labor and environmental protection
Corporate standard Anti-Corruption Policy of JSC TATNEFT named after V.D.Shashin*
Standard for corporate social responsibility
Public Organizations
Provisions on the participation of JSC TATNEFT in public organizations
* approved or overviewed in 2014
INTERACTION WITH CUSTOMERS
180 181
Current market conditions caused JSC TATNEFT to set a new
objective of paramount importance: to enhance quality of inter-
action and to establish long-term relationships with consumers.
A smoothly-running system for product quality assessment,
high level of service and increased consumers’ awareness play a
greater role in creating competitive advantages of the Company.
In the process of communication with product and service con-
sumers, the Company adheres to the United Nations Guidelines
for Consumer Protection and International Covenant on Eco-
nomic, Social and Cultural Rights.
Main principles of interaction with customers
include:
Safety.
Protection of customer’s health and safety implies provision
of such products and services, which are safe and do not
pose any unacceptable risks of damage while using or con-
suming them. JSC TATNEFT strictly controls observance of
all regulatory requirements governing product and service
quality. The Company assesses the impact of offered prod-
ucts and services on customer’s health and safety in order
to identify possible lines for improvement on all stages of
their life cycle. No cases of non-compliance with regula-
tory requirements relating to the impact of products and
services on health and safety were fixed in 2014.
Information acquisition.
The Company ensures consumers’ access to full, accurate
and understandable information, which facilitates informa-
tion-based decision-making according to individual prefer-
ences. Concluded product supply contracts are written in
clear, straightforward and understandable language, does
not contain unfair contractual liabilities, provide straight-
forward and comprehensive information on product price,
peculiarities and on contractual terms and conditions. No
cases of non-compliance with regulatory requirements
relating to the customers informing of the products and
services’ features were fixed in 2014.
Opportunity to choose.
Consumers of the Company’s products and services have
an opportunity to choose from a range of products and
services offered at competitive prices and with guaranteed
satisfactory quality.
Reparation of damages.
JSC TATNEFT has precise mechanisms for settlement of
claims and disputes with consumers, as well as measures
for their prevention. All instances of providing consum-
ers with products or services of inappropriate quality are
recorded, reasons for inappropriate quality are analyzed,
measures for their elimination are developed. Consumer’s
damages are repaired in compliance with the effective
legislation.
Favorable environment.
JSC TATNEFT takes a wide range of measures to minimize
any negative impact of offered products and services on the
environment.
Right to privacy.
The Company ensures compliance with this principle by
using reliable systems for consumers’ data collection and
protection. Consumers’ data are collected without viola-
tion of any effective legislation. Collection of personal
data of the Company’s product and service consumers is
limited with information necessary for providing products
or services and communicated with consumers’ consent
on a voluntary basis. Protection of collected personal data
is performed with the help of efficient safety means. No
claims related to violation of privacy or loss of consumers’
data were reported in 2014.
Honest and responsible marketing policy.
The Company exercises only fair marketing practices and
protects its consumers against unfair or deceiving adver-
tising and marking. The Company’s activity in the field of
product and service promotion, advertising and marketing
complies with legislation of the Russian Federation. No
cases of non-compliance of the Company’s activity with the
legislation on products and services promotion, advertise-
ment and marketing were reported in 2014.
No penalties for violation of the legislation or regulations
related to products provision and usage were charged in
respect of the Company in the reporting year.
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
INFORMING ON THE ACTIVITY RELATED TO
SUSTAINABLE DEVELOPMENT AND CORPORATE SOCIAL
RESPONSIBILITY
LIST OF ABBREVIATIONS
182 183
JSC TATNEFT has been elaborating annual reports on sustainable development and social responsibility since 2005. Report
on sustainable development and social responsibility for 2013 was published in June 2014. Since 2014, disclosure of informa-
tion on the activity related to corporate social responsibility is carried out as a part of preparation of JSC TATNEFT’s Integrat-
ed Report.
The Report was elaborated based on the Guidelines on Reporting in the Field of Sustainable Development of Global Report-
ing Initiative (GRI), Standard of Interaction with Concerned Parties AA 1000, International Standard ISO 26000 and Social Arti-
cles of the Russian Business Community (RUIE). The Report for 2014 contains standard elements of GRI Guideline version G4
reporting. In addition to the GRI Sustainability Reporting Guidelines, Oil and Gas Sector Supplement was applied.
GRI Principle
Our actions
Coverage of concerned
parties
The Company makes considerable efforts in order to involve the concerned parties into discussion of issues
related to elaboration of the report, such as selection of performance indicators, determination of the Report
format and boundary. To do that, consultations with representatives of the concerned parties, conferences and
seminars are held, questioning is carried out.
Context of sustainable
development
The information on the Company’ activity results is presented in the Report in close connection with its contribu-
tion to the sustainable development. The Report shows all key points, indexes and initiatives related to economic
stability maintenance, environmental safety improvement and strengthening of the social stability.
Information
significance and
relevance
Information
completeness
Principle of balance
Information
compatibility
Information accuracy
Timeliness
Clarity
Reliability
We strive to include only those issues and indicators in the report that are significant to the concerned parties and are
capable of influencing their decisions. While we determine significance of the issues, we take into account such fac-
tors as goal and objectives of the Company, risks and capabilities, industry-specific problems, etc.
The Company strives to achieve full disclosure of information in economic, environmental and social spheres of
the activity. The bulk of issues reviewed in the report is enough for the readers to assess the Company’s perfor-
mance and its contribution to sustainable development of the society.
In the framework of the principle of balance, the report covers both favorable results of the Company’s activ-
ity and problems that the Company faces. Amount of attention given to various issues corresponds to their
relevance.
The report ensures comparability of the activity results from year to year. Each significant change related to
boundary, coverage or reporting period is explained. To ensure comparability of the Company’s performance
with the results achieved by other companies, indicators included in the GRI guidelines and technical protocols
were used in elaboration of the report.
We strive to make information provided in the report accurate and detailed enough for the concerned parties to
use it in decision-making with a high level of reliability. Error of quantitative data is minimized. Proportions and
specific values used in the report are complimented with respective absolute values. Data are provided using
common international units and are calculated with standard coefficients.
The Company is aware of the necessity to present timely information in the report, that is why the report is issued
with equal periodicity once a year prior to the annual meeting of shareholders.
We make efforts to make information provided in the report clear, understandable and useful for different con-
cerned parties. The report contains a glossary and a list of abbreviations, which make science and technology
terms and abbreviations clear.
Information and data provided in the report are based on internal documentation, which can be assessed by independ-
ent parties. Data that cannot be supported by documents are not included in the report.
ABI
AGZS
AGNI
AZ
AZS
AIS
AO
APT
ARMITS
ASPO
ASF
BVU
BMZ
BMO VOS
BMRZ
BMT
BPTsUiA
VL
VOIR
GZNU
GZU
GIBDD
GKPZ
GO
GOST
GRP
GSM
GTS
DNS
DOL
YeS
YeEK OON
JBR
ZAO
IS
KVN
KIS
KNS
K(P)FU
KSO
KTPN
KTPU
LNT
MGPZ
MGTU
MGU
MMVB
MOT
MPT
MRP
MSOP
MUN
Auction of business ideas
Autogas filling station
Almetyevsk State Oil Institute
Anodic grounding electrode
Filling station
Automated Information System
Joint-Stock Corporation
Almetyevsk Polytechnic College
Automated work place of engineering technological service
Asphalt, resin and paraffin deposition
Emergency response team
Basin Water Administration
Bugulma mechanical plant (structural subdivision of JSC TATNEFT)
Bugulma local organization of the All Russia Society of the Blind
Microprocessor protection relay unit
Bugulma mechanical-engineering college
Power supply unit for control circuit and automatic equipment
Overhead line
All-Russian Society of Inventors and Innovators
Pump-measuring group unit
Measuring group unit
Main Directorate for Road Traffic Safety
State Complex Nature Zakaznik
Horizontal Settler
State Standards
Hydraulic Fracturing
Fuels and lubricants
Hydraulic structures
Booster pump station
Children’s holiday camp
European Union
United Nations Economic Commission for Europe
Reinforced concrete tank
Closed Joint-Stock Company
Information system
Club of the funny and inventive
Corporate Information System
Cluster pump station
Kazan (Privolzhsk) Federal University
Corporate social responsibility
Packaged Transformer Substation for outdoor installation
Packaged Transformer Substation (undersized)
Leninogorsk oil college
Minnibaevo Gas Processing Plant
Bauman Moscow State Technical University
Moscow State University
Moscow Interbank Currency Exchange
International Labor Organization
Metal-reinforced plastic pipes
Overhaul time
International Union for Conservation of Nature
Oil recovery enhancement methods
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
184 185
SED
t.u.t.
TASSR
TD
TK
TOSMS
TTD
TU
TEK
TETs
UZI
UZK
UK
ULF
UPVSN
UPN
UPS
UPTZh for PPD
USO
UTNGP
FBU
FGBU
FGU
FRD
TsLATI in PFO
TsMK tires
TsPK
TsRB
ShFLU
EIS
EKU
Electronic Document Management System
ton of reference fuel
Tatar Autonomous Soviet Socialist Republic
Trading House
Labor Code
Local administration board
Trading and Technical House
Technical Specifications
Fuel and energy complex
Heat Power Plant
Ultrasonic examination
Delayed coking unit
Administration Company
Light hydrocarbon fraction recovery
High-Sulfur Oil Treatment Installation
Oil Treatment Installation
Preliminary Water Removal Installation
Administration of Process Fluid Preparation for Formation Pressure Maintenance (structural subdivision of JSC
TATNEFT)
Sulfur Removal Installation
Tatneftegazpererabotka Administration (structural subdivision of JSC TATNEFT)
Federal State-Funded Establishment
Federal State and State-Funded Establishment
Federal State Establishment
Motion study
Centre of Laboratory Analysis and Technical Metrology in Volga Federal District
All-steel tires
Personnel Training Center
Central District Hospital
Broad light hydrocarbon fraction
Electroinsulating connections
Corporate e-University
MFN
MFTI
MchS
NGDU
NGSP
NDPI
NDS
NZSh TsMK
NIOKR
NKO
NKT
NMA
NNPF
NOU
NP i NKhZ
NPZ
NPU
NTTs
NKhK
JSC TATNEFT
OON
OOO
OOPT
OPR
ORD
ORDiZ
ORZ
ORE
OEZ
PDK
PNG
PP
PPD
PPT
PS
PTs
RAN
RVS
RID
RMOO
RSPP
RT
RF
SBT
SVN
SEM-ChVZ
SKZ
SKU
Mass media
SMK
SNG
STO
Multiphase pump
Moscow Institute of Physics and Technology
Ministry of Emergency Situations
Oil and Gas Production Administration (structural division of JSC TATNEFT)
Trade Union of Oil, Gas and Construction Workers
Mineral extraction tax
Value added tax
Nizhnekamsk All Steel Tires Plant
Research and experimental works
Non-bank credit organization
Oil-well tubing
Intangible assets
National non-governmental pension fund
Non-state educational establishment
Oil refining and petrochemical complex
Oil refinery
Oil refining installation
Scientific and Educational Center
Petrochemical Complex
Open Joint Stock Company TATNEFT named after V.D.Shashin
The United Nations
Limited Liability Company
Protected area
Industrial experiment works
Dual Production
Dual Production and Injection
Dual Injection
Dual Completion
Special Economic Zone
Maximum Permissible Emission
Associated Petroleum Gas
Industrial site
Formation pressure maintenance
Polymer coated pipes
Substation
Chain drive
Russian Academy of Sciences
Steel vertical tank
Russian Institute of Directors
Regional Yong People’s Social Organization
Russian Union of Industrialists and Entrepreneurs
Republic of Tatarstan
Russian Federation
Career Center for Students
Extraviscous oil
Technology of sedimentative capacitive modelling of natural oil and gas reservoirs
Cathodic protection station
Corporate Management Standard
Mass media
Quality Management System
Commonwealth of Independent States
Corporate Standard
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY JSC TATNEFT ANNUAL REPORT 2014
ABOUT THE COMPANY | OPERATIONS | CORPORATE MANAGEMENT | FINANCIAL RESULTS | SOCIAL RESPONSIBILITY
186
Information for the shareholders
Securities Department
Russia, Tatarstan, 423450
JSC TATNEFT
Almetyevsk, 75 Lenin St.
Tel: + 7(8553) 31-97-77
OOO Euroaziatskiy registrator
Russia, Tatarstan, 423450
(the Company’s registrator)
(the Company’s registrator)
Almetyevsk, 10 Mir St.
tel: (+7 8553) 22 10 88
fax: (+ 7 8553) 22 08 40
Report concept
Working group
for report elaboration
V.P.Lavuschchenko
V.I.Gorodniy
N.E.Dorpeko
I.G.Garifullin
E.A.Tikhturov
V.A.Voskoboinikov
R.M.Khisamov
V.A.Mozgovoy
D.V.Kurochkin
R.R.Gayfullina
A.T.Yukhimets
R.I.Khaziev
O.A.Sharagina
Design and printing
Design To Business | Brand Assistance
www.tatneft.ru