Rosneft is the leader
of the Russian oil
industry
We strive to be first in all aspects of our activities. We
are planning the future of the Company by leveraging
the latest technology and preventing adverse effects
on society and the environment.
01 About the company
2
4
6
8
9
12
14
16
27
02
28
32
34
36
38
40
51
53
54
Message from the CEO and Chairman of the Management Board
Rosneft operations
Rosneft-2030 Strategy
Long-Term Development Programme and progress report
KPI structure
Investment Programme
Operating and financial results
Health, safety, and environment
Carbon management
Corporate governance
Corporate governance
General Shareholders Meeting
Board of Directors
Anti-corruption policy
Audit Commission
Risk Management and Internal Control System
Shareholder relations, key events in 2023
Corporate Secretary
Dividend Policy
03
Appendices
1
Message from the CEO
and Chairman of the
Management Board
Igor SECHIN
Chief Executive Officer and Chairman of
the Management Board
Dear shareholders,
In 2023, Rosneft capitalised on
the benefits of its business model,
which enables the Company to
swiftly respond to diverse external
factors while pursuing its goals.
This is confirmed by Rosneft’s
operating and financial results.
During the reporting
year, Rosneft continued
its consistent efforts to
improve efficiency and unlock
production potential across
all of the Group’s producing
assets. As a result, we
managed to achieve a high level
of hydrocarbon production at
nearly 270 mmtoe.
Due to rigorous cost control and
endeavours to improve production
efficiency, unit production costs
decreased to USD 2.6 per boe
for 2023, placing Rosneft among
the companies with the lowest
production costs globally.
In 2023, Rosneft achieved strong
financial results, supported, among
other things, by its solid business
model and robust corporate policy.
Key indicators, such as revenue,
EBITDA, profit, and free cash
flow, all delivered notable growth
during the reporting period. Also,
in response to rising interest rates
in Russia, the Company focused
on reducing its total debt, making
substantial progress in this area.
Protecting shareholder interests
has traditionally been one of our
top priorities. In 2023, Rosneft
paid annual dividends for 2022
in the amount of more than
RUB 190 bln and approved the
payment of interim dividends for
2023 in the amount of RUB 326
bln. The results of the second half
of the year laid a solid foundation
for the Company to pay record-
high dividends for 2023 and
fully meet our commitments to
shareholders.
The number of Rosneft individual
shareholders continues to grow.
Between June and November 2023
alone, it increased by more ″than
a quarter″ and reached 1.14 million
people, which serves as additional
evidence of the strong trust that
investors put in Rosneft.
Rosneft has maintained its
investment in field development,
progressing with mature and new
projects alike. This ensures the
energy security of Russia while
helping meet the world’s growing
demand for energy resources.
The Company’s capex for 2023
was up by 15% to RUB 1.3 trln,
among other things, driven by
the active implementation of the
Vostok Oil flagship project. Work
is ongoing to construct the Vankor
– Payakha – Sever Bay trunk oil
pipeline, logistics infrastructure,
and hydraulic structures. Pilot
development of the Payakha,
Ichemminskoye and Baikalovskoye
fields is in progress.
A lot has been made in the gas
business, which is one of the
Company’s strategic priorities.
In 2023, Rosneft ranked first
among Russia’s independent gas
producers by bringing output
to an all-time high of 92.7 bcm
(excluding gas used for other
process needs).
Importantly, Rosneft remains
the largest supplier of fuel to
the domestic market. In 2023,
we supplied more than twice the
required amount, helping develop
exchange trading and contributing
to greater affordability of
prices for domestic consumers.
The Company’s share in the total
volume of exchange sales of
gasoline and diesel fuel was 40%.
Despite attempts by
unfriendly states to step up
sanctions, which are basically
illegitimate pressure on the
energy sector, Rosneft is
developing its cooperation
with key international partners.
Strengthening partnerships with
businesses from Asia and other
regions will help the Northern
Sea Route further establish
itself as a key transport corridor
globally.
In 2023, the Company continued
its consistent efforts to support
basic science and develop its
R&D capabilities, which are
among the crucial components
of Rosneft’s strategy. Leadership
in innovations and R&D has
traditionally been one of the key
pillars of our growth.
Rosneft developed and
implemented a unique portfolio
of high-tech software, spanning
all key processes in oil and gas
production. The Company’s IT
solutions help address tasks
in geology, engineering, field
development and operation and
are superior to foreign peers
in terms of speed, scope, and
reliance on modern algorithms.
Some of them were successfully
marketed and now enjoy strong
demand both domestically and
abroad.
In 2023, Rosneft obtained
more than 70 patents for its
innovations. Today, the Company
holds exclusive rights to more
than 1,000 intellectual property
items, which all underwent state
registration and are estimated
to have enabled total savings of
more than RUB 150 bln.
With strong production and
research capacities under
its belt, the Company also
continued to take steps to
deliver on its sustainability goals
under the Rosneft-2030: Reliable
Energy and Global Energy
Transition Strategy.
Environmental safety is among
the key areas for innovations.
Green initiatives outlined in
Rosneft’s Strategy are designed
to reduce greenhouse gas
emissions, make rational use
of associated petroleum gas,
improve carbon capture and
storage technologies, optimise
water treatment and water
discharge processes, remediate
land, and study ecosystems and
preserve their balance.
Rosneft has traditionally been
paying special attention to
reforestation, as forests are a
natural absorber of greenhouse
gases. Together with its
subsidiaries, the Company
planted more than 10 million
seedlings of various tree species
in 2023, with a total of around
26 million seedlings and trees
planted over the past three
years,
Rosneft’s performance
underscores the soundness
and balance of chosen focus on
developing our business and
pursuing new high-potential
projects while adhering to
stringent environmental
protection standards and
reducing greenhouse gas
emissions.
Under external pressure and
high volatility of the macro
environment, the Company
once again demonstrated a
very strong performance. I am
convinced that with the decisions
made and projects completed in
2023, we will be able to deliver
on all our goals, meet financial
and operating targets, and
ensure reliable uninterrupted
hydrocarbon supplies to
consumers in Russia and abroad.
2
3
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Rosneft
operations
Rosneft is the leader
of the Russian oil industry.
Production assets
Refining and processing assets
Hydrocarbons production in 2023,
mmboe per day
5.5
4.8
Petrochina
ExxonMobil
3.7
Chevron
Shell
Petrobras
bp
3.0
2.8
2.8
2.3
Liquid hydrocarbons
Gas
Source: company reports for 2023
Unit production costs in 2023,
USD per boe
2.6
bp
5.8
Petrobras1
Shell
Chevron
Petrochina
ExxonMobil
7.7
9.1
10.2
12.0
12.1
Source: company reports for 2023
4
4
1 Petrobras data covers Brazil only.
5
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Rosneft-2030
Strategy
Consistent focus on our targets
Higher
efficiency
Lower
carbon
footprint
Operational
leadership
Targets and
priorities
Increasing
production
to 330 mmtoe
Increasing gas share
in total output
to more than 25%
Higher
dividends
and returns
Leadership in terms of
unit costs
Development
of the retail
business
Technologies
and localisation1
270 mmtoe
Achievements
+10% vs 2021
+17.8% EBITDA increase
>25% share
of gas in production
or
RUB 454 bln vs 2022
USD 2.6
per boe
unit production
costs
350 filling stations
upgraded
2 Aframax type tankers
of Zvezda Shipyard
commissioned to meet the
Company’s needs
1.3 kt of catalysts produced
3 new unique software
solutions2
Committed to the environment
Targets
Achievements in 2023
Targets
Achievements in 2023
Striving
for zero equipment
breakdowns (PSER-1)
−40% vs 2022
Reducing
land contamination
−20% vs 2022 (in contamination
from pipeline oil spills)
Eliminating
legacy contaminated
lands
−11% vs 2022
>25% reduction
in GHG emissions
by 2035
<0.2% reduction in
methane emission
intensity by 2030
Zero routine
flaring of APG
by 2030
N
O
B
R
A
C
–
0
5
0
2
Y
T
I
L
A
R
T
U
E
N
5% reduction in absolute GHG
emissions vs 2020
1 mmt of CO2 reduction in
emissions as part of the Energy
Saving Programme
1 Developing efficient in-house technologies, localising critical production solutions and services.
2 New solutions added to the specialised software range to enhance exploration and production efficiency.
6
7
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES
Long-Term Development
Programme and progress report
In 2023, we revised the Programme1,
taking into account the Company’s
performance, action plans to achieve
certain strategic goals, and updated
initiatives drafted pursuant to the
Russian Government’s directives2.
We completed the Programme’s
key initiatives planned for core
businesses and functional units
in 2023. For the Programme’s key
outcomes in 2023, see the Operating
and Financial Results section.
The Programme details the Company’s
strategic focus areas, targets and goals
for all business areas and corporate
functions. It also includes a list of key
initiatives to achieve the Company’s
strategic goals.
TSATR – Audit Services LLC,
an independent auditor, completed
its engagement and provided
assurance about Rosneft’s
Programme Progress Report
and achievement of the key
performance indicators in 2023.
The opinion was received
on 22 April 2024.
KPI structure
The Company’s KPI system seeks to decompose the Company’
Development Strategy and its Long-Term Development Programme
into specific KPIs, cascade them to all management levels, evaluate
progress against targets, and create incentives for efficient management
decision-making. A strong motivation tool for employees, KPIs ensure
a step-by-step achievement of the Company’s strategic goals.
KPI progress
The Company’s Strategy
Long-Term Development Programme
Consolidated business plan
› Corporate KPIs
› Individual KPIs of the Chief Executive Officer
› Bonus disqualification (blocking) indicators for the Company
Business plans of business units
› Individual KPIs of the Company’s top managers responsible
for the performance of businesses
› Bonus disqualification (blocking) indicators set for heads and employees
of business units
Business plans of Group Subsidiaries
› Collective KPIs of Group Subsidiaries
› Individual KPIs of Group Subsidiaries’ senior management
› Bonus disqualification (blocking) indicators for Group Subsidiaries
KPI progress
1
In accordance with Instruction of the President of the Russian Federation Vladimir Putin No. Pr-3086 dated 27 December 2013; the Long-Term Development
Programme was originally developed in 2014 (approved by Rosneft’s Board of Directors on 9 December 2014, Minutes No. 12) and is subject to annual updates.
2 Directives No. 7558p-P13 dated 12 November 2014, No. 1346p-P13 dated 5 March 2015, No. 7389p-P13 dated 31 October 2014, No. 1472p-P13 dated 3 April 2016,
No. 4531p-P13 dated 28 June 2016, No. 4750p-P13 dated 4 July 2016, No. 830p-P13 dated 6 February 2017, No. 276p-P13 dated 17 January 2019, No. 6739p-P13
dated 30 July 2020, and No. 3502p-P13 dated 15 April 2021.
8
9
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES The KPI system ensures:
Well-balanced
integrated indicators
motivating
employees to achieve
the Company’s
main goals
The KPI system is aimed at:
Transparency,
measurability,
minimum sufficiency,
and consistency of KPIs
A top-down approach
to cascading
and breaking
down KPIs
To calculate annual bonuses for managers and employees, the Company analyses
progress against KPIs following the review of the annual performance based
on the management accounts and audited public financial statements.
KPI progress
Once the reporting period is
completed, the Company’s
Internal Audit Service annually
assesses the performance
against corporate and individual
KPIs set for calculating annual
bonuses for the management
of the Company and Group
Subsidiaries. The audit findings
serve as the basis to determine
the bonuses payable to the
management of the Company
and Group Subsidiaries to be
approved by governing bodies
of Rosneft (Board of Directors,
Management Board, etc.).
Target KPIs are normalised
to reflect the factors beyond
the management’s control,
such as FX volatility and global
market prices in accordance
with the Regulations on the
KPI Normalisation Procedure
Related to Management
Performance Review and
Assessment in the Reporting
Period to Calculate Annual
Bonuses, and the Guidelines
for KPI Normalisation Related
to Performance Review against
Business Plan1.
Delivering
on the Company’s
Strategy and Long-
Term Development
Programme
Consistently improving
the Company’s
financial and operating
(industry-specific)
results
Ensuring
compliance
with directives
of the Russian
Government.
With both financial (economic) and operating (industry-specific) KPIs in place,
the system breaks down relevant indicators into the following groups:
› Corporate KPIs based on the key financial, economic, operating and industry-
specific indicators from the Company’s consolidated business plan and business
plans of its business units
› Individual KPIs based on individual strategic goals for each top executive
Aside from that, for the purpose
of motivating the Company’s
employees, we introduced bonus
disqualification (blocking) indicators.
A failure to achieve targets under
these indicators reduces the
employee’s overall annual bonus
amount in the reporting period.
KPIs and targets for the senior
management are set by Rosneft’s
Board of Directors on an annual basis
subject to preliminary discussion
by the relevant committee.
10
11
1 The Regulations were approved (Minutes No. 27 dated 6 April 2015) and amended (Minutes No. 10 dated 27 September 2021) by Rosneft’s Board of Directors. The
guidelines were approved by Order of Rosneft No. 147 dated 1 April 2023 and enacted on 1 April 2023.
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Investment Programme
Rosneft’s 2023 investment programme was approved as part of
the 2023–2024 Business Plan at the Board of Directors meeting on
26 December 2022 (Minutes No. 13 dated 27 December 2022).
The 2023 capex was mainly focused
on maintaining and developing
mature and new oil and gas assets
to meet our strategic production
and reserve replacement goals,
as well as implementing cost-
effective projects to develop
refineries and a retail network
development programme.
As part of drafting
and implementing its investment
programme, the Company
swiftly responds to external
and internal developments
by selecting and prioritising
projects and quickly optimising or
reallocating investments between
different business segments
based on portfolio management
approaches.
Within our portfolio, we evaluate
projects and investment
opportunities on the basis of project
profitability by taking into account
risk assessments and the Company’s
financial capacity.
Investment process
Our investment activities
help us ensure commitment
to the following strategic
priorities:
› Sustainable business growth driven
by investments in competitive
and high value-added projects
based on an ongoing portfolio
optimisation
› Increasing efficiency
across all business streams
through an in-depth analysis
of investment needs, efficient
decision-making and project
implementation, monitoring
and control throughout
the project life cycle
› Strengthening investment
discipline by ensuring better
project identification,
classification, thorough
project analysis and efficient
decision-making process reliant
on delegation of authority
› Honouring social responsibility
principles regarding occupational
safety and environmental
protection
› Focus on the UN Sustainable
Development Goals to help
achieve progress in addressing
global economic, social
and environmental challenges,
including those related
to carbon management
Delegating powers: investment decision-making hierarchy
Capex, RUB bln
1,132
1,049
1,297
Board of Directors
Management Board
Investment Committee
Dedicated committees
Exploration
and Production
Refining,
Commerce
and Logistics
Functional
RUB 1.3 trln
capex in 2023
Rosneft’s investment governance process is integrated with all related processes, including
strategic and business planning, budgeting, reporting and financial control, project management
and corporate governance.
12
13
202220212023ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Operating
and financial results
Exploration and production
In 2023, the Company’s
hydrocarbons production amounted
to 269.8 mmtoe, including 193.6 mmt
of liquid hydrocarbons.
Natural gas production came in at
92.7 bcm in 20231.
In 2023, the Company successfully
tested 73 onshore wells, with a
record-breaking success rate of 90%.
Two new fields were discovered,
along with 133 new deposits with
reserves of 0.1 btoe (AB1C1+B2C2).
Following an audit under
the PRMS2 standards,
the Company’s
2P hydrocarbon reserves
as at the end of 2023 stood
at 11.4 btoe. The 2P reserve
replacement ratio exceeds
100%.
Production drilling in 2023
amounted to 12.0 mln m,
with the commissioning of
3.2 thousand new wells, 71%
of which were horizontal.
Refining and sales
In 2023, the Company’s volume
of oil and gas condensate refining
in Russia amounted to 88.0 mmt.
The light product yield and refining
depth across its refineries came in at
58.6% and 76.2%, respectively.
integrated catalytic systems,
incorporating hydrotreating,
dewaxing, and hydrofinishing
catalysts, which led to an increase
in the output of winter-grade diesel
fuel.
The Company has been consistently
working on domestic technologies
and import substitution. In 2023,
we produced over 900 tonnes of
diesel hydrotreating catalysts and
guard bed catalysts, over 200 tonnes
of reforming catalysts, and about
160 tonnes of catalysts and
adsorbents for hydrogen production
units.
The Company continued the
deployment of reactivated diesel
hydrotreating catalysts at its
refineries, with over 1,000 tonnes
of spent catalysts regenerated
and reactivated. We successfully
commenced the utilisation of
In 2023, the Company’s domestic
sales of petroleum products totalled
42.4 mmt, including 13.0 mmt of
gasoline and 17.2 mmt of diesel fuel.
Sustainable supply of high-quality
motor fuel to Russian consumers is
one of Rosneft’s key priorities. The
Company is an active participant
in trading at the St Petersburg
International Mercantile Exchange
(SPIMEX). In 2023, we sold 8.7 mmt
of motor fuel on the exchange,
which is more than twice the
required volume. The Company’s
share in the total volume of
exchange sales of gasoline and
diesel fuel was 40%.
1 Excluding gas used for other process needs.
2 PRMS refers to the Petroleum Resources Management System.
14
269.8 mmtoe
Company’s hydrocarbon
production in 2023
12.0 mln m
Company’s production
drilling in 2023
The price growth at the Company’s
filling stations on the domestic
market remains limited to the
inflation rate.
88.0 mmt
Company’s volume of
oil and gas condensate
refining in Russia in 2023
42.4 mmt
Company’s domestic sales
of petroleum products in
2023
Financial results
In 2023, the Company’s revenue1
amounted to RUB 9,163 bln, and
EBITDA totalled RUB 3,005 bln. Unit
lifting costs amounted to USD 2.6 per
boe.
Net income attributable to
Rosneft shareholders amounted
to RUB 1,267 bln, driven by EBITDA
growth and movements in non-cash
items.
Capex in 2023 reached RUB 1,297 bln.
The adjusted free cash flow2 in
the reporting period totalled
RUB 1,427 bln.
Implemented measures
aimed at maintaining financial
stability helped the Company
reduce its net financial debt
and advance payment arrears
by RUB 0.7 trln compared
to the beginning of 2023. The
net debt / EBITDA ratio as at
the end of 2023 was 0.9x (in
USD terms) compared to 1.3x
as at the end of 2022.
RUB 9,163 bln
Company’s revenue1
in 2023
RUB 1,267 bln
Company’s net income3
in 2023
Vostok Oil project
In 2023, the Company completed over
2.4 thousand linear km of 2D seismics
and 1.6 thousand sq km of 3D seismics
as part of the flagship Vostok Oil Project.
The acquired data interpretation is in
progress. Rosneft tested four exploration
wells with a 100% success rate, and
drilled four wells with three more wells
being tested.
Pilot development of the Payakha,
Ichemminskoye and Baikalovskoye
fields is in progress. In 2023, the
Company drilled about 50,000 m
and completed the drilling of
12 production wells.
The Company continues the
construction of the Vankor – Payakha –
Sever Bay trunk oil pipeline, with more
than 29,000 piles mounted and about
230 km of pipes welded. Construction
of the pipeline underwater section,
which will be laid by way of trenching
along the Yenisei River bottom, is in
progress. Dredging works have been
completed and a fit-for-purpose site
is being developed for the subsequent
laying of the pipeline. Technologies
and materials used in the construction
of the underwater section are
Russian-made.
Construction of logistics
infrastructure, hydraulic structures,
shore reinforcement, and expansion of
coastal and berthing infrastructure are
underway.
In December 2023, Rosneft started
winter delivery of cargoes via the
Northern Sea Route and winter
roads. A record 700,000 tonnes of
construction materials, machinery
and equipment are planned to be
delivered for the project facilities
during the winter season. This is
almost 20% more than the volumes
delivered last year over the same
period.
1
Includes revenues and equity share in profits of associates and joint ventures.
2 Adjustments for prepayments under long-term oil supply contracts (including accrued interest payments), net changes in subsidiary bank operations,
transactions involving securities.
3 Net income attributable to Rosneft shareholders.
15
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Health, safety,
and environment
As a national oil and gas champion, Rosneft operates in strict compliance
with Russian health, safety, and environment (HSE) regulations.
HSE management system
Resolutions adopted by the Board of Directors in 2018 ensure that Rosneft’s
operating and strategic priorities conform to the 17 UN Sustainable Development
Goals, with five of them defined as key focus areas: Good Health and Well-
Being, Affordable and Clean Energy, Decent Work and Economic Growth,
Climate Action and Partnership for Sustainable Development.
The Company views human life
as the greatest value and pays
special attention to ensuring
safe working conditions for
the Company’s employees and
contractors, while also taking steps
to prevent occupational accidents,
emergencies, and fires and to
mitigate their impact should such
accidents, emergencies or fires
occur.
The Rosneft-2030 Strategy sets out strategic HSE targets.
Strategic HSE targets
Drive towards:
›
›
zero fatalities by 2030 or sooner
zero equipment breakdowns by 2030 or sooner
Minimisation of environmental footprint
Net positive impact on ecosystems
Rosneft has designated its
HSE Control and Investigation
Department as the official body
responsible for exercising HSE
controls (including internal HSE IMS
audits across Group Subsidiaries)
as a way to ensure the uniformity
and unbiased character of control
procedures applied to Group
Subsidiaries.
HSE controls rely on a risk-oriented
approach and leverage distance
control tools. Audits of Group
Subsidiaries include assessment of
their HSE performance. In addition
to the mandatory controls required
by law, the Company employs the
following main types of regular
controls:
› full-scope and ad hoc inspections
to verify compliance with HSE
requirements, corporate plans
and internal documents of
the Company, as well as the
adequacy of ongoing operational
and environmental risk
management efforts;
› internal IMS audits
to assess compliance
with the Environmental
Management System
(ISO 14001) and
Occupational Health
and Safety Management
System (ISO 45001)
standards.
Following the audits,
Group Subsidiaries prepare
corrective action plans to
improve the HSE governance
system.
Rosneft has an HSE Control
Commission responsible for
reviewing the audit findings
and developing adequate
remedial initiatives (with
emphasis placed on the
elimination of systemic
violations and breaches
with a high and critical
emergency risk).
The Company pursues its HSE
objectives within the framework
of the Integrated Health, Safety
and Environment Management
System (IMS).
The system is certified annually by
independent external auditors to
verify that it meets the international
HSE standards.
In 2023, Rosneft and 74 Group
Subsidiaries once again confirmed
their compliance with ISO 45001
and ISO 14001 as part of the
Company’s overall certification.
In addition, 31 Group Subsidiaries
completed independent occupational
health and safety certification
(ISO 45001), and 33 were certified
in the area of environmental
management (ISO 14001).
The HSE IMS certification process
includes more than 100 companies,
which account for 72.5% of total
headcount in the Group Subsidiaries
covered by the management
accounting procedures.
Priority UN SDGs
16
17
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Corporate HSE governance
Safe working environment
The Board of Directors provides strategic management
of the Company’s HSE activities and regularly reviews related reports.
The HSE Committee is the
Company’s key standing
coordinating body in charge of
HSE.
In 2023, the HSE
Committee met six times
to adopt resolutions on the
prevention of occupational
accidents, incidents
at hazardous facilities,
and traffic accidents,
management of HSE risks,
and mitigation of the
environmental impact,
including the following:
Holding months of
occupational safety and
HSE campaigns as a way
to prevent fatal injuries
Ensuring adequate
design, inspection,
and maintenance of
infield roads to prevent
incidents involving
vehicle overturns
Proceeding with
the steps to
improve the HSE
risk management
process
Leveraging additional
health and safety
initiatives approved
in 2022 (Control of
Work, Behavioural
Safety Audits (BSA),
HSE Violation Tickets,
Lessons Learned,
HSE Internship)
as a proven tool
for preventing
fatal injuries
Implementing
additional
comprehensive
initiatives to prevent
incidents associated
with damages caused to
the structural elements
of overhead power lines
and cable tray systems
by vehicles and special-
purpose machinery
6 meetings
held by the HSE Committee
in 2023
As a national oil and gas champion and a major global energy company, Rosneft
boasts an impressive scale and diversity of operations, which by their nature
require a consistent risk-oriented approach to HSE management.
The Company has defined key
HSE initiatives designed to assist
in achieving its strategic targets.
In 2023, the main focus was on
improving the quality of planning,
execution, control and efficiency
for the following tools, with due
attention paid to their applicability
in the context of specific
operations.
The Control of Work
procedure involves weekly
planning of hazardous
works requiring the
issuance of work permits
and features multilevel
controls over such
works. In 2023, over
470 thousand hazardous
operations were
completed under
this procedure.
Systematic release
of lessons raising
awareness about
safety measures
designed to prevent
recurring incidents.
Internships in the HSE
units for the line managers
of production facilities
prior to their appointment
to office. In 2023, over
550 line managers
completed the internship.
Resumption of dedicated
face-to-face meetings
(suspended during the
pandemic) to discuss
HSE performance.
2023 saw four regional
meetings with the CEOs
of Group Companies,
four regional forums for
contractors, and eight
regional thematic forums.
Targeted monthly
campaigns and events in
the periods of the year
with the highest frequency
of injuries (with proactive
measures put in place
to prevent injuries).
Upgraded behavioural
safety audits featuring
photo evidence to
strengthen occupational
safety controls at
sites. In 2023, we
carried out over
86 thousand audits.
HSE Violation Tickets.
In 2023, Group
Subsidiaries and their
contractors issued over
407 thousand tickets.
Continued implementation
of targeted programmes
to prevent falling and
traffic accidents.
> RUB 54 bln
spent by the Company on
HSE initiatives in 2023
18
19
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Leadership
and safety culture
Safety culture is a priority
area for the Company.
Daily safety improvement
efforts must rely on an
informed approach, while
key safety culture objectives
must include enhancement
of informed leadership
and engagement of all
stakeholders in building
such leadership. To that
end, the Company organises
communication activities
for managers at various
levels. These processes
are directly supervised by
respective Vice Presidents.
There are feedback tools in
place for employees to seek
advice or submit proposals
on occupational safety
improvements.
In 2023, the HSE Committee
was presented with a new
approach to HSE leadership
suggesting stronger support
for certain activities and
measures focusing on
incident prevention and
further HSE development
as a way to ensure more
effective and informal use
of the leadership tools.
There were significant
updates in the relevant
toolkit, including the
Leadership Messages from
top managers and heads of
production businesses, and
the Personal Leadership
Commitments with a
focus on the management
control of dedicated HSE
initiatives and programmes.
In 2023, the updated
approach was approved for
implementation as a pilot.
Contractor relations
The lives and health of people
employed by the Company
and our contractors/
subcontractors are one of our
key priorities.
In 2023, the Company
updated the standard HSE
qualification requirements
to refine the selection of
contractors at the stage of
procurement.
To encourage contractors’
compliance with the
HSE requirements, the
Company approved an
updated version of a
mandatory HSE appendix
to contracts, which
sets out a revised list of
sanctions for breaches of
such requirements.
In 2023, the Company developed a
new version of Internal Regulations
on the Procedure for Interaction
with Contractors on Occupational
and Fire Safety, Health, and
Environment Issues. This document
includes updated provisions of the
previous version and introduces
new ones related to contractor
ratings and the audit of contractors’
management systems.
Risk-oriented approach
The aim of HSE risk management is
to introduce and maintain adequate
and sufficient management actions
regarding all identified risks that
are consistent with the level of
the risk assessed, provided with
the necessary resources allocated
by priority and approved on the
required management level of the
Company.
The applied HSE risk management
approaches include assessment, analysis
and management taking into account
global and industry best practices,
and help predict possible events and take
proactive steps to prevent them.
The Company also applies
the risk-oriented barrier
approach to the investigation
of HSE incidents
and development of remedial
actions.
HSE risk management is a set of
tools helping managers at various
levels, from senior executives to
line managers, to make the best
and most efficient decisions on
operational safety.
The Company has developed
standard diagrams for key risks,
defining a set of proactive and
reactive barriers (measures) for
a particular type of incident.
Based on the standard solutions,
Group Subsidiaries develop
programmes to create/enhance
barriers. In particular, they already
run programmes to prevent falls
and road accidents.
With the Rosneft-2030 Strategy
in place, the risk-oriented
approach remains the central
element in HSE and covers
the full cycle of operations,
from planning to performance
audits. Process safety in line
with the proactive and risk-
oriented approach results
in a set of measures aimed
at achieving the Company’s
safety targets. These
measures are aimed not only
at preventing accidents, but
also at mitigating potential
adverse consequences, primarily
for people, society and the
environment.
20
21
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Process safety and the
integrity of facilities and
equipment
and implementation of necessary
actions when developing operational
programmes and business plans.
The Company complies with
national and corporate regulations
on process safety. Operational
functions and HSE units of Group
Subsidiaries oversee both planning
The Company plays an active
role in improving HSE legislation,
including the large-scale revision
on the federal level. In 2023,
Rosneft participated in discussing
210 draft regulations on process
and fire safety, occupational
safety and health put forward
by Rostekhnadzor’s R&D
Council, the Industrial Safety
Committee of the Russian
Union of Industrialists
and Entrepreneurs, federal
ministries, the Russian
Government and the State Duma
of the Russian Federation.
As part of the efforts to deliver on its strategic HSE targets, the Company continued to implement
the following programmes/measures in 2023:
Enhancement of pipeline reliability
Maintenance and repair of tanks and tank farms based
on the findings of targeted inspections
Ensuring the integrity and continuity in Oil Refining and Petrochemicals,
with the following long-term initiatives ongoing:
›
›
›
›
›
›
›
›
›
Replacement of CrMo steel pipelines with austenitic welds;
replacement of end-of-life carbon steel pipelines (including
replacement of overhead pipelines);
removal of dead-end sections;
removal of various fittings;
elimination of emissions from open pressure relief valves;
replacement of lens and bellows expansion joints;
bringing the chemical protection systems of distillation units in
compliance with the internal documents of the Company;
bringing the hydrotreatment units in compliance with
the internal documents of the Company;
action plan focusing on inoperative chokes
Extension of functional operation times between repairs for nine key oil
refineries, two of which (Ryazan Refinery and Saratov Refinery) have already
been switched to extended functional operation times between repairs
Implementation of a dedicated programme enabling Group Subsidiaries to
establish professional rescue teams in charge of oil spill response
›
›
In 2023, Group Subsidiaries in Exploration and Production implemented a system for
assessing progress in ensuring the reliability of oilfield pipelines. The performance
assessment findings help develop measures to improve the efficiency of integrity
enhancement initiatives. There is ongoing monitoring of the condition of oilfield
pipeline crossings over water bodies, with over 118 km of pipelines replaced in 2023.
The Company introduced a project to assess the disintegration risks for pipeline
transport facilities in the Gas business. Risk assessment and ranking were
completed for pipeline transport facilities with a total length of 2,100 km.
Geotechnical monitoring:
›
To reduce the risks of on-site accidents caused by the deformation and instability of buildings and
structures, the Company continues to run its geotechnical monitoring project, which includes review of
existing production facilities and those under construction, regular training for the staff involved, and safe
maintenance of facilities located on the permafrost soil, while also developing and updating the Company’s
internal documents governing the geotechnical monitoring design, construction, and operation of facilities
located on the permafrost soil.
As part of its target innovative project to develop geotechnical monitoring technologies, Rosneft runs
a comprehensive set of initiatives, including fundamental research into current permafrost processes,
forecast of geological and engineering conditions amid climate change, search for and application of
new methodologies and geotechnical monitoring techniques enhancing the monitoring efficiency
(e.g. geotechnical monitoring cost reductions that do not translate into increased risks of on-site accidents).
Reliability assessment of technical devices, buildings, and structures at oil and gas treatment units
and reservoir pressure maintenance facilities based on the principles of risk-oriented ranking:
›
The applied assessment approaches have been implemented and are used for developing repair,
replacement, and reconstruction programmes for equipment at the on-site facilities of Group
Subsidiaries in the Exploration and Production and Gas businesses. To provide methodological
support for the assessment process, the Company has developed an internal document governing
the procedure for evaluating the condition of equipment at Group Subsidiaries involved in oil and gas
production. Efforts are underway to automate this process to enhance the quality of assessment.
22
23
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES
Road traffic safety
To achieve its production objectives,
the Company actively uses different
types of vehicles. In 2023, we
continued to implement traffic
accident prevention initiatives, which
reflect the key goals and objectives
of the Road Safety Strategy of the
Russian Federation for 2018–2024
and Decree of the President of
the Russian Federation No. 204
On National Goals and Strategic
Objectives of the Russian Federation
through 2024 dated 7 May 2018.
In 2023, the Company took the following proactive steps to reduce road safety risks and
prevent accidents:
Environmental responsibility
The Company consistently implements environmental initiatives and green
investment projects to achieve its strategic targets of minimising environmental
footprint and facilitating biodiversity conservation in the regions of operation.
identifying dangerous
locations on oilfield,
on-site, industrial, or
temporary winter roads
and installing warning
systems, traffic signs,
and cameras that could
help detect violations;
monitoring the placement
of road safety notices,
traffic signs giving
directions and alerting
drivers to danger, as
well as priority traffic
signs, snow poles, and
hazard delineators;
running accident
prevention campaigns
in the regions where
the Company operates
(including in Exploration
and Production, Gas,
and Oilfield Service):
March without Traffic
Accidents, We Are for Road
Safety – 2023, Summer
without Overturns;
monitoring compliance
with safety requirements
related to transportation
and trip planning
arrangements, compliance
with established travel
routes and work and rest
schedules by drivers of
Group Subsidiaries and
contractors using in-vehicle
monitoring systems;
assessing the equipment
of the Company’s and
contractors’ vehicles
using in-vehicle
monitoring systems
and video recorders;
enhancing controls
over works conducted
on ice roads / fast ice /
surfaces (rivers, lakes,
swamps, seas) as part of
the Winter campaign;
monitoring road
infrastructure and
maintenance, timely
cleaning and treatment
of road surfaces,
placement of traffic
signs, condition of ice and
winter roads, readiness
of utility vehicles;
running the ten-day
“Beware, Children!”
campaign at some
Group Subsidiaries
in cooperation with
the traffic police,
including by raising
awareness about road
traffic safety rules
and holding children’s
drawing contests
on traffic safety;
preventing road
accidents, including
vehicle overturns.
The programmes run by Group Subsidiaries to prevent traffic accidents have a positive effect.
In 2023, Rosneft had zero road fatalities through the fault of its employees. With that in mind,
Group Subsidiaries will continue running road traffic safety programmes in 2024 and beyond.
Green investments
In 2023, the Company’s green
investments exceeded RUB 64 bln
and targeted large environmental
projects, including projects to
improve pipeline reliability, reduce
emissions, and streamline water
management.
Environmental
management
The Company pays special
attention to air pollution and
implements air protection
initiatives and projects on an
ongoing basis. The facilities
develop APG utilisation
infrastructure (as part of the
gas investment programme),
construct desulphurisation and
sulphur production plants, build
flaring systems, etc. Several
Group Subsidiaries currently
participate in an experiment
involving quota-based emission
of priority pollutants under the
Clean Air federal project, with
work underway to comply with the
approved quotas.
One of the Company’s strategic
priorities is to minimise the
demand for fresh water in
alignment with the United Nations
Sustainable Development Goals.
This is achieved through the
implementation of infrastructure
modernisation projects and
the use of the best available
technologies. In 2023, the
Company continued to improve the
quality of wastewater discharges
through construction and
renovation of treatment facilities,
continuously high efficiency of
wastewater treatment at the
existing treatment facilities thanks
to timely repairs and replacement
of physically worn-out process
equipment, and prevention of
accidents leading to massive
discharges of pollutants into water
bodies.
Rosneft keeps handling waste in
line with the applicable Russian
laws. In 2023, the Company
processed more than 4.4 mmt of
drilling waste and over 1.1 mmt
of oil-contaminated waste, which
enabled it to dispose of the waste
accumulated in the reporting year
and reduce the amount of legacy
waste.
The Company continues to restore
land resources by reducing the area
of contaminated land, with over
480 hectares remediated (ca. 80%
owing to the efforts of internal
ecological services established by
key Group Subsidiaries).
In 2022, the Company approved
and started implementing
a programme to eliminate
environmental legacy effects,
which aims to fully eliminate
land contaminated and
waste generated as a result
of past activities of previous
owners of assets prior to
their integration into Rosneft.
As part of this programme,
Rosneft remediated more
than 230 hectares of land
contaminated with legacy waste,
including over 80 hectares in
2023.
~RUB 64 bln
spent on green investments
24
25
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Biodiversity
conservation and forest
reproduction
As part of its corporate strategic
initiatives designed to achieve a net
positive impact on ecosystems, the
Company places a special focus on
biodiversity conservation.
In pursuance of the national
Environment project and the
cooperation agreement between
Rosneft and the Russian Ministry of
Natural Resources and Environment,
the Company continued to research
the dynamics of key species in the
Arctic region. These species include
the Kara and Barents Sea population
of polar bear, Atlantic walrus, ivory
gull, and wild reindeer.
In 2023, experts analysed the
findings of the 2020–2022 research,
processed the 2022 field data,
and drafted final reports and
research recommendations on
each species. On top of that, an
information brochure was released
to provide insights into the target
investment project “Findings of
Research on Indicator Species under
Rosneft’s Biodiversity Conservation
Programme”.
In an attempt to further promote
biodiversity conservation efforts
and expand their scope, in 2023 the
Company’s experts identified key
indicator species in each biotope
across Rosneft’s footprint, while also
compiling lists of indicator species
to be used for the development
of biodiversity conservation
programmes in the Russian regions
where the Company operates.
In 2023, Rosneft completed
the preparatory stage of the
comprehensive forestation project
in the Krasnoyarsk Territory. This
project is run in collaboration with
the Government of the Krasnoyarsk
Territory and is expected to
increase the absorption of GHG
emissions by 10 mmt of CO2-equiv.,
thus contributing to the reduction
of the carbon footprint created
by Vostok Oil, the Company’s
biggest asset in the Krasnoyarsk
Territory. In 2023, Rosneft received
scientifically validated data on
the types of forestation projects
26
that would be most suitable
for the Krasnoyarsk Territory,
developed a tool to assess their
carbon and economic efficiency,
and provided project monitoring
recommendations.
On 30–31 March 2023, the
Company held a scientific and
practical workshop in Moscow to
discuss legislative gaps that hold off
the scaling of forestation projects.
The event was attended by the
officials of federal and regional
executive authorities and
the leading forestry research
organisations and culminated in
the development of proposals
for legislative changes that have
been submitted to the Federal
Forestry Agency (Rosleskhoz) and
the Russian Ministry of Natural
Resources and Environment.
The comprehensive forestation
project aims to offset the
carbon footprint of Vostok
Oil, which already employs
cutting-edge field development
technologies, and complement
the Company’s ongoing forest
reproduction and biodiversity
conservation initiatives. Over
the past three years, Group
Subsidiaries have planted over
26 mln seedlings.
>26 mln
seedlings
planted by Group
Subsidiaries over the past
three years
Carbon management
Carbon management – risk and opportunity
management
The Company takes into account the importance and impact of carbon management
risks (including risks associated with climate change) on its operations. Our
commitment to sustainability principles was further highlighted in the new
Rosneft-2030 Strategy, which provides for a reduction of the Company’s
carbon footprint while boosting its operational and financial efficiency.
Rosneft plans to achieve carbon neutrality by 2050 through a number of
strategic initiatives to reduce emissions. These initiatives imply:
A more than 25% reduction
in Scope 1 and 2 emissions
by 2035 as compared to 2020
Achievement of zero routine
APG flaring in line with the
World Bank’s Zero Routine
Flaring by 2030 initiative
A gradual transition of
the Company’s vehicles
to low-carbon fuels
A reduction of methane
intensity to below 0.2%
These initiatives will contribute
to the goals set by Russia’s Long-
Term Development Strategy with
Low Greenhouse Gas Emissions to
2050 and will help Russia fulfil its
obligations under the Paris Climate
Agreement.
Rosneft continues to improve
its carbon reporting system in
accordance with the Russian laws,
recommendations of the Bank of
Russia and internationally recognised
approaches, including TCFD1
recommendations. The Company
closely monitors the evolution of
sustainability and climate disclosure
standards developed by the
International Financial Reporting
Standards Foundation (IFRS).
Climate change and associated risks
and opportunities are effectively
integrated into Rosneft’s corporate
governance system.
To improve the climate-related
competencies of the Company’s
employees, we continued providing
internal corporate training under
an updated Carbon Management
course, with more than 83 thousand
employees completing the course in
the reporting year. The significantly
higher coverage compared to previous
years was achieved thanks to making
the corporate course available in
a distance format. In accordance
with the Carbon Management Plan
for the period until 2035, all of the
Company’s employees are obliged to
complete this training. Furthermore,
we partnered with St Petersburg
State Forestry University to offer
employees of the Head Office and
Group Subsidiaries further education
on forestation projects.
Also, the Company runs a successful
programme to detect and eliminate
sources of hydrocarbon (including
methane) emissions at Group
Subsidiaries engaged in exploration
and production. The programme
helps improve industrial safety at
the Company’s production assets
and maintain their infrastructure.
In addition, in 2023, surface
inspections were carried out in
pilot Group Subsidiaries engaged in
exploration and production in order
to have the programme rolled out
across the entire production and
sales chain.
1 Task Force on Climate-Related Financial Disclosures.
27
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Corporate governance
Key corporate governance principles
and improvements in 2023
Rosneft’s leading market
position, both domestically
and globally, and its
commitment to creating a long-
term sustainable value make
it of the utmost importance
that our corporate governance
framework ensures efficient
communication and cooperation
between the shareholders,
Board members, top managers,
employees, business partners,
and local communities across
the Company’s footprint.
Rosneft’s corporate governance
framework relies on the Corporate
Governance Code developed in line
with internationally recognised
standards.
Rosneft maintains compliance
with the Bank of Russia’s Corporate
Governance Code at a high level.
For evaluation of compliance
with the Bank of Russia’s
Code, see Appendix
to this Annual Report.
The internal documents
regulating corporate
governance are available
on the Company’s official
website.
Our corporate governance framework seeks to drive
the long-term sustainable growth of the Company’s
shareholder value.
Guiding principles for the Company’s governing bodies
Commitment to shareholders
Rosneft has adopted the world’s best corporate governance practices
and, complies with the Bank of Russia’s Corporate Governance Code
to ensure the following:
equal rights and opportunities
for, and equitable treatment
of all shareholders;
efficiency of the Risk
Management and Internal
Control System (RM&ICS);
professionalism
and independence of the Board
of Directors who act in the best
interests of all shareholders;
timely disclosure
of information
on the Company’s
activities that
is most relevant
to shareholders
and investors
for them to rely
on in making
informed decisions
(Appendix,
Corporate
Governance Code).
A substantial share
of the Company’s net
income is distributed
as dividends.
RUB 406.5 bln
paid by the Company in
2023 as interim and year-
end dividends for 2022
Innovation and global
leadership
Continuous improvement and global
leadership are the priorities that
encourage us to develop and invest
in cutting-edge technologies.
Favourable environment
for sustainable growth
The Company cares for its
employees, their families,
and members of local communities
across its footprint.
We at Rosneft keep a clear focus
on employee health. The Company
systematically implements health
protection measures aimed at
providing its employees with timely
and quality healthcare services,
health improvement and resort
treatment, disease prevention, and
promotion of a healthy lifestyle.
The Company takes care
of the environment by introducing
carbon management initiatives
and implementing best waste
management practices.
Commitment to environmental
safety is an integral part of our
corporate culture. The Company
supports scientific research,
culture, and sports. Rosneft
respects and honours human
rights and freedoms in accordance
with the Universal Declaration
of Human Rights, Social Charter
of the Russian Business, relevant
generally accepted standards,
and the laws of the Russian
Federation and other countries
where the Company operates.
Partnership with non-
governmental organisations
and cooperation with state
institutions
The Company is a party
to the UN Global Compact. Rosneft
makes a significant contribution
to the revenue part of the national
budget.
Protection of shareholders
and key stakeholders
The Company implements
best internal control and risk
management practices, develops
technologies for industrial
safety and information security,
and ensures product safety,
protecting its customers
and contractors.
Key achievements in 2023
Amid a challenging environment for Russian companies operating in international
markets, Rosneft maintained shareholder rights to participate in corporate governance
and receive dividends necessary to preserve and increase shareholder value.
Thanks to the Company’s Board
of Directors and management,
Rosneft ensured consistent
performance of governing bodies,
uninterrupted operations, and robust
information security while providing
its shareholders with sufficient
information rights. Rosneft’s shares
grew faster than the MOEX Russia
index. Net income, EBITDA, and
free cash flow surged despite oil
production cuts in Russia imposed
by OPEC+. Unlike most companies
in the Russian stock market, Rosneft
did not suspend dividend payments
in 2022 and 2023. Rosneft provided
adequate disclosure of its financial
and operating performance and
corporate governance, including
activities of the Board of Directors.
The Company’s shares remain
popular among investors, as
evidenced by a strong increase
in the number of shareholders.
Prior to the Extraordinary General
Shareholders Meeting in 2023, there
were over 1.1 million shareholders vs
233 thousand in 2H 2021.
We continue enhancing
the Shareholder’s Personal Account,
a powerful tool for shareholders
to stay in contact with the Company.
› Maintaining a high level of corporate governance.
› Improvement of digital communication formats for corporate governance stakeholders.
› Continuity of the Board of Directors and stability of the Company’s corporate governance procedures.
› Further implementation of goals and objectives outlined in the Rosneft-2030 Strategy.
Corporate governance plans for 2024
28
29
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Governance and control structure
The Company operates a two-tier management model where management
functions are split between the Board of Directors and executive bodies.
Board of Directors
Executive bodies
Board of Directors performs the two
key functions:
› strategic management of the
joint-stock company on behalf
of and for the benefit of all
shareholders, which includes
approving strategic documents
and material transactions;
› oversight of the executive bodies.
› Under the law, the Chief Executive
Officer (sole executive body)
is authorised to act on behalf
of the Company without a power
of attorney.
› Rosneft has established
a collective executive body
(Management Board) chaired
by the Chief Executive Officer.
Pursuant to the laws of the Russian
Federation, the Management
Board and its members (except
for the CEO) are not authorised
to enter into transactions or
execute legal acts on behalf
of the Company without a power
of attorney.
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General Shareholders Meeting
Rosneft’s supreme governing body responsible for decision-making on key matters
of the Company’s business.
Board of Directors
Provides strategic management of the Company’s activities; it reports
to the General Shareholders Meeting and acts on behalf and for the benefit
of all shareholders within its remit.
Set-up
Committees of the Board of Directors
Audit Committee
Reviews and then issues
recommendations for overseeing
the Company’s business,
preparing complete and accurate
accounting (financial) statements
and other reports, and ensuring
reliability and effectiveness
of risk management and internal
control systems, compliance,
internal audit, and corporate
governance
HR and Remuneration
Committee
Reviews and then issues
recommendations for assessing
effectiveness of the Company’s
HR and succession policies
and the appointment
and remuneration
system, evaluating Board
and management candidates,
reviewing independence
of independent directors,
and conducting performance
assessments of the Board
of Directors, the executive bodies,
and top managers of the Company
Strategy and Sustainable
Development Committee
Assists in defining the Company’s
strategic goals and growth
targets, including ESG goals,
and issues strategic and business
planning recommendations
Reporting
Executive bodies (Chief Executive Officer and Management Board)
Executive bodies manage the day-to-day
operations for the benefit of the Company
and report to the Board of Directors
and the General Shareholders Meeting.
Chief Executive Officer
Sole executive body
Management Board
Collective executive body
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Coordinating and consultative bodies
Coordinating and consultative
bodies of the Chief Executive
Officer carry out in-depth reviews
of matters that are reserved
to them.
These bodies include:
› Technological Council
› Investment Committee
› Budget Committee
› Compliance Committee
› Metrology Board
› Carbon Management
Committee
› HSE Committee
› Central Procurement
Committee
› Conflict Resolution Committee
› Commission on Energy
Efficiency
› Information Technology Expert
Council
› other coordinating
and consultative bodies
of the Company
Head of Internal Audit and Corporate Secretary are appointed
by the Board of Directors
Internal Audit Service
Corporate Secretary
Assists Rosneft’s Board of Directors and the
executive bodies of Rosneft and Group Subsidiaries
in enhancing the Company’s management
efficiency and improving its financial and business
performance, including through a systematic and
consistent approach to the analysis and evaluation
of the RM&ICS as well as corporate governance,
therefore providing reasonable assurance that the
Company will achieve its goals
Ensures the governing bodies’ compliance
with the applicable laws, the Company Charter
and internal regulations, which guarantee
protection of shareholders’ rights and legitimate
interests. Organises the work of the Board
of Directors and is responsible for efficient
communication between the Company’s
shareholders, governing and supervisory bodies,
and management
Functional subordination
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External auditor
Audit Commission
A commercial organisation selected through
a procurement process and approved
by the General Shareholders Meeting upon
recommendation of the Board of Directors based
on the Audit Committee’s assessment
Oversees the Company’s financial and business
operations and performance of its governing
bodies, executives, business units and functions,
branches and representative offices
30
31
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES
General Shareholders Meeting
In 2023, the Company’s supreme governing body met twice – for one Annual
(FY2022) and one Extraordinary General Shareholders Meeting.
Exercise of rights by shareholders
Rosneft shareholders may exercise their right to take part
in the Company’s General Shareholders Meeting by:
The procedure for convening, preparing for, holding and following
up on the General Shareholders Meeting is set forth by
Regulations on the General Shareholders Meeting.
Rosneft’s
Annual General Shareholders Meeting
Pursuant to Article 3 of Federal Law No. 25-FZ dated 25 February 2022, the Board
of Directors had resolved to use absentee voting as the format for the Company’s Annual
General Shareholders Meeting, which was held on 30 June 2023 (vote by means of ballots).
The meeting approved the Annual
Report, annual accounting (financial)
statements and net income
distribution for 2022 (including
for dividend payment), elected
the Board of Directors and the Audit
Commission, determined
the remuneration of the Board
and Audit Commission members
for the period, and approved
the Company’s Auditor.
Extraordinary General
Shareholders Meeting
As part of implementing its dividend policy, on 22 December 2023
the Company held an Extraordinary General Shareholders Meeting
by absentee voting, which resolved to pay interim dividends.
All resolutions of the 2023 shareholders meetings
were implemented in full.
participation (registration and voting) at in-person meetings (directly or through
their representatives acting by virtue of a power of attorney);
absentee voting (voting by paper ballots or giving voting
instructions to their respective nominees);
e-voting through the Shareholder’s Personal Account.
Given special legal frameworks
introduced by the Russian President
in certain regions, which provide
for potential travel constraints, the
Board of Directors decided to hold
the 2023 General Shareholders
Meeting in absentia.
Shareholders were given the
opportunity to exercise their
rights to participate in corporate
procedures without physical
presence via the Company’s
corporate services and remote
communication tools. In particular,
they were able to carry out
the following activities remotely:
› review the information on the meeting
on the corporate website and in their
personal accounts;
› vote on the items on the agenda
via their personal accounts,
by sending completed ballots
to the Company, or giving voting
instructions to their respective
nominees;
› ask questions on the agenda
via their personal accounts,
the shareholder hotline, or
by mail.
In order to expand
opportunities for
shareholders to exercise
their rights amid the
legislative transformation
and given the significant
increase in the number of
shareholders (over 1 million),
Rosneft continues to
develop electronic services
for shareholders and other
remote communication
channels.
Increase in the number of shareholders over the past three years, ‘000 people
1,136.8
898.5
796.6
659.7
200.1
233.6
+33.5
+16.8%
+426.1
+182.4%
+136.8
+20.7%
+101.9
+12.8%
+238.4
+26.5%
2021
(May)
2021
(September)
2022
(June)
2022
(November)
2023
(June)
2023
(November)
Number of shareholders
Increase in the number of shareholders vs previous year
32
33
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Board of Directors
Elected by the General Shareholders Meeting, the Board of Directors provides strategic
management of the Company’s activities on behalf of and for the benefit of all shareholders.
The Board of Directors seeks to balance interests of all shareholder groups in
order to ensure long-term sustainable development of the Company.
The Board of Directors plays a key role in setting up and developing the corporate
governance system and supervises the work of executive bodies.
Responsibilities of the Audit Committee
The Committee assists the Board of Directors in protecting the interests of the Company’s
shareholders by checking the accounting (financial) statements and other reports
for completeness and accuracy and ensuring reliability and effectiveness of risk management
and internal control systems, compliance, internal audit, and corporate governance.
In 2023, the Audit Committee
reviewed the report on internal audit
activities containing conclusions
on the organisational independence
of the Internal Audit Service
and individual independence
and impartiality of its employees,
information on the implementation
of the internal audit plan, the
assessment of the actual state,
reliability, and effectiveness of the
internal control and risk management
system, and the Company’s financial
performance.
The Board of Directors has three standing committees:
Audit Committee
HR and Remuneration
Committee
Strategy and Sustainable
Development Committee
Responsibilities of the HR and Remuneration Committee
The Committee assists the Board of Directors in protecting shareholder interests. To that end,
it is primarily tasked with assessing the effectiveness of the Company’s HR and succession
policies, and the appointment and remuneration system; conducting performance assessments
of the Board of Directors, the executive bodies, and other top managers of the Company.
In 2023, the Committee considered
the independence of one of
Rosneft’s directors, reviewed a
report on the implementation of
the Action Plan for Adoption of
Professional Standards at Rosneft
and the Group Subsidiaries, Rosneft
Policy on Ensuring Succession and
Induction of Members of the Board
of Directors and Management
Board, top management’s collective
and individual KPIs for 2023, their
normalised KPI performance criteria
for 2022, and actual results.
The committees are composed of non-executive
directors from the Company’s Board of Directors.
Members of each committee also include
independent directors. The Audit Committee
is chaired by an independent director.
The committees of the Board of Directors
are responsible for the preliminary consideration
of most important matters and the provision
of recommendations to the Board of Directors
to inform their decisions.
The committees operate in accordance
with approved plans to address the objectives set
by the Board of Directors during their tenures.
In accordance with the Company’s Regulations
on Rosneft Board Committees, each of the existing
committees submits to the Board of Directors
an annual progress report. The Board
of Directors positively assessed the performance
of the committees in the 2022/2023 corporate
year.
Responsibilities of the Strategy and Sustainable Development Committee
The Committee assists the Board of Directors in providing strategic
management of the Company’s activities and protecting shareholders’ interests
by overseeing Rosneft’s strategy and sustainable development.
In 2023, the Committee made
recommendations to the Board of
Directors on a number of strategic
business projects, preliminarily
reviewed the 2022 Sustainability
Report, as well as HSE reports and
audit results of the Company’s
Long-Term Development Programme.
Regulations
on Rosneft Board
Committees
34
35
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Anti-corruption policy
and measures to combat
corruption and prevent conflicts of interest
Rosneft works to maintain compliance with the requirements
of the anti-corruption laws of the Russian Federation, including
through a set of measures aimed at building an organisational
structure and elements of corporate culture, and establishing rules
and procedures to prevent corporate fraud and corruption.
These efforts are aligned with:
› Federal Law No. 273-FZ On
Combating Corruption dated
25 December 2008;
› The National Anti-Corruption
Strategy and the National
Anti-Corruption Plan
for 2010–2011 approved by Decree
of the President of the Russian
Federation No. 460 dated
13 April 2010;
› The National Anti-Corruption
Plan for 2021–2024 approved
by Decree of the President of the
Russian Federation No. 478 dated
16 August 2021.
All of the Company’s
governing bodies contributed
to these efforts within their
remit.
1. Rosneft’s Board
Anti-corruption measures are
compliant with the guidelines of the
Russian Ministry of Labour and the
Federal Agency for State Property
Management.
of Directors (the Audit
Committee of the Board
of Directors) approved
strategic documents
and guiding principles,
and regularly assesses
the efficiency of such
efforts; considered
and approved the results
of a review of the
anti-corruption risk
management and internal
control process.
2. Rosneft’s Chief Executive
Officer ensures
the implementation
of the Company’s Policy
on Combating Corporate
Fraud and Involvement
in Corruption Activities,
and approves the relevant
internal regulations.
3. In accordance
with the National Anti-
Corruption Plan for
2021–2024 approved
by Presidential
Executive Order No. 478
dated 16 August 2021
(Instruction of the Russian
Government No. MM-P17-
12165 dated 6 September
2021) we drafted
a Comprehensive Anti-
Fraud and Anti-Corruption
Programme for 2021–2024
(approved by Rosneft’s
Compliance Committee
on 20 June 2022, Minutes
No. KK-1).
In the reporting period:
› by Order No. 484 dated 29
December 2023, the Company
drafted and enacted Rosneft’s
Standard on Countering Corporate
Fraud and Corruption;
› the Company updated its
employees, on a quarterly basis,
on typical violations of anti-fraud
and anti-corruption rules;
› the Company assessed the
risk of corporate fraud and
corruption on a quarterly
basis in line with the approved
methodology.
The Company manages
conflicts of interest at all levels.
The rules for the avoidance
and prevention of conflicts
of interest are set forth
in the Corporate Governance
Code, the Code of Business
and Corporate Ethics,
the Company’s Policy
on Combating Corporate Fraud
and Involvement in Corruption
Activities, and the Regulations
on Managing Conflicts
of Interest.
The Regulations set out
a framework to classify conflicts
of interest, including conflicts
of interest between shareholders
and members of the Company’s
governing bodies (e.g. decisions
made by corporate governing
bodies that might adversely
affect the Company’s financial
and operating performance;
the Company failing to make
a statutory disclosure or
members of corporate governing
bodies underreporting on their
positions in governing bodies
of other entities, on interests
(stakes) held in other entities,
or other information required
to be disclosed by the applicable
laws, the Company’s Charter or
internal regulations).
The Board members’ obligations
to disclose a conflict of interest
are set out in the Regulation
on Holding by Members
of Rosneft Board of Directors
of Rosneft Shares, Shares
of and Equity Stakes in Group
Subsidiaries.
In addition, the Company:
› collects annual declarations
on property and property-
related obligations of its
officers and employees,
as well as on income,
property and property-
related obligations of their
spouses and minor children
who are included in the list
of persons required to submit
such declarations;
› carries out an annual campaign
to collect ethical declarations
of the Company’s employees
in order to monitor their
compliance with restrictions,
prohibitions, and requirements
of anti-corruption laws;
requires new employees
and employees appointed
to new positions to sign an
anti-corruption clause, which
forms part of their employment
contracts and includes
the restrictions, prohibitions,
and requirements aimed
at preventing the conflict
of interest.
All Group Subsidiaries have
set up conflict of interest
commissions.
The Company runs ongoing
corporate training programmes
in the field of countering
corporate fraud and corruption
for its employees, including
those whose job responsibilities
include participation
in combating corruption,
and new hires.
The Company operates a 24/7
Security Hotline to report
on suspected, proven,
and potential cases of corporate
fraud, corruption, and conflict
of interest.
In 2023, the Security Hotline
received 16,331 reports, with
244 violations confirmed.
Identified/prevented damage
amounted to RUB 197.7 mln.
Rosneft rewarded three
persons who provided
information that made it
possible to prevent corporate
fraud, corrupt practices, and
conflicts of interest, as well as to
compensate for financial and/or
non-financial damage incurred
by the Company.
Members of the Company’s
Audit Committee are updated
on the Security Hotline
operation on a quarterly basis.
The Corruption Control
section on the official
corporate website is regularly
updated and contains:
› the Company’s
statement on zero
tolerance for any form or
manifestation of corporate
fraud and corruption;
› key provisions of
anti-corruption laws;
› internal documents
on anti-corruption;
› information on the Security
Hotline;
› links to the Company’s
reports providing results of
its anti-corruption efforts.
16,331
reports
received by the Security
Hotline in 2023
RUB 197.7 mln
of identified/prevented
damage
36
37
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Audit Commission
The Audit Commission monitors the Company’s financial and business
activities and comprises five members elected on an annual
basis by the Annual General Shareholders Meeting.
The Audit Commission audits the Company’s financial and business operations,
verifies the accuracy and reliability of data included in Rosneft’s annual
reports and annual accounting (financial) statements, and prepares proposals
and recommendations for improving the asset management efficiency and RM&ICS.
Members of the Audit Commission
Olga Boltrukevich
Born in 1983.
Graduated from Moscow Institute of Physics and Technology.
Section Head of the Financial Policy Department of the Russian Ministry
of Finance.
On 30 June 2023, the Annual
General Shareholders Meeting
resolved to elect the Audit
Commission as follows:
Ilya Karpov
Born in 1988.
In 2023, the Audit Commission
held two meetings, which, among
other things, adopted its action
plan and approved an audit
programme.
The findings of the Audit
Commission following the audit
were communicated as part
of the materials for the General
Shareholders Meeting
in the form of an opinion
of the Audit Commission
on the accuracy and reliability
of data included in Rosneft’s
Annual Report and annual
accounting (financial) statements
as at 31 December 2022.
Chair
Olga Andrianova
Born in 1958.
Graduated from the All-Russian State Distance-Learning Institute of Finance
and Economics.
Holder of a ministerial award – Certificate of Merit of the Russian Ministry
of Energy.
Chief Accountant – Head of Finance and Economics at JSC ROSNEFTEGAZ.
Graduated from Kutafin Moscow State Law University.
Head of the Department of Property Relations and Privatisation of Major
Organisations of the Federal Agency for State Property Management.
Gleb Kostenko
Born in 1995.
Graduated from Moscow Power Engineering Institute.
Deputy Director of the Department of the Russian Ministry of Energy.
Sergey Poma
Born in 1959.
Graduated from Nakhimov Black Sea Higher Naval School and St Petersburg
State University.
Vice President and Corporate Secretary of the National Association
of Securities Market Participants (NAUFOR).
38
39
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Risk Management and Internal
Control System
The Company has in place
processes to identify, assess
and manage strategic risks
that may hinder the delivery
against long-term targets,
financial and operational risks
that affect the implementation
of the Company’s current
business plan, and business
process risks that may hamper
the Company’s ability to achieve
business targets.
Rosneft has established and is continuously
improving its Risk Management and Internal
Control System (RM&ICS) aimed
at proactive identification and analysis
of risks that may impact the Company’s
long-term targets as well as its ongoing
financial and business operations.
To develop a well-structured and integrated
risk management and internal control system,
the Company has put in place a multi-level regulatory
framework in this area, which outlines key RM&ICS
principles at various stages.
Main risk groups
Short-term targets
First-year targets outlined
in the Company’s business plan
Medium-term and long-term targets
Targets outlined in the Company’s development strategy
1 year
3 years
5 years and longer
Corporate financial
and operational risks
Strategic risks
and strategic threats
Company policy
Key principles
› Policy on the Risk Management and Internal Control System
Company standards
› Standard on Risk Management and Internal Control System
› Standard on the Corporate-Wide Risk Management System (CWRMS)
Company regulations
and standard requirements
› Regulations on Design, Implementation and Maintenance
of the Internal Control System
› Regulations on Market Risk Management
› Regulations on Development and Use of the Company-Wide Register
of Standard Risks and Controls
Methodological guidelines
› Guidelines for Determining and Applying Risk Appetite
› Risk Assessment Guidelines
› Principle of integration
› Principle of continuity
› Principle of optimality
› Principle of separation
of duties and powers
› Principle of full
responsibility
› Principle of adaptability
and RM&ICS
enhancement
RM&ICS operating
principles
› Principle of reasonable
assurance
› Principle
of methodological
integrity
› Principle of risk-
oriented approach
› Principle
of reasonableness
in formalising
control procedures
and documenting
RM&ICS
The principles and objectives
of the RM&ICS are set out
in the Company’s Policy
on the Risk Management
and Internal Control System 1
developed in accordance
with the Russian regulatory
requirements and drawing
on recommendations
of international firms engaged
in risk management, internal
control and audit services.
These are intended to provide
reasonable assurance that
the Company will achieve its goals.
1 Rosneft’s Policy on the Risk Management and Internal Control System No. P4-05 P-01 approved by Resolution of the Company’s Board of
Directors, Minutes No. 15 dated 13 December 2021.
40
41
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES RM&ICS stakeholders
Rosneft’s RM&ICS has various stakeholders whose roles are distributed
depending on their involvement in developing, introducing, and monitoring
the performance of the system. The RM&ICS has three management levels.
Strategic level
Operational level
Board of Directors
and Audit Committee
of the Board
of Directors
› Define RM&ICS principles
and approaches
› Approve RM&ICS focus
areas and follow up
on their progress
› Approve corporate
reports on financial
and operational risks
› Approve risk appetite
› Make sure the RM&ICS
performance is analysed
and evaluated
› Monitor the RM&ICS
reliability
and performance
Chief Executive
Officer
› Validates RM&ICS
focus areas
› Validates RM&ICS
reports
› Validates risk appetite
Risk Management
Committee
› Validates the
materials for
RM&ICS issues
reported to the Chief
Executive Officer
› Resolves RM&ICS
operational disputes
Management
Security Service
› Develops, updates,
and introduces internal
anti-fraud and anti-
corruption regulations
› Participates
in ensuring compliance
with internal regulations
and implementing
anti-fraud and anti-
corruption initiatives
approved by Rosneft’s
executive bodies
› Manages the Security
Hotline
› Conducts inspections/
investigations
into abusive/
unlawful practices
by the Company’s
employees and third
parties
› Distributes roles
and responsibilities among
employees
› Manages risks
› Develops and implements
control procedures
› Conducts self-assessment
of internal controls
Risk and Internal Control
Methodology Department
› Plans RM&ICS focus areas
› Develops, implements
and updates Company-wide
RM&ICS guidelines
› Prepares reports on risks
and internal controls
› Manages the RM&ICS roll-out
and operation across Rosneft’s
business units and Group
Subsidiaries
› Provides guidelines to key RM&ICS
stakeholders, trains them in risk
management and internal controls
RM&ICS
independent
monitoring
and performance
assessment
Internal Audit Service
› Monitors the RM&ICS
reliability and performance
› Conducts audits
› Monitors
the implementation
of RM&ICS improvement
proposals made by internal
auditors
› Assists the Company’s
executive bodies
in investigating abusive/
unlawful practices
by the Company’s
employees and third parties
Business Units
Performing Certain
RM&ICS Functions
› Prepare and consolidate
RM&ICS reports
› Manage the roll-out
of RM&ICS elements
and develop proposals
for the risk management
methodology
› Assist the Company’s
management
in conducting self-
assessment of internal
controls
Employees
Audit Commission
› Implement risk management
controls and initiatives
› Assist the Company’s
management in managing
risks
› Help identify, assess
and report on risks
and internal controls,
and conduct assessment
of internal controls
› Audits the Company’s
financial and business
operations, verifies
the accuracy and reliability
of data included
in Rosneft’s annual reports
and annual accounting
(financial) statements
42
43
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES RM&ICS enhancement
Owing to ongoing
improvements in its
RM&ICS, the Company
can promptly respond
to changes in the external
environment
and internal business
processes, achieve
better performance,
and increase its
shareholder value.
RM&ICS enhancement highlights for 2023
RM&ICS enhancement initiatives
Results
Development and improvement
of guidelines on the Risk
Management and Internal
Control System
Development and implementation
of an RM&ICS training programme
for the employees of Rosneft
and Group Subsidiaries
› Business Process Regulations on Design, Implementation
and Maintenance of the Internal Control System
were developed
› Standard Requirements for Design, Implementation
and Maintenance of the Internal Control System were drafted
› Newly appointed and previously trained risk and internal control
experts at Rosneft and Group Subsidiaries underwent training
›
Company employees were trained in internal control fundamentals
Development of the Company’s risk
management and internal control
infrastructure and procedures
› Current assessment of RM&ICS effectiveness in 2022 was
performed. The results were reviewed by Rosneft’s Risk
Management Committee
Enhancement of the risk assessment
framework leveraging economic
and mathematical models and expert
reviews
Implementing and maintaining
the Internal Control System
› Rosneft developed methodological guidelines on the assessment of
the risk of failure to comply with the repair plan
› The following activities were implemented:
– The Company’s quantitative risk assessment models were verified
(back-tested) (on an annual basis)
– Portfolio assessment of the Company’s exposure to market risks
was carried out (on a monthly basis)
› A self-assessment of the Company’s internal control was carried out,
including the evaluation of control procedures conducted as part
of a plan for testing their implementation
› A plan for developing, implementing and maintaining the Internal
Control System was approved by the top manager in charge
Improving the RM&ICS processes
across Group Subsidiaries
› The Corporate-Wide Risk Management System was implemented
by five Group Subsidiaries
Key targets and objectives of the RM&ICS enhancement, as well as critical steps
to achieve them, are set out in the RM&ICS Enhancement Plan for the current and
next two years. The RM&ICS Enhancement Plan is agreed upon by the Company’s
CEO and approved by the Board of Directors.
Internal Control System
The ICS is an integral part of the RM&ICS.
Both systems have aligned goals.
The ICS is governed by the Company’s Policy on the Risk
Management and Internal Control System, Standard on
Risk Management and Internal Controls, Business Process
Regulations and Standard Requirements for Design,
Implementation and Maintenance of the Internal Control System.
The Company relies on the above internal documents
to identify risks inherent in its business processes
and develop and implement controls, thus improving
manageability and efficiency across business processes,
reliability of financial statements, and compliance
with the applicable laws and internal regulations.
To achieve the ICS objectives, the Company needs to:
1. Define and update key ICS focus areas in alignment with the Company’s needs and stakeholder
requirements
2. Assess business process risks, develop, adopt and follow controls, including the development of uniform
guidelines to support efficient ICS operations
3. Identify shortcomings in existing controls, develop and implement initiatives to address the same,
streamline and upgrade controls
4. Develop and implement tools to facilitate communication and information sharing among all RM&ICS
stakeholders, including via information systems
The Company’s management and employees ensure the ICS efficiency by managing the relevant functions
and performing their job duties.
44
45
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Corporate-Wide Risk Management
System (CWRMS)
Key CWRMS components
1 Annual
planning
2 Risk
identification
3 Risk
assessment
Ongoing enhancement
of the CWRMS
infrastructure and
process
Regulations and
policies
Interfaces between
the CWRMS and other
processes
Distribution of roles
within the CWRMS
6 Risk
monitoring
5 Reporting
4 Responding
to risks
Risk management process
Risk management infrastructure
A combination of risk management elements
supported by the existing organisational structure,
internal policies and regulations, risk management
procedures and techniques, which are applied across
all management levels and functions of the Company
to make its risks acceptable in the context of achieving
Rosneft’s strategic and operational goals
A set of elements that provide a Company-wide
basis, tools, and framework for risk management
Risk management at Rosneft
is governed by the Company’s Policy
on the Risk Management and Internal
Control System1, Standard on Risk
Management and Internal Controls2
and Standard on the Corporate-Wide
Risk Management System3.
The CWRMS is a combination
of interrelated elements
embedded into various
business processes
of the Company (including
strategic and business planning
processes) and implemented
at all management levels by all
employees of the Company.
As part of CWRMS, our
management (at various
organisational levels,
including Group Subsidiaries
and the Company) regularly
identifies and assesses risks
and develops response measures
covering, among others, risks
that affect the Company’s long-
term goals (strategic risks) along
with financial and operational
risks. Risk reporting includes all
necessary information on risks,
including their assessment,
description of measures aimed
at their mitigation, and is
communicated to Rosneft’s Board
of Directors, Audit Committee,
management, and employees of
the Company.
The Company’s management
arranges for and steers risk
management processes
within its remit, and seeks
to find an optimal balance
and maintain an acceptable
risk level (risk appetite) when
choosing a risk response
and specific mitigants.
1 Rosneft’s Policy on the Risk Management and Internal Control System No. P4-05 P-01 approved by Resolution of the Company’s Board of Directors, Minutes No. 15
dated 13 December 2021.
2 Rosneft’s Standard on Risk Management and Internal Controls No. P4-05 S-0028 approved by Resolution of the Company’s Management Board No. Pr-IS-09p
dated 31 March 2022.
3 Rosneft’s Standard on the Corporate-Wide Risk Management System No. P4-01 P-01 put into effect by Resolution of the Company’s Management Board No. 660
No. Pr-IS-36p dated 28 September 2018.
Rosneft’s risks
Industry-wide risks
› Risk of accidents
› Risk of fatal injuries
› Risk of failure to achieve oil and gas condensate production targets
› Risk of failure to achieve natural gas and gas condensate production targets
› Risk of lower quality of refinery feedstock
› Risk of failure to comply with the repair plan in oil refining and petrochemicals
› Risk of failure to achieve planned volumes of bulk wholesale of crude oil, petroleum products,
gas processing products, and petrochemicals
› Risk of penalties for the quality of gas fed into transportation systems
› Risk of failure to achieve natural gas price targets
› Risk related to rising prices for electric power
› Risk of accumulation of unclaimed liquid and non-liquid inventories
Financial risks
› Market risks
› Risk of an increase in overdue receivables
› Risk of tax claims and risk of losing tax benefits
› Risk of default/cross-default
Legal risks
› Litigation risk
› Risk of breach of competition laws
Risk appetite of the Company
The following risk appetite indicators were approved for 2023:
Financial
and economic
performance
The Company strictly
complies with its financial
covenants. The Company
ensures that all its
short- and long-term
commitments are fulfilled
as they fall due.
Health, safety,
environment
Recognising the nature and scale
of the footprint of its business, products
and services, the Company feels responsible
for safe and accident-free operation
and protects health and safety of its
employees and local residents in regions
of its operation.
As part of its commitment to prevent
any potential adverse impact on the
environment, the Company makes every
effort to protect, preserve and restore
natural resources.
Corporate
governance
The Company has zero
tolerance for any form or
manifestation of corporate
fraud and corruption.
46
47
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES ESG risks
Rosneft is fully aware of the importance and impact of sustainability
risks, including ESG, on the Company’s business.
Internal audit
In 2023, Rosneft’s Internal Audit Service was governed by the Company’s
Policy on Internal Audit, Code of Ethics of the International Institute
of Internal Auditors, and international practices of internal audit.
› conducting audits and activities
in line with the internal audit
plan approved by Rosneft’s
Chief Executive Officer
and endorsed by the Board’s
Audit Committee;
› performing other inspections
and tasks in line with
instructions of Rosneft’s Board
of Directors (recommendations
of its Audit Committee) and/or
the Company’s Chief Executive
Officer;
› monitoring the Company’s
progress in addressing breaches
and shortcomings identified during
internal audits;
› performing other functions
essential to meet the tasks
assigned.
Rosneft’s internal audit function is performed by the Vice
President – Head of the Internal Audit Service (Head
of Internal Audit) and functional units of the Internal
Audit Service. In accordance with Rosneft’s organisational
structure, units of the Internal Audit Service report directly
to the Head of Internal Audit.
Rosneft’s management evaluates
the impact of strategic threats
(including those related
to sustainable development)
on the Company’s strategic targets
using expert analysis and statistical
approaches. The assessment
horizon and the metrics used
depend on the way specific
targets are set out in the strategy.
The results are then consolidated
using the probability theory
and mathematical statistics methods
to identify the key strategic threats,
assess strategic risks, and develop
measures to mitigate them.
We analyse sustainability risks
as part of the effort to identify
and assess risks that can
affect the Company’s long-
term goals (strategic risks
and threats). The annual process
to identify and assess (prioritise)
strategic risks and threats
takes into account Russian
and international research
on the oil and gas industry
development, and is based
on the Company’s strategic
targets as set out in its
development strategy. Following
this analysis, we determine a list
of strategic threats that can
potentially impact the Company’s
ability to achieve its strategic
goals. This list also includes
threats related to various aspects
of sustainable development.
Strategic threats related to sustainable development
Environmental
Social
Corporate governance
› Accidents
and environmental damage
› Advance of alternative
energy and green
technologies, and
improvements in energy
efficiency
› Changes in the structure
of energy consumption
› Natural disasters
› Climate change
in the regions where
the Company operates
› Epidemics and diseases
› Cyber security
› HR and social risks
› Deterioration of the tax regime
› Conflicts, terrorism, civil
disturbance
› Safety of critical facilities
› Tighter regulation
and requirements
in the industry
› Stricter regulation and
requirements related to
climate change. New climate
initiatives
› Reputation and less appealing
investment case
The Internal Audit Service
assists Rosneft’s Board
of Directors and the executive
bodies of Rosneft and Group
Subsidiaries in enhancing
the Company’s management
efficiency and improving
its financial and business
performance, including through
a systematic and consistent
approach to the analysis
and evaluation of the RM&ICS
as well as corporate governance,
therefore providing reasonable
assurance that the Company will
achieve its goals. It also helps
ensure:
› accuracy, reliability,
and integrity of information
on the Company’s financial
and business operations,
including those of Group
Subsidiaries;
› efficiency and effectiveness
of the Company’s operations,
including those of Group
Subsidiaries;
› room for improvement
available across the Company’s
financial and business
operations, including those
of Group Subsidiaries;
› integrity of the Company’s
assets, including those
of Group Subsidiaries.
Functional units of Rosneft’s
Internal Audit Service
are mainly responsible for:
› developing an internal audit
plan based on the risk-oriented
approach;
› assessing the RM&ICS
reliability and performance
as well as its adequacy given
the scale and complexity
of the Company’s business;
› assessing corporate
governance;
48
49
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Reporting and accountability
lines of internal audit
Functionally and administratively, the Internal Audit Service reports
to Rosneft’s Board of Directors and Chief Executive Officer respectively.
The existing reporting lines
whereby the Head of Internal Audit
reports to the Board of Directors
and the Company’s executive bodies
provide sufficient independence
for performing internal audit functions.
Heads of the Internal Audit functional
units do not participate in managing
functional areas of the Company’s
business requiring management
decisions on audited entities.
The Head of Internal Audit
provides Rosneft’s Chief
Executive Officer and the
Board of Directors (its Audit
Committee) with confirmation
of organisational independence
of the Internal Audit Service
and individual impartiality
of internal auditors at least once
a year, as part of the internal
audit performance report.
Internal Audit Quality Assurance and
Improvement Programme
In order to ensure proper quality control and performance
evaluation of internal audit, the Internal Audit Quality Assurance and
Improvement Programme was developed and put in place.
Shareholder relations,
key events in 2023
The Company has established a multi-level system
to protect the rights of its shareholders.
Shareholder rights guaranteed by law
Pursuant to the Russian laws, the Company’s
shareholders have the right to:
› vote at the General Shareholders Meeting on a one-share-one-vote basis;
› propose items for the agenda of the General Shareholders Meeting and nominate candidates
to the Board of Directors (if a shareholder owns at least 2% of voting shares);
› exercise pre-emptive right to buy shares in any future issue and issue-grade securities convertible
into shares;
› receive dividends declared by the Company, in proportion to the number of shares held;
› review information and materials provided in preparation for the General Shareholders Meeting;
› obtain information on the Company’s operations upon request and as established by the Russian
laws;
› freely dispose of Rosneft’s shares;
› exercise other rights granted under the Russian law.
To deliver against the Programme’s
targets, a regular in-house
self-assessment of the internal
audit quality was conducted
in 2023. It was concluded
following the self-assessment
that the internal audit
function was generally
in line with the requirements
of the Company’s Policy
on Internal Audit and other
regulations on internal audit,
the International Standards
for the Professional Practice
of Internal Auditing, and the Code
of Ethics of the International
Institute of Internal Auditors.
In 2023, the risk-oriented internal
audit plan was implemented in full.
The Head of the Internal Audit
Service prepared a report
on the internal audit performance
for 2023 and submitted it
to Rosneft’s Board of Directors
and its executive bodies.
50
In accordance with Federal
Law No. 208-FZ On Joint-Stock
Companies dated 26 December 1995,
an internal audit opinion
was developed following an audit
of the reliability and effectiveness
of the RM&ICS, and also other
internal audit inspections conducted
in 2023.
Following the 2023 reliability
and effectiveness assessment
of RM&ICS, the Internal Audit
Service concluded that the RM&ICS
ensured overall support of the risk
management process and efficient
internal control system, providing
reasonable assurance that
the Company would achieve its goals.
Additional rights guaranteed by the Company’s
Charter and internal regulations
The Company offers equal and fair opportunities for its shareholders to exercise their legal rights by securing
additional rights and procedures in the Charter and internal regulations, including the right to:
receive part of the Company’s profit as dividend;
receive necessary information on the
Company on a timely and regular basis;
participate in managing the Company’s operations.
51
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Official channels of communication
with shareholders
Protecting shareholders’
title to shares
The Company has established efficient means of communicating with its shareholders.
The Company has several communication channels in place to facilitate the exercise of corporate rights and promote efficient
shareholder relations, including:
The Company practices reliable and safe methods of recording title to its shares
and has engaged a professional registrar to maintain its Shareholder Register.
Shareholder’s Personal Account on the Company’s website;
24 hour shareholder Hotline (a multichannel phone line
to receive and handle calls):
8 (800) 500-11-00 (toll-free within Russia) and +7 (495) 987-30-60;
mailing address for letters: 26/1 Sofiyskaya Embankment,
Moscow, 117997, Russia;
email for requests:
shareholders@rosneft.ru;
fax: +7 (499) 517-86-53.
Shareholder’s Personal Account
To gain access to their personal
accounts, shareholders need
to request login and password from
the Moscow Head Office or regional
branches of the Company’s registrar,
Reestr-RN LLC.
The rules governing
the procedure of registering
a personal account can be found
on the website of Reestr-RN LLC
or on the Company’s website.
Any questions concerning access
to the Shareholder’s Personal
Account can be addressed to:
› Reestr-RN LLC call centre by
phone: +7 495 411-79-11
(email:
support@reestrrn.ru);
› Hotline for Rosneft shareholders
at: 8-800-500-11-00
(toll-free within Russia)
and +7 495 987-30-60,
email:
shareholders@rosneft.ru).
The tool enables all Rosneft
shareholders, regardless of where
their shares are kept, to take part
in the General Shareholders Meeting
online: register, vote on the agenda
items, review information
for the meeting, and ask their
questions to the speakers.
All Rosneft shareholders of record
also can:
› receive updates on their accounts
in the register of shareholders
online;
› use the registrar’s services
remotely (request and receive
certificates, extracts, and notices)
and pay for them online;
› monitor accrued dividends;
› request and receive 2-NDFL
earnings certificates
in a convenient way;
› exercise their rights in relation
to several personal accounts within
one session (one account).
Shareholders can log into their
personal accounts at
https://lka.rosneft.ru.
52
offices, which operate in the regions
where the majority of the Company
shareholders reside.
The Company, together
with Reestr-RN LLC, regularly
notifies its shareholders of the need
to update their personal data
recorded in the Shareholder Register
of Rosneft.
The registrar, Reestr-RN LLC,
registers holders of securities
in Rosneft, more than
130 issuers within the Group,
and over 1.4 thousand joint-stock
companies from various industries.
Reestr-RN LLC has been operating
in the registrar services market for
over 20 years and consistently ranks
among the top ten Russian registrars,
records rights to shares of more
than half a million security holders,
actively develops digital customer
services, and maintains a network
of 13 branches and 45 transfer agent
Resolutions of the General
Shareholders Meeting
Regulation on Provision
of Information to Rosneft
Shareholders
Contact details of
the registrar and its service
offices
In 2023, the Corporate
Governance Department
handled 4,910 applications,
including:
Corporate Secretary
3,867
phone calls
452
letters
212
emails
379
requests claiming unpaid dividends
for prior periods
Answers to frequently asked questions can
be found on
the Company’s website.
The Corporate Secretary of Rosneft oversees the Company’s compliance
with applicable laws, as well as Rosneft’s Charter and internal regulations
ensuring execution of the rights and legal interests of the Company’s
shareholders and successful interaction with shareholders, supports
the Board of Directors’ performance, and refines corporate governance
practices in line with shareholders’ and other stakeholders’ interests.
The Corporate Secretary reports
to the Board of Directors
and is appointed and dismissed
by the Chief Executive Officer
on the basis of the Board
of Directors’ resolution.
The Corporate Secretary acts
as the Board of Directors secretary
and the General Shareholders
Meeting secretary.
As part of their function to ensure
Rosneft’s shareholder relations
and prevent corporate conflicts,
the Corporate Secretary coordinates
activities to implement procedures
required under the laws of Russia
and Rosneft’s internal regulations
with a view to executing the rights
and legal interests of shareholders
and controlling the same,
as well as overseeing the execution
of rights and property interests
of shareholders in decision-making
by Rosneft’s governing bodies.
The Corporate Secretary engages
in actions required to prevent
abuse of rights by all the parties
involved in corporate relations,
identifies potential corporate
conflicts early on, and steps
in to prevent and resolve them.
53
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Dividend Policy
The Dividend Policy approved by the Board of Directors formalises the Company’s
key principles of, and approaches to, dividend payouts to shareholders
and introduces transparent decision-making processes for paying out (declaring)
dividends and determining their amount and payment procedure.
Principles of the Dividend Policy:
ensuring compliance
with the requirements
of the Russian laws,
the Company’s Charter
and internal regulations
when paying out
(declaring) dividends;
maximising
the transparency
of the dividend
calculation process;
increasing
the Company’s
investment appeal;
В
О
К
С
И
А Р
К
3. О Ц ЕН
4. РЕАГИРОВАНИЕ Н А Р И С К И
maintaining
the balance
of short- and long-
term interests
of shareholders;
supporting
shareholder
commitment
to improving
the Company’s
profitability;
ensuring that
the dividend payout
pattern comfortably
reflects an increase
in Rosneft’s net profit.
making dividend
payments in a way
most convenient
for our shareholders;
paying out dividends
as soon as practicable;
In 2023, the Company discharged
99.98% of its obligation to pay out
dividends. Dividends were paid
to all shareholders of record,
except for persons who failed
to timely notify the issuer’s registrar
of changes in the data recorded
on their profile.
The Company’s Charter provides
for a five-year period when
shareholders may claim dividends
declared but not paid due to missing
address or banking details,
which is longer than required
by the applicable laws.
In 2023, the Extraordinary General
Shareholders Meeting resolved to
to pay interim dividends. A total
of RUB 326.1 bln was allocated
by Rosneft to paying its interim
dividends for the first half
Rosneft’s dividend history
RUB bln
600
500
400
300
25
25
25
25
200
100
0
of 2023, which represents 50%
of the Company’s IFRS net income
attributable to Rosneft shareholders.
The interim dividends were not due
as at 31 December 2023. On 23
May 2024, the Board of Directors
recommended that the General
Shareholders Meeting approve
RUB 29.01 per share as dividend
for FY2023.
The total amount of dividends
recommended for FY2023,
including the interim dividends
paid in 2024, is RUB 633.6 bln
or RUB 59.78 per share1.
The dividend payout ratio
calculated as dividends divided
by non-consolidated net income
under RAS for 2023 is 95.5%,
while the dividend payout
ratio calculated as dividends
divided by consolidated net
income under IFRS is 50%
of the Company’s IFRS net
income attributable to Rosneft
shareholders.
The decision to pay dividends is made by the General
Shareholders Meeting upon recommendation of the Board
of Directors.
50
50
50
50
50
50
50
35
35
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
7.53
8.05
12.85
8.21
11.75
5.98
10.48
25.91
33.41
6.94
41.66
38.36
59.78
Dividend payout ratio under IFRS, %
FY dividends, RUB bln
Interim dividends, RUB bln
Interim dividend per share, RUB
FY dividend per share, RUB
7.53 –
Dividend per share for the period, RUB
%
60
50
40
30
20
10
55
RUB 406.5 bln
paid by the Company in 2023 as
dividend for 9M 2022 and FY2022
54
In 2023, the Company made no
changes to its Dividend Policy.
1
Including the interim dividends and the dividends recommended by the Board of Directors to be approved at the Annual General Shareholders Meeting in 2024.
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES
Appendices
Summary Consolidated
Financial Statements
of Rosneft Oil Company
for the year ended
31 December 2023
Audited consolidated financial
statements and our auditor’s report
thereon
most significance in our audit of
the financial statements of the
current period.
We expressed an unmodified audit
opinion on the audited consolidated
financial statements in our report
dated 19 February 2024. That report
also includes:
› the communication of key audit
matters. Key audit matters
are those matters that, in our
professional judgment, were of
Management’s responsibility for
the summary consolidated financial
statements
Management is responsible for
the preparation of the summary
consolidated financial statements
in accordance with the principles
specified in Note 1 “Basis of
preparation of the summary interim
consolidated financial statements”.
Auditor’s responsibility
Our responsibility is to express an
opinion on whether the summary
consolidated financial statements are
consistent, in all material respects,
with the audited consolidated
financial statements based on our
procedures, which are conducted
in accordance with International
Standard on Auditing (ISA) 810
(Revised) Engagements to Report on
Summary Financial Statements.
Independent auditor’s report
To the Shareholders and Board of Directors of PJSC Rosneft Oil Company
Qualified opinion
The accompanying summary
consolidated financial statements,
which comprise the summary
consolidated balance sheet as at
31 December 2023, the summary
consolidated statement of profit
or loss and summary consolidated
statement of cash flows for the
year then ended, and related
notes are derived from the audited
consolidated financial statements
of PJSC Rosneft Oil Company
and its subsidiaries (hereinafter
collectively referred to as the
“Company”) for the year ended
31 December 2023 prepared in
accordance with International
Financial Reporting Standards (the
“audited consolidated financial
statements”).
Except for the effects of the matter
described in the Basis for qualified
opinion section, in our opinion, the
accompanying summary consolidated
financial statements are consistent,
in all material respects, with the
audited consolidated financial
statements, in accordance with the
principles specified in Note 1 “Basis
of preparation of the summary
interim consolidated financial
statements”.
Basis for qualified opinion
The Company has not presented
comparative information to the
summary consolidated balance
sheet, the summary consolidated
statement of profit and loss, the
summary consolidated statement of
cash flows and notes to the summary
consolidated financial statements,
which is inconsistent with the
principles for preparing the summary
consolidated financial statements.
Summary consolidated
financial statements
The summary consolidated financial
statements do not contain all the
disclosures required by International
Financial Reporting Standards (IFRS).
Reading the summary consolidated
financial statements and the
auditor’s report thereon, therefore,
is not a substitute for reading the
audited consolidated financial
statements and the auditor’s report
thereon.
Starygina Natalia Gennadievna,
acting on behalf of TSATR – Audit Services Limited Liability Company on the basis of power of
attorney w/o number dated 29 September 2022, partner in charge of the audit resulting in this
independent auditor’s report (main registration number 21906108494)
19 February 2024
Details of the auditor
Name: TSATR – Audit Services Limited Liability Company
Record made in the State Register of Legal Entities on 5 December 2002, State Registration Number 1027739707203.
Address: Russia 115035, Moscow, Sadovnicheskaya naberezhnaya, 77, building 1.
TSATR – Audit Services Limited Liability Company is a member of Self-regulatory organization of auditors Association
“Sodruzhestvo”. TSATR – Audit Services Limited Liability Company is included in the control copy of the register of
auditors and audit organizations, main registration number 12006020327.
Details of the audited entity
Name: PJSC Rosneft Oil Company
Record made in the State Register of Legal Entities on 12 August 2002, State Registration Number 1027700043502.
Address: Russia 115035, Moscow, Sofiyskaya embankment, 26/1.
56
57
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES
Rosneft Oil Company Summary consolidated balance sheet
(in billions of Russian rubles)
Notes
31 December 2023
(in billions of Russian rubles)
Rosneft Oil Company Summary consolidated statement of cash flows
Assets
Current assets
Non-current assets
Property, plant and equipment
Other non-current assets
Total non-current assets
Total assets
Liabilities and equity
Current liabilities
Non-current liabilities
Equity
Share capital
Retained earnings
Other funds and reserves
Total equity
Total liabilities and equity
5
6
3,839
12,639
2,309
14,948
18,787
4,832
5,541
1
5,885
2,528
8,414
18,787
Operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities
Net cash provided by operating activities
Investing activities
Capital expenditures
Other proceeds from investing activities
Net cash used in investing activities
Financing activities
Proceeds from loans and borrowings
Repayment of loans and borrowings
Other financing repayment
Net cash used in financing activities
Net increase in cash and cash equivalents
For the year ended 31 December 2023
1,529
1,236
2,765
(1,297)
104
(1,193)
873
(1,439)
(971)
(1,537)
35
The accompanying notes to the summary consolidated financial statements are an integral part of these statements.
The accompanying notes to the summary consolidated financial statements are an integral part of these statements.
Rosneft Oil Company Summary consolidated statement of profit or loss
(in billions of Russian rubles, except earnings per share data, and share amounts)
For the year ended 31 December 2023
Revenues and equity share in profits of associates and joint ventures
Oil, gas, petroleum products and petrochemicals sales
Support services, other revenues, equity share in profit of associates and joint ventures
Total revenues and equity share in profits of associates and joint ventures
Costs and expenses
Production and operating expenses
Depreciation, depletion, amortization and impairment
Taxes other than income tax
Other costs and expenses
Total costs and expenses
Operating income
Other expenses
Income before income tax
Income tax expense
Net income
Net income attributable to Rosneft shareholders
Net income attributable to Rosneft shareholders, per common share (in RUB) –
basic and diluted
Weighted average number of shares outstanding (millions)
8,990
173
9,163
675
769
3,156
2,381
6,981
2,182
(225)
1,957
(428)
1,529
1,267
133.37
9,500
The accompanying notes to the summary consolidated financial statements are an integral part of these statements.
58
59
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Rosneft Oil Company. Notes to the summary
consolidated financial statements.
December 31, 2023
(all amounts in tables are in billions of Russian rubles, except as noted otherwise)
1. Basis of preparation
These summary consolidated
financial statements were derived
from consolidated financial
statements of the Company for the
year ended December 31, 2023,
which were prepared in accordance
with International Financial Reporting
Standards. The summary financial
statements were prepared with
a purpose of presentation of
consolidated financial position and
consolidated financial results of the
Company without causing damage to
the Company and (or) its partners.
These summary consolidated
financial statements consist of:
› Summary consolidated balance
sheet as of December 31, 2023;
› Summary consolidated statement
of profit or loss for the year ended
December 31, 2023;
› Summary consolidated statement
of cash flows for the year ended
December 31, 2023;
› Notes to the summary
consolidated financial statements.
These summary consolidated
financial statements for the year
ended December 31, 2023, contain
information facilitating comprehension
of the Company’s activities by the
users and do not disclose all the
information presented in consolidated
financial statements of the Company
for the year ended December 31, 2023.
Decisions of the management
on preparation of the summary
consolidated financial statements
as well as on the range of sensitive
information were made with
consideration of the following
regulatory legal act #903 On the
temporary procedure for disclosing
and providing information by some
Russian business entities dated
November 27, 2023.
60
Furthermore, the following information
was withdrawn from the summary
consolidated financial statements:
statement of other comprehensive
income, statement of changes in
equity, general information about the
Company, information on capital and
financial risk management, acquisition
and disposals of subsidiaries and joint
arrangements, segment information,
personnel expenses, non-controlling
interest, information about financial
instruments, taxes, export customs
duties, inventories, finance income and
expenses, cash and cash equivalents,
accounts receivable and payable,
information on funds in settlements
and sources of financing, on other
non-financial assets and liabilities,
on lease agreements, on intangible
assets and goodwill, on investments in
associates and joint ventures, pension
benefit obligations, on related parties
transactions, on key subsidiaries, on
commitments and contingencies, as
well as information on supplementary
oil and gas disclosure (unaudied).
Comparative information for the
year 2022 is not presented in these
summary consolidated financial
statements, as it is considered to be
sensitive and has not been earlier
disclosed for publication in accordance
with decree of the Government of
the Russian Federation #395 On
specifics of access to information,
which is included in governmental
informational resource of accounting
(financial) statements, and on
disclosure of consolidated financial
statements dated March 18, 2022.
The basis of preparation and
disclosure of these summary
consolidated financial statements
are as follows:
information of the consolidated
balance sheet, consolidated
statement of profit or loss,
consolidated statement of cash flows
and do not include information on
other comprehensive income and on
changes in equity.
“Current assets” of the summary
consolidated balance sheet includes
cash and cash equivalents, restricted
cash, other short-term financial
assets, accounts receivable, bank
loans granted, inventories, value
added tax, excise and other taxes
receivable, prepayments and other
current assets.
“Other non-current assets” of the
summary consolidated balance
sheet includes right-of-use assets,
intangible assets, other non-current
financial assets, investments in
associates and joint ventures, bank
loans granted, deferred tax assets,
goodwill and other non-current non-
financial assets.
“Current liabilities” of the summary
consolidated balance sheet includes
accounts payable and accrued
liabilities, loans and borrowings and
other financial liabilities, income tax
liabilities, other tax liabilities, current
provisions, prepayments on long-
term oil and petroleum products
supply agreements and other current
liabilities.
“Non-current liabilities” of the
summary consolidated balance sheet
includes loans and borrowings and
other financial liabilities, deferred
tax liabilities, non-current provisions,
prepayments on long-term oil and
petroleum products supply agreements
and other non-current liabilities.
These summary consolidated
financial statements are intended to
summarize and present aggregated
“Other funds and reserves” of the
summary consolidated balance sheet
includes treasury shares, additional
paid-in capital, reserve for foreign
exchange differences on translation
of foreign operations and other funds
and reserves.
“Other costs and expenses”
of the summary consolidated
statement of profit or loss includes
the cost of purchased oil, gas,
petroleum products, goods for
retail and refining costs, general
and administrative expenses,
transportation costs and other
commercial expenses, exploration
expenses, export customs duty.
“Other expenses” of the summary
consolidated statement of profit or
loss includes finance income, finance
expenses, other income, other
expenses, and foreign exchange
differences.
“Other proceeds from investing
activities” of the summary
consolidated statement of cash flows
includes the acquisition of short-term
financial assets, proceeds from the
sale of short term financial assets,
acquisition of long term financial
assets, proceeds from the sale of non-
current financial assets, proceeds
from the sale of subsidiaries, net of
cash disposed, proceeds from sale of
property, plant and equipment.
“Other financing repayment” of the
summary consolidated statement
of cash flows includes repayment
of other financial liabilities, interest
paid, dividends paid.
The summary consolidated
financial statements for the year
ended December 31, 2023 were
approved and authorized for issue
by management of the Company on
February 19, 2024.
in accordance with IFRS. The principal
adjustments relate to: (1) recognition
of certain expenses; (2) valuation
and depreciation of property, plant
and equipment; (3) deferred income
taxes; (4) impairment of assets; (5)
accounting for the time value of money;
(6) accounting for investments in oil
and gas property and conveyances; (7)
consolidation principles; (8) recognition
and disclosure of guarantees,
contingencies, commitments and
certain other assets and liabilities; (9)
business combinations and goodwill;
(10) accounting for derivative financial
instruments; (11) purchase price
allocation to the identifiable assets
acquired and the liabilities assumed.
The consolidated financial statements
include assets, liabilities, equity,
income, expenses and cash flows
of the parent and its subsidiaries
presented as those of a single economic
entity. All significant intercompany
transactions and balances have been
eliminated. The equity method is
used to account for investments in
associates in which the Company has
the ability to exert significant influence
over the associates’ operating and
financial policies. Investments in
entities where the Company holds
the majority of shares, but control is
exercised jointly with other participants,
are also accounted for using the
equity method. Investments in other
companies are accounted for at fair
value. Determination of the level of
control or influence in the entities
where the Company holds a share is
carried out taking into account the
powers established by the agreement
in respect of the investment and
the existing rights that provide the
Company with the opportunity to
manage significant activities at the
present time.
2. Significant accounting
policies
Business combinations and
goodwill
The accompanying consolidated
financial statements differ from
the financial statements issued for
statutory purposes in accordance with
Russian accounting principles in that
they reflect certain adjustments, not
recorded in the Company’s statutory
books, which are appropriate for
presenting the financial position,
results of operations and cash flows
Business combinations are accounted
for using the acquisition method. The
date of acquisition is the date when
effective control over the acquiree
passes to the Company.
The cost of an acquisition is
measured as an aggregate of the
consideration transferred, measured
at acquisition date fair value, and
the amount of any non-controlling
interest in the acquiree. For each
business combination, the Company
elects whether it measures the
non-controlling interest in the
acquiree either at fair value or at the
proportionate share of the acquiree’s
identifiable net assets. Acquisition
costs incurred are expensed and
included in administrative expenses.
Any contingent consideration to
be transferred by the acquirer
is recognized at fair value at the
acquisition date. Subsequent changes
to the fair value of the contingent
consideration which is deemed to be
an asset or a liability should be treated
as measurement-period adjustments if
they result from additional information
about the facts and circumstances
which existed at the acquisition date.
Subsequent changes to the fair value
of the contingent consideration which
is deemed to be an asset or a liability
should be recognized within profit
or loss for the period if they result
from information about the facts and
circumstances that occurred after
the acquisition date. If the contingent
consideration is classified as equity, it
should not be re-measured.
Goodwill is initially measured at cost
being the excess of the aggregate of
the consideration transferred and
the amount recognized for non-
controlling interests over the fair value
of net identifiable assets acquired and
liabilities assumed. If the aggregate of
the consideration transferred and the
amount of non-controlling interest is
lower than the fair value of the net assets
of the subsidiary acquired and liabilities
assumed, the difference is recognized in
profit or loss for the period.
From the date of initial recognition,
goodwill is measured at initial cost less
accumulated impairment losses. For
the purpose of impairment testing,
goodwill acquired in a business
combination shall, from the acquisition
date, be allocated to the Company’s
cash-generating units, which are
expected to benefit from the synergies
of the combination, irrespective of
whether other assets or liabilities of
the acquiree are assigned to those
units or groups of units.
If the Company disposes of a part of
a cash generating unit, the goodwill
associated with the part disposed
of shall be included in the carrying
61
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES amount of this part when determining
the gain or loss on disposal; the above
mentioned part of goodwill to be
disposed of shall be measured on the
basis of the relative values of the part
disposed of and the total value of the
cash generating unit.
The Company reassesses whether it
controls the investees when facts and
circumstances indicate that there are
changes to one of the three elements
of control.
Associates
Investments in associates are
accounted for using the equity
method unless they are classified
as non-current assets held for sale.
Under this method, the carrying value
of investments in associates is initially
recognized at the acquisition cost.
The carrying value of investments in
associates is increased or decreased by
the Company’s reported share in the
profit or loss and other comprehensive
income of the investee after the
acquisition date. The Company’s
share in the profit or loss and other
comprehensive income of an associate
is recognized in the Company’s
consolidated statement of profit or
loss or in the consolidated statement
of comprehensive income, respectively.
Dividends paid by the associate are
accounted for as a reduction of the
carrying value of investments.
The Company’s net investments in
associates include the carrying value
of the investments in these associates
as well as other long-term investments
that, in substance, form part of
the Company’s net investments in
associates. For example, an item for
which settlement is neither planned
nor likely to occur in the foreseeable
future is, in substance, an extension
of the Company’s investment in that
associate. Such items may include
preference shares and long-term
receivables or loans, but do not include
trade receivables, trade payables or
any long-term receivables for which
adequate collateral exists, such as
secured loans. If the share in losses
exceeds the carrying value of the
investments in associates and the value
of other long-term investments related
to investments in these associates, the
Company ceases to recognize its share in
62
losses when the carrying value reaches
zero. Any additional losses are provided
for and liabilities are recognized only
to the extent that the Company has
legal or constructive obligations or
has made payments on behalf of the
associate. If the associate subsequently
makes profits, the Company resumes
recognizing its share in these profits only
after its share of the profits equals the
share of losses not recognized.
The carrying value of investments in
associates is tested for impairment
by reconciling its recoverable amount
(the higher of its value in use and
fair value less costs to sell) to its
carrying value, whenever impairment
indicators are identified.
Joint arrangements
The Company participates in joint
arrangements either in the form of
joint ventures or joint operations.
A joint venture implies that the
parties that have joint control of the
arrangement have rights to the net
assets of the arrangement. A joint
venture involves establishing a legal
entity where the Company and other
participants have respective equity
interests. Equity interests in joint
ventures are accounted for under the
equity method, as described above in
respect of associates.
The Company’s share in net profit
or loss and in other comprehensive
income of joint ventures is recognized
in the consolidated statement of
profit or loss and in the consolidated
statement of comprehensive income,
respectively, from the date when
joint control commences until the
date when joint control ceases. A
joint operation implies that the
parties that have joint control of the
arrangement have rights to the assets,
and obligations for the liabilities,
relating to the arrangement. In relation
to its interest in a joint operation
the Company recognizes its assets,
including its share of any assets held
jointly, its liabilities, including its share
of any liabilities incurred jointly, its
revenue from the sale of its share
of the output arising from the joint
operation, its share of the revenue
from the sale of the output by the joint
operation, and expenses, including its
share of any expenses incurred jointly.
Cash and cash equivalents
Cash represents cash on hand, in the
Company’s bank accounts, in transit
and interest-bearing deposits which can
be effectively withdrawn at any time
without prior notice or any penalties
reducing the principal amount of the
deposit. Cash equivalents are highly
liquid, short-term investments that are
readily convertible to known amounts
of cash and have original maturities of
three months or less from their date of
purchase. They are carried at cost plus
accrued interest, which approximates
fair value. Restricted cash is presented
separately in the consolidated balance
sheet if its amount is significant.
Financial assets
The Company recognizes financial
assets in its balance sheet when, and
only when, it becomes a party to the
contractual provisions of the financial
instrument. When financial assets are
recognized initially, they are measured
at fair value, which is usually the price
of the transaction, i.e. the fair value of
consideration paid.
When financial assets are recognized
initially, they are classified as one of
the following, as appropriate:
(1) Financial assets at fair value
through profit or loss;
(2) Financial assets at fair value
through other comprehensive
income; or
(3) Financial assets at amortised cost.
The Company classifies financial
assets on the basis of both the
Company’s business model for
managing the financial assets, as
well as the contractual cash flow
characteristics of the financial assets.
A financial asset shall be measured at
fair value through profit or loss unless
it is measured at amortised cost or at
fair value through other comprehensive
income. However, the Company
may make an irrevocable election
at initial recognition for particular
instruments in equity instruments
that would otherwise be measured
at fair value through profit or loss to
present subsequent changes in fair
value in other comprehensive income.
In particular, the Company classifies
shares of other companies, which
are not included in the category of
measured at fair value through profit
or loss, as financial assets at fair value
through other comprehensive income.
All derivative instruments are recorded
in the consolidated balance sheet at
fair value in either current financial
assets, non-current financial assets,
current liabilities related to derivative
instruments, or non-current liabilities
related to derivative instruments. The
recognition and classification of a gain or
loss that results from recognition of an
adjustment of a derivative instrument
at fair value depends on the purpose
for issuing or holding the derivative
instrument. Gains and losses from
derivatives that are not accounted for
as hedges under International Financial
Reporting Standard (“IFRS”) 9 Financial
Instruments are recognized immediately
in the profit or loss for the period.
Fair value is the price that would
be received to sell an asset or paid
to transfer a liability in an orderly
transaction between market
participants at the measurement date.
Subsequent to initial recognition, the
fair value of financial assets at fair value
that are quoted in an active market is
defined as bid prices for assets and
ask prices for issued liabilities as of the
measurement date.
If no active market exists for financial
assets, the Company measures
the fair value using the following
methods:
› Analysis of recent transactions
with peer instruments between
independent parties;
› Current fair value of similar
financial instruments;
› Discounting future cash flows.
The discount rate reflects the
minimum return on investment an
investor is willing to accept before
starting an alternative project, given
its risk and the opportunity cost of
forgoing other projects.
A financial asset shall be measured
at amortised cost if both of the
following conditions are met:
(a) The financial asset is held within a
business model whose objective is
to hold financial assets in order to
collect contractual cash flows; and
(b) The contractual terms of the
financial asset give rise on
specified dates to cash flows that
are solely payments of principal
and interest on the principal
amount outstanding.
Examples of financial assets that may
fall into this category are loans given,
accounts receivable, bonds and notes
issued by 3rd parties, which are not
quoted at active market – if they
fulfill the requirements set above.
A financial asset shall be measured
at fair value through other
comprehensive income if both of the
following conditions are met:
(a) The financial asset is held within a
business model whose objective
is achieved by both collecting
contractual cash flows and selling
financial assets; and
(b) The contractual terms of the
financial asset give rise on
specified dates to cash flows that
are solely payments of principal
and interest on the principal
amount outstanding.
Dividends and interest income are
recognized in the consolidated
statement of profit or loss on an
accrual basis. The amount of accrued
interest income is calculated using
the effective interest rate.
Upon de-recognition of debt financial
assets (bonds, notes etc.) classified
as financial instruments at fair value
through other comprehensive income,
cumulative gains or losses previously
recognized in other comprehensive
income are reclassified to profit or loss.
In case of equity financial assets (shares,
stocks etc.), classified as financial
instruments at fair value through other
comprehensive income, such cumulative
gain or loss shall never be subsequently
transferred to profit or loss.
Interest income as a component
of finance income is disclosed in
the notes to financial statements
separately for each category of
financial assets.
Regular way purchases and sales of
financial assets are accounted for at
trade date.
Financial liabilities
The Company recognizes financial
liabilities on its balance sheet when,
and only when, it becomes a party
to the contractual provisions of the
financial instrument. When financial
liabilities are recognized initially, they
are measured at fair value, which is
usually the price of the transaction, i.e.
the fair value of consideration received.
When financial liabilities are
recognized initially, they are classified
as one of the following:
› Financial liabilities at fair value
through profit or loss;
› Other financial liabilities.
Financial liabilities at fair value
through profit or loss are financial
liabilities held for trading or financial
liabilities designated at this category
upon initial recognition.
The Company may, at initial
recognition, irrevocably designate
a financial liability as measured
at fair value through profit or loss
when permitted by IFRS standards
and when doing so results in more
relevant information.
Financial liabilities not classified
as financial liabilities at fair value
through profit or loss are designated
as other financial liabilities. Other
financial liabilities include, inter alia,
trade and other accounts payable,
and loans and borrowings payable.
Subsequent to initial recognition,
financial liabilities at fair value
through profit or loss are measured
at fair value, with changes in fair
value recognized in profit or loss in
the consolidated statement of profit
or loss. Other financial liabilities are
carried at amortized cost.
The Company removes a financial
liability (or part of a financial liability)
from its statement of financial
position when, and only when, it is
extinguished – i.e. when the obligation
specified in the contract is discharged,
cancelled or expires. The difference
between the carrying value of a
financial liability (or a part of a financial
liability) extinguished or transferred
to another party and the redemption
value, including any transferred
non-monetary assets and assumed
liabilities, is recognized in profit or loss.
Cash flows from the operating activities
of subsidiary banks are included within
operating activities of the Consolidated
Statement of Cash Flows. Operating
63
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES liabilities of subsidiary banks, including
interbank loans, customer deposits,
promissory notes and REPO obligations,
are included within Accounts payable
and accrued liabilities.
Earnings per share
Basic earnings per share is calculated
by dividing net earnings attributable
to common shares by the weighted
average number of common shares
outstanding during the corresponding
period. In the absence of any securities-
to-shares conversion transactions, the
amount of basic earnings per share
stated in these consolidated financial
statements is equal to the amount of
diluted earnings per share.
Treasury shares
Treasury shares are outstanding
Treasury shares purchased from
the shareholders. Treasury shares
are presented in the consolidated
balance sheet as a deduction from
equity at cost of repurchase.
Inventories
Inventories consisting primarily
of crude oil, petroleum products,
petrochemicals and materials and
supplies are accounted for at the
weighted average cost by subsidiaries
unless net realizable value is less
than cost. Materials that are used
in production are not written down
below cost if the finished products
into which they will be incorporated
are expected to be sold above cost.
Repurchase and resale
agreements
Securities sold under repurchase
agreements (“REPO”) and securities
purchased under agreements to
resell (“reverse REPO”) generally
do not constitute a sale of the
underlying securities for accounting
purposes, and so are treated as
collateralized financing transactions.
Interest paid or received on all REPO
and reverse REPO transactions is
recognized in Finance expense or
Finance income, respectively, and
calculated using the effective interest
method.
64
Exploration and production assets
Exploration and production assets
include exploration and evaluation
assets, mineral rights and oil and gas
properties (development assets and
production assets).
Exploration and evaluation costs
The Company recognizes exploration
and evaluation costs using the
successful efforts method as
permitted by IFRS 6 Exploration
for and Evaluation of Mineral
Resources. Under this method, costs
related to exploration and evaluation
(license acquisition costs, exploration
and appraisal drilling) are temporarily
capitalized in cost centers by field
(well) until the drilling program results
in the discovery of economically
feasible oil and gas reserves.
The length of time necessary for
this determination depends on
the specific technical or economic
difficulties in assessing the
recoverability of the reserves. If a
determination is made that the well
did not encounter oil and gas in
economically viable quantities, the
well costs are expensed to Exploration
expenses in the consolidated
statement of profit or loss.
Exploration and evaluation costs,
except for costs associated with
2D-seismic, topographical, geological,
and geophysical surveys, are initially
capitalized as exploration and
evaluation assets. Exploration and
evaluation assets are recognized
at cost less impairment, if any, as
property, plant and equipment
until the existence (or absence)
of commercial reserves has been
established. The initial cost of
exploration and evaluation assets
acquired through a business
combination is formed as a result of
purchase price allocation. The cost
allocation to mineral rights for proved
properties and mineral rights for
unproved properties is performed
based on the respective oil and gas
reserves information. Exploration
and evaluation assets are subject to
technical, commercial and management
review as well as review for indicators
of impairment at least once a year.
This is to confirm the continued intent
to develop or otherwise extract value
from the discovery. When indicators of
impairment are present, an impairment
test is performed.
If, subsequently, commercial reserves
are discovered, the carrying value,
less losses from impairment of the
respective exploration and evaluation
assets, is classified as oil and gas
properties (development assets).
However, if no commercial reserves are
discovered, such costs are expensed
after exploration and evaluation
activities have been completed.
Upon the sale or retirement of
property, plant and equipment,
the cost and related accumulated
depreciation are eliminated from
the accounts. Any resulting gains or
losses are included in profit or loss.
Depreciation, depletion and
amortization
Oil and gas properties are depleted
using the unit-of-production method
on a field-by-field basis starting from
the commencement of commercial
production.
In applying the unit-of-production
method to mineral licenses, the
depletion rate is based on total
proved reserves. In applying the unit-
of-production method to producing
wells and the related oil and gas
infrastructure, the depletion rate is
based on proved developed reserves.
Other property, plant and equipment
are depreciated using the straight-
line method over their estimated
useful lives from the time they are
ready for use, except for catalysts
which are amortized using the unit-
of-production method.
Components of other property, plant and equipment and their respective estimated useful lives are as follows:
Development and production
Property, plant and equipment
Useful life, not more than
Oil and gas properties (development
assets) are accounted for on a field-
by-field basis and represent (1)
capitalized costs to develop discovered
commercial reserves and to put fields
into production, and (2) exploration and
evaluation costs incurred to discover
commercial reserves reclassified from
exploration and evaluation assets to
oil and gas properties (development
assets) following the discovery of
commercial reserves.
The cost of oil and gas properties
(development assets) also includes
the expenditures to acquire such
assets, directly identifiable overhead
expenses, capitalized financing
costs and related asset retirement
(decommissioning) obligation costs.
Oil and gas properties (development
assets) are generally recognized as
construction in progress.
Following the commencement of
commercial production, oil and gas
properties (development assets) are
reclassified as oil and gas properties
(production assets).
Other property, plant and
equipment
Other property, plant and equipment
is stated at historical cost as of the
acquisition date, except for property,
plant and equipment acquired prior
to January 1, 2009, which is stated
at deemed cost, net of accumulated
depreciation and impairment. The
cost of maintenance, repairs, and
the replacement of minor items of
property is charged to operating
expenses. Renewals and betterments
of assets are capitalized.
Buildings and structures
Plant and machinery
Vehicles and other property, plant and equipment
Service vessels
Offshore drilling assets
Land generally has an indefinite useful
life and is therefore not depreciated.
Impairment of non-current
assets
Intangible assets (excl.
goodwill)
Intangible assets with finite lives are
amortised over the useful economic life
and assessed for impairment whenever
there is an indication that the intangible
asset may be impaired. The amortisation
period and the amortisation method
for an intangible asset with a finite
useful life are reviewed at least at the
end of each reporting period. Changes
in the expected useful life or the
expected pattern of consumption of
future economic benefits embodied
in the asset are considered to modify
the amortisation period or method, as
appropriate, and are treated as changes
in accounting estimates.
Construction grants
The Company recognizes construction
grants from local governments when
there is a reasonable assurance
that the Company will comply with
the conditions attached and that
the grant will be received. The
construction grants are accounted for
as a reduction of the cost of the asset
for which the grant is received.
The Company assesses at each
balance sheet date whether there is
any indication that an asset or cash
generating unit may be impaired. If any
such indication exists, the Company
estimates the recoverable amount of
the asset or cash-generating unit.
In assessing whether there is any
indication that an asset may be
impaired, the Company considers
internal and external sources of
information. It considers at least the
following:
External sources of information:
› During the period, an asset’s
market value has declined
significantly more than would be
expected as a result of the passage
of time or normal use;
› Significant changes with an
adverse effect on the Company
have taken place during the period,
or will take place in the near future,
in the technological, market,
economic or legal environment in
which the Company operates or
in the market to which an asset is
dedicated;
› Market interest rates or other
market rates of return on
investments have increased during
30-45 years
5-25 years
6-10 years
20 years
20 years
the period, and those increases are
likely to affect the discount rate
used in calculating an asset’s value
in use and decrease the asset’s
recoverable amount materially;
› The carrying amount of the net
assets of the Company is more
than its market capitalization.
Internal sources of information:
› Evidence is available of
obsolescence or physical damage
of an asset;
› Significant changes with an adverse
effect on the Company have taken
place during the period, or are
expected to take place in the near
future, in the extent to which, or
manner in which, an asset is used
or is expected to be used (e.g., the
asset becoming idle, or the useful
life of an asset is reassessed as
finite rather than indefinite);
› Information on dividends from
a subsidiary, joint venture or
associate;
› Evidence is available from internal
reporting that indicates that the
economic performance of an asset
is, or will be, worse than expected.
Such evidence includes the
existence of:
– Cash flows on acquiring
the asset, or subsequent
cash needs for operating
65
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES or maintaining it, that are
significantly higher than those
originally budgeted;
– Actual net cash flows or
operating profit or loss
flowing from the asset that are
significantly worse than those
budgeted;
– A significant decline in
budgeted net cash flows or
operating profit, or a significant
increase in budgeted losses,
flowing from the asset;
– Operating losses or net cash
outflows for the asset, when
current period amounts are
aggregated with budgeted
amounts for the future.
The following factors indicate that
exploration and evaluation assets
may be impaired:
› The period for which the Company
has the right to explore in the specific
area has expired during the period or
will expire in the near future, and is
not expected to be renewed;
› Substantive expenditure on further
exploration for and evaluation of
mineral resources in the specific area
is neither budgeted nor planned;
› Exploration for and evaluation
of mineral resources in the
specific area have not led to the
discovery of commercially viable
quantities of mineral resources
and the Company has decided to
discontinue such activities in the
specific area;
› Sufficient data exist to indicate
that, although a development in the
specific area is likely to proceed, the
carrying amount of the exploration
and evaluation asset is unlikely to
be recovered in full from successful
development or by sale.
The recoverable amount of an asset
or a cash-generating unit is the
higher of:
› The value in use of an asset (cash-
generating unit); and
› The fair value of an asset (cash-
generating unit) less costs to sell.
If the asset does not generate cash
inflows that are largely independent
of those from other assets, its
recoverable amount is determined
for the asset’s cash-generating unit.
The Company initially measures the
value in use of a cash-generating
unit. When the carrying amount of a
66
cash-generating unit is greater than its
value in use, the Company measures
the unit’s fair value less costs of
disposal for the purpose of measuring
the recoverable amount. When the fair
value is less than the carrying value an
impairment loss is recognized.
Value in use is determined by
discounting the estimated value of
the future cash inflows expected
to be derived from the asset or
cash-generating unit, including
cash inflows from its sale. The value
of the future cash inflows from a
cash-generating unit is determined
based on the forecast approved by
management of the business unit to
which the unit in question pertains.
Impairment of financial assets
At each balance sheet date the
Company recognizes an allowance for
expected credit losses on a financial
asset measured at amortised cost,
and at fair value through other
comprehensive income, a lease
receivable, a contract asset or a loan
commitment and a financial guarantee
contract to which the impairment
requirements apply. Requirements
of IFRS 9 concerning impairment do
not apply to equity instruments of any
category as well as to the instruments
at fair value though profit or loss.
Expected credit losses for significant
counterparties, including banks, are
determined based on credit rating of
particular counterparty and relevant
probability of default.
The allowance for financial asset
at amortised cost is recognized in
profit or loss in correspondence with
a balance sheet account reducing
the carrying amount of the financial
asset. The allowance for financial
assets at fair value through other
comprehensive income shall be
recognized in other funds and
reserves and shall not reduce the
carrying amount of the financial asset
in the statement of financial position.
Capitalized interest
Interest expense on borrowed
funds used for capital construction
projects and the acquisition of
property, plant and equipment is
capitalized provided that the interest
expense could have been avoided if
the Company had not made capital
investments. Interest is capitalized
only during the period when
construction activities are actually
in progress and until the resulting
properties are put into operation.
Capitalized borrowing costs include
exchange differences arising from
foreign currency borrowings to the
extent that they are regarded as an
adjustment to interest costs.
Leasing agreements
In respect of the contracts (or separate
components of a contract), which
convey to the Company the right to
control the use of an identified asset
(as it is determined in IFRS 16 Lease)
for a period of time in exchange
for consideration, the Company
recognizes a right-of-use asset and a
lease liability at the commencement
date. Non-lease components of
the contract are accounted for in
accordance with other relevant IFRS.
In accordance with requirements of
IFRS 16 Lease para 3-8, the Company
does not apply the Standard to
leases to explore for or use minerals,
oil, natural gas and similar non-
regenerative resources and to leases
of wells, to short-term leases (taking
into consideration economically
feasible prolongations), as well as to
leases for which the underlying asset
is of low value (less kRUB 300).
The Company determines the lease
term as the non-cancellable period of
a lease, together with both: periods
covered by an option to extend the
lease if the lessee is reasonably certain
to exercise that option; and periods
covered by an option to terminate
the lease if the lessee is reasonably
certain not to exercise that option.
At the commencement date, the
Company measures the lease
liability at the present value of the
lease payments that are not paid at
that date. The lease payments are
discounted using the incremental
borrowing rate, as interest rate
implicit in the lease, as a rule, cannot
be readily determined. As the finance
function lays predominantly within
the parent company, incremental
borrowing rates are calculated
centrally, except for the banks of the
Group and cases of direct financing
of the subsidiaries.
At the commencement date, the
Company measures the right-of-use
asset at cost, which comprises the
amount of the initial measurement of
the lease liability, any lease payments
made at or before the commencement
date, less any lease incentives received,
any initial direct costs incurred by
the lessee, an estimate of costs to be
incurred by the lessee in dismantling
and removing the underlying asset,
restoring the site on which it is located
or restoring the underlying asset to
the condition required by the terms
and conditions of the lease, unless
those costs are incurred to produce
inventories.
Lease payments are evenly
distributed between finance
expenses and a decrease of a lease
liability so that a constant periodic
rate of interest is produced on
the remaining balance of the lease
liability. Finance expenses are
recognized in the consolidated
statement of profit or loss.
In respect of subsequent accounting for
a leased property the same accounting
policies are applied as for the owned
assets, e.g. depreciation policy.
Asset retirement
(decommissioning) obligations
The Company has asset retirement
(decommissioning) obligations
associated with its core business
activities.
The Company’s exploration,
development and production
activities involve the use of wells,
related equipment and operating
sites, oil gathering and treatment
facilities, tank farms and in-field
pipelines.
Generally, licenses and other
regulatory acts require that such
assets be decommissioned upon the
completion of production. According
to these requirements, the Company
is obliged to decommission wells,
dismantle equipment, restore the
sites and perform other related
activities. The Company’s estimates of
these obligations are based on current
regulatory or license requirements, as
well as actual dismantling and other
related costs. These liabilities are
measured by the Company 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.
In accordance with IFRS
Interpretations Committee (“IFRIC”)
Interpretation 1 Changes in Existing
Decommissioning, Restoration and
Similar Liabilities, the provision is
reviewed at each balance sheet date
as follows:
› Upon changes in the estimates of
future cash flows (e.g., the costs of
and timeframe for abandoning one
well) or the discount rate, changes
in the amount of the liability are
included in the cost of the item of
property, plant, and equipment,
whereby such cost may not be
negative and may not exceed the
recoverable value of the item of
property, plant, and equipment;
› Any changes in the liability due to
its nearing maturity (change in the
discount) are recognized in Finance
expenses.
The Company’s refining and
distribution activities involve refining
operations, marine and other
distribution terminals, and retail sales.
The Company’s refining operations
consist of major petrochemical
operations and industrial complexes.
Legal or contractual asset retirement
(decommissioning) obligations
related to petrochemical, oil refining
and distribution activities are not
recognized due to the limited history of
such activities in these segments, the
lack of clear legal requirements as to
the recognition of obligations, as well as
the fact that decommissioning periods
for such assets are not determinable.
Because of the reasons described
above, the fair value of an asset
retirement (decommissioning)
obligation in the refining and
distribution segment cannot be
reasonably estimated.
Due to continuous changes in
the Russian regulatory and legal
environment, there could be future
changes to the requirements and
contingencies associated with the
retirement of long-lived assets.
Income tax
Since 2012 Russian tax legislation had
allowed income taxes to be calculated
on a consolidated basis. The main
subsidiaries of the Company were
therefore combined into a consolidated
group of taxpayers. For subsidiaries
which were not included in the
consolidated group of taxpayers, income
tax was calculated on an individual
subsidiary basis. In accordance with the
provisions of the Tax Code of the Russian
Federation, starting from January 1,
2023, the institution of consolidated
groups of taxpayers ceased to operate.
Deferred income tax assets and liabilities
are recognized in the accompanying
consolidated financial statements in the
amount determined by the Company in
accordance with IAS 12 Income Taxes.
Deferred tax is provided using the liability
method on temporary differences at the
reporting date between the tax bases
of assets and liabilities and their carrying
amounts for financial reporting purposes.
A deferred tax liability is recognized
for all taxable temporary differences,
except to the extent that the
deferred tax liability arises from:
› The initial recognition of goodwill;
› The initial recognition of an asset or
liability in a transaction which:
– Is not a business combination;
– At the time of the transaction,
affects neither accounting profit,
nor taxable profit (tax loss); and
– At the time of the transaction,
does not give rise to equal
taxable and deductible
temporary differences.
› Investments in subsidiaries when the
Company is able to control the timing
of the reversal of the temporary
differences and it is probable that
the temporary differences will not
reverse in the foreseeable future.
A prior period tax loss planned to be
used to reduce the current or future
amount of income tax is recognized
as a deferred tax asset.
A deferred tax asset is recognized only to
the extent that it is probable that taxable
profit will be available against which the
deductible temporary differences can
67
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES be utilized, unless the deferred tax asset
arises from the initial recognition of an
asset or liability in a transaction that:
› Is not a business combination;
› At the time of the transaction,
affects neither accounting profit
nor taxable profit (tax loss); and
› At the time of the transaction, does
not give rise to equal taxable and
deductible temporary differences.
The Company recognizes deferred
tax assets for all deductible
temporary differences arising from
investments in subsidiaries and
associates, and interests in joint
ventures, to the extent that the
following two conditions are met:
› The temporary difference will reverse
in the foreseeable future; and
› Taxable profit will be available
against which the temporary
difference can be utilized.
Deferred tax assets and liabilities
shall be measured at the tax rates
that are expected to apply to the
period when the asset is realized or
the liability is settled, based on tax
rates (and tax laws) that have been
enacted or substantively enacted by
the end of the reporting period.
The measurement of deferred tax
assets and liabilities reflects the tax
consequences that would follow from
the manner in which the Company
expects, at the end of the reporting
period, to recover or settle the carrying
amount of its assets and liabilities.
Deferred tax assets and liabilities
are offset when there is a legally
enforceable right to set off current tax
assets against current tax liabilities
and when they relate to income taxes
levied by the taxation authority of the
same jurisdiction and the Company
intends to settle its current tax assets
and liabilities on a net basis.
The carrying amount of a deferred tax
asset is reviewed at each balance sheet
date. The Company reduces the carrying
amount of a deferred tax asset to the
extent that it is no longer probable that
sufficient taxable profit will be available
to allow the benefit of part or all of that
deferred tax asset to be utilized.
Deferred tax assets and liabilities are
classified as Non-current Deferred tax
assets and Non-current Deferred tax
liabilities, respectively. Deferred tax
assets and liabilities are not discounted.
68
Recognition of revenues
Revenues are recognized when (or as)
the Company satisfies a performance
obligation by transferring a promised
good or service (i.e. an asset) to a
customer. An asset is transferred when
(or as) the customer obtains control of
that asset, which usually occurs when
the title is passed, provided that the
contract price is fixed or determinable
and collectability of the amount of the
consideration is probable. Specifically,
domestic sales of crude oil and gas,
as well as petroleum products and
materials are usually recognized
when title passes. For export sales,
title generally passes at the border
of the Russian Federation. Revenue
is measured at the fair value of the
consideration received or receivable
taking into account the amount of any
trade discounts, volume rebates and
reimbursable taxes.
Sales of support services are
recognized as services are performed
provided that the service price can
be determined and no significant
uncertainties regarding the receipt of
revenues exist.
Transportation expenses
Transportation expenses recognized
in the consolidated statement of
profit or loss represent all expenses
incurred by the Company to transport
crude oil for refining and to end
customers, and to deliver petroleum
products from refineries to end
customers (these may include pipeline
tariffs and any additional railroad
transportation costs, handling costs,
port fees, sea freight and other costs).
Refinery maintenance costs
The Company recognizes the costs of
overhauls and preventive maintenance
performed with respect to oil refining
assets as expenses when incurred.
Environmental liabilities
Expenditures that relate to an
existing condition caused by past
operations, and do not have a future
economic benefit, are expensed.
Liabilities for these expenditures
are recorded when environmental
assessments or clean ups are
probable and the costs can be
reasonably estimated.
Accounting for contingencies
Certain conditions may exist as of the
date of these consolidated financial
statements which may further
result in a loss to the Company, but
which will only be resolved when
one or more future events occur
or fail to occur. The Company’s
management makes an assessment
of such contingent liabilities which
is based on assumptions and is a
matter of opinion. In assessing loss
contingencies relating to legal or
tax proceedings that involve the
Company or unasserted claims that
may result in such proceedings, the
Company, after consultation with
legal or tax advisors, evaluates the
perceived merits of any legal or tax
proceedings or unasserted claims as
well as the perceived merits of the
amount of relief sought or expected
to be sought therein.
Provisions and contingent liabilities do
not constitute finally asserted legal
obligations of PJSC Rosneft Oil Company.
If the assessment of a contingency
indicates that it is probable that a
loss will be incurred and the amount
of the liability can be estimated, then
the estimated liability is accrued in
the Company’s consolidated financial
statements. If the assessment
indicates that a potentially material
loss contingency is not probable, but
is reasonably possible, or is probable
but cannot be estimated, then the
nature of the contingent liability,
together with an estimate of the
range of possible loss if determinable
and material, would be disclosed.
Loss contingencies considered
remote are generally not disclosed
unless they involve financial
guarantees, in which case the
nature of the guarantee would
be disclosed. However, in some
instances in which disclosure is not
otherwise required, the Company
may disclose contingent liabilities
or other uncertainties of an unusual
nature which, in the judgment of
management after consultation with
its legal or tax counsel, may be of
interest to shareholders or others.
Taxes collected from customers
and remitted to governmental
authorities
Refundable taxes (excise and value-
added tax (“VAT”)) are deducted
from revenues. Other taxes and
duties are not deducted from
revenues and are recognized as
expenses in Taxes other than income
tax in the consolidated statement of
profit or loss.
VAT and excise receivable and
payable are recognized as Value
added tax, excise and other taxes
receivable and Other tax liabilities
in the consolidated balance sheet,
respectively.
Excises non-refundable by
customers
Excises non-refundable by customers
are presented within Taxes other
than income tax in the consolidated
statement of profit or loss. The
expenses mentioned above are
decreased by reverse excise on
petroleum crudes.
Tax on additional income (AIT)
AIT is recognized as an expense
within Taxes other than income tax
in the consolidated statement of
profit or loss, as the management of
the Company perceives AIT as a tax
related to extraction activities.
Functional and presentation
currency
The consolidated financial
statements are presented in Russian
rubles, which is the functional
currency of Rosneft Oil Company
and the majority of its subsidiaries
operating in the Russian Federation.
The functional currency of the foreign
subsidiaries is generally the U.S.
dollar.
Transactions and balances
Foreign currency transactions
are translated into the functional
currency using the exchange rates
prevailing at the dates of these
transactions. Foreign exchange
gains and losses resulting from the
settlement of such transactions and
from the translation of monetary
assets and liabilities denominated
in foreign currencies at year-end
exchange rates are recognized in the
profit or loss for the period.
Foreign exchange gains and losses
resulting from the translation of
monetary assets and liabilities
designated as foreign currency
cash flow hedging instruments
are recognized within other
comprehensive income and reclassified
to profit or loss in the period when the
hedged item affects profit or loss.
Non-monetary items that are
measured in terms of historical cost in
a foreign currency are translated using
the exchange rates as at the dates of
the initial transactions. Non-monetary
items measured at fair value in a
foreign currency are translated using
the exchange rates at the date when
the fair value is determined.
The results and financial position of
all of the Company’s subsidiaries,
joint ventures and associates that
have a functional currency which
is different from the presentation
currency are translated into the
presentation currency as follows:
› Assets and liabilities for each
balance sheet presented are
translated at the closing rate at
that reporting date;
› Income and expenses for each
statement of profit or loss and
each statement of comprehensive
income 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); and
› All resulting exchange differences are
recognized as a separate component
of comprehensive income.
Prepayment on oil and
petroleum products supply
agreements
In the ordinary course of business,
the Company enters into long-term
oil supply contracts. The contract
terms may require the buyer to make
a prepayment.
The Company considers long-term
oil supply contracts to be regular-
way sale contracts entered into and
continued to be held for the purpose
of the receipt or delivery of non-
financial items in accordance with
the Company’s expected purchase,
sale or usage requirements. Regular-
way sale contracts are exempted
from the scope of IAS 32 Financial
Instruments: Presentation and
IFRS 9 Financial Instruments.
Conditions for meeting the definition
of a regular-way sale are not met if
either of the following applies:
› The ability to settle net in cash or
another financial instrument, or by
exchanging financial instruments,
is not explicit in the terms of the
contract, but the Company has a
practice of settling similar contracts
net in cash or via another financial
instrument or by exchanging
financial instruments (whether with
the counterparty, by entering into
offsetting contracts or by selling the
contract before its exercise or lapse);
› For similar contracts, the Company
has a practice of taking delivery of the
underlying goods and selling them
within a short period after delivery
for the purpose of generating a profit
from short-term fluctuations in price
or from a dealer’s margin.
Prepayments received for the
delivery of goods or respective
deferred revenue are accounted for
as non-financial liabilities because
the outflow of economic benefits
associated with them is the delivery
of goods and services rather than a
contractual obligation to pay cash or
another financial asset.
Changes in accounting policies
and disclosures
The accounting policies adopted are
consistent with those of the previous
financial year except for the adoption
of a new standard and amendments
to existing standards effective as of
January 1, 2023:
› IFRS 17 Insurance Contracts.
IFRS 17 establishes a single
framework for the accounting
for insurance contracts and
contains requirements for related
disclosures. The new standard
replaces IFRS 4 Insurance
Contracts;
69
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES › Amendments to IAS 8
Accounting Policies, Changes
in Accounting Estimates and
Errors. The amendments introduce
a new definition of “accounting
estimates”. The amendments also
clarify the distinction between
changes in accounting estimates
and changes in accounting policies
and the correction of errors;
› Amendments to IAS 1 Presentation
of Financial Statements. The
amendments provide guidance and
examples of application of materiality
judgements to accounting policy
disclosures;
› Amendments to IAS 12 Income
Taxes, named Deferred
Taxes Related to Assets and
Liabilities Arising from a Single
Transaction. The amendments
clarify that initial recognition
exception under IAS 12 does
not apply to such transactions
as recognition of leases and
decommissioning obligations;
› Amendments to IAS 12 Income
Taxes, issued in connection with
International Tax Reform related
to introduction of the global
minimum tax on the income of
large multinational groups (Pillar
Two model rules). The amendments
introduced a temporary exemption
to the accounting and disclosures
for deferred taxes, arising on
implementation of the new tax
legislation; also the amendments
introduced targeted disclosure
requirements. (The amendments
became effective immediately on
publication, in May’ 23).
The new standard and amendments
mentioned above did not have a
material impact on the consolidated
financial statements.
Changes in presentation of
settlements with state budget in
the Consolidated balance sheet
Federal law On Introducing Changes
in Part I and II of the Tax Code of the
Russian Federation dated July 14,
2022 #263-FZ presumes introduction
of a new system for the purposes
of management of tax and fees
payments beginning January 1, 2023.
account for every taxpayer within
the Federal Treasury; this STA will be
used for the purposes of payment of
a single tax payment (STP), covering all
taxes and fees accrued by a taxpayer
during current (tax) period. STP
does not presume identification of
particular taxes / fees / other payments
to budget. As a result of adopted
changes, settlements with budget in
the Consolidated balance sheet as of
December 31, 2023 are presented on
a net basis within each legal entity.
Nevertheless, the balance for income tax
is presented separately in accordance
with requirements of IAS 1 and IAS 12.
3. Significant accounting
judgements, estimations
and assumptions
The preparation of consolidated
financial statements requires
management to make a number of
accounting estimates and assumptions
that affect the reported amounts of
assets and liabilities and the disclosure
of contingent assets and liabilities. The
actual results, however, could differ
from those estimates.
The most significant accounting
estimates and assumptions used
by the Company’s management in
preparing the consolidated financial
statements include:
› Estimation of oil and gas reserves;
› Estimation of rights to,
recoverability and useful lives of
non-current assets;
› Impairment of goodwill, fixed
assets and right-of-use assets;
› Estimated credit losses for
accounts receivable;
› Assessment of asset retirement
(decommissioning) obligations;
› Assessment of legal, tax
contingencies, guarantees,
recognition and disclosure of
contingent liabilities;
› Assessment of deferred income
tax assets and liabilities;
› Assessment of environmental
remediation obligations;
› Fair value measurements;
› Purchase price allocation to the
identifiable assets acquired and
the liabilities assumed;
› Treatment of certain taxes as
The law introduces a new tax mechanism
in a form of a Single Tax account
(STA), which provides opening a single
income taxes, production taxes or
other taxes, e.g. treatment of the
tax on additional income.
70
Significant estimates and assumptions
affecting the reported amounts
are those used in determining the
economic recoverability of reserves.
Such estimates and assumptions
may change over time when new
information becomes available, e.g.:
› More detailed information on
reserves was obtained (either as a
result of more detailed engineering
calculations or additional
exploration drilling activities);
› Supplemental activities to enhance
oil recovery were conducted;
› Changes were made in economic
estimates and assumptions (e.g. a
change in pricing factors).
4. New and amended
standards and
interpretations issued
but not yet effective
In January 2020, the IASB issued
amendments to IAS 1 Presentation
of Financial Statements named
Classification of Liabilities as Current
or Non-current. The amendments clarify
requirements for classifying liabilities as
current or non-current. The amendments
are effective on or after January 1,
2024; earlier application is permitted.
The Company does not expect the
amendments to have a material impact
on the consolidated financial statements,
as the Company already applies criteria
set by the amendments.
In September 2022, the IASB issued
narrow-scope amendments to IFRS 16
Leases related to lease liability in a sale
and leaseback. The amendments require
from the seller-lessee to measure lease
liability arising from leaseback in such a
way, that no profit or loss is recognised
in respect of the right-of-use retained.
The amendments are effective on or
after January 1, 2024; earlier application
is permitted. The Company does not
expect the amendments to have a
material impact on the consolidated
financial statements.
In October 2022, the IASB issued
amendments to IAS 1 Presentation
of Financial Statements named Non
current Liabilities with Covenants.
The amendments presume that
liability is classified as non-current if the
company has a substantial right to defer
settlement for at least 12 months after
the reporting date. The amendments
clarify the criteria of classification
(incl. that “future” covenants as well
as management intentions do not
affect classification as of the reporting
date) and require certain additional
disclosures. The amendments are
effective on or after January 1, 2024;
earlier application is permitted.
The Company does not expect the
amendments to have a material impact
on the consolidated financial statements.
In May 2023, the IASB issued
amendments to IAS 7 Statement
of Cash Flows and IFRS 7 Financial
Instruments: Disclosures named
Supplier Finance Arrangements.
The amendments clarify the influence
of supplier finance arrangements
on liabilities, cash flows, exposure to
liquidity risk and risk management.
Also the amendments presume certain
additional disclosures. The amendments
are effective on or after January 1,
2024; earlier application is permitted.
The Company does not expect the
amendments to have a material impact
on the consolidated financial statements.
In August 2023, the IASB issued
amendments to IAS 21 The Effects of
Changes in Foreign Exchange Rates
named Lack of Exchangeability.
The amendments clarify when the
currency is not exchangeable into the
other currency, the order of estimation
of the spot exchange rate when the
currency is not exchangeable, and
sets the requirements for the related
disclosures. The amendments are
effective on or after January 1, 2025;
earlier application is permitted.
The Company does not expect the
amendments to have a material
impact on the consolidated financial
statements.
The Company does not plan for
early adoption in respect of above-
mentioned new standards and
amendments to existing standards to
which this option is available, except for
the amendment named Classification
of Liabilities as Current or Non-current,
as the Company already applies criteria
set by these amendments.
5. Property, plant and equipment
Cost as of January 1, 2023 (restated)
Depreciation, depletion and impairment as of January 1, 2023 (restated)
Net book value as of January 1, 2023 (restated)
Prepayments for property, plant and equipment as of January 1, 2023
Total as of January 1, 2023 (restated)
Cost
Additions
Disposals and other movements
Foreign exchange differences
Changes in cost of asset retirement (decommissioning) obligations
As of December 31, 2023
Depreciation, depletion and impairment
Depreciation, depletion and impairment
Disposals and other movements
Foreign exchange differences
As of December 31, 2023
Net book value as of December 31, 2023
Prepayments for property, plant and equipment as of December 31, 2023
Total as of December 31, 2023
6. Shareholders’ equity
On June 30, 2023 the Annual General
Shareholders’ Meeting approved
dividends on the Company’s common
shares for 2022 in the amount of RUB
17.97 per share, which comprised
RUB 170.7 billion (excluding dividends
related to treasury shares).
On December 22, 2023 the
Extraordinary General Shareholders
Meeting approved payment
of interim dividends on the
Company’s common shares from the
consolidated net income attributable
to Rosneft shareholders for the first
half of 2023 in the amount of RUB
30.77 per share, which comprises
RUB 292 billion (excluding dividends
related to treasury shares).
Phone:
+7 (499) 517-88-99
Fax:
+7 (499) 517-72-35
E-mail:
PJSC Rosneft Oil Company
postman@rosneft.ru
Legal address:
Russian Federation, 115035, Moscow,
Sofiyskaya embankment, 26/1
Corporate website:
www.rosneft.ru (Russian)
www.rosneft.com (English)
Mailing address:
Russian Federation, 115035, Moscow,
Sofiyskaya embankment, 26/1
Total
16,276
(5,026)
11,250
343
11,593
1,698
(60)
293
(68)
18,139
(761)
32
(55)
(5,810)
12,329
310
12,639
71
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Report on compliance with the principles
and recommendations of the Corporate
Governance Code
This report on compliance with the principles
and recommendations of the Corporate Governance Code
(the Report) was reviewed by Rosneft’s Board of Directors
at a meeting held on 23 May 2024 (Minutes No. 18
dated 27 May 2024) as part of the 2023 Annual Report.
The Board of Directors certifies that this Report contains
complete and reliable information on Rosneft’s compliance
with the principles and recommendations of the Corporate
Governance Code in 2023.
Rosneft assesses its compliance with the Corporate
Governance Code as per the guidelines recommended
by the Bank of Russia in Letter No. IN-06–28/102
on Disclosure of Compliance with the Principles
and Recommendations of the Corporate Governance Code
in the Annual Report of a Public Joint-Stock Company
dated 27 December 2021. Key aspects of the Company’s
corporate governance model and practice are outlined
in Section Corporate governance of Rosneft’s 2023 Annual
Report.
No.
Corporate governance principles
Criteria for compliance with a corporate governance principle
Status of compliance with a corporate governance principle
1
Explanations on the failure to meet criteria for compliance with a corporate governance principle
2
To maintain effective relations with shareholders, Rosneft provides the following
communication channels: a shareholder hotline, mail and email, fax.
The Company does not consider setting up a dedicated online forum, as it has other
communication channels in place, as well as provides for the opportunity to discuss
agenda items at General Shareholders Meetings and, if relevant, using Rosneft’s social
networks, which are mentioned on Rosneft’s official website
1.1. The Company shall ensure equitable and fair treatment of all shareholders exercising their right to participate in managing the Company
1.1.1
The Company provides the best possible conditions
for shareholders to participate in General
Shareholders Meetings, make informed decisions
on agenda items, coordinate their actions
and express their opinions on matters under
consideration
1. The Company provides an easily accessible communication channel, such
as a hotline, email or online forum, for shareholders to express their opinions
and put questions regarding the agenda in preparation for a General Shareholders
Meeting.
The Company provided such communication channels and made them available
to shareholders before every General Shareholders Meeting held in the reporting
period
1.1.2
The procedure to notify shareholders of a General
Shareholders Meeting and provide them
with relevant materials enables them to get
well-prepared
1.
In the reporting year, the notice of a General Shareholders Meeting was posted
(published) on the Company’s website at least 30 days prior to the date
of the Meeting, unless the applicable law established a longer period.
2. The notice specified the documents required for admission to the Meeting venue.
3. Shareholders were informed about the persons who proposed agenda items
and nominated candidates to the Company’s Board of Directors and Audit
Commission (if the Company’s Charter required establishing such Commission)
1.1.3 When preparing for and participating in a General
Shareholders Meeting, shareholders have
unrestricted and timely access to any relevant
information and materials, and are able to put
questions to the Company’s executive bodies
and directors, as well as communicate with one
another
1.
In the reporting period, shareholders had the opportunity to put questions
to the Company’s executive bodies and directors both before and during
the General Shareholders Meeting.
2. The Board of Directors’ opinions (including dissenting opinions (if any) recorded
in the minutes) on each of the agenda items of the General Shareholders Meetings
held in the reporting period were added to the Meeting materials.
3. The lists of persons entitled to participate in each General Shareholders Meeting
in the reporting period were made available to the shareholders eligible to review
such lists as soon as the Company received those
1 The “complied with” status is assigned only if the Company’s corporate practice meets all the criteria for compliance with a corporate governance principle
set out in the third column of the form to be used for reporting on compliance with the Code’s principles. If the Company’s corporate practice meets only
some of the compliance criteria or none of them, the “complied with in part” or “not complied with” status is assigned in the fourth column of the form to be used
for reporting on compliance with the Code’s principles.
Explanations are given for each criterion for compliance with a corporate governance principle (assessment criterion) if the Company meets only
some of the criteria or none of them.
2
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
72
73
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES No.
Corporate governance principles
Criteria for compliance with a corporate governance principle
Status of compliance with a corporate governance principle
Explanations on the failure to meet criteria for compliance with a corporate governance principle
1.1.4
There are no unjustified difficulties preventing
shareholders from exercising their rights to convene
a General Shareholders Meeting, nominate
candidates to the governing bodies and propose
items for the agenda
1. The Charter enables shareholders to propose items for the agenda of the Annual
General Shareholders Meeting during at least 60 days after the end
of the respective calendar year.
2.
In the reporting period, the Company rejected no item proposed for the agenda
and no candidate to the Company’s bodies due to misprints or other minor flaws
in shareholders’ proposals
1.1.5
Each shareholder is able to exercise their voting
right without hindrance, in the simplest and most
convenient way
1. The Company’s Charter enables shareholders to fill out an electronic voting ballot
on the website specified in the notice of a General Shareholders Meeting
1.1.6
The procedure for holding a General Shareholders
Meeting established by the Company provides
all persons present at the Meeting with equal
opportunities to express their opinions and ask
questions
1.
In the reporting period, sufficient time for reporting on and discussing agenda
items was provided at General Shareholders Meetings held in the form
of a meeting (joint presence of shareholders), with shareholders having
an opportunity to express their opinions and ask questions on agenda items.
2. The Company extended invitations to the candidates nominated to the Company’s
governing and supervisory bodies and took all the necessary steps to make
sure they participate in the General Shareholders Meeting convened to vote
on their candidacies. During the Meeting, candidates to the Company’s governing
and supervisory bodies were available for questions from the shareholders.
3. The sole executive body, the officer in charge of accounting, the Chairman or other
members of the Board’s Audit Committee were all available for questions from
the shareholders during the General Shareholders Meetings held in the reporting
period.
4.
In the reporting period, the Company used telecommunications equipment
to provide shareholders with remote access to participate in the General
Shareholders Meetings, or the Board of Directors made a well-informed decision
to abstain from using such equipment in the reporting period due to its irrelevance
(unavailability)
1.2. Shareholders are provided with an equitable and fair opportunity to receive a share of the Company’s profits in the form of dividends
1.2.1
The Company has developed and implemented
a transparent and clear procedure to determine
the amount of dividends and pay them out
1.2.2
The Company does not resolve to pay out
dividends if such resolution, though not in breach
of the legislation, is not economically viable and may
lead to false assumptions about the Company’s
operations
1. Regulations on the Company’s Dividend Policy have been approved by the Board
of Directors and disclosed on the Company’s website.
2.
3.
If, in accordance with the dividend policy of a company issuing consolidated
financial statements, the amount of dividends is determined based
on the company’s results recorded in its financial statements, the dividend policy
shall employ the consolidated financial statements.
In the reporting period, substantiation of the suggested net income distribution
arrangements, including dividend payments and allocations for the Company’s own
needs, and their assessment for compliance with the Company’s dividend policy
(including explanations and the economic rationale for allocating part of the net
income to cover the Company’s own needs) were included in the materials
for the General Shareholders Meeting set to consider income distribution
(including dividend payments / dividend declaration)
1.
In addition to statutory restrictions, the Regulations on the Company’s Dividend
Policy define financial/economic circumstances under which the Company shall not
pay out dividends
1.2.3
The Company does not allow any negative changes
in the dividend rights of its current shareholders
1.
In the reporting period, the Company did not perform any actions causing negative
changes in the dividend rights of its current shareholders
1.2.4
The Company makes every effort to prevent
shareholders from receiving profit (gain) from
the Company other than in the form of dividends
and liquidation value
1.
In the reporting period, persons controlling the Company did not use any means
to receive profit (gain) from the Company other than in the form of dividends
(for example, by resorting to transfer pricing, unjustifiably rendering services
to the Company at inflated prices, or using internal loans issued to controlling
persons and/or their controlled entities as a substitution for dividends)
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
Explanation on items 1–3: no General Shareholders Meetings were held in the form
of a meeting (joint presence of shareholders) during the reporting period in line with
Federal Law No. 25-FZ of 25 February 2022 On Amending the Federal Law On Joint-
Stock Companies and Suspending Certain Provisions of Legislative Acts of the Russian
Federation.
Explanation on item 3: the Company has approved the Rosneft Dividend Policy. In line
with this Policy, the Company shall distribute at least 50% of its net income recorded
in the IFRS consolidated financial statements (subject to Resolution of the Government
of the Russian Federation No. 774-r dated 29 May 2006). The Board of Directors also
works to establish if it is possible to pay out dividends in the amount determined pursuant
to the Rosneft Dividend Policy and includes the relevant analysis in the Meeting materials.
In accordance with recommendations approved by the Bank of Russia with respect
to the disclosure of a report on compliance with the principles and recommendations
of the Corporate Governance Code in the annual report of a public joint-stock company
(Bank of Russia’s Letter No. IN-06–28/102 dated 27 December 2021), the Company
included explanations of the Board of Directors on allocating part of the Company’s
income for certain needs in the materials for the General Shareholders Meeting set
to consider income distribution (for 2023)
Pursuant to Resolution of the Government of the Russian Federation No. 774-r dated
29 May 2006, the Rosneft Dividend Policy sets the target dividend at no less than 50%
of Rosneft’s IFRS net income. Said Resolution of the Government contains no restrictions
(in addition to statutory restrictions) on a resolution to pay no dividends.
In accordance with recommendations approved by the Bank of Russia with respect
to disclosure of compliance with the principles and recommendations of the Corporate
Governance Code in the annual report of a public joint-stock company (Bank of Russia’s
Letter No. IN-06–28/102 dated 27 December 2021) and clause 2.2.3 of the Rosneft’s
Dividend Policy, the Company included explanations of the Board of Directors
on the absence of any financial limitations on dividend payments in the materials
for the General Shareholders Meeting set to consider income distribution (for 2023)
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1.3. Corporate governance framework and practices ensure equality of all shareholders owning shares of the same class (type),
including minority and foreign shareholders, and their equitable treatment by the Company
1.3.1
The Company ensures fair treatment of each
shareholder by its governing bodies and controlling
persons, specifically allowing no abuse of minority
shareholders by major shareholders
1.
In the reporting period, persons controlling the Company did not abuse the rights
of the Company’s shareholders, and there were no conflicts between persons
controlling the Company and the Company’s shareholders (or even if there
were any, the Board of Directors gave such conflicts due consideration)
1.3.2
The Company does not perform any actions that will
or may result in artificial redistribution of corporate
control
1. The Company has no quasi-treasury shares, or no quasi-treasury shares were used
in voting during the reporting period
1.4. Shareholders are provided with reliable and effective methods of registering their ownership of shares and the opportunity
to dispose of their shares freely and without hindrance
1.4.1
Shareholders are provided with reliable and effective
methods of registering their ownership of shares
and the opportunity to dispose of their shares freely
and without hindrance
1. The technologies used by the Company’s registrar and the terms and quality
of rendered services meet the needs of the Company and its shareholders
and ensure the most effective way to keep record of share ownership and exercise
shareholder rights
2.1. The Board of Directors is responsible for the strategic management of the Company, formulating key principles
of and approaches to the risk management and internal control system in the Company, supervising the work of the Company’s
executive bodies and performing other core functions
2.1.1
The Board of Directors is responsible
for the appointment of executive bodies and their
dismissal, including as a result of failure to perform
properly. The Board of Directors also ensures that
the Company’s executive bodies act in accordance
with the approved development strategy
and the Company’s business profile
2.1.2
The Board of Directors sets major long-term targets
for the Company, as well as assesses and approves
its key performance indicators and primary
business goals, along with the Company’s strategy
and business plans with regard to its core operations
2.1.3
The Board of Directors formulates the principles
of and approaches to risk management and internal
control system in the Company
1. The Board of Directors has the powers stated in the Charter to appoint and dismiss
members of executive bodies and to determine the terms and conditions of their
contracts.
2.
3.
1.
In the reporting period, the Nomination (Appointment, HR) Committee1 considered
the matter regarding whether the members of executive bodies had the necessary
professional qualification, skills and expertise to meet the current and expected
needs of society in line with the Company’s approved strategy.
In the reporting period, the Board of Directors reviewed the report (reports)
of the sole executive body and the collective executive body (if applicable)
on the implementation of the Company’s strategy
In the reporting period, the Board of Directors addressed matters related
to the strategy implementation and revision, approval of the Company’s financial
and business plan (budget), and review of criteria and indicators (including interim
ones) as regards delivering on the Company’s strategy and business plans
1. The principles of, and approaches to, organising the Company’s risk management
and internal control system were established by the Board of Directors and are set
out in the Company’s internal regulations defining the risk and internal control
management policy.
2.
In the reporting period, the Board of Directors approved (revised) the Company’s
acceptable risks (risk appetite) or the Audit Committee and/or the Risk
Committee (if applicable) considered the feasibility of putting forward the revision
of the Company’s risk appetite for consideration by the Board of Directors
1 Hereinafter the Nomination Committee.
76
• Complied with
° Complied with in part
° Not complied with
° Complied with
• Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
Pursuant to the Russian Government’s resolution, Rosneft signed an agreement
with a 100% government-owned company to sell all of Rosneft’s interests
and cease participation in all of its projects in Venezuela, including the joint
ventures of Petromonagas, Petroperija, Boqueron, Petromiranda and Petrovictoria,
as well as oilfield services companies, commercial and trading operations.
Based on the agreement, all Rosneft assets and trading operations in Venezuela and/or
those with connection to Venezuela have been disposed of, terminated or liquidated.
The agreement and the sale of assets resulted in Rosneft’s wholly-owned subsidiary
receiving a 9.6% stake in its parent company.
In addition, the Company’s Open Market Share Buyback Programme, which also covers
GDRs, saw its 100% subsidiary acquire a further 0.76% stake. None of these shares
were used in voting during the reporting period
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ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES No.
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2.1.4
The Board of Directors determines the Company’s
policy on remuneration and/or reimbursement
of expenses (compensations) to its directors,
executive bodies and other key managers
1. The Company has developed and implemented the policy (policies) approved
by the Board of Directors on remuneration and reimbursement of expenses
(compensations) to its directors, executive bodies and other key managers.
2.
In the reporting period, the Board of Directors addressed matters related
to the above policy (policies)
2.1.5
The Board of Directors plays a key role in preventing,
identifying and resolving internal conflicts between
the Company’s bodies, shareholders and employees
1. The Board of Directors plays a key role in preventing, identifying and resolving
internal conflicts.
2. The Company has developed a framework for identifying transactions involving
a conflict of interest and a set of measures for resolving such conflicts
2.1.6
The Board of Directors plays a key role in ensuring
the Company’s transparency, full and timely
information disclosure, and unhindered access
of shareholders to the Company’s documents
1. The Company has determined persons responsible for the implementation
of the Information Policy in its internal regulations
2.1.7
The Board of Directors oversees the Company’s
corporate governance practices and plays a key role
in the Company’s material corporate events
1.
In the reporting period, the Board of Directors reviewed the results of self-
assessment and/or external assessment of the Company’s corporate governance
practices
2.2. The Board of Directors is accountable to the Company’s shareholders
2.2.1
Information on the performance of the Board
of Directors is disclosed and provided to shareholders
1. The Company’s Annual Report for the reporting period includes information
on attendance of meetings of the Board of Directors and Committees by each
of directors.
2. The Annual Report includes information on key results of the Board of Directors’
performance assessment (self-assessment) carried out in the reporting period
2.2.2
The Chairman of the Board of Directors is available for
contact by the Company's shareholders
1. The Company has a transparent procedure in place for shareholders to send
requests to the Chairman of the Board of Directors (and, if applicable, the senior
independent director) and to receive feedback
2.3. The Board of Directors manages the Company in an effective and competent manner, and is able to make objective
and independent judgements and decisions in the best interests of the Company and its shareholders
2.3.1
Elected to the Board of Directors are only those
individuals who have an impeccable business
and personal reputation, as well as the knowledge,
skills and experience required for making decisions
within the remit of the Board of Directors
and performing its functions effectively
2.3.2
The Company’s directors are elected through
a transparent procedure providing shareholders
with sufficient information on candidates to form
an opinion about their personal and professional
qualities
1.
In the reporting period, the Board of Directors (or its Nomination Committee)
assessed candidates to the Board of Directors in terms of their required
experience, knowledge, business reputation, lack of conflict of interest, etc.
1.
In all cases where the agenda of a General Shareholders Meeting held
in the reporting period included election to the Board of Directors, the Company
provided shareholders with biographical details of all candidates to the Board
of Directors, results of assessment carried out by the Board of Directors (or its
Nomination Committee) to determine whether the members had the necessary
professional qualification, skills and expertise to meet the current and expected
needs of the Company information on their compliance with the independence
criteria as per Recommendations 102–107 of the Code, and their written consent
to be elected to the Board of Directors
2.3.3
The composition of the Board of Directors
is balanced, including in terms of directors’
expertise, experience, knowledge and business skills,
and worthy of shareholders’ trust
1.
In the reporting period, the Board of Directors analysed its needs in terms
of professional qualifications, expertise and skills and identified the competencies
the Board of Directors needs to develop in short and long run
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
° Complied with
• Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
Explanation on item 1: information on attendance of meetings of the Board of Directors
and its Committees is not disclosed in the Annual Report in accordance with Resolution of
the Government of the Russian Federation No. 351 dated 12 March 2022 and Presidential
Executive Order No. 903 dated 27 November 2023
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2.3.4 The number of directors ensures the most effective
1.
arrangement of activities of the Company’s Board
of Directors, including by way of establishing
Committees, and enables a candidate voted
for by the Company’s substantial minority
shareholders to be elected to the Board of Directors
In the reporting period, the Board of Directors reviewed whether the number
of directors was in line with the Company’s needs and shareholders’ interests
2.4. The Board of Directors includes a sufficient number of independent directors
2.4.1
An independent director is a person with sufficient
professional skills, experience and independence
to form their own opinions and make objective
and fair judgements not influenced by the Company’s
executive bodies, certain groups of shareholders or
other stakeholders.
Under normal circumstances a candidate (elected
director) may not be considered independent if
they are related to the Company, its substantial
shareholder, its substantial counterparty or
competitor, or the government
1.
In the reporting period, all independent directors met all of the independence
criteria as per Recommendations 102–107 of the Code or were recognised
as independent by the Board of Directors
2.4.2 Candidates to the Board of Directors are assessed
1.
for compliance with the independence criteria,
with independent directors being regularly checked
against these criteria. Such assessments is in line
with the substance over form principle
In the reporting period, the Board of Directors (or its Nomination Committee)
formed an opinion regarding the independence of each candidate to the Board
of Directors and submitted the relevant report to shareholders.
2. The Board of Directors (or the Nomination Committee) considered
the independence of the current directors (after they had been elected) at least
once in the reporting period.
3. The Company has developed procedures determining actions to be taken
by a director if they cease to be independent, including their obligation to notify
the Board of Directors accordingly and in a timely manner
2.4.3
Independent directors make up at least one third
of the elected directors
1.
Independent directors make up at least one third of the Board of Directors
2.4.4 Independent directors play a key role in preventing
1.
internal conflicts in the Company and taking material
corporate actions by the Company
In the reporting period, independent directors (with no conflict of interest) make
a preliminary assessment of material corporate actions involving a potential
conflict of interest and submit the results thereof to the Board of Directors
2.5. The Chairman of the Board of Directors ensures that the Board of Directors performs its functions in the most effective way
2.5.1
The Chairman of the Board of Directors has been
elected from among independent directors, or
a senior independent director has been appointed
from among the elected independent directors
to coordinate their work and liaise with the Chairman
of the Board of Directors
1. The Chairman of the Board of Directors is an independent director, or a senior
independent director has been appointed from among independent directors1.
2. The role, rights and responsibilities of the Chairman of the Board of Directors
(and, if applicable, of the senior independent director) are duly specified
in the Company’s internal regulations
2.5.2
The Chairman of the Board of Directors ensures
constructive atmosphere during meetings, facilitates
open discussion of agenda items and oversees
implementation of the Board of Directors’ resolutions
1.
In the reporting period, the performance of the Chairman of the Board of Directors
was assessed as part of the Board of Directors’ performance assessment
(self-assessment)
2.5.3
The Chairman of the Board of Directors ensures that
directors are provided with information required
to make informed decisions on agenda items
in a timely manner
1. The responsibility of the Chairman of the Board of Directors to ensure timely
provision to directors of complete and reliable information on agenda items
is specified in the Company’s regulations
1 The Company specifies which of the two suggested approaches it uses.
80
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
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2.6. Directors act reasonably and in good faith in the best interests of the Company and its shareholders, based on sufficient
awareness and with due diligence and care
2.6.1 Directors make decisions taking into account all
available information, having no conflict of interest,
ensuring equitable treatment of the Company’s
shareholders and keeping within the limits
of common business risks
1. The Company’s internal regulations specify that directors shall notify the Board
of Directors of any conflict of interest they might have in relation to any agenda
item prior to the discussion of that item at a meeting of the Board of Directors or
its Committee.
2. The Company’s internal regulations specify that a director shall abstain from voting
on any item where they have a conflict of interest.
3. The Company has established a procedure enabling the Board of Directors to get
professional advice on matters within its remit at the Company’s expense
2.6.2 Directors’ rights and responsibilities are clearly stated
1. The Company has adopted and published an internal regulation clearly specifying
and set forth in the Company’s internal regulations
directors’ rights and responsibilities
2.6.3 Directors have sufficient time to perform their duties
1. The assessment (self-assessment) of the Board of Directors in the reporting period
included the analysis of individual attendance of meetings of the Board of Directors
and the Committees and a review of whether a director had been on the Board
long enough.
2. As per the Company’s internal regulations, directors shall notify the Board
of Directors of their intention to join the governing bodies of other companies
(excluding those controlled by the Company) and of the fact of such
an appointment
2.6.4 All directors have equal access to the Company’s
documents and information. Newly elected
directors are provided with sufficient information
on the Company and the Board of Directors’ activities
as soon as practicable
1. As per the Company’s internal regulations, directors have the right to access
information and documents needed for the performance of their duties related
to the Company and its controlled entities, and the Company’s executive bodies
are obliged to procure the relevant information and documents.
2. The Company has a formalised induction programme in place for newly elected
directors
2.7. Meetings of the Board of Directors, preparation for and attendance of these meetings are key to the effectiveness of the Board of Directors
2.7.1 Meetings of the Board of Directors are held
1. The Board of Directors held at least six meetings in the reporting year
as necessary, given the Company’s scope
of operations and objectives at any given time
2.7.2
The Company’s internal regulations set out
a procedure to prepare and hold meetings
of the Board of Directors enabling directors to make
proper preparations
1. The Company has approved an internal regulation setting out the procedure
to prepare and hold meetings of the Board of Directors and specifying, among
other things, that the notice of a meeting shall be generally given at least five days
prior to the date of the meeting.
2.
In the reporting period, the directors who were unable to attend the meeting
in person had the opportunity to participate in discussion and voting on agenda
items remotely – via conference calls and video conferencing
2.7.3
The format of a meeting of the Board of Directors
is determined taking into account the importance
of agenda items. Resolutions on the most important
matters are adopted at in-person meetings
1. The Company’s Charter or another internal regulation specifies that the most
important matters (including those listed in Recommendation 168 of the Code)
shall be reviewed at in-person meetings of the Board of Directors
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
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2.7.4
Resolutions on the most important matters
related to the Company’s operations are adopted
at meetings of the Board of Directors by a qualified
majority vote or by a majority vote of all elected
directors
1. The Company’s Charter specifies that resolutions on the most important
matters, as per Recommendation 170 of the Code, shall be adopted at meetings
of the Board of Directors by a qualified majority of at least three quarters
of the votes or by a majority vote of all elected directors
° Complied with
• Complied with in part
° Not complied with
2.8. The Board of Directors establishes Committees for preliminary consideration of the most
important matters related to the Company’s operations
2.8.1
For preliminary consideration of matters related
to the monitoring of the Company’s financial
and business operations, an Audit Committee
composed of independent directors has been
established
1. The board of directors has a standing audit committee comprised entirely
of independent directors.
2. The Company’s internal regulations specify the Audit Committee’s objectives,
including, among others, those set out in Recommendation 172 of the Code.
3. At least one member of the audit committee, who is an independent director,
has knowledge and expertise in the preparation, analysis, evaluation and audit
of accounting (financial) statements.
4. The audit committee held at least one meeting per quarter during the reporting
period
° Complied with
• Complied with in part
° Not complied with
2.8.2 For preliminary consideration of matters related
1. The board of directors has a standing remuneration committee comprised entirely
to the development of an effective and transparent
remuneration framework, a Remuneration
Committee composed of independent directors
and chaired by an independent director not being
the Chairman of the Board of Directors has been
established
of independent directors.
2. The remuneration committee is chaired by an independent director who is not
the chairman of the board of directors.
3. The Company’s internal regulations specify the Remuneration Committee’s
objectives, including, among others, those set out in Recommendation 180
of the Code, as well as the circumstances (events) on the occurrence of which
the Remuneration Committee shall consider a revision of the Company’s
remuneration policy for members of the Board of Directors, executive bodies
and other key executive officers
° Complied with
• Complied with in part
° Not complied with
Paragraph 10.5.5 of Rosneft’s Charter specifies the range of matters to be resolved
by the Board of Directors by a qualified majority vote. Given the scope of Rosneft’s
operations, the number of matters reviewed by the Board of Directors, the composition
of the Board of Directors and the economic sanctions the Company is exposed
to, expanding this range to include all matters set out in Recommendation 170
of the Code may materially impede or prevent the resolution of matters material
to the Company. Therefore, setting a higher quorum as recommended by the Code may
result in the Board of Directors not being able to resolve a number of key matters.
At the same time, the number of directors, the structure of the Board of Directors,
including four independent directors, the procedure to prepare for meetings, discuss
matters at them and disclose information on them guarantee the protection of rights
of all shareholder groups of the Company. The Company has no intention to change its
approach in the medium term
Explanation on item 1: the principle is not complied with inasmuch as the Audit Committee
of the Board of Directors is not exclusively composed of independent directors.
The Audit Committee of the Board of Directors is mostly made up of independent
directors.
The elected Chairman of the Audit Committee of the Board of Directors is an independent
director.
The remit of the Audit Committee of the Board of Directors includes matters reserved
for an Audit Committee by the Corporate Governance Code.
Taking into account:
›
›
the Company’s three standing committees (the Audit Committee, HR
and Remuneration Committee, and Strategic Planning Committee);
the recommendations and restrictions set out in the Code (on the minimum
number of Committee members (three), on the maximum number of Committees
a director may sit on, on the minimum number of independent directors on an Audit
Committee and an HR and Remuneration Committee, and on the composition
of Committees based on directors’ relevant expertise), compliance
with the recommendation to have all Committees chaired by independent directors
is impracticable.
The committees seek to guarantee succession in their membership to maintain their
combined competencies and with regard to the role of each director in each committee.
At the same time, the Company’s internal regulations, including the Regulations
on the Board of Directors, specify procedures to prevent any conflict of interest
and eliminate the risk of recommendations by the committee of the Board of Directors
being affected by the controlling shareholder or executive bodies.
Explanation on items 1–2: the principle is not complied with inasmuch as the HR
and Remuneration Committee of the Board of Directors is not exclusively composed
of independent directors.
The HR and Remuneration Committee of the Board of Directors is mostly made up
of independent directors. The elected Chairman of the HR and Remuneration Committee
of the Board of Directors is a non-executive director.
The remit of the HR and Remuneration Committee of the Board of Directors includes
matters reserved for a Nomination Committee and a Remuneration Committee
by the Corporate Governance Code.
Taking into account:
›
›
the Company’s three standing committees (the Audit Committee, HR
and Remuneration Committee, and Strategic Planning Committee);
the recommendations and restrictions set out in the Code (on the minimum
number of Committee members (three), on the maximum number of Committees
a director may sit on, on the minimum number of independent directors on an Audit
Committee and an HR and Remuneration Committee, and on the composition
of Committees based on directors’ relevant expertise), compliance
with the recommendation to have all Committees chaired by independent directors
is impracticable.
At the same time, the Company’s internal regulations, including the Regulations
on the Board of Directors, specify procedures to prevent any conflict of interest
and eliminate the risk of recommendations by the committee of the Board of Directors
being affected by the controlling shareholder or executive bodies.
The Company has no intention to change its approach in the medium term
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2.8.3
For preliminary consideration of matters related
to human resources (succession) planning, expertise
and performance of the Board of Directors,
a Nomination (Appointment, HR) Committee mostly
composed of independent directors has been
established
1. The board of directors has a standing nomination committee (or its objectives specified
in Recommendation 186 of the Code are implemented by a different committee)
with the majority of its members being independent directors.
2. The Company’s internal regulations specify the objectives of the nomination committee
(or another relevant committee with combined functionality), including, among others,
those set out in Recommendation 186 of the Code.
3. To align the composition of the Board of Directors with the objectives and purposes
of the Company, in the reporting period, the Nomination Committee, acting on its own
or jointly with other Committees of the Board of Directors, or an authorised shareholder
engagement division arranged for interaction with a broad range of shareholders
to discuss the selection of candidates for the Company’s Board of Directors
2.8.4 Given the scope of operations and risk levels,
1.
the Company’s Board of Directors has ensured
that the composition of its Committees is fully
in line with the Company’s objectives. Additional
committees have been either established or found
unnecessary (a Strategy Committee, a Corporate
Governance Committee, an Ethics Committee, a Risk
Management Committee, a Budget Committee,
a Health, Safety and Environment Committee, etc.)
In the reporting period, the Company’s Board of Directors reviewed the relevance
of the structure of its Board of Directors to the scale, nature, objectives, needs
of the Company and its risk profile. Additional committees have been either
established or found unnecessary
2.8.5
The composition of Committees enables
comprehensive discussion of matters subject
to preliminary consideration with due regard
to varying opinions
1. The Audit Committee, the Remuneration Committee and the Nomination
Committee (or another relevant committee with combined functionality)
were chaired by independent directors in the reporting period.
2. The company’s internal regulations (policies) contain provisions that prohibit
the non-members to attend meetings of Audit Committee, the Remuneration
Committee and the Nomination Committee (or another relevant committee
with combined functionality), unless they are invited by the chairman
of a respective committee
2.8.6 Committee Chairmen report on their Committees’
1.
performance to the Board of Directors and its
Chairman on a regular basis
In the reporting period, Committee Chairmen regularly reported to the Board
of Directors on their Committees’ performance
2.9. The Board of Directors arranges performance assessment of the Board of Directors, its Committees and directors
2.9.1
The Board of Directors’ performance assessment
is aimed at evaluating the effectiveness of the Board
of Directors, its Committees and directors,
checking their performance against the Company’s
development needs, enhancing their activities
and identifying areas for improvement
1. The Company’s internal regulations set out the procedure for carrying out
the assessment (self-assessment) of the Board of Directors.
2.
In the reporting period, assessment (self-assessment) of the Board of Directors’
performance included performance assessment of individual directors
and the Board of Directors as a whole.
3. Results of the assessment (self-assessment) of the Board of Directors carried
out in the reporting period were reviewed at an in-person meeting of the Board
of Directors
2.9.2 Performance assessment of the Board of Directors, its
1. To assess the Board of Directors’ performance on an independent basis,
Committees and directors is carried out on a regular
basis at least once a year. To assess the Board
of Directors’ performance on an independent basis,
an external organisation (consultant) is engaged
at least once every three years
the Company engaged an external organisation (consultant) at least once
over the last three reporting periods
3.1. The Company’s Corporate Secretary ensures effective day-to-day interaction with shareholders, coordinates the Company’s
efforts to protect shareholder rights and interests, and contributes to the Board of Directors’ efficient work
3.1.1
The Corporate Secretary has sufficient knowledge,
experience and expertise to perform their duties,
as well as impeccable reputation, and enjoys
shareholders’ trust
1. The Company’s website and Annual Report provide biographical details
of the Corporate Secretary (including the age, eduction, qualification
and expertise) and positions the Corporate Secretary held in governing bodies
of other legal entities at least over the last five years
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
° Complied with
• Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
° Complied with
• Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
° Complied with
° Complied with in part
• Not complied with
Explanation on item 1:
the elected Chairman of the HR and Remuneration Committee of the Board of Directors
is a non-executive director.
Resolutions on the compositions of the Board of Directors’ committees seek to ensure an
optimal balance of independent and non-executive directors in line with their core and
specific competencies.
The committees seek to guarantee succession in their membership, inter alia taking into
account changes in the Board of Directors, to maintain their combined competencies and
with regard to the role of each director in each committee
Explanation on item 3:
given the increased sanctions pressure on fuel and energy companies, the Board
of Directors reviewed the results of its assessment by absentee voting in order to mitigate
the risk of personal sanctions against members of the Board of Directors
In accordance with Resolution of the Government of the Russian Federation No. 351
dated 12 March 2022 and Presidential Executive Order No. 903 dated 27 November 2023
information on the Corporate Secretary is not disclosed
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Explanations on the failure to meet criteria for compliance with a corporate governance principle
3.1.2
The Corporate Secretary is sufficiently independent from
the Company’s executive bodies and has the powers
and resources required to perform their duties
1. The Company has adopted and disclosed an internal regulation on Corporate
Secretary.
2. The Board of Directors approves the candidate for the position of Corporate
Secretary, terminates the Corporate Secretary’s powers and considers
the payment of additional remuneration to the Corporate Secretary.
3. The Company’s internal regulations define the Corporate Secretary’s right
to request and receive the Company’s documents and information from governing
bodies, structural subdivisions and officers of the Company
4.1. Remuneration paid by the Company is sufficient to attract, motivate and retain employees with the required competence
and expertise. Remuneration is paid to the Company’s directors, executive bodies and other key managers in accordance
with the remuneration policy adopted by the Company
4.1.1
4.1.2
4.1.3
4.1.4
Remuneration paid by the Company to directors,
executive bodies and other key managers
is sufficient to ensure their efficient work
and enables the Company to attract and retain
competent and qualified specialists. At the same
time, the Company avoids paying higher-than-
required remuneration or creating unreasonably
wide remuneration gaps between any of the above
persons and Company employees
The Company’s remuneration policy has been
developed by the Remuneration Committee
and approved by the Board of Directors. The Board
of Directors, supported by the Remuneration
Committee, monitors the introduction
and implementation of the remuneration policy
in the Company, and revises and amends it
as necessary
The Company’s remuneration policy provides
for transparent mechanisms to determine
the amount of remuneration payable to its directors,
executive bodies and other key managers, and covers
all types of payments, benefits and privileges
provided to them
The Company develops a policy on reimbursement
of expenses (compensations) specifying reimbursable
expenses and service levels that its directors,
executive bodies and other key managers are entitled
to. This policy may form part of the Company’s
remuneration policy
1. The remuneration of members of the Board of Directors, governing bodies
and other key executive officers of the Company is based on pay benchmarking
against peers
1.
In the reporting period, the Remuneration Committee reviewed the remuneration
policy (policies) and/or its (their) implementation practices, assessed their
effectiveness and transparency and, where necessary, submitted relevant
recommendations to the Board of Directors to revise this policy (policies)
1. The Company’s remuneration policy (policies) provides (provide) for transparent
mechanisms to determine the amount of remuneration payable to its directors,
executive bodies and other key managers, and covers (cover) all types of payments,
benefits and privileges provided to them
1. The Company’s remuneration policy (policies) or other internal regulations specify
procedures to reimburse its directors, executive bodies and other key managers
for the expenses incurred
4.2. Remuneration system for directors ensures alignment of their financial interests with the long-term financial interests of shareholders
4.2.1
The Company pays fixed annual remuneration to its
directors. The Company does not pay remuneration
for participation in individual meetings of the Board
of Directors or its Committees.
1.
2.
The Company does not offer short-term
motivation plans and additional financial incentives
to the members of its Board of Directors
In the reporting period, the Company paid remuneration to members of the Board
of Directors in line with the Company’s remuneration policy.
In the reporting period, the Company did not offer the members of its Board
of Directors any short-term motivation plans and additional financial incentives
based on the Company’s performance (performance indicators). The Company
did not pay remuneration for participation in individual meetings of the Board
of Directors or its Committees
4.2.2
Long-term ownership of the Company’s
shares ensures best alignment of directors’
financial interests with the long-term interests
of shareholders. At the same time, the Company
does not link the right to sell shares to achieving
certain performance indicators, and directors do not
participate in options plans
4.2.3
The Company does not provide any additional
payments or compensations to directors in the event
of early termination of office due to a transfer
of control over the Company or any other
circumstances
1.
If the Company’s internal regulation (regulations), namely its remuneration policy
(policies), allows (allow) distribution of the Company’s shares to directors, clear
rules on share ownership by directors aimed at encouraging their long-term
ownership shall be introduced and disclosed
1. The Company does not provide any additional payments or compensations
to directors in the event of early termination of office due to a transfer of control
over the Company or any other circumstances
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
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Explanations on the failure to meet criteria for compliance with a corporate governance principle
4.3. Remuneration system for members of executive bodies and other key managers of the Company links their remuneration
to the Company’s performance and their personal contribution thereto
4.3.1
Remuneration paid to members of executive bodies
and other key managers of the Company ensures
a reasonable and justified balance between the fixed
and variable components, with the latter depending
on the Company’s performance and an employee’s
personal (individual) contribution thereto
1.
In the reporting period, the variable remuneration for members of executive
bodies and other key managers of the Company was linked to annual performance
indicators approved by the Board of Directors.
2. During the latest assessment of the remuneration system for members
of executive bodies and other key managers of the Company, the Board
of Directors (the Remuneration Committee) ensured that the Company maintained
an effective balance between the fixed and variable components of remuneration.
3. The remuneration payable to members of the executive bodies and other officers
of the Company factors in the risks to which the Company is exposed to prevent
excessively risky decision-making in management
4.3.2 The Company has introduced a long-term incentive
plan for members of its executive bodies and other
key managers involving its shares (options or other
derivatives with its shares as underlying assets)
1.
If the Company introduces a share-based long-term incentive plan for members
of its executive bodies and other key officers (share-based financial instruments),
the right to sell shares and other financial instruments may be exercised no earlier
than three years after the date on which they were granted. Moreover, the right
to sell them is subject to the achievement by the Company of certain performance
indicators
4.3.3 The amount of severance pay (“golden parachute”)
1.
payable by the Company to members of its executive
bodies or key managers in the event of early
termination of office, provided that such termination
is initiated by the Company with no misconduct
on the part of the respective employee, does not
exceed twice the size of the fixed component of their
annual remuneration
In the reporting period, the amount of severance pay (“golden parachute”) paid
by the Company to members of its executive bodies or key managers in the event
of early termination of office, provided that such termination was initiated
by the Company with no misconduct on the part of the respective employee, did
not exceed twice the size of the fixed component of their annual remuneration
5.1. The Company has put in place an effective risk management and internal control system to provide reasonable assurance that
it will achieve its goals
5.1.1
The Board of Directors has formulated the principles
of and approaches to the risk management
and internal control system in the Company
1. Risk management and internal control functions of the Company’s governing
bodies and divisions are clearly set out in the Company’s internal regulations /
relevant policy approved by the Board of Directors
5.1.2
The Company’s executive bodies ensure
the establishment and maintenance of an effective
risk management and internal control system
in the Company
1. The Company’s executive bodies have ensured the distribution of risk management
and internal control duties, powers and responsibilities among heads of units
and divisions accountable to them
5.1.3
The Company’s risk management and internal control
system provides an accurate, fair and clear view
of the Company’s current situation and prospects,
and ensures integrity and transparency
of the Company’s statements, as well as a reasonable
and acceptable level of risk-taking
1. The Company has approved an anti-corruption policy.
2. The Company has established a safe, secure and easily accessible channel (hotline)
to inform the Board of Directors or its Audit Committee about violations of law,
internal procedures or the Code of Corporate Ethics
5.1.4
The Company’s Board of Directors takes
the necessary steps to ensure that the Company’s
Risk Management and Internal Control System
functions effectively and is in line with the relevant
principles and approaches formulated by the Board
of Directors
1.
2.
In the reporting period, the Board of Directors (the Audit Committee and/or
the Risk Committee (if applicable) arranged for an assessment of reliability
and effectiveness of the risk management and internal control system.
In the reporting period, the Board of Directors reviewed the findings from
the assessment of reliability and effectiveness of the risk management and internal
control system to include them in the Company’s annual report
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
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Status of compliance with a corporate governance principle
Explanations on the failure to meet criteria for compliance with a corporate governance principle
5.2. The Company conducts internal audits to assess the reliability and effectiveness of its Risk Management, Internal Control
System and corporate governance on a regular and independent basis
5.2.1
For the internal audit purposes, the Company
has established a dedicated unit or engaged
an independent external organisation. Functional
accountability and administrative accountability
of the internal audit unit are separated. The internal
audit unit is functionally accountable to the Board
of Directors
1. For the internal audit purposes, the Company has established a dedicated
internal audit unit functionally accountable to the Board of Directors, or engaged
an independent external organisation with the same accountability principle
5.2.2
The internal audit unit is responsible for assessment
of reliability and effectiveness of the risk
management and internal control system
and the corporate governance system and relies
on generally accepted internal audit standards
1.
2.
In the reporting period, as part of internal audit, the reliability and effectiveness
of the internal control and risk management system was assessed.
In the reporting period, as part of the internal audit, the corporate governance
practice (practices) were assessed, including the communication procedures
(including those relating to internal control and risk management) at all levels
of the Company’s governance and the stakeholder engagement procedures
6.1. The Company and its operations are transparent to shareholders, investors and other stakeholders
6.1.1
The Company has developed and implemented
an Information Policy ensuring effective exchange
of information between the Company, its
shareholders, investors and other stakeholders
1. The Company’s Board of Directors has approved its Information Policy developed
in accordance with the Code’s recommendations.
2.
In the reporting period, the Board of Directors (or its Committee) considered
the effectiveness of communication between the Company, shareholders,
investors and other stakeholders and the advisability of (need for) a revision
of the Company’s Information Policy
6.1.2
The Company discloses information on its corporate
governance system and practices, including detailed
information on its compliance with the principles
and recommendations of the Code
1. The Company discloses information on its corporate governance system
and on the general corporate governance principles it uses, including by disclosing
such information on the Company’s website.
2. The Company discloses information on the composition of its executive bodies
and Board of Directors, on the independence of directors and their membership
in the Committees of the Board of Directors (as defined in the Code).
3.
If there is a person controlling the Company, the Company publishes
a memorandum on behalf of such controlling person detailing their plans
as regards corporate governance in the Company
6.2. The Company discloses complete, up-to-date and accurate information on the Company in a timely manner to ensure that its
shareholders and investors are able to make informed decisions
6.2.1
The Company discloses information on a regular
basis and in a consistent and timely manner, in line
with the principles of data accessibility, accuracy,
completeness and comparability
1. The Company has in place a procedure streamlining the work of all the Company’s
structural subdivisions and employees involved in disclosing information or whose
activity may lead to the need for disclosing information.
2.
3.
If the Company’s securities are traded in established foreign markets, disclosures
of material information during a reporting year are made in Russia and in such
markets on a concurrent and equal basis.
If foreign shareholders own a substantial number of shares in the Company,
disclosures during the reporting year were made in Russian and in one of the most
widely used foreign languages
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
° Complied with
• Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
In accordance with Resolution of the Government of the Russian Federation No. 351
dated 12 March 2022 and Presidential Executive Order No. 903 dated 27 November 2023
information on members of the Management Board is not disclosed
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ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES No.
Corporate governance principles
Criteria for compliance with a corporate governance principle
Status of compliance with a corporate governance principle
Explanations on the failure to meet criteria for compliance with a corporate governance principle
Explanation on items 2–3: the Company discloses information in line with requirements
of the Bank of Russia but limits the volume of the disclosure to meet the provisions of
Resolution of the Government of the Russian Federation No. 351 dated 12 March 2022 and
Presidential Executive Order No. 903 dated 27 November 2023.
Rosneft's Board of Directors oversees the development of the strategy and performance
assessment at controlled legal entities using the following mechanisms:
1. control over executive bodies whose remit includes the approval of the Group
Subsidiaries’ plans as per Rosneft's Charter;
2. corporate procedures governed by Rosneft's internal regulations, which ensure
alignment of all strategic planning documents of Rosneft and the Group Subsidiaries
with Rosneft’s strategy approved by the Board of Directors.
The powers of the Board of Directors to approve Rosneft’s Strategy and monitor its
implementation, and the powers of the Chief Executive Officer and the Management
Board to approve the planning documents of the Group Subsidiaries are set forth
in Rosneft’s Charter. The powers of the Strategy and Sustainable Development Committee
of Rosneft’s Board of Directors to define the Company's policy with respect to the Group
Subsidiaries are set forth in the Regulations on Rosneft Board Committees and disclosed
on the corporate website.
Detailed information on internal procedures for approval of strategic documents
of the Group Subsidiaries and control over their implementation by the Board of Directors
(its committees) is not disclosed. The Company has no intention to change this approach
in the medium term
6.2.2 The Company avoids formal approach to information
disclosures and discloses material information on its
operations even if such disclosures are not required
by law
1. The Company’s Information Policy defines approaches to non-mandatory
disclosure of information on other events (actions) that have a material effect
on the price and quotes of its securities.
2.
In accordance with Recommendation 290 of the Code, the Company discloses
information on its capital structure in the Annual Report and on its website.
3. The Company discloses information on its material controlled legal entities,
including their key business areas, mechanisms for ensuring their accountability,
and the powers of the Company’s Board of Directors to define their strategy
and assess their performance.
4. The Company publishes a non-financial report, i.e. a sustainability report,
environmental report, corporate social responsibility report or another
report providing non-financial information, including that on the Company’s
environmental (environment protection and climate change), social,
and governance (ESG) performance, other than the report of the issuer of issue-
grade securities or the annual report of a joint-stock company
6.2.3 As a key communication tool to liaise
1. The Company’s Annual Report provides information on the results of the external
with shareholders and other stakeholders, the Annual
Report provides information needed to assess
the Company’s performance for the year
and internal audit assessment by the Audit Committee.
2. The Company’s Annual Report provides information on the Company’s
environmental and social policies
6.3. The Company provides shareholders with equal and unhindered access to information and documents as per their request
6.3.1 No unreasonable difficulties prevent the shareholders
1. The Company’s information policy (internal regulations setting forth
from exercising their right to access the Company's
documents and information
the information policy) define(s) the procedure ensuring unhindered access
to the Company’s information and documents at the shareholders’ request.
2. The Company’s information policy (internal regulations setting out the information
policy) contain(s) provisions stipulating that the Company shall take all necessary
steps to obtain the information on its controlled entities from the relevant
controlled entities, as may be requested by the shareholders
6.3.2 When providing information to shareholders,
the Company maintains a reasonable balance
between the interests of individual shareholders
and those of the Company, as it is in the Company’s
best interests to keep confidential any sensitive
commercial information that may have a material
effect on its competitive position
1.
2.
In the reporting period, the Company did not refuse to provide shareholders
with requested information, or such refusals were justified.
If and when required by the Company’s Information Policy, shareholders
are informed of the sensitive nature of the information provided and undertake
to keep it confidential
7.1. Actions that have or may have a material effect on the Company’s shareholding structure and financial position and,
consequently, on the shareholders’ position (material corporate actions) are taken on fair terms ensuring that rights
and interests of the shareholders and other stakeholders are respected
7.1.1 Material corporate actions include reorganisation
1. The Company’s Charter sets out a list (criteria) of transactions or other actions
of the Company, acquisition of 30% or more
of the Company’s voting shares (takeover), major
transactions made by the Company, increase or
reduction in the Company’s charter capital, listing
and delisting of the Company’s shares, and other
actions that may result in a material change
in the rights of shareholders or be against their
interests. The Company’s Charter sets out a list
(criteria) of transactions or other actions deemed
to be material corporate actions and reserved
to the Company’s Board of Directors
7.1.2
The Board of Directors plays a key role in making
decisions or recommendations with regard
to material corporate actions and relies
on the opinion of the Company’s independent
directors
deemed to be material corporate actions. As per the Company's Charter, decision-
making with regard to material corporate actions is reserved to the Board
of Directors. If and when the law expressly reserves such corporate actions
to the General Shareholders Meeting, the Board of Directors provides shareholders
with relevant recommendations
1. The Company has established a procedure for independent directors to express
their opinions on material corporate actions before their approval
° Complied with
• Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
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Explanations on the failure to meet criteria for compliance with a corporate governance principle
7.1.3 When taking material corporate actions affecting
the rights and legitimate interests of shareholders,
the Company ensures equitable treatment of all of its
shareholders, and, where statutory mechanisms
protecting shareholder rights are insufficient, takes
additional steps to protect the rights and legitimate
interests of the Company’s shareholders.
In doing so, the Company is guided not only
by the formal regulatory requirements, but also
by the corporate governance principles specified
in the Code
1. Approval of the Company's material transactions is reserved to Board of Directors
as per the Company's Charter, with due regard to the specifics of the Company's
operations and in addition to regulatory requirements for transaction approvals.
2.
In the reporting period, all material corporate actions were duly approved prior
to their implementation
• Complied with
° Complied with in part
° Not complied with
7.2. The Company ensures that material corporate actions are taken in a manner enabling shareholders to receive full information
on such actions in due time and influence them, and guarantees respect and due protection of shareholder rights when such
actions are taken
7.2.1
Information on material corporate actions
is disclosed, with an explanation of the relevant
reasons, conditions and consequences
1.
In the reporting period, the Company disclosed information on its material
corporate actions (if any) in a timely and detailed manner, including the relevant
reasons, conditions and consequences for the shareholders
7.2.2
Rules and procedures for taking material corporate
actions are set forth in the Company’s internal
regulations
1. The Company’s internal regulations set out the rules and procedure for engaging
an appraiser to determine the value of the property to be sold or purchased
in a major transaction or a related-party transaction.
2. The Company’s internal regulations set out a procedure for engaging an appraiser
to determine the value of the Company’s shares to be purchased or bought back.
3.
If a member of the Company's Board of Directors, the sole executive body,
a member of the collegial executive body, or a person who is a controlling person
of the Company or a person entitled to give the Company binding instructions has
no formal interest in the Company's transactions, but has a conflict of interest or
other actual interest with regard to such transactions, such persons shall abstain
from voting on the approval of such transactions as required by the Company's
internal documents
• Complied with
° Complied with in part
° Not complied with
• Complied with
° Complied with in part
° Not complied with
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97
ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Information on core internal regulations that
serve as a basis for the preparation of this annual
report, including key internal documents regulating
the internal audit function and the functioning
of the RM&ICS
THIS ANNUAL REPORT HAS BEEN PREPARED BASED ON THE FOLLOWING LOCAL
(INTERNAL) REGULATIONS OF ROSNEFT:
› Charter;
› Regulations on the Information Policy;
› Rosneft’s Corporate Governance Code;
› Regulations on Provision of Information to Rosneft
› Code of Business and Corporate Ethics of Rosneft;
› Regulations on the General Shareholders Meeting;
› Regulations on the Board of Directors;
› Regulations on Rosneft Board Committees;
Shareholders;
› Regulations on Internal Control Rules
for the Prevention, Detection and Suppression
of Illegal Use of Insider Information in Rosneft
and/or Market Manipulation;
› Rosneft’s Dividend Policy;
› Regulations on Remunerations and Compensations
Payable to Members of the Board of Directors;
› Company Policy on Combating Corporate Fraud
and Involvement in Corruption Activities;
› Regulations on the Collective Executive Body
(Management Board);
› Regulations on the Sole Executive Body (Chief
Executive Officer);
› Standard on Payments and Compensations to Top
Managers;
› Regulations on the Audit Commission;
› Regulations on Remunerations and Compensations
Payable to Rosneft’s Audit Commission Members;
› Regulations on the Corporate Secretary;
› Company Policy on Internal Audit;
› Company Policy on Risk Management and Internal
Control System;
› Company Policy on Health, Safety
and Environmental Protection.
General information about
Rosneft
Date of state registration
and registration number of Oil
Company Rosneft:
› date of state registration
of the Company as a legal entity:
7 December 1995;
› Number of State Registration
Certificate of the Company:
024.537;
› date of entry in the Uniform State
Register of Legal Entities about
a legal entity established prior
to 1 July 2002: 12 August 2002;
› series and number of Certificate
of Entry in the Uniform State
Register of Legal Entities about
a legal entity established
prior to 1 July 2002: series 77
No. 004856711;
› Primary State Registration
Number under which entry about
the establishment of the Company
is made in the Uniform State
Register of Legal Entities:
1027700043502.
Constituent entity of the Russian
Federation in whose territory
the Company is registered: Moscow.
Main types of operations
of the Company: geological
prospecting and geological
exploration work aimed at oil, gas, coal
and other minerals search; extraction,
transportation and processing
of oil, gas, coal and other minerals
and timber; production of oil
products, petrochemicals and other
products, including electric
power, woodworking products,
fast moving consumer goods
and provision of services to the public;
storage and sale (including sale
in the domestic market and export
sale) of oil, gas, oil products, coal,
electric power, woodworking
products, and other hydrocarbon
and other derivatives.
Pursuant to Decree of the Government
of the Russian Federation No. 1226-r
dated 20 August 2009, Rosneft
has been included into the list
of strategic enterprises charged
with implementation of uniform public
policy in those branches of economy
where such entities operate.
Pursuant to Decree of the President
of the Russian Federation No. 688
dated 21 May 2012, Rosneft has been
included into the list of strategic
enterprises and strategic joint-stock
companies.
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ABOUT THE COMPANYCORPORATEGOVERNANCEAPPENDICES Contact details
Full name:
Public Joint-Stock Company Rosneft
Oil Company
Abbreviated name:
For institutional investors:
Investor Relations Department,
Rosneft
Telephone: +7 (495) 411-05-04
ir@rosneft.ru
E-mail:
PJSC Rosneft Oil Company
Ras auditor of the company:
TSATR – Audit Services LLC
77 Sadovnicheskaya Embankment,
Bld. 1, Moscow, 115035, Russia
Telephone: +7 (495) 705-97-00;
+7 (495) 755-97-00
Facsimile: +7 (495) 755-97-01
Registrar of the company:
Reestr-RN LLC
20 First Shchipkovsky Side Street,
Moscow, 115093, Russia
Telephone: +7 (495) 411-79-11
Facsimile: +7 (495) 411-83-12
E-mail:
Website:
support@reestrrn.ru
www.reestrrn.ru
Moscow office:
10 Butyrskiy Val, Bldg. A, 13th Floor,
Moscow, 125047, Russia
Facsimile: +7 (495) 967-71-13
Location of the company:
26/1 Sofiyskaya Embankment,
Moscow, 117997, Russia
Post address:
26/1 Sofiyskaya Embankment,
Moscow, 117997, Russia
Information service:
Telephone: +7 (499) 517-88-99
Facsimile: +7 (499) 517-72-35
Telex: 114405 DISVO.RU
E-mail:
postman@rosneft.ru
For shareholders:
Shareholder Relations Division,
Corporate Governance Department,
Rosneft
Telephone: +7 (495) 987-30-60;
8 (800) 500-11-00 (calls from Russia
toll-free)
Facsimile: +7 (499) 517-86-53
E-mail:
shareholders@rosneft.ru
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