Novatek (NVTK) 2018年年度報告「LSE」.pdf

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1、EXPANDING OUR GLOBAL LNG FOOTPRINTANNUAL REPORT 2018HYDROCARBON RESERVES549 Hydrocarbon productionMLN BOE+8.5Natural gas production increase11.8Liquid hydrocarbons production%9%Share of natural gas production in RussiaTotal proved hydrocarbon reserves(SEC)Fields and license areas56 PRODUCTION15.79BL

2、N BOE1.22 Total proved hydrocarbon reserves addition(SEC),including productionBLN BOEMMTNOVATEK at a Glance 2018PAO NOVATEK is one of the largest independent producers of natural gas in Russia.The ompany is engaged in the exploration,production,processing and sale of natural gas and liquid hydrocarb

3、ons and has almost twenty-five years of experience in the Russian oil and gas industry.The Company entered the international gas market in December 2017 with the start of LNG production at the Yamal LNG Project.$SALES15.8Liquid hydrocarbons sales volumeMMTTotal revenues832 RR BLNUSD BLN6LNG sales on

4、 international markets 415Normalized EBITDA 26.06Recommended dividend per share RR51.9Market capitalization as of 31.12.2018(LSE)66Natural gas sales in RussiaBCMBCMRR BLNContentsREVIEW OF OPERATING RESULTSLicenses.40Hydrocarbon Reserves.40Geological Exploration .41Field Development.43Hydrocarbon Pro

5、duction.44LNG Projects.44Processing of Gas Condensate.47Natural Gas Sales.48Liquid Hydrocarbons Sales .49ENVIRONMENTAL AND SOCIAL RESPONSIBILITYEnvironmental Protection.52Industrial Safety and Occupational Health.54Human Resources.56Social Policy and Charity.57Letter to Shareholders.6Strategic Prior

6、ities.12Business Model.13Key Events and Achievements 2018.22Key Indicators.244Annual Report 2018MANAGEMENT AND CORPORATE GOVERNANCECorporate Governance System.62General Meeting of Shareholders.62Board of Directors .63Board Committees .65Management Board.66Remuneration to Members of the Board of Dire

7、ctors and Management Board.67Internal Control and Audit.67Share Capital.69Dividends.70Information Transparency.71ADDITIONAL INFORMATIONRisk Management System.73Risk Insurance.81Information on Members of NOVATEKs Board of Directors.81Information on Members of NOVATEKs Management Board.84Report on maj

8、or,and interested-party transactions that the Company did in the reporting year.87Corporate Governance Code Compliance Report.87Forward-looking Statements.110Conversion Factors.110Terms and Abbreviations.111IFRS Consolidated Financial Statements for 2018.112Contact Information.1885Expanding Our Glob

9、al LNG FootprintLetter to ShareholdersMARK GYETVAYDeputy Chairman of the Management BoardLEONID MIKHELSONChairman of the Management BoardALEXANDER NATALENKOChairman of the Board of Directors6Annual Report 2018Yamal LNG was launched in record time and on budget with the commissioning of the second an

10、d third LNG trains accomplished ahead of schedule by six months and more than a year,respectively.Yamal LNG established a new benchmark in the industry known for numerous budget overruns and delays in project implementation.The successful launch of all three liquefaction trains confirms that Yamal L

11、NG is a unique project in the fastest-growing segment of the natural gas industry,enabling us to emerge as one of the major players in the global LNG market.With a nameplate capacity of 16.5 million tons per annum(mmtpa)with the launch of three LNG trains,Yamal LNGs natural gas feedstock is based on

12、 reserves of the South-Tambeyskoye field on the coast of the Ob Bay,located on the hydrocarbon-rich Yamal Peninsula.We will build the fourth LNG train with a planned capacity of 0.9 mmtpa based on NOVATEKs patented proprietary liquefaction technology called“Arctic Cascade”using equipment produced an

13、d manufactured domestically in Russia.Combined,the project should reach a nameplate capacity of 17.4 mmtpa.Yamal LNG is an integrated project encompassing natural gas production,liquefaction and marketing,with its key advantages of a prolific conventional reserve base,proven development technologies

14、,very low lifting costs,advantageous geographical location and colder ambient temperatures.These strategic favorable operating conditions further support our future LNG projects on the Yamal and Gydan peninsulas,thus making our overall LNG platform extremely attractive based on lower capital intensi

15、ty per ton of LNG produced,and optional transport routes to East and West natural gas consuming markets.Yamal LNG is currently the largest LNG project in Russia with an aggregate share of about 5%of the global LNG market and represents a unique benchmark for the global oil and gas industry.We have s

16、omething to be proud of,as we have consistently demonstrated our ability to develop our asset base and competitively produce natural gas and LNG in Russias Arctic zone.We have gained invaluable experience in implementing a large-scale LNG project in the Arctic region where,despite the harsh climatic

17、 conditions,the colder ambient temperature provides us with a competitive advantage to lower the cost of liquefaction.Many industry commentators consider natural gas as a“transition”or“bridge”fuel.We disagree with this characterization.Natural gas is a clean burning fossil fuel and will play a major

18、 role in the future energy mix as a key contributor to meet climate change and de-carbonization goals.We are very optimistic about our future LNG projects given forecasted LNG and natural gas demand scenarios,and the transition from coal to natural gas in the primary energy mix to support sustainabl

19、e development principles.We officially opened the summer navigation period via the Northern Sea Route when we delivered the first commercial LNG shipments to China from Yamal LNG using the newly designed Arc7 ice-class tankers.These shipments were made possible due to the exceptional characteristics

20、 of our brand new,fully dedicated fleet of ice-class LNG carriers to serve our Arctic projects.These unique ice-class LNG carriers enable year-round navigation without icebreaker support along westbound navigation routes and,eastbound during the Arctic zones seasonal navigation period,along the Nort

21、hern Sea Route.During 2018,we delivered LNG cargos to Asia,India,South America,the Middle East and Europe,representing 113 cargos,or 8.4 million tons.This demonstrates the commercial viability of delivering competitively priced LNG from the Arctic region of Russia to all major consuming regions of t

22、he world.We also optimized our transport costs by decreasing the travel distance of the Arc7 ice-class tankers to ensure Dear Shareholders,TWO THOUSAND AND EIGHTEEN was an incredible year for NOVATEK culminating with the successful launch of our flagship Yamal LNG project and reaching the facilities

23、 full design capacity in record time.It marked a year of exceptional achievements and EXPANDING OUR GLOBAL LNG FOOTPRINT with shipments tocustomers around the globe.549Total hydrocarbons production7%growth as compared with 2017MMBOE7Expanding Our Global LNG Footprintthe timely loading and offloading

24、 of LNG produced from the Yamal LNG project.In November 2018,Yamal LNG successfully completed the first ship-to-ship LNG transshipment in the area near the port of Honningsvag in northern Norway.The operational experience gained from this process will be used at our future large-scale LNG transshipm

25、ent projects in Kamchatka and the Murmansk Region,according us the opportunity to build an efficient logistics chain for our LNG projects.Our LNG strategy also provides for medium-tonnage and low-tonnage projects,enabling us to build effective distribution channels to target niche markets and custom

26、er segments.In the reporting year,we completed the construction and began commissioning of Cryogas-Vysotsk,a medium-tonnage LNG plant located on the Baltic Sea.In 2018,we established a joint venture with Fluxys to build a medium-tonnage transshipment LNG terminal in Rostock in Germany,which will rec

27、eive LNG carriers from the Cryogas-Vysotsk liquefaction facility.In order to manage our transportation costs and build up the unique competencies of Arctic navigation,in May 2018,we created a wholly owned transport subsidiary called Maritime Arctic Transport.Establishing an efficient Northern Sea Ro

28、ute shipping model is one of our key priorities to realize our long-term strategy and improve the competitiveness of NOVATEKs Arctic projects.The successful launch of our flagship LNG project demonstrated our ability to contribute in a meaningful way to the next wave of LNG projects delivering cost

29、competitive LNG to the international markets.This year,we are ready to move forward with implementing our next LNG project,Arctic LNG 2,and this past May,we agreed in principle with our long-term partner TOTAL to enter the project and in March 2019,the deal was closed.The intention of our respected

30、partner to enter into the Arctic LNG 2 project at an early stage confirms the outstanding economic attractiveness and huge perspectives of future LNG projects on the Yamal and Gydan peninsulas.Arctic LNG 2 is based on the prolific hydrocarbon resources of the Utrenneye field located on the Gydan pen

31、insula.The project provides for the construction of three LNG trains at 6.6 mmtpa each,for a combined total of 19.8 mmtpa.Through innovation and technology,our goal for Arctic LNG 2 is to significantly reduce Arc 7We officially opened the summer navigation period via the Northern Sea Route when we d

32、elivered the first commercial LNG shipments to China from Yamal LNG using the newly designed Arc7 ice-class tankers 113 LNG cargos or 8.4 mln tons of LNG offloaded in 2018 from Yamal LNGArctic LNG 2,based on the prolific hydrocarbon resources of the Utrenneye field located on the Gydan Peninsula,env

33、isages for the construction of three LNG trains for a combined total of 19.8 mmtpaThe successful launch of all three liquefaction trains confirms that Yamal LNG is a unique project in the fastest-growing segment of the natural gas industry,enabling us to emerge as one of the major players in the glo

34、bal LNG market8Annual Report 2018Our large,high-quality,low-cost resource base in the hydrocarbon-rich Yamal and Gydan peninsulas underlies our ambitious growth strategythe liquefaction capital costs by using gravity-based structures(GBS)as the projects platform.In late 2018,we completed the front e

35、nd engineering and design work,or FEED,confirming the commercial viability of the projects concept and estimated capital costs.Correspondingly,Arctic LNG 2 signed contracts on the design and construction of GBS,and the supply of turbo machinery equipment.In parallel,during 2018,we made ongoing const

36、ruction progress at the LNG construction yard in the Murmansk Region,which will serve as the center for fabrication and construction of GBS platforms.We can substantially facilitate global LNG trade and decrease the travel distance of the Arc7 ice-class tankers by constructing our transshipment faci

37、lities in the Murmansk Region(westbound cargos)and at Kamchatka(eastbound cargos).This provides our commercial trading group with various options to trade LNG cargos to maximize netback margins based on trading spreads between the Pacific and Atlantic LNG trades.Moreover,we signed an agreement durin

38、g the past year with the Ministry of the Russian Federation for the Development of the Far East and the Government of the Kamchatka Territory on the construction of a marine LNG transshipment complex in the Kamchatka region.It is paramount that we optimize our LNG logistical model to ensure the most

39、 effective and efficient year-round transport scheme.NOVATEK plans to significantly increase production of natural gas and LNG,and we are interested in developing the whole natural gas value chain to enhance the competitive advantages of our scalable low-cost LNG projects.In 2018,we concluded severa

40、l Memorandums of Understanding in relation to the Companys current and future LNG projects.Our large,high-quality,low-cost resource base in the hydrocarbon-rich Yamal and Gydan peninsulas underlies our ambitious growth strategy.In 2018,we successfully expanded our resource base through exploration w

41、orks as well as obtaining new mineral licenses on the Yamal and Gydan peninsulas.Over the past several years we have managed to acquire through tenders and auctions very enviable license areas to support our future LNG growth ambitions.We will continue to deploy capital to our exploratory activities

42、 to prepare these license areas for future LNG projects.Our first exploration well testing the North-Obskiy license area located in the shallow waters of the Ob Bay yielded a new field discovery called the North-Obskoye field.The North-Obskoye field was the single standalone largest gas discovery in

43、 the world in 2018 with natural gas reserves attributable to the first exploration well amounting to 322 billion cubic meters(bcm)according to the Russian reserve classification methodology.In 2018,significant reserve growth was also confirmed at the Utrenneye field with the discovery of of two new

44、Nyakhartinskoye fieldNorth-Obskoye field Utrenneye field9Expanding Our Global LNG Footprintthe launch of the three trains at Yamal LNG and the acquisition of new assets at the end of 2017 and first quarter 2018.We had a very successful year marketing natural gas to both the domestic and internationa

45、l markets.Our natural gas sales volumes,including LNG volumes sold,aggregated 72.1 bcm,representing an increase of 11.0%as compared with 2017.Volumes of natural gas sold in the Russian domestic market in 2018 were 66.1 bcm,whereas LNG volumes sold on international markets amounted to 6.1 bcm or 57 c

46、argos of LNG.Sales volumes of LNG in 2017 were 0.1 bcm as Yamal LNG commenced LNG shipments on 8 December 2017.Our current business generates sufficient operating cash flows to internally fund our operations,service our debt and liabilities,and distribute cash to our shareholders in the form of divi

47、dends.Our strong cash flow generated from our core domestic business has allowed us to significantly reduce our long-term debt portfolio and maintain strong credit metrics.In 2018,our revenues increased by 43%to RR 832 bln and our normalized EBITDA increased by 62%to RR 415 bln while our normalized

48、profit increased 49%to RR 233 bln.Based on the Companys financial results,the Board of Directors recommended to the General Meeting of Shareholders to approve dividends for 2018 at RR 26.06 per share,exceeding the dividend paid out for the previous year by 74.3%.TWO THOUSAND AND EIGHTEEN began the t

49、ransformation of NOVATEK into a global gas company.We will play a major role in the global LNG markets and our ambitious strategic goal to be one of the largest single LNG producers in the world is supported by our unique resource potential,professional competences,exceptional experience gained with

50、 the launch of Yamal LNG,a balanced investment portfolio,keen focus on cost control and adherence to strict financial policies.These characteristics are the hallmark of a successful company but they alone are not sufficient to attain the status of a truly great company.We must take a responsible app

51、roach to our business conduct.NOVATEK seeks to hydrocarbon deposits increasing the fields natural gas reserves up to about 2 trillion cubic meters.The new deposits expand the fields reserve potential and open additional opportunities for implementing the Arctic LNG 2 project.Our exploration success

52、was not only confined to the Yamal and Gydan peninsulas.We discovered the Nyakhartinskoye field,located in close proximity to the Companys Yurkharovskoye field.This represents a very important reserve discovery to maintain NOVATEKs natural gas production output in the area of the Unified Gas Supply

53、system.The Companys reserves were also positively impacted by successful exploration works at the Utrenneye,Urengoyskoye(Samburgskiy license area)and Yarudeyskoye fields,as well as production drilling at the South-Tambeyskoye,North-Russkoye and Yaro-Yakhinskoye fields.We obtained the following new l

54、icenses:the South-Leskinskiy,Payutskiy,Palkurtoiskiy,Centralno-Nadoyakhskiy,Beregovoy,Ust-Yamsoveyskiy and Chernichniy license areas.Our total SEC proved reserves,including the Companys proportionate share in joint ventures,aggregated 15,789 million barrels of oil equivalent(boe),including 2,177 bcm

55、 of natural gas and 181 million metric tons(mmt)of liquid hydrocarbons.At year-end 2018,our total proved reserves increased by 4%compared to year-end 2017,representing a reserve replacement rate of 222%for the year,the addition of 1,218 million boe,inclusive of 2018 production.We retained our core c

56、ompetitive advantage by being ranked among the lowest cost hydrocarbon producers globally,and our lifting costs remained at a very low level of$0.6 per boe.We are fully committed to our strategy providing for strict cost control and conservative financial policies.During the past year,NOVATEKs hydro

57、carbon production totaled 549.1 million boe,including 68.8 bcm of natural gas and 11,800 thousand tons of liquids(gas condensate and crude oil),representing an increase in total hydrocarbons produced by 35.8 million boe,or by 7.0%,as compared with 2017.The positive factors contributing to our produc

58、tion growth were mainly attributable to The Company built a new residential school for 800 schoolchildren in the Gyda settlement located on the Gydan Peninsula.It is crucial that we give back to society and develop the future generation of Russia.72.1Natural gas sales volumes,including volumes of LN

59、G sold,11%growth as compared with 2017BCM 10Annual Report 2018 62Increase of normalized EBITDA to RR 415 bln%comply with the best sustainability principles taking into consideration the interests of all stakeholders when making decisions.We see sustainable development as one of the cornerstones of o

60、ur future growth and key to EXPANDING OUR GLOBAL LNG FOOTPRINT.YNAO is the principal home of our major oil and gas operations.Social commitments are often overlooked in the grander scheme of our development activities and lofty LNG ambitions but it is crucial that we give back to society and develop

61、 the future generation of Russia.We are very proud to have built a new residential school for 800 schoolchildren in the Gyda settlement located on the Gydan peninsula.This past year began the first academic year for students in a new school.We also launched the“Health Territory”charity project assis

62、ting children with medical care and targeted aid in the Yamal Nenets Autonomous Region(YNAO).We were recognized for our efforts in environmental protection,social responsibility and corporate governance by the global community.In 2018,NOVATEK remained a constituent of the FTSE4Good Emerging Index of

63、 FTSE Russell Ratings.We became the winner of the 2018 National Environmental Award named after Vladimir Vernadskiy in the nomination“Innovative Eco-efficient Technologies in Industry and Energy”with our“Arctic Cascade”liquefaction technology;and the winner of the“Change Management.Visionaries.”awar

64、d with our Sustainability Report in the category“Disclosure of Information on Social Impact”.We would not be here today if it were not for the thousands of dedicated employees working at NOVATEK and our joint ventures.Human capital is mission critical to develop a world-class company based on innova

65、tion and technology to drive our next wave of LNG projects ALEXANDER NATALENKO Chairman of the Board of DirectorsLEONID MIKHELSON Chairman of the Management BoardMARK GYETVAY Deputy Chairman of the Management Boardand maintain our commitment to our core domestic business.We thank all of our employee

66、s for their commitment and dedication as we continue our journey of transforming NOVATEK into a global gas company.On behalf of the Board of Directors and Management Board,we are pleased to present to all our valued stakeholders the Companys 2018 Annual Report.We would like to thank everyone for you

67、r continued support,as we remain committed to growing NOVATEK and EXPANDING OUR GLOBAL LNG FOOTPRINT while implementing the best international practices and principles of sustainable development.11Expanding Our Global LNG FootprintBuild low cost scalable LNG platformIncrease hydrocarbon productionOp

68、timizemarketing channelsMaintain low coststructureConservative financial policiesEfcient investment decisionsSustainable developmentCorporate governancetechnologytechnologyinnovationinnovationRESOURCE BASEGROWTHStrategic PrioritiesResourse base growth Organic resource growth from exploration and dev

69、elopment activities on the Yamal and Gydan peninsulas Strategic acquisitions and active participation in license tenders Increase hydrocarbon production Increase gas production through development of projects within the UGSS and LNG projects in the Arctic Development of deeper Jurassic and Achimov l

70、ayers Fully utilize processing capacity of Ust-Luga complex Maintain low cost structure Remain one of the lowest cost hydrocarbon producers in the global oil&gas industry Optimize cost structure through strategic investment of capital Develop low cost LNG value chainOptimize marketing channels Maxim

71、ize use of Northern Sea Route and develop key transshipment points Build diversified LNG trading portfolio Develop strategic partnerships with industry partners in key markets Build low cost scalable LNG platform Increase production through development of scalable LNG projects Development of proprie

72、tary LNG technologies Integrated projects for production and liquefaction of natural gas Sustainable development Reduce and prevent negative environmental impact Increase the efficiency and rational use of natural resources,energy efficiency12Annual Report 2018Business Model11.011.078%Purovsky Plant

73、(nameplate capacity-11 mmtpa)Stabilization of gas condensate Sales volumeProducing fieldsSeparation and treatmentUst-Luga Complex(nameplate capacity-6 mmtpa)Fractionation of stable gas condensate22%LPG22%62%Naphtha 16%Jet fuel13%Fuel oil 9%GasoilYamal LNGNatural gas by pipelineCrude oil by pipelineU

74、nstable gas condensate by pipeline 2.71.96.7domestic marketinternational marketNatural gasCrude oilLPGStable gas condensatePetroleum products72.14.534%66%92%8%86%14%LNGby seaStable gas condensateby rail Stable gas condensate78%Stable gas condensateMMT100%BCMMMTMMTMMTMMTby sea22%78%6.96.9MMT13Expandi

75、ng Our Global LNG Footprintfields and license areasSyskonsynyinskiy LA(located in KMAO)Producing FieldsYamal LNGPurovsky Gas Condensate Processing PlantArctic LNG 2Gas condensate pipelines of NOVATEKProspective Fields and License AreasYamal-Nenets Autonomous Region15.79Total proved hydrocarbon reser

76、ves(SEC)BLN BOE 222Reserve replacement rate%56Yamal-Nenets Autonomous RegionHydrocarbon Reserves14Annual Report 2018West-Yurkharovskoye fieldNyakhartinskiy license areaMalo-Yamalskoye fieldNorth-Obskiy license areaShtormovoy license areaUtrenneye fieldSouth-Tambeyskoye fieldVerhnetiuteyskiy+West-Sey

77、akhinskiy LASyadorskiy license areaEast-Tambeyskiy license areaNyavuyahskiy license areaGydanskiy 1 license areaPalkurtoiskiy license areaPayutskiy license areaWest-Solpatinskiy license areaGydanskiy license areaGeofizicheskiy license areaTrekhbugorniy license areaNorth-Tanamskiy license areaTanamsk

78、iy subsoil areaCentral-Nadoyakhskiy license areaNorth-Tasiyskiy license areaYarudeyskoye fieldNorth-Yubileynoye fieldWest-Urengoiskiy license areaNorth-Urengoyskoye fieldUkrainsko-Yubileynoye fieldYurkharovskoye fieldEast-Tazovskoye fieldNorth-Russkiy license areaDorogovskoye field,Dorogovskiy 1 lic

79、ense areaKharbeyskoye fieldEast-Tarkosalinskoye fieldKhancheyskoye fieldTermokarstovoye fieldOlimpiyskiy license areaRaduzhnoye fieldOsenniy license areaYaro-Yakhinskiy license areaBeregovoy license areaWest-Yaroyakhinskiy license areaNorth-Chaselskiy license areaChernichnoye fieldYumantilskiy licen

80、se areaSouth-Khadyryakhinskiy license areaLadertoyskiy license areaLadertoyskiy 1 license areaUst-Yamsoveyskiy license areaYevo-Yakhinskoye fieldSamburgskiy license areaSouth-Leskinskiy license areaNorth-Russkoye fieldWest-Chaselskoye fieldNorth-Khancheyskoye+Khadyryakhinskoye fieldKrasnoyarsk Terri

81、tory15Expanding Our Global LNG Footprint3215.5Arc7 The project is supported by a fleet of Arc7 ice-class tankers supplemented by lower ice-class designated tankers to transport LNG cargosNameplate capacity of each of the three trains in operationYamal LNG is the largest LNG project in RussiaTHE PROJ

82、ECT WAS CONSTRUCTED AND COMMISSIONED ON BUDGETNo.1MMTPATRAINS LAUNCH12 on schedule6 months ahead of schedulemonths ahead of scheduleYamal LNGUNIQUE integrated project for production,liquefaction and sale of natural gas.In 2018,three LNG trains reached full capacity.16Annual Report 201832111317.4Name

83、plate capacity of Train 4LNG liquefaction capacity after Train 4 launchNOVATEKs patented proprietary liquefaction technology will be utilized for construction of Train 4MMTPA0.9LNG cargos offloaded from Yamal LNG in 2018LNG production at Yamal LNG in 2018MMTPA8.6MMT OF LNGARCTIC CASCADE17Expanding O

84、ur Global LNG FootprintArctic LNG 2LNG CONSTRUCTION CENTERLNG construction center is the worlds first complex to build GBS-based LNG trains.The LNG Construction Center will comprise two dry docks to build GBS and facilities to manufacture topside modules.This new facility will establish a state-of-t

85、he-art LNG platform in Russia,create new jobs in engineering and production,and also contribute to regional economic developmentBelokamenkaLNG Construction CenterYamal-Nenets Autonomous RegonUtrenneye fieldYamal PeninsulaYamal LNGArctic LNG 2Gydan PeninsulaSouth-Tambeyskoye fieldThe Utrenneye field

86、is the resource base for the ProjectInnovative construction concept using gravity-based structures(GBS)LNG trains will be fabricated at NOVATEKs LNG Construction CenterThree LNG trains at 6.6 mmtpa each Arctic LNG 2 is the second LNG project of NOVATEK which includes the construction of three LNG tr

87、ains,with a total design capacity of 19.8 mmptaExploration drilling at the Utrenneye field 18Annual Report 2018Accommodation camp up to 15,000 peopleConcrete batch plant 180,000 cubic meters per annumReinforced concrete structures fabrication shopsProcess module fabrication shops(up to 100,000 tons

88、per annum)CONCEPTIn 2018:Completed the front end engineering and design work(FEED)Contracted more than 50%of the equipment for the Project1,138BCM OF NATURAL GAS57MMT OF LIQUID HYDROCARBONSUtrenneye fields reserves under PRMS as of 31.12.2018Started site preparation,construction of early phase power

89、 supply facilities,production wells drilling and berth constructionSigned a contract on the design and construction of GBSSigned an agreement for the supply of turbo machinery equipment,including the supply of gas turbine compressors and gas turbine generators for the three liquefaction trainsNOVATE

90、K and TOTAL agreed in principle on the entry into the Arctic LNG 2 providing for a purchase by TOTAL of a 10%participating interest in the project.The deal was closed in 2019KEY ADVANTAGES Optimize and reduce CAPEX per ton of LNG liquefaction Low cost,onshore conventional natural gas Reduce construc

91、tion and logistical costs as main LNG equipment is built and installed at the LNG construction center High local content Minimize scope of work in the Arctic area Minimize environmental impactTotal area over 150 Ha19Expanding Our Global LNG FootprintCryogas-Vysotsk is our first medium-scale LNG proj

92、ect on the Baltic SeaCryogas-VysotskLNG production facility is located in the port of Vysotsk,the Leningrad RegionSales:Domestic market Baltic,Scandinavian and North-Western European markets Refueling of bunkering vessels and sales of LNG as a motor fuelWe see vast prospects in using LNG as marine f

93、uel and motor fuel to substitute for diesel and fuel oil,that will contribute to decreasing emissions and improving the environment.NOVATEK and Fluxys established a joint venture to design,build,finance,own and operate a medium-scale LNG transshipment terminal with a capacity of about 300 mtpa in th

94、e port of Rostock,Germany.The transshipment terminal will receive LNG carriers from the Cryogas-Vysotsk liquefaction facility and further LNG deliveries to the consumer market will be made via trucks.It will also have an option of bunkering and loading of bunkering vessels.The project infrastructure

95、 includes two LNG trains with a capacity of 330 mtpa each,a 42 mcm LNG storage tank and an offloading terminalVysotskVysotskBaltic SeaPolandSwedenLithuaniaGermanyRostockRussiaEstoniadelivery by seadelivery by landtransshipmentFinland20Annual Report 2018660Initial design capacityMTPA OF LNGShipping b

96、erth designed to handle up to 30 mcm capacity LNG tankersBunkering21Expanding Our Global LNG Footprint“ARCTIC CASCADE”We patented the“Arctic Cascade”proprietary liquefaction technology for use at Train 4 of Yamal LNG.NOVATEK was recognized by the National Environmental Award named after Vladimir Ver

97、nadskiy in the nomination category of“Innovative Eco-efficient Technologies in Industry and Energy”for its Arctic Cascade natural gas liquefaction process.Key Events and Achievements 2018YAMAL LNG The Yamal LNG project reached its full capacity more than a year ahead of the initial schedule.First LN

98、G cargos were shipped to Europe,the Asian Pacific region and Latin America.Yamal LNG carried out the first ship-to-ship LNG transshipment.LARGE GEOLOGICAL DISCOVERIES We discovered the North-Obskoye field through our successful exploration efforts,which was named the worlds largest standalone gas fi

99、eld discovery in 2018.Anew field called Nyakhartinskoye was also discovered.While testing a prospecting well at the Utrenneye field,we discovered new gas condensate deposits and confirmed the commercial productivity of the fields Middle Jurassic layer.We acquired mineral licenses for the Beregovoy,U

100、st-Yamsoveyskiy,Payutskiy,Palkurtoiskiy,Central-Nadoyakhskiy,South-Leskinskiy and Chernichniy license areas.The Company commissioned the oil deposits at the Yaro-Yakhinskoye oil,gas and condensate field(Arcticgas).YNAO22Annual Report 2018DEVELOPMENT OF LNG BUSINESS NOVATEK and TOTAL agreed in princi

101、ple on TOTALs entry into Arctic LNG 2.The deal was closed in 2019.We signed contracts with SAREN on the design and construction of gravity-based structures(GBS)and Nuovo Pignone on the supply of turbo machinery equipment for the Arctic LNG 2 project.An agreement was signed with the Ministry for the

102、Development of the Russian Far East and with the Government of the Kamchatka Region for the construction of an offshore LNG transshipment terminal.We signed strategic cooperation agreements on LNG projects with Sovcomflot,Rosatom,Siemens,and SACE,the Italian export and credit agency.Memorandums of U

103、nderstanding were signed with Saudi Aramco,KOGAS,the Japan Oil,Gas and Metals National Corporation(JOGMEC)and Japans Saibu Gas.NOVATEK incorporated the Maritime Arctic Transport LLC,a wholly owned subsidiary to manage and optimize shipping costs,and to build unique competencies in Arctic navigation.

104、SUSTAINABLE DEVELOPMENT NOVATEK remained a constituent in the FTSE4Good Emerging Index published by FTSE Russell Ratings.For its Sustainability Report,the company received the“Change Management.Visionaries.”Award in the Social Impact Disclosure category.A new“Health Territory”charity project was lau

105、nched aimed at providing medical aid to children from the regions where we operate.A new boarding school for 800 children was built in Gyda village on the Gydan peninsula,in one of the most remote settlements of the Yamal-Nenets Autonomous Region.We created a joint venture with Fluxys for the constr

106、uction of a mid-scale LNG transshipment terminal in the port of Rostock in Germany.23Expanding Our Global LNG FootprintKey IndicatorsUnit20172018ChangeFinancial indicatorsTotal revenuesRR mln583,186831,75842.6%Normalized profit from operations1RR mln163,751225,53937.7%Normalized EBITDA(including sha

107、re in EBITDA of JVs)1RR mln256,464415,29661.9%Normalized profit attributable to shareholders of PAO NOVATEK2RR mln156,166232,93049.2%Normalized earnings per share,basic and diluted2RR51.7877.2949.3%Net cash provided by operating activitiesRR mln180,399216,34919.9%Cash used for capital expenditures3R

108、R mln29,87194,038214.8%Free cash flowRR mln150,528122,311(18.7%)Operating indicatorsProved natural gas reserves(SEC)bcm2,0982,1773.8%Proved liquid hydrocarbon reserves(SEC)mmt16418110.4%Total hydrocarbon reserves(SEC)mmboe15,12015,7894.4%Natural gas productionbcm63.468.88.5%Liquid hydrocarbons produ

109、ctionmt11,77411,8000.2%Proportionate share in LNG production of JVs4mt1625,152n/aTotal productionmmboe513.3549.17.0%Daily productionmmboe/day1.411.507.0%Positions in RussiaShare in natural gas production5%9.19.30.2 p.p.Share in liquid hydrocarbons production5%2.22.1(0.1 p.p.)1.Excluding the effect f

110、rom disposal of interests in joint ventures.2.Excluding the effects from the disposal of interests in joint ventures,as well as foreign exchange gains(losses).3.Cash used for capital expenditures represents purchases of property,plant and equipment,materials for construction and capitalized interest

111、 paid per Consolidated Statement of Cash Flows net of payments for mineral licenses and acquisition of subsidiaries.4.Natural gas and LNG production at Yamal LNG are reported at 60%.5.According to CDU TEK information.24Annual Report 201820142015201620172018Total proved hydrocarbon reserves(SEC),mmbo

112、eProved natural gas reserves(SEC),bcmNatural gas production,bcmLiquids production,mmtProved developedOperating cash flow,RR blnDividends per share,RRNormalized EBITDA2,RR blnNormalized profit attributable to shareholders of PAO NOVATEK3,RR blnGas condensateCrude oilProved undeveloped201412,64312,817

113、13,40215,12015,7891,7511,7751,8482,0982,1776.09.112.411.811.8201520162017201820142015201620172018201420152016201720182014201520162017201820142015201620172018201420152016201720182014201520162017201862.167.967.663.468.8111.2132.9173.8180.4216.3159.6214.2242.4256.5415.310.313.513.914.9526.06137.374.413

114、3.8156.2232.965%35%66%34%41%59%1.Recommendation of the Board of Directors.2.Including share in EBITDA of JVs.Excluding the effect from disposal of interests in JVs.3.Excluding the effects from the disposal of interests in JVs,as well as foreign exchange gains(losses).25Expanding Our Global LNG Footp

115、rint5941351423511327NOVATEK-Yurkharovneftegas fieldsNOVATEK-Tarkosaleneftegas fields Others Arcticgas fields South-Tambeyskoye North-Urengoyskoye TermokarstovoyeYarudeyskoyeHydrocarbon production breakdown,%:Luquid hydrocarbonsproduction breakdown,%:Total hydrocarbon production7%growth as compared w

116、ith 2017MLN BOE549gas condensate crude oilTotal liquid hydrocarbons productionMMT11.8Total natural gas production8.5%growth as compared with 2017BCM68.8Geological Explorationand ProductionWe continued to achieve some of the lowest lifting costs in the industry.In 2018,NOVATEK produced commercial hyd

117、rocarbons at 18 fields.1.5 per boe 20142018 reserve replacement cost47.6 invested in resource base developmentRR BLNUSD54years proved and probable reserve to production ratio(PRMS)26Annual Report 2018Processing of de-ethanized condensateMT11,017Processing of stable gas condensateMT6,949Ust-Luga Comp

118、lexFractionation and transshipmentof stable gas condensateStable gas condensateSIBURs TobolskPetrochemical ComplexProduction of marketable LPGNGLStabilization of gas condensateUnstable gas condensatePurovskyPlant8,501 2,2471,9971,0878436332,452 15 stable gas condensateNGL and LPGregenerated methanol

119、heavy naphthalight naphthajet fuelship fuel componentgasoilProcessing of Gas CondensatePUROVSKY PLANTThe Purovsky Plant is the central element in our vertically integrated value chain that provides us complete operational control over our processing needs and access to higher yielding marketing chan

120、nels for our stable gas condensate.The Purovsky Plant processes unstable gas condensate into stable gas condensate and natural gas liquids(NGL).UST-LUGA COMPLEXThe Gas Condensate Fractionation and Transshipment Complex is located at the all-season port of Ust-Luga on the Baltic Sea.The Ust-Luga Comp

121、lex processes stable gas condensate into light and heavy naphtha,jet fuel,ship fuel component(fuel oil)and gasoil,and enables us to ship the value-added petroleum products to international markets.The Ust-Luga Complex also allows for transshipment of stable gas condensate to the export markets.Total

122、 output of the Purovsky Plant in 2018,mtTotal output of the Ust-Luga Complex in 2018,mt27Expanding Our Global LNG Footprint26Power generation companiesLarge industrial consumersWholesale traders,ex-fieldOthersHouseholdsStavropolRegion2014201520162017201865.064.762.567.272.1Tula RegionLipetskRegionSm

123、olenskRegionMoscow and MoscowRegion21862945Natural Gas SalesIn 2018,natural gas sales volumes,including volumes of LNG sold,aggregated 72.1 bcm,representing an increase of 11%as compared with 2017NOVATEK plays an important role in ensuring supplies of natural gas to the domestic market.During 2018,t

124、he Company supplied natural gas to 40 regions of Russia.Revenues from natural gas sales amounted to RR 375.2 billion,representing a 51.5%increase compared to 2017.The revenue increase was mainly driven by start of LNG deliveries from the Yamal LNG project and an increase in sales prices and volumes

125、in the Russian domestic market.Natural gas sales breakdown on the Russian domestic market by customers in 2018,%Natural gas sales,bcm28Annual Report 20181426PermTerritoryVologdaRegionNizhnyNovgorodRegionKostromaRegionChelyabinskRegionTyumenRegionKhanty-MansiyskAutonomous RegionYamal-NenetsAutonomous

126、 RegionMain regions of gas salesOther regions of gas sales40regions in RussiaTotal volume of natural gas sales in Russia66.1BCM29Expanding Our Global LNG Footprint57LNG CARGOS170LNG tanker capacity45Vessel powerMCMMWt Milford HavenAtlantic OceanRotterdamZeebruggeIsle of GrainDunkerqueBilbaoMontoir-d

127、e-Bretagnesold by NOVATEK in 2018BrazilCHRISTOPHE DE MARGERIELNG SalesOne of our core commercial marketing priorities is to expand our supply geography and grow our presence in the key consuming markets.In 2018,we shipped LNG cargos to Europe,the Asian-Pacific region and Latin America,thus demonstra

128、ting the commercial viability of delivering cost-competitive LNG around the globeARC7 SPECIFICATIONSLNG TRANSPORTATIONThe Arc7 ice-class carriers,designed specifically for NOVATEKs Arctic projects,enable year-round navigation without icebreaker support along westbound navigation routes and,eastbound

129、 during the Arctic zones seasonal navigation period,along the Northern Sea Route30Annual Report 201819.55.5Speed in open waterSpeed in ice 1.5 m thick19The first LNG tanker voyage from the port of Sabetta to China was completed in 19 days as compared to 35 days for the conventional route via the Sue

130、z CanalKNOTSKNOTSDAYSdelivery pointtransshipmentArctic OceanHonningsvagYamal LNGRussiaIndiaChina31Expanding Our Global LNG FootprintLiquid Hydrocarbons SalesNOVATEK sells liquid hydrocarbons(stable gas condensate,petroleum products,light hydrocarbons,LPG and crude oil)domestically and internationall

131、yIn 2018,our liquids sales revenues increased to RR 450.6 billion,or by 35.6%as compared to 20171712290,142166321BelarusUSACanadaRomaniaSpainPolandItalyBelgiumFranceUnited KingdomNetherlandsDenmarkLatviaEstoniaUst-Luga productsOtherJet fuelFuel oil and gasoilNaphthaCrude oilStable gas condensateLPG

132、and lighthydrocarbonsNorwayLiquid hydrocarbons sales,%32Annual Report 2018451Liquid hydrocarbons sales revenuesRR BLN15.8Liquid hydrocarbons sales volumeMMTRussiaMalaysiaUAESingaporeTaiwanSouth KoreaJapanChinaFinlandSwedenOmanStable gas condensateExport marketsUst-Luga ComplexPurovskyPlantJet fuelGa

133、soilHeavy naphthaLight naphthaCrude oilFuel oilLPG33Expanding Our Global LNG FootprintEnvironmental and Social ResponsibilityEnvironmental expenses in 2018,%522963341111Protection and use of water resourcesEnviromental protection against production and consumption wasteEnvironmental monitoring and e

134、valuationof the backgroundSoil protectionMeasures for the protection of flora and fauna and preservation of biodiversityAtmospheric air protection and climate changeSubsurface protectionEnvironmental management Environmental damage compensationOtherENVIRONMENTAL PROTECTIONNOVATEK,through its subsidi

135、ary NOVATEK-AZK,is implementing a pilot project for the sale of LNG as a motor fuel.Converting a vehicle to LNG enables a significant reduction of soot and carbon monoxide emissions compared to conventional fuels.BIODIVERSITYIn 2018,at Yamal LNG we carried out a study of marine mammals migration rou

136、tes and an assessment of LNG shipping impact on their population in the northern part of the Ob Bay.ACHIEVEMENTS NOVATEKs Arctic Cascade liquefaction technology was recognized by the Vernadsky National Environmental Award in the Innovative Eco-Effective Industrial and Energy Technologies category.97

137、.1APG utilization rate%38Reduction of injury frequency rate%11,119completed OHS training and certification EMPLOYEES34Annual Report 201823Reduction of atmospheric emissions%2,384Expenses on environment protection and sustainable nature managementRR MLN35Expanding Our Global LNG Footprint351371386213

138、3Targeted Compensation and Socially Important PaymentsHealth Resort Treatment and RehabilitationPension ProgramVoluntary Medical InsuranceCulture and sportsState Guarantees Support ProgramNOVATEK-Veteran ProgramRepayable Financial Aid ProgramOthers112 young specialists participated in the Steps in D

139、iscovering Talents Program.We had our sixth class.In September 2018,Moscow hosted the 13th Interregional Research-to-Practice Conference for the Companys young specialists attended by 93 employees.A total of 40.5%of white-and blue-collar workers upgraded their skills in 2018.Social expenses for empl

140、oyees,%As part of the World Football Championship 2018 youth events,a match between the winning teams of the Chelyabinsk and Kostroma championships and the team from Italy was held on Moscows Red Square36Annual Report 201813,694employees at NOVATEK,its subsidiaries and joint ventures as of 31 Decemb

141、er 2018NOVATEKs personnel structure as of 31.12.18,%Projects and activities related to the support of indigenous peoples,charitable contributions,cultural and educational programs,%EDUCATIONAL PROGRAMSFor many years,NOVATEK has been developing a continuing education program set to bring professional

142、s to the Company,which provides opportunities to gifted students from the regions where we operate.“Gifted Children”program implemented at School No.8 in Novokuybyshevsk,school No.2 in Tarko-Sale,school No.81 in Tyumen and in 2018,school No.2 in Salekhard joined the program.1,431Social program expen

143、ses for employeesRR MLN34131226114581118661Cooperation with regions of operations,including support of indigenous peoples of the Far NorthSports programs Cultural programs and projectsEducational programs Other Children in desperate needExploration and productionTransportation and marketingProcessin

144、gPower supplyAdministrative personnelAncillary servicesIn October 2018,77 employees participated in the 4th Professional Skills Contest among field workers of the NOVATEK Group.The Innovator Corporate Idea Management System focuses on improving business operations,reduction of production costs and i

145、mplementation of new work methods.In 2017 and 2018,more than 500 ideas were submitted,of which 40 were approved for implementation and 24 ideas were implemented.They generated an economic effect of RR 104.7 bln.In 2018,NOVATEK and its subsidiaries invested RR 2,047 million in projects and activities

146、 related to the support of indigenous peoples,charitable contributions,cultural and educational programs.Two Grants programs for schoolchildren and teachers from the Purovsky District:in 2018,the Company awarded 39 grants to students and 4 teachers received grants under this program.In 2018,a new bo

147、arding school for 800 children was built in Gyda village on the Gydan Peninsula,in one of the most remote settlements of the Yamal-Nenets Autonomous Region.37Expanding Our Global LNG FootprintThe Board of Directors MembershipCorporate GovernanceMR.ALEXANDER E.NATALENKOBorn in 1946Chairman of the Boa

148、rdof DirectorsMember of the StrategyCommitteeMR.ANDREI I.AKIMOVBorn in 1953Member of the StrategyCommitteeMR.MICHAEL BORRELLBorn in 1962Member of the StrategyCommitteeThe Company has established an effective and transparent system of corporate governance complying with both Russian and international

149、 standards.NOVATEKs supreme governing body is the General Meeting of Shareholders.The corporate governance system comprises the Board of Directors,the Board Committees,and the Management Board,as well as internal control and audit bodies and the Corporate Secretary3838Annual Report 2018MR.LEONID V.M

150、IKHELSONBorn in 1955Chairman of the ManagementBoardMR.GENNADY N.TIMCHENKOBorn in 1952Member of the StrategyCommitteeMR.ARNAUD LE FOLL(from 18.01.2019)Born in 1978Member of the Strategy Committee MR.ROBERT CASTAIGNEBorn in 1946Independent DirectorChairman of the Audit CommitteeMember of the Remunerat

151、ionand Nomination Committee DR.BURCKHARD BERGMANNBorn in 1943Independent DirectorChairman of the Strategy CommitteeMember of the Audit CommitteeMember of the Remuneration and Nomination CommitteeMR.VICTOR P.ORLOVBorn in 1940Independent Director Chairman of the Remuneration and Nomination CommitteeMe

152、mber of the AuditCommitteeIndependent Board Members3939Expanding Our Global LNG FootprintLicensesNOVATEKs core fields and license areas are located in the Yamal-Nenets Autonomous Region.In 2018,we expanded the Companys operational footprint and obtained new licenses in Russias Krasnoyarsk Territory,

153、the Gydan Penin-sula in close proximity to existing license areas of the Company as well as offshore licenses located in Monte-negro and Lebanon.The Yamal-Nenets Autonomous Region(YNAO)is one of the worlds largest natural gas producing regions and accounts for approximately 80%of Russian natural gas

154、 production and 15%of global natural gas production.The concentration of the Companys fields in this prolific gas-producing region provides favorable opportunities for increasing NOVATEKs shareholder value with a minimum level of risks,low finding cost,and efficient replacement of reserves.With more

155、 than 20 years of operational expe-rience in the region,NOVATEK is in a good position to efficiently monetize its resource base.Exploration and production of hydrocarbons in Russia is subject to federal licensing regulations.As of 31 December 2018,NOVATEK subsidiaries and joint ventures held 56 lice

156、nses for subsoil use.NOVATEK also entered into agreements on exploration and production of hydrocarbons on four offshore blocks in Montenegro and on two offshore blocks in Lebanon.The duration of licenses for the Companys core fields exceeds 15 years.In particular,the license for the South-Tambeysko

157、ye field is valid until 2045,for the Utren-neye field until 2120,for the East-Tarkosalinskoye field until 2043,for the Yurkharovskoye field until 2034,and for the Samburgskiy license area of Arcticgas until 2034.In the reporting year,NOVATEK significantly expanded its portfolio of licenses.In Februa

158、ry 2018,NOVATEK won the ALROSA public auction,obtaining the subsoil licenses for the Beregovoy and Ust-Yamsoveyskiy license area.As of 31 December 2018,the two license areas had a total of 1,217 mmboe of Russian hydrocarbon reserves or 871 mmboe of PRMS reserves.Our subsidiary NOVATEK-Yurkharovnefte

159、gas won the auctions for hydrocarbon exploration and production licenses for the Payutskiy and South-Leskinskiy license areas.The licenses were issued for a term of 27 years.The Payutskiy and South-Leskinskiy areas are located within the Krasnoyarsk Territory in the vicinity of NOVATEK assets,namely

160、 the West-Solpatinskiy,North-Tanamskiy,Nyavuy-akhskiy and Tanamskiy areas in the Gydan Peninsula.The Companys subsidiaries obtained five geological study licenses in 2018,which include prospecting and field appraisal,in particular,for the geological study of the Palkurtoiskiy and Central-Nadoyakhski

161、y areas and flanks of fields being explored,including the Gydanskiy 1,Lader-toyskiy 1,and Dorogovskiy 1.The new acquisitions are estimated to hold a total resource potential of 19,872 mmboe.The Company already holds a vast resource base in the Gydan Peninsula,including the Utrenneye,Geofizich-eskoye

162、,and Gydanskoye fields and a set of prospective license areas.With new licenses,NOVATEK is accumu-lating its vast hydrocarbon resource base in the peninsula and,accordingly is in a position to consider significant long-term projects to increase its hydrocarbon production output.NOVATEK strives to st

163、rictly observe all of its license obli-gations and conducts continuous monitoring of license tenders in order to expand its resource base in strategi-cally important regions.Hydrocarbon ReservesMost of the Companys reserves are located onshore or can be developed from onshore locations and are attri

164、b-uted to the conventional hydrocarbon categories(capable of being exploited using conventional technologies,in contrast to unconventional gas deposits such as shale gas or coal-bed methane).DeGolyer and MacNaughton,an independent petroleum engineers firm,estimates the Companys reserves on an annual

165、 basis under both the SEC and PRMS reserves reporting standards.Review of Operating Results40Annual Report 2018As of 31 December 2018,NOVATEKs SEC proved reserves,including the Companys proportionate share in joint ventures,aggregated 15,789 million barrels of oil equiv-alent(mmboe),including 2,177

166、bcm of natural gas and 181 mmt of liquid hydrocarbons.The Companys proved reserves grew by 4%,and the reserve replacement ratio stood at 222%.At year-end 2018,the Companys reserve to production ratio(or R/P ratio)was 29 years.As of 31 December 2018,the Companys total PRMS proved and probable reserve

167、s,including the Compa-nys proportionate share in joint ventures,aggregated 29,619 mmboe,including 4,021 bcm of natural gas and 387 mmt of liquid hydrocarbons,with a total R/P ratio of 54 years.The Companys reserves trend in 2018 was positively impacted by successful exploration at the Utrenneye,Uren

168、goyskoye(Samburgskiy license area)and Yarud-eyskoye fields,production drilling at the South-Tam-beyskoye,North-Russkoye and Yaro-Yakhinskoye fields,as well as the acquisition of new assets(Beregovoye field and Ust-Yamsoveyskiy license area).Excluding the effect of obtaining new licenses,the organic

169、reserve replace-ment rate was 121%due to successful exploration and field development.The high quality of the reserve base enables NOVATEK to maintain its position as one of the lowest cost producers in the global oil and gas industry.Our average 2018 and five-year(2014-2018)proved reserve replaceme

170、nt costs amounted to RR 87(USD 1.4)per boe and RR 83(USD 1.5)per boe,respectively.Geological Exploration NOVATEK aims to expand its resource base through geological exploration at fields and license areas not only in close proximity to existing transportation and produc-tion infrastructure,but also

171、in new potentially prospec-tive hydrocarbon areas.The Company ensures the efficiency of geological exploration work by deploying state-of-the-art technologies and relying on the expe-rience and expertise of the specialists in its geology department,and the Companys Scientific and Technical Center lo

172、cated in Tyumen.The Company uses a systematic and comprehensive approach to exploration and development of its fields and license areas,from the collection and interpreta-tion of seismic data to the creation of dynamic field models for the placement of exploration and production SEC proved reserves

173、as of 31 December 2018(based on the Companys equity ownership interest in joint ventures)and duration of licensesField/license area OwnershipDuration of licenseNatural gas reserves,bcmLiquids reserves,mmtTotal reserves 2,177181South-Tambeyskoye50.1%(59.97%of reserves)204542414Utrenneye100%212041715Y

174、urkharovskoye100%20341927Urengoyskoye(Arcticgas)50%203418345Verkhnetiuteyskoye+West-Seyakhinskoye100%20441572Geofizicheskoye100%20341290.4East-Tarkosalinskoye100%20439322Yaro-Yakhinskoye 50%20347213North-Urengoyskoye50%2038645North-Russkoe100%2031603Urengoyskoye(Ust-Yamsoveyskiy LA)100%2024525Berego

175、voy100%2070433Kharbeyskoye100%203642641Expanding Our Global LNG FootprintField/license area OwnershipDuration of licenseNatural gas reserves,bcmLiquids reserves,mmtGydanskiy100%204439-North-Chaselskoye50%lifetime of the field271Olimpiyskiy100%2059262West-Yaroyakhinskiy100%2025243Samburgskoye50%20342

176、22East-Tazovskoye100%2033183Termokarstovoye51%2097164Khancheyskoye100%2044151Yarudeyskoye51%(100%of reserves)20291421Others-484wells.We employ modern geological and hydrodynamic modeling as well as new well drilling and completion techniques to maximize the ultimate recovery of hydro-carbons in a co

177、st effective and environmentally prudent manner.In 2018,NOVATEK continued exploration on the Yamal and Gydan peninsulas to expand the resource base of LNG projects.With a prospecting well drilled in the shallow waters of the Ob Bay we discovered the North-Obskoye field.This discovery represented the

178、 worlds largest standalone gas condensate field find in 2018*.Aggregate reserves of natural gas and condensate approved by the State Reserves Commission according to the Russian reserves classification amounted to 322 bcm and 16 mmt,respec-tively.With the testing of a prospecting well at the Utrenne

179、ye field,we discovered two new gas condensate deposits and confirmed the commercial productivity of the fields Middle Jurassic layers.Total natural gas reserves in the newly discovered deposits within the Utrenniy license area held by Arctic LNG 2 amounted to 405 bcm of natural gas and 40 mmt of gas

180、 condensate.Taking into account these new deposits,the fields total reserves amount to around 2 trillion cubic meters of natural gas and 105 mmt of liquids.The reserves were approved by the State Reserves Commission.By adding new deposits we improve the fields resource potential and open up addition

181、al prospects in the execution of Arctic LNG 2.An exploration well drilled to the Jurassic layers at the South-Tambeyskoye field showed a significant flow with 430 mcm/day of gas and 81 tons/day(743 barrels/day)of stable condensate.The estimated reserves based on the Jurassic layers will be submitted

182、 to the State Reserves Commission for a formal expert review in 2019.A prospecting well in the Nyakhartinskiy license area tested a commercial flow with 160 mcm/day of gas and 109 tons/day(938 barrels/day)of gas condensate.This field is geographically next to the well-developed infra-structure of th

183、e Yurkharovskoye field and is an impor-tant discovery for NOVATEK to maintain its production levels within the UGSS.The reserves will be submitted for expert review by the State Reserves Commission in 2019.We have commenced an active exploration program at the Gydanskoye field.An initial prospecting

184、 well discov-ered significant oil and gas potential in the Achimov deposits.In 2018,we continuted 3D seismic exploration at the Gydanskiy,North-Obskiy,West-Solpatinskiy,Verkhne-teuteyskiy,and West-Seyakhinskiy license areas located on the Yamal and Gydan pensisulas.In order to maintain pipeline gas

185、production levels and unstable gas condensate volumes sent to the Purovsky Plant,we continued exploration in the fields and license areas within the Nadym-Pur-Taz district located in the YNAO.At the Yurkharovskoye field,a well was drilled to further explore lower Jurassic deposits,which confirmed th

186、e commercial productivity of the Jurassic gas condensate formations.We are preparing to test the well in 2019.*Data provided by international energy research firms Wood Mackenzie,Rystad Energy.42Annual Report 2018Table continuedIn the North-Russkoye,Kharbeyskoye and Dorogov-skoye license areas(colle

187、ctively referred to as the“North-Russkoye cluster”),three prospecting wells were drilled to confirm oil and gas potential and to define commercial productivity,a prerequisite required to prepare the fields for development.In the Samburgskiy license area,the successful explor-atory drilling confirmed

188、 productivity of the Achimov layers,where a commercial flow of gas condensate at testing of wells was received.Seismic data and drilling results indicated the prospects for new discoveries in the drilled layers as well as deeper horizons.The well testing for the Jurassic layers at the Yarud-eyskoye

189、field showed a commercial flow with 206 mcm/day of gas and 19 tons/day(162 barrels/day)of gas condensate.In the reporting year,we shot 2,926 linear km of 2D seismic and 4,759 square km of 3D seismic works,as well as drilled a total of 36,100 meters of prospecting and exploration wells.The successful

190、 exploration works contributed 989 bcm of gas and 61 mmt of liquids to NOVATEKs reserves under the Russian reserves classification,as well as 164 bcm of gas and 34 mmt of liquids to our PRMS reserves.Field DevelopmentIn 2018,NOVATEK continued development activities at our producing and prospective f

191、ields.In the reporting year,the Companys subsidiaries invested RR 47.6 bln in resource base development.Production drilling in 2018,including production drilling at our joint ventures,reached 446,000 meters,representing a 70%increase over 2017.Our drilling activities were mainly driven by the develo

192、pment of the Yaro-Yakhin-skoye,North-Obskoye,East-Tarkosalinskoye,North-Uren-goyskoye,East-Tazovskoye and Samburgskoye fields.A total of 67 production wells,including 40 natural gas and gas condensate and 27 oil wells,were completed and commissioned during the year.NEW FACILITIES COMMISSIONED AT PRO

193、DUCING FIELDSIn 2018,at the North-Russkoye field,we continued the construction of gas and condensate pipeline links with diameters of 820 mm and 273 mm,and started the construction of the pipeline crossing under the Taz river.Construction activities were ongoing on the gas treat-ment facility,booste

194、r compressor station,auxiliary build-ings and living camp.On the crude oil part of the Yaro-Yakhinskoye field,an oil treatment facility with a capacity of 1.4 mmtpa with a oil delivery point,an external crude oil pipeline 57 km long,well pads and oil and gas gathering systems were built and commissi

195、oned into operation.Ten new well pads have been put into operation at the Yarudeyskoye field.Construction has been completed and a 40-km road from the Nadym-Salekhard Federal road to the Yarudeyskoye field has been put into operation.Geological ExplorationUnits20172018Change2D seismiclinear km-2,926

196、n/aSubsidiarieslinear km-2,926n/aJoint ventureslinear km-3D seismicsquare km1,4654,759225%Subsidiariessquare km1,2154,412263%Joint venturessquare km25034739%Exploration drilling000 m24.536.147%Subsidiaries000 m16.224.350%Joint ventures000 m8.311.842%43Expanding Our Global LNG FootprintHydrocarbon Pr

197、oductionIn 2018,NOVATEK produced commercial hydrocarbons at 18 fields.The Companys production(including attrib-utable share in the production of JVs)amounted to 549.1 mmboe,up 7.0%compared with 2017.The produc-tion increase was due to LNG production growth at the Yamal LNG,as well as the acquisition

198、 of new production fields at the end of 2017 and in the first quarter of 2018(Beregovoy,West-Yaroyakhinskiy and Syskonsynyinskiy license areas).The production volumes at mature fields of our subsidiaries and joint ventures decreased mainly due to natural declines in the reservoir pressure at the cur

199、rent gas-producing horizons.Total natural gas production including the Companys share in production of joint ventures aggregated 68.81 bcm,representing approximately 82.0%of our total hydrocarbon output.The share of gas produced from the gas condensate bearing layers(or“wet gas”)in proportion to tot

200、al gas production was 77.6%.Production of natural gas increased by 8.5%as compared to 2017 volumes.Production of liquid hydrocarbons including the Compa-nys share in production of joint ventures totaled 11,800 thousand tons,of which 59.3%was gas conden-sate and the remaining 40.7%consisted of crude

201、oil.Production of liquid hydrocarbons increased by 0.2%as compared to 2017,with gas condensate production amounting to 7,001 thousand tons and crude oil produc-tion coming to 4,799 thousand tons.In 2018,we continued to achieve some of the lowest lifting costs in the industry.The Companys lifting cos

202、ts were RR 38.5(USD 0.61)per boe in 2018.LNG ProjectsYAMAL LNG PROJECTYamal LNG is an integrated project for the extraction,liquefaction and sale of natural gas.OAO Yamal LNG is the operator and the owner of all the assets.As of the end of 2018,the shareholder structure of Yamal LNG was Hydrocarbon

203、production(including share in production by joint ventures)Hydrocarbon production(including share in production by joint ventures)Units20172018ChangeTotalmmboe513.3549.17.0%Gasmmcm63,39968,8068.5%mmboe414.6450.0Liquid hydrocarbonsmt11,77411,8000.2%mmboe98.799.1Gas,mmcmChangeLiquids,mtChange201720182

204、0172018Total63,39968,8068.5%11,77411,8000.2%NOVATEK-Yurkharovneftegas fields(100%)30,54027,745(9.2%)1,4891,264(15.1%)NOVATEK-Tarkosaleneftegas fields(100%)11,08210,069(9.1%)1,6651,661(0.2%)Arcticgas fields(50%,before 21.03.2018-53.3%)13,96413,698(1.9%)4,1903,999(4.6%)South-Tambeyskoye(59.97%)7768,21

205、3n/a25542n/aNorth-Urengoyskoye(50%)4,291 3,789(11.7%)379310(18.2%)Termokarstovoye(51%)1,2551,246(0.7%)421403(4.3%)Yarudeyskoye(100%)1,3621,50010.1%3,5963,439(4.4%)Others1292,546n/a9182n/a44Annual Report 2018as follows:NOVATEK 50.1%,TOTAL 20%,CNPC 20%,and the Silk Road Fund 9.9%.Yamal LNG was constru

206、cted and commissioned ahead of schedule and on budget,an unprecedented accom-plishment in the global oil and gas industry.The commissioning of the second and third LNG trains were executed ahead of the initial schedule by 6 months and by more than a year,respectively.The first liquefaction train sta

207、rted production in 4Q 2017,whereas LNG trains 2 and 3 became operational in July and November 2018,respectively,and the Yamal LNG project reached its full operational capacity as early as December 2018.The aggregate design capacity of the three LNG trains amounted to 16.5 mmtpa of LNG,or 5.5 mmtpa p

208、er train.We plan to construct a fourth LNG train with the design capacity of 0.9 mmtpa,utilizing the Arctic Cascade lique-faction technology patented by NOVATEK.In 2018,Yamal LNG shipped 113 LNG cargos(8.4 mmt)and 30 cargos of stable gas condensate(717 mt).The South-Tambeyskoye field located in the

209、North-East of the Yamal Peninsula is the resource base of the Project.The field is being developed with horizontal wells with total drilled lengths up to 5,000 meters and hori-zontal sections of up to 1,500 meters.The license for exploration and production of hydro-carbons at the South-Tambeyskoye f

210、ield held by Yamal LNG is valid until 2045.As of 31 December 2018,the fields SEC proved reserves amounted to 707 bcm of natural gas and 24 mmt of liquid hydrocarbons.In terms of proved reserves,the South-Tambeyskoye field is the largest field in NOVATEKs portfolio.In 2018,the production drilling res

211、ults increased the proved reserves at the field by 38 bcm of natural gas and 4 mmt of liquid hydrocarbons under the SEC reserves methodology,including produc-tion.According to the PRMS standards,the proved and probable reserves of the South-Tambeyskoye field as of the end of 2018 amounted to 1,002 b

212、cm of natural gas and 37 mmt of liquid hydrocarbons.The fields production capacity exceeds 27 bcm of natural gas and 1 mmt of stable gas condensate per annum.A new fleet of LNG tankers designated as Arc7 ice class LNG carriers were specifically designed for the Yamal LNG project capable of navigatin

213、g the Northern Sea Route(NSR)without icebreaker support all year round(westbound)and throughout the summer-autumn navi-gation period(eastbound).As of the end of 2018,eight of the fifteen Arc7 ice-class carriers were in operation.Yamal LNG project.Loading of LNG tanker45Expanding Our Global LNG Footp

214、rintIn November 2018,we started ship-to-ship LNG trans-shipment operations in the vicinity of the port of Honningsvag in northern Norway in order to optimize transportation costs,shorten the travel distance for the Arc7 ice-class carriers and ensure timely loading and offtake of LNG production.The L

215、NG is transshipped from the Arc7 ice class carriers to conventional LNG carriers delivering the cargos to the customers.Yamal LNG inaugurated the 2018 summer navigation period along the NSR by delivering the first LNG cargos destined to China.These voyages represented the first shipment of Russian L

216、NG along the NSR without icebreaker support.Moreover,they marked the start of regular LNG shipments via the NSR,which were only made possible by the unique ice-breaking characteristics of Arc7 carriers.The inaugural voyage from the port of Sabetta through the NSR to the destination port was complete

217、d in 19 days as compared to 35 days for the conventional route via the Suez Canal.ARCTIC LNG 2 PROJECT Arctic LNG 2 is the second LNG project of NOVATEK.The project includes the construction of three LNG trains,with a design capacity of 6.6 mmtpa of LNG each,or a total of 19.8 mmpta,and at least 1.6

218、 mmtpa of stable gas condensate.The project employs an innovative construc-tion concept using gravity-based structures(GBS).OOO Arctic LNG 2 is the operator and owner of all the assets.The Utrenneye field is the resource base for Arctic LNG 2.The field is located on the Gydan Peninsula in YNAO appro

219、ximately 70 km across the Ob Bay from Yamal LNG.In 2018,the boundaries of the license area were expanded,and gas condensate deposits of the fields southern flank were included in the area.The license term was extended until 2120.In 2018,the Utrenneye field exploration drilling discov-ered two new de

220、posits and confirmed the commercial productivity of the Middle Jurassic layers.The discov-ered deposits hold total reserves of 405 bcm of natural gas and 40 mmt of gas condensate under the Russian reserves classification.As of 31 December 2018,the Utren-neye fields reserves under the Russian reserve

221、s classifi-cation totaled 1,978 bcm of natural gas and 105 mmt of liquids.OOO Arctic LNG 2 holds the LNG export license.In 2018,we completed the front end engineering design(FEED)and started site preparation,construction of early phase power supply facilities,production wells drilling and berth cons

222、truction.The GBS design concept as well as extensive locali-zation of equipment and materials manufacturing in Russia will considerably decrease the capital cost per ton of LNG produced,ensuring the projects low cost structure and increasing its competitive advantages.NOVATEK will build the LNG Cons

223、truction Center in Belokamenka near Murmansk to provide fabrication of the GBS,assembly and installation of topside modules.The LNG Construction Center will comprise two dry docks to build GBS and facilities to manufac-ture topside modules.This new facility will establish a state-of-the-art LNG plat

224、form in Russia,create new jobs in engineering and production,and also contribute to regional economic development as well as manufacturing and equipment orders throughout Russia.In December 2018,Arctic LNG 2 signed an agreement on the design and construction of three GBS platforms,with the Russian c

225、ompany SAREN,a joint venture of Renaissance Heavy Industries Russia(RHI Russia B.V.)and SAIPEM S.p.A of Italy.In December,a contract was also signed with Nuovo Pignone(Italy)for the supply of gas turbine compres-sors and gas turbine power generators for three lique-faction trains.In May 2018,NOVATEK

226、 and TOTAL agreed in principle on the entry into the Arctic LNG 2 providing for a purchase by TOTAL of a 10%participating interest in the project.The deal was closed in March 2019.CRYOGAS-VYSOTSK PROJECTOne of our LNG strategic initiatives is to develop small-to medium-scale LNG projects.This approa

227、ch allows us to build effective marketing channels to sell our products on different markets.We see vast prospects in using LNG as marine fuel and motor fuel to substitute for diesel and fuel oil,that will contribute to decreasing emissions and improving the environment.19.8Total design capacity of

228、three LNG trains of Arctic LNG 2MMTPA113and 30 cargos of stable gas condensate were shipped from Yamal LNG in 2018LNG CARGOS46Annual Report 2018In July 2017,NOVATEK acquired a 51%participation interest in the Cryogas-Vysotsk project including construction of an LNG production facility and a trans-sh

229、ipment terminal.Cryogas-Vysotsk,located in the port of Vysotsk,the Leningrad Region,is our first medium-scale LNG project with an initial design capacity of 660 mtpa.As of year-end 2018,most of the plant construction works were completed and equipment commissioning was in progress.The project infras

230、tructure includes two LNG trains with a capacity of 330 mtpa each,a 42-mcm LNG storage tank and an offloading terminal designed to handle LNG carriers with a capacity of up to 30 mcm.In 2018,NOVATEK and Fluxys established a joint venture to design,build,finance,own and operate a medi-um-scale LNG tr

231、ansshipment terminal with a capacity of about 300 mtpa in the port of Rostock,Germany.The transshipment terminal will receive LNG carriers from the Cryogas-Vysotsk liquefaction facility and further LNG deliveries to the consumer market will be made via trucks.It will also have an option of bunkering

232、 and loading of bunkering vessels.Processing of Gas CondensatePUROVSKY PLANTOur subsidiaries and joint ventures are producing wet gas,a mixture of natural gas and gas condensate.After being separated and de-ethanized at the field,the main part of unstable(de-ethanized)gas condensate is deliv-ered vi

233、a a system of condensate pipelines owned and operated by the Company for further stabilization at our Purovsky Plant located in the YNAO in close proximity to the East-Tarkosalinskoye field.The Purovsky Plant is the central element in our verti-cally integrated value chain that provides us complete

234、operational control over our processing needs and access to higher yielding marketing channels for our stable gas condensate.The Purovsky Plant processes unstable gas condensate into stable gas condensate and natural gas liquids(NGL).In the reporting period,the Purovsky Plant processed 11,018 mt of

235、de-ethanized gas condensate,representing a 3.7%decrease compared to 2017.The processing capacity of the Purovsky Plant is in line with the total production capacity of NOVATEK and its joint ventures fields.The 2018 output mix included 8,501 mt of stable gas conden-sate,2,452 mt of NGL and LPG and 15

236、.0 mt of regener-ated methanol.The Purovsky Plant is connected via its own railway line to the Russian rail network at the Limbey rail station.Subsequent to the launch of the Ust-Luga Complex in 2013,most of the stable gas condensate volumes produced at the Purovsky Plant are delivered by rail to Us

237、t-Luga for further processing or transshipment to exports,with the remaining volume of stable gas condensate sold directly from the plant to the domestic market.All of the NGL volumes(feedstock for LPG produc-tion)produced at the plant are delivered by pipeline to SIBURs Tobolsk Petrochemical Comple

238、x for further processing.UST-LUGA COMPLEXThe Gas Condensate Fractionation and Transship-ment Complex(the“Ust-Luga Complex”)is located at the all-season port of Ust-Luga on the Baltic Sea.The Ust-Luga Complex processes stable gas condensate into light and heavy naphtha,jet fuel,ship fuel component(fu

239、el oil)and gasoil,and enables us to ship the value-added petroleum products to international markets.The Ust-Luga Complex also allows for transshipment of stable gas condensate to the export markets.After launching in 2013,the complex also allowed us to improve logistics and reduce transportation co

240、sts due to a more favorable geographical location of Ust-Luga compared to the port of Vitino,through which we had previously exported our stable gas condensate.In the reporting year,the Ust-Luga Complex processed 6,949 mt of stable gas condensate into 6,807 mt of end products,including 4,244 mt of l

241、ight and heavy naphtha,1,087 mt of jet fuel and 1,476 mt of ship fuel compo-nent(fuel oil)and gasoil.The Ust-Luga Complex will commence constructing a hydrocracker unit in 2019 that will eventually reduce the fuel oil and gasoil component 1,978of natural gas and 105 mmt of liquids-the Utrenneye fiel

242、ds reserves under the Russian reserves classification as of 31 December 2018BCM660Initial design capacity of Cryogas-Vysotsk,our first medium-scale LNG projectMTPA47Expanding Our Global LNG FootprintProcessing volumes and output of the Purovsky Plant,mtProcessing volumes and output of the Ust-Luga C

243、omplex,mt20172018ChangeProcessing of de-ethanized condensate11,44511,017(3.7%)OutputStable gas condensate8,8538,501(4.0%)NGL and LPG2,4932,452(1.6%)Regenerated methanol16.515.0(9.1%)20172018ChangeStable gas condensate processing6,9616,949(0.2%)OutputHeavy naphtha2,2612,247(0.6%)Light naphtha1,9621,9

244、971.8%Jet fuel1,0721,0871.4%Ship fuel component(fuel oil)967843(12.8%)Gasoil56463312.2%into higher grade petroleum products.We expect this new upgrading unit will be commissioned in 2020.High value-added petroleum products produced at the Ust-Luga Complex have a significant positive impact on the pr

245、ofitability of our liquid hydrocarbons sales and the Companys cash flow generation.As the Ust-Luga Complex reached full processing capacity we transshipped stable gas condensate to the export markets by sea.Natural Gas SalesNOVATEK sells natural gas within the Russian Federa-tion as well as exports

246、natural gas in the form of LNG.The Company started exporting LNG in December 2017 when the first train at the Yamal LNG project started production.In addition,on the European market we sell regasified liquefied natural gas arising during the transshipment of LNG(boil-off gas),as well as during the r

247、egasification of purchased LNG at our own regasifi-cation stations in Poland.In 2018,natural gas sales volumes,including volumes of LNG sold,aggregated 72.13 bcm,representing an increase of 11%as compared with 2017.Revenues from natural gas sales amounted to RR 375.2 billion,repre-senting a 51.5%inc

248、rease compared to 2017.The revenue increase was mainly driven by the start of LNG deliveries from the Yamal LNG project and an increase in sales prices and volumes in the Russian domestic market.SALES IN THE RUSSIAN FEDERATIONIn 2018,the total volume of natural gas sales in the Russian Federation am

249、ounted to 66.07 bcm,increasing by 1.8%compared to the previous year.NOVATEK plays an important role in ensuring supplies of natural gas to the domestic market.During 2018,the Company supplied natural gas to 40 regions of the Russian Federation.Our end customers and traders were located primarily in

250、the following regions:the Chelyab-insk Region,the Khanty-Mansiysk Autonomous Region,Moscow and Moscow region,YNAO,Lipetsk,Tyumen,Vologda,Stavropol,Nizhny Novgorod,Smolensk,Tula and Kostroma regions and Perm Territory.The above regions accounted for more than 92%of our total gas sales in the Russian

251、Federation.In order to manage seasonal gas demand,NOVATEK has entered into an agreement with Gazprom for under-ground storage services.Natural gas inventories are accumulated during warmer periods when demand is lower and then used to meet increased demand during periods of colder weather.At year-en

252、d 2018,our inven-tories of natural gas,including LNG,amounted to approximately 2.2 bcm.48Annual Report 2018NOVATEK,through its subsidiary NOVATEK-AZK,is implementing a pilot project for the sale of LNG as a motor fuel.Together with industrial and commercial enterprises of the Chelyabinsk region,we h

253、ave converted a number of pilot automotive vehicles(haul trucks and highway trucks)to the dual-fuel mode(LNG+diesel).In 2018,the preliminary testing results of these vehicle types were positive.Together with Chelyabinsk transport companies,we started trial operation of buses using LNG as a motor fue

254、l.Two mobile refueling units were launched to refuel haul trucks,highway trucks and public transport in the Chelyabinsk region.SALES ON INTERNATIONAL MARKETSThe successful start of LNG sales on international markets confirms NOVATEKs transformation into a global gas company.Yamal LNG is currently th

255、e largest LNG project in Russia with an aggregate share of about five percent of the global LNG market.In 2018,we sold 6.06 bcm of LNG(4.0 mmt)or 57 cargos.In 2017,LNG sales amounted to 0.1 bcm due to the start of LNG shipments from the Yamal LNG project on 8 December 2017.One of our core commercial

256、 marketing priorities is to expand our supply geography and grow our presence in the key consuming markets.In the reporting year,we shipped LNG cargos to Europe,the Asia-Pacific region and Latin America,thus demonstrating the commercial viability of delivering cost-competitive LNG around the globe.I

257、n June 2018,Yamal LNG shipped the first cargo of LNG under a long-term offtake agreement with Gas Natural Fenosa,a Spanish company.This represented the first Russian gas delivered under a long-term contract to Spain,where Russian pipeline gas is not supplied.In July,we shipped our first cargos to Ch

258、ina via the NSR in just 19 days(one way)compared to 35 days of delivery via the traditional eastern route via the Suez Canal.NOVATEK began using the NSR in 2010,by successfully supplying large-capacity tankers with liquid hydrocarbons to the Asia-Pacific region.The Company has now become a pioneer i

259、n supplying Russian LNG along this important navigational route.This first LNG shipment opened a new era in the supply of Russian LNG to the growing energy consuming markets of the Asia-Pacific region.The NSR ensures shorter transportation time and lower costs,playing a key role in developing our hy

260、drocarbon fields on the Yamal and Gydan peninsulas.Liquid Hydrocarbons Sales NOVATEK sells liquid hydrocarbons(stable gas conden-sate,petroleum products,light hydrocarbons,LPG and crude oil)domestically and internationally.The Company strives to respond quickly to changing market conditions by optim

261、izing the customer base and supply geography,as well as developing and maintaining logistics infra-structure.In 2018,the liquids sales volume reached 15,822 mt,or 0.7%less than in 2017.In 2018,export sales decreased by 0.3%as compared to 2017 and amounted to 8,997 mt.In 2018,our liquids sales revenu

262、es increased to RR 450.6 billion,or by 35.6%as compared to 2017,mainly driven by higher global benchmark prices.High-value added petroleum products from the Ust-Luga Complex accounted for a 42%share of our overall liquids sales volumes.We sold a total of 6,683 mt of stable gas condensate products,in

263、cluding 4,185 mt of naphtha,1,082 mt of jet fuel and 1,416 mt of fuel oil and gasoil.The majority of petroleum products(98%)were exported.Export volumes were distributed as follows:Europe 55.1%,Asia-Pacific 32.2%,North America 10.4%and the Middle East-2.3%.Most of our heavy naphtha was exported to A

264、sia-Pacific,light naphtha to Northwest Europe and North America,jet fuel,gasoil and fuel oil to Northwest Europe.Natural gas sales,mmcm20172018ChangeTotal gas sales65,00472,13411.0%International sales106 6,061n/aSales within the Russian Federation,including:64,89866,0731.8%End customers61,56061,9010

265、.6%Traders3,3384,17225.0%Share of end customers in domestic gas sales94.9%93.7%(1.2 p.p.)49Expanding Our Global LNG FootprintExport and domestic sales of stable gas condensate continued in 2018.Condensate was sold to international markets,including purchased volumes from Yamal LNG.Total stable gas c

266、ondensate sales volumes amounted to 1,908 mt,representing a 0.5%decrease compared to 2017.A portion of light hydrocarbons produced at the Purovsky Plant is processed on tolling terms at SIBURs Tobolsk Petrochemical Complex into marketable LPG,which is then delivered to NOVATEKs customer base,while t

267、he rest of the light hydrocarbons volumes are sold to SIBUR.We sold 1,248 mt of light hydrocarbons in 2018.Marketable LPG sales volumes totaled 1,428 mt in 2018,representing a 5%increase compared to 2017.LPG export sales volumes amounted to 593 mt or 42%of the total LPG sales volumes.Novatek Polska,

268、our wholly owned LPG trading company in Poland,sold all of our LPG export volumes.In the domestic market,our LPG is sold through large wholesale channels as well as through our retail network and small wholesale stations.In 2018,large wholesale supplies to the domestic market stood at 688 mt,represe

269、nting 82%of domestic LPG sales.We also sold LPG via our retail network of 68 stations and seven small wholesale stations in the Chelyab-insk,Volgograd,Rostov and Astrakhan regions.The combined sales from our retail and wholesale stations totaled 146 mt.Sales of crude oil in 2018 totaled 4,542 mt,whi

270、ch is 1.6%lower compared with 2017.We sold 66%of our crude oil volumes in the domestic market,with the remaining volumes exported to international markets.375.2Natural gas sales revenues,51.5%growth as compared with 2017RR BLN6.1of LNG sold in 2018BCM Liquid hydrocarbons sales,mt20172018ChangeTotal1

271、5,93915,822(0.7%)Petroleum products(Ust-Luga)6,7436,683(0.9%)Crude oil4,6164,542(1.6%)Stable gas condensate1,9181,908(0.5%)Light hydrocarbons1,2881,248(3.1%)LPG1,3601,4285.0%Other1413(7.1%)50Annual Report 2018450.6Liquids sales revenues,35.6%growth as compared with 2017RR BLN15.8Liquids sales volume

272、 MMTYamal LNG51Expanding Our Global LNG FootprintEnvironmental and Social ResponsibilityNOVATEK adheres to the principles of effective and responsible business conduct and considers the welfare of its employees and their families,environmental and industrial safety,the creation of a stable and benef

273、icial social environment as well as contributing to Russias overall economic development as priorities and responsibilities of the Company.Environmental ProtectionNOVATEKs core producing assets are located in the Far North,a harsh Arctic region with vast mineral resources and a fragile and vulnerabl

274、e environment.he Company is committed to environmental protection in its operations.In 2018,the Companys overall expenses on environmental protection and sustainable nature management amounted to RR 2.4 bln.We would like to highlight the most significant actions in environmental protection and susta

275、inable management in 2018.The Company built a sewage and water-methanol mixture thermal disinfection unit at the Purovsky Condensate Processing Plant.In terms of pollutants content in effluents,this unit uses state-of-the-art technologies and meets the stringent Russian requirements for air protecti

276、on.The Yamal LNG plant completed and commissioned the treatment facilities for stormwater and residential sewage.The wastewater is treated to meet regulatory statutory norms and then once treated is discharged into the Ob Bay basin.The treatment process employs mechanical,biological,physical and che

277、mical methods.Treated wastewater is disinfected with ultraviolet irradiation.Chemically and oil contaminated industrial effluents are treated in the treatment plant that brings it in line with quality standards thus enabling injecting them into absorbing formations.Before being injected,the wastewat

278、er undergoes separation,two-stage flotation and post-treatment in a pressure sand filter.NOVATEK is an active contributor to the national objective of converting vehicles to using natural gas as fuel.The Company is developing the market segment for natural gas as a motor fuel by expanding the networ

279、k of its natural gas retail stations in various Russian regions.We launched a new business area,namely the construction of LNG retail stations and the subsequent use of LNG as an environmentally friendly motor fuel.Converting a vehicle to LNG enables the reduction of soot and carbon monoxide emissio

280、ns by more than three times compared to conventional fuels(gasoline and diesel).We drilled our first offshore prospecting well in shallow waters strictly adhering to the stringent environmental standards for activities within the Russian Federation inland seas.We developed an Accidental Spill Respon

281、se Plan and an environmental monitoring program for the North-Obskiy license area.Regular water monitoring in the Ob Bay of the Kara Sea demonstrated that its hydrochemical and organoleptic properties are in line with the statutory standards.Environmental safety was ensured by multi-purpose emergenc

282、y response and rescue vessels.Drill cuttings were transported to the port of Sabetta to be further disposed of in an eco-friendly manner.In Yamal LNG,we carried out a study of marine mammals migration routes and an assessment of LNG shipping impact on their population in the northern part of the Ob

283、Bay and in the southern part of the Kara Sea,including aerial monitoring of their headcount and analysis of seal distribution on ice in the northern part of the Ob Bay(estimated headcount ranges between 3,639 and 5,433 individuals).Baseline data were collected prior to the start of active ice naviga

284、tion in order to assess and supervise its impact on ringed seals during the ice period,and to develop mitigation measures.One of the tasks that the crews of chartered vessels sailing through the Ob Bay and the Kara Sea should address is to monitor encounters with marine mammals,record the coordinate

285、s and distances as well as the numbers and species of animals encountered.In case of dangerous proximity,a vessel must take measures to avoid troubling animals(slow down or divert).52Annual Report 2018*The increase in water consumption is associated with water intake during the operation of a marine

286、 self-lifting drilling rig to ensure the cooling of technological equipment.Key Environmental Indicators of NOVATEK(including joint ventures)Unit20172018ChangeWater consumptionmcm2,7792,9937.7%*Atmospheric emissions mt108.984.3(22.6%)Energy Resource Consumption by NOVATEK in 2018(including joint ven

287、tures)UnitsVolumeRR mln,net of VATNatural gasmmcm2,1852,667.0ElectricityMWh1,907,7698,106.0Heating energyGcal899,752661.5Crude oiltons1,47811.2Motor gasolinetons1,24658.9Diesel fueltons5,499264.6Butanetons97,786n/aOthertons1,1776.6One of the Companys priorities is the rational usage of resources,inc

288、luding energy resources.The table below sets out the physical volumes and the Russian rouble equivalent of energy resources consumed by the Company in 2018.Photography of a participant of photo contest“See and Preserve!”53Expanding Our Global LNG FootprintTo encourage NOVATEK employees and residents

289、 of the Purovsky district of the YNAO to preserve the Far North environment and foster environmental awareness,an environment-related photo contest“See and Preserve!”was held.A total of 32 participants from among residents of the Purovsky District,YNAO,and NOVATEK employees submitted 198 works for t

290、he contest.A jury consisting of district administration representatives and professional photographers defined the best pictures.In each of the five categories,three winners were announced who received valuable gifts.In 2018,more than 1,500 employees from the regions where the Company operates took

291、part in“Green Spring 2018”,a Russian national environmental campaign.Following a re-certification audit by Bureau Veritas Certification Rus,the NOVATEK HSE Management System was confirmed to be in compliance with OHSAS 18001 and a new version of the international standard ISO 14001 Environmental Man

292、agement System.The Companys Arctic Cascade liquefaction technology was recognized by the Vernadsky National Environmental Award in the Innovative Eco-Effective Industrial and Energy Technologies category.This event is an annual competition aiming to discover and promote projects in the area of envir

293、onmental protection and safety.Arctic Cascade,a prospective natural gas liquefaction technology developed and patented by NOVATEK,ensures enhanced performance with lower power consumption and reduced equipment costs.The technology is designed to use equipment from Russian manufacturers.Environmental

294、 monitoring was performed throughout the reporting year at all of the Companys license areas and production facilities.During the monitoring process the condition of the environmental components is studied,soil,ground,snow cover,water and bed samples are taken.Air contamination level is inspected.Th

295、e status of fish stock and fodder resources in water areas is studied as are hydrologic and hydrochemical parameters.The samples taken are tested in certified laboratories.Based on the laboratory analysis the condition of the environment components is evaluated as well as its dynamic pattern over th

296、e year.The monitoring revealed that the condition of the environmental components in the Companys production facility locations is evaluated as stable.In the reporting year,the Company continued its participation in the Carbon Disclosure Project(CDP),whereby information on greenhouse gas emissions a

297、nd operations energy efficiency is disclosed,as well as in the CDP Water Disclosure Project to disclose data on the use of water resources.Taking part in these projects,the Company intends to achieve a balance between the climate change risks and efficiency of investment projects.The Company offers

298、all stakeholders full access to its environmental information,including by publications in federal and local printed media,on its website,and other disclosure means.Industrial Safety and Occupational HealthNOVATEK is fully committed to putting the life and health of its employees above operational r

299、esults,and is aware of its responsibility for ensuring accident-free operations and safe labor conditions for its employees,as well as protecting the health of the population in the areas in which it operates.NOVATEK has in place an occupational health and safety management system which is part of a

300、 wider management system and ensures risk management based on the key principle of prioritizing prevention over incident containment and response.The Company is engaged in exploration,production,processing and sales of natural gas and liquid hydrocarbons,which implies setting up complex technologica

301、l processes for operating fire and explosion hazardous facilities.Operation of fire and explosion hazardous facilities requires that work and services at hazardous production facilities be performed in strict compliance with industrial safety laws.To prevent accidents and incidents,and ensure accide

302、nt containment and response at Class 1 and 2 hazardous production facilities,a unified industrial safety management system and industrial safety declaration were developed providing estimates and specifying activities for:identification,assessment and forecasting of accident risks;2.4Expenses on env

303、ironmental protection and sustainable nature managementRR BLN54Annual Report 201823Reduction of atmospheric emissions%planning and implementation of accident risk mitigation measures;coordination of activities to prevent accidents and incidents;industrial control procedure;and employees participatio

304、n in the development and implementation of accident risk mitigation measures.To compensate for the damage inflicted to third parties and the environment as a result of an accident at a hazardous industrial facility,all hazardous industrial facilities are insured in accordance with Federal Law No.225

305、-FZ On Mandatory Insurance of Civil Liability of Owners of Hazardous Facilities for Damages Inflicted by Emergencies at Hazardous Facilities.Executives and specialists of subsidiaries and joint ventures supervised by Rostekhnadzor have been qualified for compliance with industrial security and safet

306、y rules in territorial bodies of Rostechnadzor.From among these employees,the Company set up industrial safety assessment commissions to evaluate staff that operate technical devices at hazardous production facilities.Occupational health training is mandatory for all categories of employees and is o

307、ffered in all controlled entities.Structural unit leaders,including top managers,take courses in training centers,while specialists are offered in-house training opportunities.For that,training programs were developed,and occupational health knowledge testing commissions were set up.In-house occupat

308、ional health training and knowledge testing not only enable significant cost optimization but also save man-hours as such training and tests take place on the job.In 2018,11,119 employees completed occupational health training and safety certification in line with the approved training plan.In 2018,

309、365 industrial safety and occupational safety compliance checks were carried out by commissions of subsidiaries and joint ventures with results documented in industrial control reports.Employees in charge submit monthly reports to their respective health and safety units specifying remedial actions.

310、All violations are remedied within defined timeframes.In 2018,NOVATEK ran programs of integrated and targeted audits of controlled entities for compliance with occupational health,industrial,fire and environmental safety requirements by NOVATEKs committee.In the reporting year,the Company conducted

311、integrated audits of four(4)Company entities,and targeted audits of eight(8)entities.Based on their findings,relevant reports were produced,and remedial measures were developed.At the Company level,data are collected and analyzed regarding remediation of all findings of both scheduled and unschedule

312、d audits carried out by the state supervisory authorities and integrated and targeted audits of the Companys committee.To prevent accidents and incidents,each year the Company develops and consistently implements technical inspection,certification and test schedules for various types of technical eq

313、uipment(external and internal inspection,hydrostatic and pneumatic tests,and industrial safety audits).In 2018,the Company performed industrial safety audits of 534 equipment items and extended their safe operating life.To protect the rights of employees to an occupational health-compliant workplace

314、,special assessments of working conditions were performed to cover all workplaces.When workplaces with harmful working conditions are identified,a range of measures is first implemented to eliminate adverse factors.If these prove impossible to eliminate,the time of exposure to harmful conditions is

315、then restricted while the affected employee is granted all guarantees and compensations for operating in harmful working conditions.In the reporting year,7,050 workplaces were certified.A special workplace certification process found 5,950(86.4%)workplaces to have permissible conditions.No workplace

316、s with hazardous working conditions were identified.The Company also arranged for preliminary health screening and regular medical examinations for timely detection of contraindications and signs of occupational diseases.No occupational diseases were identified for the reporting period.55Expanding O

317、ur Global LNG FootprintWorkers engaged in certain high-hazard operations and exposed to high-hazard production environments(operation and maintenance of hazardous industrial facilities)undergo mandatory mental health evaluation.The Company actively exercises its right to receive a 20%refund of the m

318、andatory social insurance payment that is duly transferred to the Social Insurance Fund of the Russian Federation to cover occupational accidents and diseases.These funds are mainly used to finance procurement of protective clothing and workplace certifications.Human ResourcesEmployees are NOVATEKs

319、most valuable resource,allowing the Company to grow rapidly and effectively.The Companys human resource management system is based on the principles of fairness,respect,equal opportunities for professional development,dialogue between management and employees,as well as continuous,comprehensive trai

320、ning and development opportunities for the Companys employees at all levels.As of the end of 2018,NOVATEK and its subsidiaries had 13,694 employees,57.9%of whom work in exploration and production,11.3%in processing,17.8%in transportation and marketing,5.4%in power supply,6.4%are administrative perso

321、nnel and 1.2%are engaged in ancillary services.The predominant age of the personnel is between 30 and 50.The average age of the Companys employees is 40 years.PERSONNEL TRAINING AND DEVELOPMENTAmid the rapid development of technologies and management systems,our multilevel training and professional

322、development program enable our employees to contribute to raising the Companys competitiveness.In 2018,the primary activities of training and professional development included:implementing an In-house Training program to improve the competences of the Companys employees;implementing the“Steps in Dis

323、covering Talents”program for young specialists targeted at training highly qualified personnel whose competence level fully meets business needs;developing and improving the Corporate System for the Evaluation of Technical Competencies;and engaging young specialists to take part in research and prac

324、tice conferences;NOVATEK Scientific and Technical Center(NOVATEK STC)has hosted an In-House Training Program since 2016.In 2018,NOVATEK STC experts developed and delivered training courses on the following subjects:“Lithofacies Analyses.Depositional Environment.Theory and Practice”;”Dynamic Simulati

325、on of Multiphase Streams in Pipelines and Wells using OLGA Software:Principal Tasks and Examples of their Solution”;“Complexing Logging Methods to Address Geological Tasks.Basics of Log Interpretation and Practical Application(in NOVATEK Group projects)”;“Basics of Geological 3D Modelling”;“Basics o

326、f Intra-and Inter-Field Hydrocarbons Transportation Engineering and Operation”;and Application of Petroleum System Studies(Basin Analysis)during Exploration.A total of 34 of the Companys employees received training under this program in 2018.In 2018,NOVATEK continued its efforts to advance the profe

327、ssional capabilities of its employees,improve working conditions and train its personnel on safe working practices at its production facilities.A total of 40.5%of white-and blue-collar workers upgraded their skills.In 2018,the Corporate System for the Evaluation of Technical Competencies tested 274

328、employees across the Group,including 49 persons who were tested at recruitment and 156 persons at promotion.In 2018,112 young specialists participated in the Steps in Discovering Talents Program.We had our sixth class and 28 specialists graduated from the on-the-job adaptation and professional devel

329、opment program while 30 young specialists guided by 22 mentors completed the first step of the program.In autumn 2018,another 54 young specialists and 48 mentors assigned to them joined the program.Young specialists received the Mentoring Culture training courses together with their mentors.In total

330、,34 mentors attended the training.In 2018,the number of companies participating in the program increased to ten.Key Health and Safety Indicators of NOVATEK(including joint ventures)20172018ChangeAccidents at hazardous production facilities00Incidents at hazardous production facilities21(50%)Injury f

331、requency rate1.270.79(38%)56Annual Report 2018In September 2018,Moscow hosted the 13th Interregional Research-to-Practice Conference for the Companys young specialists attended by 93 employees.Based on the results of the competition,all the winners received cash prizes,while fifteen(15)of the first

332、place winners were also awarded a trip to petroleum training centers in Japan.In October 2018,the 4th Professional Skills Contest among field workers of the NOVATEK Group took place.A total of 77 participants from 9 entities took part in the event.The Contest was hosted by NOVATEK-Purovsky Plant and

333、 included two stages,a theoretical and a practical part with results of both defining the winners.In 2017,the Innovator Corporate Idea Management System,an automated framework to collect and process employees proposals on improving and developing business including labor-saving proposals,was launched in NOVATEK and its 14 subsidiaries.More than 230 ideas on improving business operations,reduction