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Edited Transcript of SIBN.MZ earnings conference call or presentation 18-Nov-19 2:00pm GMT

Nine Months 2019 Gazprom Neft' PAO Earnings Call (IFRS)

Moscow Nov 27, 2019 (Thomson StreetEvents) -- Edited Transcript of Gazprom Neft' PAO earnings conference call or presentation Monday, November 18, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Alexei Viktorovich Yankevich

Public Joint Stock Company Gazprom Neft - CFO, Deputy CEO of Economics & Finance and Member of the Management Board

* Igor Shkirov

* Nikita Anichkin

Public Joint Stock Company Gazprom Neft - Head of Investment Department (Downstream)

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Conference Call Participants

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* Alexander Burgansky

Renaissance Capital, Research Division - MD and Head of Oil & Gas Research

* Angelina Glazova

JP Morgan Chase & Co, Research Division - Research Analyst

* Evgenia Dyshlyuk

Gazprombank (Joint Stock Company), Research Division - Director of Equity Research for Oil and Gas

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Presentation

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Unidentified Company Representative, [1]

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(technical difficulty)

[Interpreted] this call as far as the financial performance is concerned, we will have Alexei Yankevich, who is the Management Board Member, Deputy General Director for Economics and Finance from Upstream. We will hear about from Igor Shkirov, who is the Head of the Planning and Efficiency and Upstream and Production Head; and Nikita Anichkin from the Economics and Finance Department, will tell us about the logistics refining. And during the Q&A, we will be joined by our colleagues from other departments.

And traditionally, before we begin the broadcasting of our comments and the webcast is showing our presentation, I would like to remind us that various comments and various statements, which during this conference call may and most probably are going to be made, may contain and will contain various statements about the future and various expectations about the financial performance and the future financial performance of the company and all statements with the exception of those which are actual one should be and must be considered as forecast, which is about our future expectations based upon the current environment and various assumptions made by the senior management and take into account known and unknown risks and uncertainties, which may lead to the actual results or events eventually being quite different from the ones which have been referred to during this conference call. Thank you very much. Now let me pass the microphone over to Alexei Yankevich.

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Alexei Viktorovich Yankevich, Public Joint Stock Company Gazprom Neft - CFO, Deputy CEO of Economics & Finance and Member of the Management Board [2]

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[Interpreted] Dear colleagues, good evening and good afternoon. Today, we are presenting to you the results for the company's performance Gazprom Neft over the past 9 months. I shall immediately say that the external environment for all companies this year hasn't been as favorable as it was in 2018.

We all recall that the previous 2018, we started almost at $70 per barrel. And towards September, we went up to almost a record level of $83 and that was the kind of a fantastic period of time. We all understood that it was not going to be for good. Then various adjustment took place and consequently, we see that the 9 months this year in terms of the oil price were much modest. And that naturally affected the company's performance.

Partially, one should underscore that the oil price hike was compensated for by the ruble exchange rate changes, not in full. And as a result, the external environment effect over the performance of many companies [as well as] ours turned out to be a bit negative, but we're trying to struggle against that. And even despite that, the company was able to provide for a positive result, not only in revenue, but EBITDA, although a little, but grew year-on-year and so the RUB 616 billion, which is plus 0.2%, and the net profit, which is RUB 320 billion, which is plus 7.1% year-on-year. That was brought about by the growing production and the output growth at the new highly effective fields and by different measures to improve efficiency, practically in all of our business segments.

The refining throughput decline is a consequence of our maintenance program, and this is something that we principally commented during the previous quarters. However, and basically, the overall dynamics turned out to be positive, and most importantly that year-on-year, we're able to come out with the operational and net profit growth.

As far as the quarterly dynamics is concerned, here, the factor from the external environment turned out to be stronger. We're not able to fully compensate for that. And so consequently we see a little bit of an EBITDA going down, just a bit of a percentage slightly moving downward. Then in terms of the refining throughput, that is the consequence on the maintenance schedule, as I said, as well as the seasonal effect, which do altogether show a positive picture. But overall, summarizing the results, yes, indeed, the external environment has been worse. But overall the company was able to come up positively from it.

Now let me now pass the floor over to my colleagues and we'll traditionally start with Upstream.

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Igor Shkirov, [3]

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[Interpreted] Good afternoon. Igor Shkirov, Head of the Upstream Economics. Yes. So Slide 6 consequently shows that our production grew compared to the third quarter 2018. So quarter-on-quarter, which is [3%], so looking at the 9 months, this is the 4.2% growth compared to the 9 months of 2018. The key production drivers are production from Yamal, Messoyakha and Orenburg, which is our highly effective set of assets.

Slide #7, as far as operational expenses are concerned, here is the kind of a picture, which we demonstrated. As a result of the second quarter, so a comparable period in 2018 shows that we are growing this year. But this is the low base effect. Comparing ourselves to 2018, we're able to maintain that level.

On the next slide, #8. Here, we are drawing your attention to the new projects, we're currently quite busy with effective approaches on maintaining our resource base and production at our brownfields, two such examples, which is remote group of fields, which were launched earlier in 2014. The peak of production we're expecting to be 1.7 million tonnes. And effectively, we're quite close to achieving it in 2019. The output will be 1.5 million tonnes, which includes 6 fields. And this particular asset really sustains our good output now in Noyabrskneftegaz in Yamalo-Nenets.

The next project is Project Zima, certainly a new one. We are planning to produce 4.4 million tonnes of oil equivalent and we have launched a project to produce Early Oil and are completing well, so we are planning with this (inaudible) to come up with the 4.4 million tonnes of oil equivalent in 2024 and really start to know commercial production in 2021.

Next slide is #9, which is where we continue our technology innovations, which is quite effective. The first one is where we are continuing to successfully experiment with hydrofracking, growing our competencies here, particularly here, we have substituted the matter -- used the new one with the polymers, which gave us additional 15% incremental fracking.

Novoportovskoye field also goes through additional drilling. The next record is 1,000 horizontal section almost within 3 days. The East-Messoyakha field, the kind of horizontal sections that we are drilling. In this particular case, we have drilled 1 at the Achimov formation, which is 3.2 kilometers and 435 tonnes a year with [fountaineering] output, and we are actively working, applying the domestic technologies since we started applying the autonomous bottom sea CRAB stations at the Ayashsky license area, and whereas previously, we used only foreign contractors for these kind of operations.

Slide #10 is the next one. Recently, we have launched the first Integrated Field Development Centre, it is a center of excellence, one may say, made up of several hubs, which is the project management center, which is called upon to optimize project supervision; as well as the center for drilling and the well construction center; the production center of excellence, to control over the production of oil and gas. All these are separate centers, which are applying twin -- digital twin technologies. And apart from the fact that in each of these center of excellences, we are optimizing our own processes. And there is a great efficiency in terms of the process growth, simply because of the synergies, they are sort of connected into a network, and that creates an integrated center, which gives us a lot of effect in doing our core operations.

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Nikita Anichkin, Public Joint Stock Company Gazprom Neft - Head of Investment Department (Downstream) [4]

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[Interpreted] Good afternoon, ladies and gentlemen. Nikita Anichkin, Head of the Economics and Finance in the Downstream. I would like to introduce your attention over the Downstream operations over the first 9 months of 2019.

Slide #12. In Q3, as you can see on the chart, we see the Brent price decline towards the second quarter of 2019, which led to lower netbacks and taking into account the changes of market perimeters, the ultimate benefit was of [$0.7] per barrel. In terms of the oil and distribution, we have exports volumes growing and up to 14 million tonnes of sales because of the growth of production in Novoportovskoye and East-Messoyakha fields, which overall is better than the 9 months results of 2018 by 14 additional percent.

Next slide, please. Next slide demonstrates the key refining indicators. The refining decline year-on-year has been brought about by planned maintenance work at the Yaroslavl refinery in the first half of 2019, something that Mr. Yankevich previously mentioned. At the same time, we respect the completion of maintenance brought about growing refining throughput by 10.6% in the third quarter compared to the second one. One should note that the work done enabled us to optimize the subsequent maintenance, which will positively affect our ability to provide refined product to the market during the traditional high demand season.

Also in Q3, at the Omsk refinery, we had completed the installation of the key equipment and the installation of catalytic cracking, which will enable 1.5x to grow the production of high-octane gasolines.

Next slide, please. The next couple of slides, which is 14 and 15, this way, we'll be able to consider the results in our premium business segments. It is important to note that throughout all of these segments, over 9 months, the dynamics has been positive. And as far as the sales of jet fuel is concerned, at present, up to 282 airports, the bunkering business growth of our sales volumes has been conditioned by a greater demand for the fuel [mostly] through the wholesale channels at the Northwest and the Black Sea. Also we started supplies of the new environmentally-friendly bunkering fuel with a content of sulfur not more than 0.5%, which conforms to the latest requirements. As far as bitumen is concerned, we have grown our volumes and improved the assortment as a result of the production of the new high gauge of road bitumen.

In the lubricant segments, we've launched a new high-tech product for marine engines, a lubricant called Gazprom Neft Ocean, which is also compliant with the MoU. As far as the motor fuels are concerned, here you can see on this slide the results of the 9 months. Within this particular segment, we have achieved considerable results, amongst which one of the most important one is the ability to maintain our sectoral leadership within the Gazprom Neft network in terms of the daily (inaudible) location. Another important driver behind the positive trend, one may describe an effective loyalty program within this network, which this year celebrates its 10 anniversary.

Next slide, please. In conclusion, I would like to say a few words about our pilot project by Gazprom Neft. In the territory of the Omsk refinery, we have launched the first solar panel power station with 1 megawatt. The sole capacity of this particular project underscores the attention of our company towards innovative developments and traditional methodologies in areas of safety and self-supply.

Thank you very much for your attention. And dear colleagues, now Mr. Yankevich here is back with a more detailed analysis of our financial performance.

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Alexei Viktorovich Yankevich, Public Joint Stock Company Gazprom Neft - CFO, Deputy CEO of Economics & Finance and Member of the Management Board [5]

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[Interpreted] So -- in as far as the overall dynamics are concerned, as I have mentioned it in many ways, it has been determined by the external environment that we have been struggling with in order to compensate for this negative effect. And as far as the year-on-year results are concerned, the oil price decline has been partially compensated for by the ruble exchange rate. As far as the quarter-on-quarter is concerned, the station there is different because there also was quite a considerable oil price decline over 10%. But it wasn't compensated for by the ruble exchange rate because [the available --] ruble exchange rate quarter-on-quarter practically hasn't changed, remaining about [RUB] 64.5. So respectively, this blow hasn't been cushioned in the form of oil price declines. So the effect here has been much more considerable and not to be able to compensate forward by internal factors, but at the same time, you can note that the EBITDA and the net profit, there is a bit of decline, but it's quite slight. So all in all, we were able to maintain the level of the second quarter.

Next slide, please. Here is what we are showing in detail. The effect from different factors, looking at it in a year-on-year lens. We have been more than able to compensate for the external environment and even provide for a slight growth. And the biggest contribution came from our production growth from the new fields and also from the downstream optimization in terms of the operational program and the assortment, as well as our sales through the premium channels.

Next slide, please. In as far as the quarterly dynamics is concerned, through various internal measures, we've been able to uphold the efficiency. But encompassing it within 12 year -- months, 10 more months period within just 1 quarter, we've been able to come up with the 16% growth, but the effect from the external environment was, as I said, quite considerable. What's really worth noting here amongst the external factors, we are taking into account only pricing, taxation, but in terms of our internal objective factors, we had to down our Prirazlomnoye platform for various preventative maintenance, which altogether brought about a bit of a decline in the quarterly dynamics, and we are very much looking forward to be able to recover this in the subsequent quarters. And so if it wasn't for that, our third quarter definitely would have been looking much better than the second one.

Now looking at the cash flow, overall, one may say that during the 9 months, really, we've been able to attain some good results in terms of the cash flow, generally. And the free cash flow we've been able to completely provide for quite a considerable and voluminous dividend payment this year. And principally speaking, free cash flow comes out to be even higher than this. At the same time, we are generating certain income from the fixed asset divestiture, which all together enables us to come up with a positive cash flow, even taking into account a slight expansion in terms of acquisitions, which are primarily made up of the licenses as well as increasing our petrochemical business share, something that we've mentioned in our report.

But one may immediately say a few words about the future that didn't affect about the cash flow statement during the 9 months. But we will see within the 12 months report because decision has been made. The money has been paid out. We have additionally paid out this year the interim dividend covering the 6 months' period. So overall, if you are looking at the current period, I mean, the whole 2019, the payment to the shareholders will come up to a record amount more than RUB 200,000 -- RUB 200 billion, but we'll never come close to that before. And even if we jump a little bit ahead in discussing our investments and CapEx, one may say that the additional funds that we've been able to earn, are distributed in favor of the shareholders rather than investments because our investment growth and capital expenditure growth is not as substantial as the absolute dividend figure that we were able to witness in terms of the payment when compared 2019 to 2018.

Next slide, please. Now let me switch over to the topic of our CapEx. So generally speaking, our CapEx grew by 16%. Principally speaking, that has been an expected result. As we previously communicated to you, we are now moving into the most active phase of our refining upgrading because we are being quite active right now at our refineries. Construction processes are in full swing as well as procurement and contracting. And so principally speaking, we are towards the maximum (inaudible) in terms of the spending into our downstream. And further on, we will start slowly going down starting in '22, '23.

Besides, there is also production growth, which has been conditioned by several drivers. You shouldn't be taken aback by the fact that CapEx has been growing also pertaining to brownfields, although at first sight that might not really look quite rational. But there are 2 reasons to it. The first one, principally speaking, we started in 2019 from a low base of 2018. Let me remind us that in 2018, we were quite fast in responding to the OPEC+. We've put into operation quite a few instruments and have considerably reduced our activity in brownfields. And so currently, we are not really growing it, but rather trying to recover it compared to the last year as soon as the opportunities presented themselves. Besides, there is a certain accounting factor at play, because in terms of our investments into the brownfields and greenfields. I would say that in as far as our classic brownfields are concerned, specifically in Noyabrsk and in Orenburg, we have some greenfields as part of the brownfield cluster. So if you separate these greenfields, then the growth would be a little bit lower. So this growth from RUB 84 billion to RUB 97 billion is also conditioned by the fact that our investments are principally growing into the kind of the fields which you can consider as straightforward greenfields, but specifically, this is a remote set of fields as well as our Orenburg cluster, where we have purely growing assets there undergoing the first and the second development stage. So this is as far as greenfields are concerned, but this is quite logical, because apart from Novoportovskoye and our flagship field, also coming very close to being launched 2 major greenfields that we have, which is Severo-Stakhanovskoye and that is where we are becoming more and more active, which brings about more investment.

So principally, it is all evolved into such a situation that on the one hand, we are moving into a much more active phase in as far as our refineries are concerned, and on the other hand, we continue to develop our greenfields. We had a bit of a contraction, once we came out of an active stage with regard to the Novoportovskoye field. But right now, there are new greenfields coming instead. And so again, our investments are slightly nudging up.

So overall, these are the kind of dynamics that we are seeing. And before the end of the year, we will be adhering to the previously given guidance, which is going to be [400] give or take. So that is the amount that we are going to keep up with. So also there are some additional projects that we have taken on, simply because some good results, good cash flow, but I shall repeat it again, it has been done not to the detriment of our shareholders who have been able to receive the biggest share of our additional cash flow.

Next slide, please. I shall conclude reviewing our financial performance, where they pictured out our financial stability. Just a few comments because this stability and sustainability really is improving. And so our net debt to EBITDA is staying at historically minimum marks. We have closely come to 0.5, which is a bit low leverage in our case. But that means that we do have quite a considerable debt capacity, which in the future, we may resort to in order to properly maintain an equilibrium between the shareholder interest on the one hand and the goals of the [end of our] business on the other hand because -- and a lot of ideas about the development of the company, which may bring about a long-term growth of the value of the company. So this low leverage is quite a handy thing because this is the kind of an instrument which we may always resort to besides considering the fact that the market rates are growing and the borrowing costs are going down. So you can see that like in an average case, our rate is going down. And the ruble debt rate has gone down to 7.79%, which is really a good thing because I do remember the kind of times of the high oil prices and everything was quite all right and even (inaudible). So right now against much more modest conditions in the oil market, this principally points to quite a good situation in Russia. And our ability to achieve these kind of low levels of the debt. And as a confirmation, we've been able to really drive good transaction. We placed our 5-year bonds worth RUB 25 billion.

The unique thing about it is that these are the bonds with our call option, which means that we've been able to hedge ourselves from the further rate reductions. So we've been able to buy back these bonds at the nominal value on the one hand, but on the other hand, we are able to fix such in absolute terms, a very good rate of 6.85%, which is our absolute record. I do not really remember, previously in placing ruble papers at the rate, which would be less than 7%.

So with that, let me complete my presentation, and we'll be ready to answer your questions. Thank you for your attention.

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Questions and Answers

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Operator [1]

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(Operator Instructions)

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Evgenia Dyshlyuk, Gazprombank (Joint Stock Company), Research Division - Director of Equity Research for Oil and Gas [2]

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(foreign language)

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Unidentified Company Representative, [3]

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[Interpreted] Evgenia, thank you very much for your first question. And I shall comment on this, this way. Without doubt, always as far as our sales are concerned, we're trying to target the environment as any commercial business, but in this particular case, this was not the environment rather but the development of our sales and marketing as well as promoting our products. We've been quite seriously able to move onwards with our bitumen and in lubricant sales, and so this growth in sales comes from our efforts aimed at developing the business rather than just the environment being so. And we are trying -- we're trying to arbitrage in between the exports and domestic sales. So this is the enhancement of our assortment of product and doing some job with the premium channels.

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Evgenia Dyshlyuk, Gazprombank (Joint Stock Company), Research Division - Director of Equity Research for Oil and Gas [4]

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(foreign language)

[Interpreted] Thank you very much for answering the first question. The second question is this. As part of the new Gazprom's new dividend policy, which is expected to be announced, the group is going to switch over to the 50% dividend payment ratio in the course of the next 3 years. May one expect in this slide that Gazprom Neft 50% dividend payment ratio shall be reached sooner compared to the controlling shareholders' time schedule? And when are you going to disclose this, if at all?

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Unidentified Company Representative, [5]

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[Interpreted] Thank you very much for this question, Evgenia. First off, I suppose that already now, we are quite close to the 50% level based on the effect of the last dividend payment covering first 6 months, 40%. We should consider this very close to 50%. So principally speaking, there's not much ground for us to cover. The second point is that we confirm our intention to reach 50% and our senior executive previously stated it. So we're being quite consistent. In as far as the speed of the matter is concerned, whether it will happen faster, that will definitely not be slower than in the case of our main shareholder, quite possibly that will be quicker. It will depend upon many factors, upon the environment as well as upon our need and as far as the development projects are concerned, as well as the balance between the long-term value creation and a shorter-term returns to shareholders in the form of a dividend. This is the [carbon] equilibrium that we've always tried to maintain in the most effective manner. And so further on, we will sustain it. But again, I'm not in a position to quote to you an exact timing. But generally speaking, I have given you enough prompts. So you may guess what it is.

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Evgenia Dyshlyuk, Gazprombank (Joint Stock Company), Research Division - Director of Equity Research for Oil and Gas [6]

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(foreign language)

[Interpreted] May I ask a third question? May I -- maybe I have missed it. When you mentioned the CapEx level for next year, could you please again tell us what are your expectations for CapEx level next year?

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Unidentified Company Representative, [7]

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(foreign language)

[Interpreted] As far as our investment target are concerned, the net investment cash flow, we expect to be somewhere at the level of RUB 400 billion, give or take. This is the guidance that we've given previously. And this is the figure, again, give or take, we would expect to remain for the next 2 to 4 years. In some years it will be more, in some years it might be less. Well, I would say, during the next 2 to 3 to 4 years, so RUB 400 billion or thereabout is what we should expect, which is the net investment cash flow since we might use divestments. We won't cease to further optimize our portfolio by the general investment. Net investment cash flow should be expected at around this level.

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Operator [8]

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Alexander Burgansky, Renaissance Capital.

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Alexander Burgansky, Renaissance Capital, Research Division - MD and Head of Oil & Gas Research [9]

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(foreign language)

[Interpreted] I've got 4 short questions about Upstream. First of all, could you possibly tell us what is the kind of production growth that you expect next year, considering the fact that OPEC+ restrictions remain?

My second question -- could you end the third question together? Could you give us a more detailed guidance about Prirazlomnoye and [Novy Port] fields about your production plans for the next few years, possibly for the next year, which is 2020, '21?

And my last question, a more detailed 1 about Prirazlomnoye. I am of the impression, considering the previous several quarters including the third one, that the general Prirazlomnoye production is staying at a slightly lower level than you had expected a year or 2 years ago. Does it coincide with your understanding that the way Prirazlomnoye is delivering? Or maybe it was done purposefully smart over OPEC restrictions? Or maybe you're optimizing your production? Or maybe there are other factors which affect the Prirazlomnoye performance?

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Unidentified Company Representative, [10]

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(foreign language)

[Interpreted] As far as our production dynamics is concerned, yes, one is to imagine that no -- that restrictions are not going to change, that the OPEC+ quotas will just stay as they are. Then generally speaking, one shouldn't expect any major growth and the overall hydrocarbon production may growing insignificantly, just about 1 incremental percent. That's the way I may see it. But generally, we do expect certain positive changes. However, our conservative scenario is this 1%.

Now in as far as the production volume in between they mentioned about fields as concerned, I don't have the figures at my hand here, so we will send it to you separately. And as far as Prirazlomnoye is concerned, it remains to be a growing asset for us. And we do expect that in the future, it will produce more. But you should, at the same time, understand it yourselves that in as far as such complexes are concerned, it was very difficult to come up with a precise estimate of what it will be in the future. There could be deviations. But overall, we are remaining in the trend. And in as far as our investment model targets are concerned, yes, there is a bit of an optimization, which we apply generally to the portfolio as well as to individual assets within it. We are trying to align our CapEx against the output throughout the whole portfolio, trying to optimize our activities for the purpose of achieving the maximum return on capital in different upstream project. So that can always be different adjustments and deviation from the plan. But the -- all in all, this trend is following the trend. And so generally, I would say that its model is being confirmed rather than we see any substantial changes. There are certain deviations, but they are not of a critical nature.

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Operator [11]

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(Operator Instructions) Angelina Glazova, JPMorgan.

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Angelina Glazova, JP Morgan Chase & Co, Research Division - Research Analyst [12]

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(foreign language)

[Interpreted] Some of my questions that I wanted to ask you have been already voiced. So what remains in my side is with respect to the Arctic projects, there is quite a serious newscast that we are watching, specifically that Gazprom Neft, in as far as the exemptions that it may be given, may go forward with some substantial investments into the Arctic offshore considering partnering with various gas process and projects. Are there any details that you may share with us in terms of what one should expect? And to what extent it may affect your overall Arctic development strategy?

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Unidentified Company Representative, [13]

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(foreign language)

[Interpreted] Well, without a doubt, the Arctic is what we're very much interested in. But in as far as the projects are concerned that you might mean, that doesn't constitute our core projects in oil like [Novy Port]. I would even say that these are not about even the fringes that we are developing based on the gas front operatorship contract. These are very new kind of projects, and one should understand that these are not the projects, but rather the ideas which are currently going through a very initial phase of assessment. But I should concede that the Arctic is the kind of the region where you find a lot of reserves. But the ability to monetize these reserves has always been quite a problem, and that is exactly the reason why they haven't been actively developed. You find a lot of oil, a lot of gas there. But again, the monetization is a big issue because of the harsh conditions and the remote geography. But there are different technologies which would enable one to monetize these resources and these are the technologies that we are currently looking into. But again, this is a bit of a learning curve for us following the completion of which we will be in a position to come up with certain investment ideas and communicate these to you.

But in the meantime, I haven't been communicating these to the investment community because this is just an idea, far from being an investment exercise. Yes, it is very exciting. This may very probably open up for us the opportunity to, amongst other things, run major successful projects. And I suppose that the amount of money that you may have heard in the public space do signify a bit of a prospective evaluation about the overall size of such a project or projects. And in case all these preliminary considerations are successful and we are able to identify the applicable successful technology, that may transform into major successful projects.

Yes indeed, the amount of money to be involved is humongous, but this is very preliminary, initial stage. So that absolutely won't affect our investment plans within the next 3 to 5 years, definitely.

(foreign language)

Interpreted And I would also like to add on top of what just previously said, because your question is such a comprehensive one. So my first comment was more about the gas and chemicals that you mentioned and about the new technology for monetizing crude and gas. You also asked about the offshore area, but as far as offshore is concerned, we do have licenses and we do have fields in the Arctic offshore, but they are currently going through the early exploration stage. We are continuing it, but this is the plan that you are familiar with because that is also part of the greater Arctic. And that is where we are continuing our work totally within our plans. And you are aware of it. You are familiar with all of the figures. And I've mentioned them previously on more than 1 occasion. We are moving exactly according to plans. But again, these are early exploration projects.

Apart from it, I should mention, out of what is closer in terms of the time frame, something that one may expect in the next 3 to 5 years, it is everything which is around our Novy Port field, where we are putting in some serious efforts developing it further. We're building a whole cluster around it. And we will be developing the reserves' next rate. There are fields which are smaller, but the ones which nevertheless may come up with some good contribution loading up our Arctic infrastructure and our Arctic terminal. So these are our plans for the foreseeable future. And that is where we will be investing into -- and you will definitely be able to see and feel them within our investment plans. So these are the projects more related to more or less conventional type of technology, well-proven and tested in time. And so my first comment was more about brand-new projects related to introducing the kind of technology, which has yet been tried in Russia. And that's where the volume could be quite huge, but that's where you would also see of uncertainties.

(foreign language)

Interpreted Dear ladies and gentlemen, thank you for very much for participating in this conference call. And great many thanks to the management of the company, who prepared a very detailed presentation, and which I do commend for being able to come back with elaborate answers. So if there are any questions remaining, we will be more than happy to get back to you separately and share with you all of the statistics that you requested. Thank you very much again.

[Portions of this transcript that are marked Interpreted were spoken by an interpreter present on the live call.]