OREANDA-NEWS. May 31, 2012. During the meeting with analysts devoted to TRANSNEFT's IFRS results in the year 2011, M.Grishanin, the first Vice-President clarified a series of questions regarding the Company’s financial activity.

In particular, Mr. Grishanin said that TRANSNEFT JSC plans to assign for dividends 25 per cent from nett profit of the results of the year 2011, including 15 per cent for common shares, and 10 per cent for preference shares. “The dividend policy hasn’t changed”, he said and reminded that the Board of Directors will consider this question on May 24th. “There is no any preliminary decision yet”, Mr. Grishanin noted. According to the Russian Accounting Standards, TRANSNEFT’s nett profit amounted 11.142 billion RUR. So, 1.67 billion RUR can be assigned for common shares, and 1.114 billion RUR for preference shares.

Mr. Grishanin also said that there are no plans to raise tariffs for TRANSNEFT JSC’s services in the year 2012. “We do not see any potential of tariffs raising for more than a yearly inflation level”, he said. According to Mr. Grishanin, this rate can even be lowered in a later date.

As Mr. Grishanin said, the risk of early redemption of TRANSNEFT’s Eurobonds still remains. “We haven’t got a decision of the tax agency yet. The question remains undetermined”, he said. According to Mr. Grishanin, if a decision to pay taxes is made, the Company would have legal proceedings. Moreover he informed that in such a case, TRANSNEFT would be ready to buy out 100 per cent of own bonds. “I suppose that investors’ attitude to us will not change after that”, the First Vice-President added. He also said that according to the schedule, TRANSNEFT plans to forward 1.5 billion USD for bond retirement in the year 2012.

Privatization of 3 per cent of TRANSNEFT Company will result in violation of covenants on the Company’s debts. “The covenants would be changed because in consequence of privatization, the effective control will also be changed: other voting shareholders will appear”, Mr. Grishanin said. He pointed out that covenants appear in all the credit agreements, including the Chinese credit. TRANSNEFT has already pointed out the risks of changes in the sphere of corporate management, that a partial privatization may result in. In particular, minorities would have the right to make decisions in respect of deals with their own interest.

Mr. Grishanin informed that making forecasts for its activities, TRANSNEFT reasons from crude oil production increase in the Russian Federation at a rate of 2 per cent annually in the nearest 5 years. So, TRANSNEFT calculates its abilities on the basis of expectations that the crude oil production will amount 562.4 million tons in the year 2016.

Decision on a project of building “Yug” oil product pipeline will be made in the year 2013, according to Mr. Grishanin. “High quality diesel oil shall be pumped through this oil product pipeline, and only LUKOIL Company has this kind of diesel oil on this direction”, he said. At the same time, the First Vice-President added that LUKOIL Company possesses diesel oil in amount of 3.5 million tons, but one should possess not less than 8 tons of this oil product to cover outlay of this project. “We have nothing to pump yet”, Mr. Grishanin concluded.