PJSC Rosneft Oil Company

Pavel Fedorov - Vice President Artem Prigoda - VP and Advisor Vlada Rusakova - VP Didier Casimiro - VP, Refining, Petrochemical, Commerce & Logistics Alexander Krastilevskiy - Advisor

Ronald Smith - Citigroup Karen Kostanian - Bank of America Merrill Lynch Alexander Kornilov - Aton LLC Ildar Khaziev - HSBC Alexander Burgansky - Renaissance Capital Henri Patricot - UBS Investment Bank Igor Kuzmin - Morgan Stanley Artem Konchin - Sova Capital Limited Evgenia Dyshlyuk - Gazprombank

Good afternoon, dear ladies and gentlemen. Very sorry for slight delay in starting this conference call regrettably.

Just because of the operational requirements, we had to postpone it until now. Thank you very much for participating in this call dedicated to the IFRS performance results in 2017.

My name is Pavel Fedorov. I'm the first VP of the company.

In attendance with me are also Didier Casimiro, who's VP for Downstream; Vlada Rusakova, VP for Gas business; Artem Prigoda, who's the CFO for Upstream; and a number of other company managers who are in charge of different businesses. After a brief presentation, we will respond to your questions.

Please note that this presentation, like always, shall contain a number of references to the future events and outlooks and respectively, envisages a certain limitation of liability because of that. And as far as macroeconomic performance for 2017, we observed a gradual improvement of the macroeconomics.

The Urals price grew from $52 per barrel in the first quarter up to $60 per barrel in the fourth quarter. At the same time, the average price grew by 26%, reaching $53 per barrel.

The ruble exchange rate depreciated slightly towards the end of the year. And during the past few months, the ruble oil price exceeded RUB 3,500 per barrel.

In the current situation, such macroeconomic indicators enable us to compensate for a number of negative factors, which, as we previously described during previous quarters, continue to affect the economics of the oil and gas companies in the industry. In the first place, that is about the factors related to the tax burden, and this is also about the growth of the excise note in terms of the limitations of raising prices in the domestic refining market as well as the accompanying transportation tariffs as part of the inflation.

Speaking about 2017. The year is described by a number of important events, including not only the good quality operational and financial results of the company, but also completion of a number of strategic deals.

And as far as strategic deals are concerned, I guess, it would make sense to note the successful completion of the acquisition of 49% of the Essar Oil, the 30% share in the concession agreement for the development of the gas in the field of Zohr in Egypt and the remaining expenses to complete all of these. These were borne in the third quarter of 2017.

And in Q4, we started seeing the positive effect from our investment term to the Indian company, with Zohr achieving its planned performance. And so this particular project would also be proportionately consolidated into our reporting.

In order to strengthen the company's position in a number of strategic markets, last year, the company started a mutually beneficial cooperation with Iraqi Kurdistan as far as trading, production, transportation and hydrocarbons was concerned. A separate comment within this particular geography will be made by Didier Casimiro during his part of the presentation.

Financing of the Kurdistan project at this point in time has been completed as part of the oil supply agreement in Q2. The shipments of hydrocarbons began separately.

As far as domestic market was concerned, we're able to put together a new production, Erginsky cluster, in the Siberia, which unites several fields with expected total production in excess of 8 million tonnes. The first step in developing this particular field -- or this particular cluster was the launching of the Kondinskoe field in Q4 within the expected timing and within the budget as well.

Like it was before, we continue to say that we are confident in the high profitability of our new projects. Very precisely, we weigh all the risks and the integrated profit indicators.

I believe that the very successful examples, considering last year's case and as far as successful integration is concerned and the -- was the acquisition of Bashneft with the overall synergy from it, considerably exceeds our prudent estimations just within last year, reaching more than RUB 50 billion of -- and additional synergy income from this particular asset, which is more than 1 quarter from the overall assessment of the synergy outcome, which the company stated in the course of the privatization deal. Similarly, in our reporting, which was disclosed in the presentation, you will separately note the fact that concerning the number of strategic deals that we went into last year, in the first place, it applies to Venezuela.

There is high progress taking place, and there is quite a significant material reduction of the prepayments made available. So specifically talking about the prepayments given to Venezuela in 2014, we already see almost 50% reduction of those in 2017.

In this way, one can see that the repayment of these monies is going according to the schedule. And I believe that Didier Casimiro will separately comment on the high efficiency that was generated out of this particular deal and any other questions that you might have to him.

In compliance with this Rosneft Strategy 2020, which was endorsed by the Board of Directors in December last year, the company, within the next few years, will focus upon integrating new assets into a structure, maximizing synergies. It will target, in many ways, to improve the efficiency of its operations on the existing assets as well as increasing its cash flow while maintaining the planned growth rates, which we have announced to the market.

Now with your permission, we will elaborate on our operational of results of Rosneft later on. And let me pass the microphone to Artem Prigoda, who's in charge of the finance and economics of upstream and exploration, our CFO within this particular stream, and he will tell us a few more details about what we did in upstream.

Thank you very much, Pavel. Okay, good afternoon, dear colleagues.

I would like to highlight a few several important achievements in our segment last year. First of all, the company continue to demonstrate production growth in its hydrocarbon performance without -- despite the external limitations imposed.

Previously, the production of hydrocarbons reached 5.7 million barrels of oil equivalent a day in 2017, having grown by 6.5%, including liquids by 7.6% up to 4.6 billion barrels. Also, we achieved a new drilling record, having increased by 30% up to 12 million meters.

And so commissioning of new horizontal wells grew up to 36% horizontal wells, where the multistage frac grew by 67% this year of in-house drilling service. And overall meterage consistently stayed at 60% level.

Also, it is important to note that we ensured a growing output at the Uvatneftegaz, which has become one of the key achievements last year. Our company grew its output of oil by 64% up to the level above 66.5 million tons in 2017, while the daily output in Q4 2017 exceeded 190,000 tons, which is more than 69 million tonnes within a year if you recalculate that.

So about the Kurd, almost 12 months before the endorsed plans for the production, we also continued to focus upon more active development of the lower horizons with unconventional subsurface characteristic, gradually growing output in Vankorneftegaz, Varyoganneftegaz and other subsidiaries. Developing new fields.

Fully consistent with the schedule, major projects, such as Suzun and Messoyakhaneftegaz last year, produced more than 5.7 million tons in Rosneft's share. Originally, we have been able to commission into operation the Erginsky complex.

And in November, we started shipping the first oil through -- into the Transneft trunk pipeline. The Erginskoye field, as was mentioned, was launched in Q4 and already produced 15,000, 17,000 barrels a day.

Similarly, the company started a complex technological testing for the oil treatment facility at the Yurubcheno-Tokhomskoye field in East Siberia last year. The overall output within these 2 projects reached almost 1 million tons.

The midterm perspective. The growing output at the major fields and the active development of the new greenfields and oil and gas projects will grow the output by the company.

Specifically this year, we're planning to launch the next major project, second stage of the Taas-Yuryakh, Tagulsk, Russkoye and the first stage of the Kuyumbinskoe field. The key strategy for the upstream segment remains the application of the state-of-the-art technologies when working our project in 2017.

The Middle Botuobinskoye [indiscernible] will drill the well with 7 sidetracks with overall length of 5,030 meters within the oil plays. And we also continue to introduce technologies, which have been launched last year.

In Yugansk, the horizontal well, the 2-well stage design was standard solution for the new pads. While the controlled drilling under pressure is broadly being applied at almost all of the wells in Yurubcheno-Tokhomskoye field.

With the active development of the current fields, the management is not forgetting about this replacement. In 2017, we grew the seismic acquisition by more than 30%.

We discovered 162 new plays, 31 new fields. The amount of the proven reserves under the SEC classification grew by 6%, almost up to 40 billion barrels of oil equivalent towards the end of the year.

The oil replacement ratio with the proven reserves reached the impressive 180%. The outstanding results of the exploration effort with the growing reserves became possible through a stage-by-stage introduction of new technologies as well as the acquisition and interpretation of the seismic data.

And we continue to continue that effort so as to raise the precision in our exploration drilling up to 95%. Rosneft remains a leader amongst major international oil and gas companies from the point of view of the proven reserves.

The -- in terms of the replacement ratio, in the future, we will focus upon maintaining the quality of the company's portfolio and improving the global position of the company. The considerable part of the portfolio is gas, which accounts for almost 1/3 of the reserves.

Vlada Rusakova, the Vice President for the Gas business, will continue this presentation by highlighting the key events in this segment.

Good afternoon, dear colleagues. Considering the year-end result, the production of gas exceeded 68 billion cubic meters of gas, having grown compared to last year by 2%.

The level of the utilization of the associated petroleum gas was 89.2%. The income from the sale of gas in the territory of Russia during 2017 grew by 1.2% compared to 2016, while the share in the domestic market, the company share amounted to almost 17%.

In December, we began production as part of the development of the Zohr field in the Egyptian offshore. The implementation of this similar scale of project, together with the foreign partners, enables us to expand our experience in developing the offshore deposits and strengthens the company's positions in a very important Egyptian strategic market.

We also were able to achieve agreements with BP on a joint development of the Kharampurskoye and Festivalny license areas, which are located in the Yamalo-Nenets Autonomous District, with the overall subsurface reserves exceeding 80 -- 880 billion cubic meters of gas. Currently, as part of our strategy, we are focusing our resources and efforts upon developing projects with a high level of return upon capital invested.

The basic purpose is to launch this project within the budget and within the expected time, which will enable us to produce more gas. We'll grow our share in the overall hydrocarbon production in the company.

All of this, in a multiple way, would enable us to grow EBITDA from gas business. In 2019, we are planning to take Rospan up to a new level of production.

In 2020, we will launch Kharampur. So overall, we see that previously stated target to achieve by 2020 the output at 100 billion is feasible, and we are moving towards that.

The key success factor in increasing the amount of output by 50% within the next 3 years is the availability in the portfolio of the company of the contracts which provide for the sales of the basic load of gas we produce. And later on, I would be eager to answer any of your questions.

But currently, let me pass the microphone to Didier Casimiro, who is Vice President for Marketing, Oil and Chemicals, Commercials and Logistics.

Thank you, Vlada. Good afternoon, dear colleagues.

Well, considering the results of 2017, the refining volume through the company's refineries almost reached 100 million tonnes, primarily thanks to the integration of the Bashneft assets. On top of that, the company was able to improve the quality of its output.

And the output of the lighter products grew by 1.8 percentage points up to 58.4% and the refining depth by 3.2 percentage points to 75.2%. In the second half of last year, at the Novo crude refinery, we delivered equipment for the hydrocracking unit.

And the Angarsk petrochemical plant saw the completion of the installation of the heavy-load equipment for the diesel treatment unit. So the launching of these units as part of the upgrading program will enable us to produce more high-quality diesel and automobile gasolines as part of the integration process of Bashneft's assets and the integration into the single train of the refining, we started delivering the high octane components to the Ufa refining, from them to the Rosneft refineries to the Ryazan refinery.

We completed large-scale installation of the atmospheric crude processing. As part of the basic events that we undertook as part of the environmental year in 2017, the Bashneft and Ufaneftekhim facilities had the launching of one of the biggest bio treatment unit, which is based on the state-of-the-art technology by GE.

The company continued to diversify its input deliveries. The eastward shipments grew by 10.7% up to 47.7 tonnes.

And one of the growth factors here was the expansion of the shipments to China, including through the territory of Kazakhstan as part of our renewed contract. One of the top priority areas in the development of the company is to develop its premium sales channels for the refined product.

For example, the overall volume of the refined product sales, specifically jet fuels grew by 10%, bunker fuel by 47%, bitumen by 23% within 2017. The sale of -- through that highly marginal retail network also grew by 17% compared to 2016.

So towards the end of 2017, we practically completed the consolidation into a single sub-holding of the whole of the retail business in order to develop an optimum structure for this business management. Last year, Rosneft continued to successfully expand its sales markets and acquire a share in this rather top-class asset, where a considerable potential for the future development would enable the company to open up a fast-growing domestic Indian market as well as expand the export destinations and specifically to the Middle East into the Southeast Asia, Australia and Africa.

Very soon, we will be paying attention to improving the profitability in our integrated refining and retail networks. Now let me pass the microphone over back to Pavel Fedorov, who will cover the financial performance results.

Thank you very much very much, Didier, and thank you very much, dear colleagues. Speaking about the results for Q4 2017, the results overall were relatively positive.

And as far as the financial performance of the company was concerned, the company demonstrated the key financial performance growing. The income grew by 14%, exceeding USD 1.7 trillion.

EBITDA grew up to RUB 393 trillion. The -- so the net income doubled up to RUB 100 billion.

Free cash flow of the company is -- also has considerably improved despite the seasonal increase of CapEx, which we note in every Q4 towards the end of the year. So overall, considering last year, also through Q4, the company has considerably grown its income and profit both in rubles and dollars.

In dollar dominations, it grew by 38% up to USD 106 billion. EBITDA grew by 24% up to USD 24 billion, while net income, which is attributable to Rosneft shareholders, by 41% up to USD 3.8 billion.

The income and profit dynamics have stayed within the range of the financial performance comparable to the global peers. So last year, we grew our investments in accordance with investment plans, which we have had.

And that investment was related to launching of about 10 major projects within the next 18 to 24 months, which we see over the horizon, and the company is completing its investment cycle related to these specific projects' implementation. In 2017, CapEx grew by 30% up to RUB 922 billion.

This growth, amongst other things, was related to the growing geography of the operation of the company. And as I stated, in achieving progress in developing new upstream projects, this year in 2018, the CapEx program, which was approved by the Board of Directors, calls for maintaining CapEx at the level of 2017.

Now speaking about the financial debt of the company, wherein last year, we observed a certain growing level because it was -- the company was entering into the -- a number of strategic projects. At the international market, the company is able to maintain its debt burden at the comfortable level.

Towards the end of 2017, net debt-to-EBITDA ratio was about 2.1 in U.S. dollars.

The company continues to work at optimizing its debt portfolio, including extending the maturity date within its various obligations. And by rebalancing the time frame of our debt portfolio, the company is able to maintain its focus upon maintaining a sustainable cash flow, which enables Rosneft to maintain its resilience within the volatile commodity market environment and, without doubt, to continue to work for the benefit of its shareholders.

Thank you very much for your understanding, and now we will start the Q&A. Thank you.

I have a lot of questions. I'll try to limit myself to 2 the first pass.

First is operational. In Q4, Rosneft was producing a little over 4.5 million barrels a day of liquids.

At the same time, we can observe that a number of greenfields are running well below capacity. Assuming there were no political constraints, the OPEC-plus agreement on production, how much more oil could Rosneft be producing right now if Trebs and Titov, Suzun and these other greenfields will run at their full current capacity?

I'll stop there and let you answer.

Thank you very much, Ron, for this question, but I guess that our answer is going to be very simple. We are optimizing the way we operate the above-mentioned fields in such a way that it is difficult to talk about a long-term optimum level and the maximum level that these fields might produce.

The only thing that we have to -- from the system is the number of quotas which are related to the OPEC-plus commitments where we are limited in a certain notion of that. But as far as the rest is concerned, we are optimizing within midterm and long-term horizon.

Thank you.

I've got one question about Kurdistan. Could you disclose the period of time for which these prepayments...

Karen, it's very difficult to hear you. I can't hear you at all.

Could you please speak up and repeat it again?

Can you hear me now?

Hello? Yes, yes, now we can hear you.

Hello?

Yes, all right. So my question is about Kurdistan.

Could you possibly explain or disclose the prepayments, for which period of time they were made, within which period of time a repayment is going to take place? And do you plan to do any more prepayments within 2018?

Well, Didier Casimiro will answer the question.

First of all, people that I've seen during my visits to London or Singapore maybe add more insight into this matter. When we are talking about prepayments, we need to be clear that prepayment is a way -- a form actually of securing our concession agreement on the pipeline that goes from Kirkuk up to the border of Fish-Khabur and Endyrsky-Novo [indiscernible].

So when we're talking about the number that is in the press, which is 2.1 billion, 1.8 billion is actually 60% of the value of the concession. 40% or 1.2 billion is held by the KAR Group because actually, the concession is held in a joint venture between Rosneft and the KAR Group.

So that is the first thing. Now to make sure that we are actually only getting into this concession on the first of 2019, once that all the conditions precedent have been met, we have an agreement with the KRG that if something happens, all these funds will be coming back under the form of barrels.

We should be clear that there is no problem, even on the current circumstances, to actually give these barrels back because we are talking about something like 1.8 million barrels on a monthly basis. And as you know, even on the 2-day circumstances, the pipeline easily pumps up and around 300,000 per day.

So you're talking about six days actually being pumped. Furthermore, we are ourselves part of conversations that are happening between the Ministry of Natural Resources of the Kurdish regional government and the Ministry of Oil in Baghdad to restart pumping extra barrels from the Bai Havana and other fields in the Kirkuk area.

So again, if anything is going to happen, there's going to be more barrels available. So one more time, yes, prepayment, but the prepayment is there to hold the concession agreement, which starts on the first of 2019, concession which is signed for 20 years plus five.

I've got a lot of questions, but I will limit it to two questions. First question is about Bashneft.

It's demonstrated a record-high profit. The profit growth compared to 2016 practically was fourfold.

And so my question, because of that, is more kind of a dividend policy from this company, I'm wondering [indiscernible] 2017 [indiscernible] understanding? And respectfully, what will be the dividend payment ratio from this company, considering the fact that historically, in the past 2 years, it was at 50% level.

And my second question, previously, the company stated that an important element in the strategy was in the spinning off its retail subsidiary, intra-separate business and bringing forward a foreign partner into it. Could you please tell us, what is the current status?

Is there any progress with respect to this particular plan, and in terms when one should expect any news about it?

Thank you very much for your questions. So let me now to answer it in the following way.

And as far as the retail deal is concerned, the company is not commenting the commercial negotiations. It is holding right now and any unfinished projects.

So -- and as far as retail transaction is concerned, there won't be any comments. The other thing, I would like [indiscernible] to maybe offer a few words about what is going on with the retail business and as far as its progress and the results that we have reached in 2017 because they were very considerable.

So good afternoon, dear colleagues. I would like to tell you that from the point of view of spinning off this business until 2017, almost 99% have been completely reorganized into a separate legal entity of all the regional sales.

And as it has been, so it will remain the focus upon improving the efficiency and bringing along our associated business. And so this is everything.

Yes, indeed, if at all possible, I would like to now respond to your first question, which was about Bashneft. In an understandable way, the company currently operates within the Rosneft boundaries, and a whole number of new procedures and approaches have been implemented to their operation.

And as far as the dividend payments are concerned, we shall adhere without doubt to these standards set forth for interacting with minority shareholders. We're soon going to have the Board of Directors session, which we'll make a decision about the level of payments for the Bashneft shareholders.

Thank you.

I've got a couple of questions, one about prepayments. In favor of Venezuelan PDVSA, could you please tell me, do I understand correctly that the biggest amount of the repayment of this prepayment took place in Q4 in 2017?

Could you also tell us how overall the sum -- the total sum of all of the loans and prepayments issued to Venezuela changed during the course of the year, and specifically in Q4? And my second question is about refining.

Do you have an expectation that you may share as to the dates when the main conversion units are going to be commissioned into operation this year and next year? I would like to understand also why your outlook for this specific point is so unpersonalized.

So -- and yes, because as far as I remember, in your presentations, you used to state that the majority of the units are expected to be commissioned to operation past 2017, and we didn't have any specific dates written to that.

Thank you very much for this question. Pleased to start with.

Let me answer about your refining questions. Without doubt, we have a very precise schedule, and I don't know whether it is really worthwhile to talk about technical specifics.

But our colleagues in IR, Andre Baranov, and his colleagues will be ready to communicate with you separately because I have a very clear understanding about it. And as far as the immediate future is concerned, talking about the longer-term future, certainly, there are certain issues that were raised previously, which is about a long-term sustainable mode in taxation for the refining industry.

And here, I believe that we'll be able to provide you with a full schedule of our long-term commissioning to operations. We do need to have a clear understanding of what the stable fiscal regime for this particular industry will evolve into.

So -- and as far as Venezuela is concerned, I believe there is Slide #9 in the presentation that you can take a look at. And I would ask Didier Casimiro to comment on it in detail.

Thank you.

Also on Slide 9, if you'll allow me again to speak in English because Slide #9, as you will see, talks about $4 billion, which are the first 2 prepayments. And the logic of saying this is that there's contracts that were closed in 2014, while the other contracts were only closed in 2016 and only started paying back therefore much later.

But I think for you, the most important thing as investors is to understand how much money has been put into prepayments. So the number is $6.5 billion.

At the end of the month of February, only in capital, we had already received back $2.350 billion. And actually, if we include also the interests to that money by the end of February, we are at more than $3,260,000,000.

So in short, what I'm trying to say is that 50%, if you think about it like this, so the money that we put into Venezuela is already back. So we are fully online in actually in receiving our prepayments back.

The last prepayments are running up until the end of 2020. So we are online with getting the money back is what I would say, both when it comes to the actual capital as when it comes to interest.

Further, now I think it is important to understand that at the current prices, obviously, given the fact that we have fixed amount of barrels, we will not see any problems in delivering further repayments, both of capital and interest. Thank you.

I've got one question. Could you please comment, in your presentation stated that one of your objectives for 2018 was to reduce the level of short-term debt.

Could you possibly give us a comment about your plans to reduce the overall debt level, including the long-term one?

Well, just I would like to highlight, again, that our objective is not to reduce the long-term component in our debt portfolio because our objective is to properly balance our debt portfolio. And as far as a short-term component of it is concerned, this is the first point.

Now speaking about our forward-looking expectations in our financial guidance is something that we're not giving. But in an easily understood way, brokers and analysts do have a certain profile of debt repayment, which is more than evident.

The company's generating a good cash flow. And so out of it, funds, amongst other things, will be applied to reducing the debt burden of the company, at the same time being aware that the company's continuing to service the commitment and obligation that it has.

So every quarter, we do that also out of our cash flow.

Two questions for me, the first one on upstream [indiscernible], and the second one on costs. So the first one, you mentioned several projects due to start up in 2018.

Do you expect to be able to increase your liquids production this year? Or do you plan to reduce production at your brownfields?

And then secondly, could you provide us some guidance on upstream and downstream costs for 2018, please?

Well, we'll have Artem Prigoda answering the first question as far as upstream and downstream guidance.

Yes. As you have correctly noted in our presentation, it was mentioned that we are planning to launch, additionally, a major project, but also to continue growing production from mature fields, and specifically from Yugansk.

So yes, indeed, we are planning to grow production from both our brownfields and greenfields through the next stage -- and through launching new projects, we have also Erginsky cluster with 8.5 million of plateau to be reached, which we will be reaching with every year. So I believe that this is quite a comprehensive information.

And we're following this path without really losing our way on schedule, on time, on budget. Now with respect to the costs, I can tell you because I think that was what you asked about in upstream.

Well, principally speaking, in 2017, we had major growth.

[Indiscernible].

All right. Could you repeat your question then about the cost reduction?

So what was the question about?

And my second question was on the level of upstream, downstream for 2018?

All right. All right.

So OpEx is, in 2017, in terms of basic changes, they took place because of having [indiscernible] joining us, where historically, there was quite a big operational expense burden. The second came from growing tariffs and indexing wages, which we did in 2017, which totaled about 80% of all of our key changes in OpExes.

Additionally, as you may well recall, in 2017, we were working under the motto of 2017, the year of environmental protection. So we have to really improve our HSE indicators and performances specifically in the environmental part of it.

And so, respectively, the average well stock -- active well stock grew, which allowed us to maintain that and to maximize the effect from investments per barrel of oil recovered. So if you take a very straightforward look, the OpEx was about 76% and about 8% OpEx growth, which fully fits the annual trends in the Russian market.

It is also important to say that we are able to maintain our leadership in this $3 per barrel, enables us to really consider sales as a successful leader. Thank you.

[indiscernible], let's make it a final question, please.

I've got a question -- I've got two questions. The first one, rather, I'll ask to make you it more specific to understand correctly, as it was translated, that towards the end of February, the overall amount of debt from PDVSA was USD 3.1 billion?

And my second question, could you also specify if you can give us any guidance, the run rate EBITDA and net profit, at this point in time at the quarterly level for Essar project and Zohr?

Yes. Let me first come back to your first question.

So no, no, it's not completely what I said. So what I said is that we have given $6.5 billion in prepayments to Venezuela.

And that by the end of Feb of this year, we had already received back both in capital and interest more than 3,002,000,000 -- I mean, $3,260,000,000. So what I was saying is that, therefore, if you would just be looking at the capital -- so the working capital, if you think about it like this, there are prepayment in terms of working capital invested in there, that 50% has already come back.

Obviously, that is why I was talking about capital and interest. I get interest as much as I do capital, right?

That is why my number without interest that I also gave you was 3 5 -- was, sorry, $2,350,000,000, okay? So we are obviously getting large interests on these amounts.

But again, the most important thing, I think, for investors is to understand that all the money is coming back in line with the contractual obligations. And I want to repeat that the different contracts were close to different points in time with different grace periods.

And that is why, sometimes, you don't see a payback in our previous contract maybe as soon as you thought, but all these payments are coming back in time. And one more time, if we just think of the $6.5 billion, if we get about for interest now $3.250 billion, which is half of it, has already come back.

So we're absolutely certain of we are doing there. And for anybody who can count, I'm sure that there's many of you at the other side of the line.

I mean, I gave you the numbers of capital and capital, plus interest. So you can see that these contracts carry actually very high interest and, therefore, are very effective for the company.

On your second question, as you know, the year closure for Essar is at the end of March. I can't really give you the exact numbers of that, but what I can tell you is -- to give you an idea, is if you look at the 5-year plan that we are talking about numbers somewhere between when we're talking about EBITDA somewhere around $1.2 billion, and at the end of the plan closer to $1.650 billion for 100% of the EBITDA, again, I always like to remind everybody, when we talk about Essar, that Essar is owned by a consortium of companies, of which we know we only have 49%, and is managed by the management.

Thank you very much.

And for Zohr, if possible?

Well, we mentioned that Zohr currently is not a significant contributor, that it only ramps up its production. And only as of the second quarter, one will be able to talk about substantive contributions and figures.

So we're not going to disclose anything about Zohr. Sorry.

My first question is about the prepayments due that you will have to pay next year. What is the dollar amount due for the next 12 months compared to their overall value?

And second question is on your downstream OpEx. It's gone up by 46% year-on-year.

You only had a 16% or 17% volumes-driven increase. So I was curious whether -- what kind of trend we should expect looking forward on that front.

Alexander Krastilevskiy. I would like to comment about downstream OpExes.

As far as I understand, we're talking primarily about the refining assets. So as you might know, the operation expenses, in many ways, directly depend upon the spectrum of products produced.

And so, respectively, as of today in the company and as far as downstream is concerned, we are running the cost optimization program along a full value chain. And so, currently, we have a plan and a current indicator in comparable terms lower than OpExes from last year, currently at the level of 1,300 -- RUB 1,500.

And so all of the expenses, which for our certain standard level are being covered by EBITDA. And we can see that through the operational improvements, which we make in our facilities by improving the gas condensate loading and the -- which considerably improves the output of lighter products and the products with better profit margins.

It is quite comparable with the last year's picture. And so seeing the growth, if there is such a growth, it's just fully covered by EBITDA.

That we see in the overall performance by this segment.

[Indiscernible] due 12 months portion in dollar terms?

On the prepayment dues, just -- this is Didier here again. So just a quick one on this one.

I mean, I can't give you the exact numbers on this. However, directionally, I think the following is important.

As you remember, the long-term contracts that was signed, they were signed in 2013, 2014. So meaning that they had a 5-year tenure.

They are coming to an end, both this year and next year, right? So actually, one coming to an end already now in the second quarter.

Then you have one actually coming to an end at the end of the second quarter, so start of the third quarter. And then we have second half of next year, one large -- the large 5-year contracts coming to an end.

So the only thing that we are doing today is actually signing up prepayment contracts that have a tenure of maximum a year. And therefore, they are all, as you know, euro-based contracts for the supply of Europe through a European company.

It is the only possibility to work in a way that is consistent with sanctions. That is what I can say.

Otherwise, obviously, we still have the large 25-year Chinese contract. But again, also do not forget there that, that contract was done in leaps of 5-year, although they had grace periods going from 3 to 0.

So equally there, what I'm trying to say is, obviously, these numbers are coming down. Thank you.

I've got two questions. Do you have any plans about M&A activities for the current year?

This is my first question. And my second question, I would like you to specify.

With respect to Rospan, do you maintain your production guidance for 2019? If I remember correctly, that was about 19 billion cubic meters.

And could you also give us some sort of a guidance for the current year production?

Yes. Thank you very much.

But you see, as far as M&A activities are concerned, we are not sharing any comments with respect to the possible plans that are taking pretty costly are usually taking place in different -- very different parts of the business. But you it all at the points and the highlights of our strategy.

The main part of it is a very focused improvement of our operation efficiency of our current existing asset base. And so specifically, the company goes for that.

But at the same time, one can also expect that within the midterm outlook, the company will go and identify a number of new partners. And in an understandable way, the company shall review various proposals that they may receive.

But at the same time, we're not having any tangible plans in as far as changing our approaches to M&A activities concerned, apart from those that are written to our strategy. That is, first, a very important premise.

Now with respect to Rospan and output guidance, I suppose we're not able to provide you with a detailed information because the kind of the guidance we used to have within the midterm period, I mean, to Rospan's, remains unchanged. So I don't think there are any changes of what we see.

So I guess, [indiscernible] we agree that for this year, we're not going to change anything for now. Right.

So if there any changes, they are definitely going to be for the better. But largely speaking, right now, we're not having any changes to share with you about Rospan.

Actually, my question was just answered. Appreciate it.

Well, dear colleagues, thank you very much for attending today's conference. As always, we will remain in touch.

As and again, if you have any unanswered questions, [indiscernible] and Andrey Baranov, please get in touch with them. Thank you very much, and see and hear you again.