Strategy for 2010-2015 approved by the Board of Directors

At a regular meeting on 18 December 2009 the Sovcomflot (SCF Group) Board of Directors approved the SCF Group’s Strategy for 2010-2015.
During the past five years the SCF Group’s fleet has grown by more than three times and currently exceeds 10.4 million tones (DWT). The average age of the SCF Group’s tankers has been reduced from 7.5 to 6 years. By entering such segments as the transportation of liquefied natural and petroleum gas, as well as the development of new and unique transportation technologies for crude oil shuttle tanker operations in extremely harsh and heavy ice conditions of the Arctic and the Far-Eastern seas, the range of services offered to customers has been significantly broadened. As sovcomflot states, revenues have increased more than three times and in 2009 amounted to USD 1.23 billion.
While looking into the future with cautious optimism, the Board of Directors recognises that the SCF Group’s Strategy for 2010-2015 will be implemented in a challenging market environment. In the short and medium term the oversupply of tonnage will continue, resulting from the decline in global trade and transportation volumes and massive deliveries of newbuildings. Sergey Frank, Sovcomflot President & CEO, noted: “Based on the analysis of market trends, the Board considers that it is desirable to maintain the SCF Group’s industrial business model providing for deep integration in the oil and gas industry value chain, and in the servicing of oil and gas companies at all phases of their production cycle from the wellhead to the end users of oil products. This strategy is based on the SCF Group’s desire to maintain its leading position as regards quality of service, safety and environmental standards, and the development of energy efficient technologies, and further widening of the scope of services offered to its clients.”
Target parameters of the strategy as per Sovcomflot include:
• maintaining the SCF Group’s leading position in servicing Russian exports of hydrocarbons;
• the creation of a national integrated offshore upstream services provider centred on Sovcomflot with a specific focus on operating in the harsh environment and ice conditions of Russia’s Arctic and Far-Eastern regions;
• strengthening Sovcomflot’s status as “preferred carrier” for core Russian and international oil and gas companies and maintaining its position within the world’s top tanker companies;
• further consolidating the Group’s market positions, both by expanding its own fleet, by operating chartering pools and by providing commercial operation of third parties’ vessels;
• focusing the SCF Group’s investment policy on the needs of core Russian and international oil and gas clients as opposed to more speculative market expectations. The volume of investments in 2010-2015 will exceed USD 5.5 billion;
• doubling key economic parameters of the SCF Group’s activities by the end of 2015, maximizing the return on invested capital , and achieving sustainable long-term growth of the Group’s equity value.