Russia’s state oil company Rosneft bared its new medium-term strategy to 2022 which could generate more than RUB 180 billion (USD 3.12 billion) in additional cash flow for the company over five years, according to Igor Sechin, Rosneft chairman and CEO.

“The objective for the next five years is to increase returns from the company’s assets and projects amid the volatility of the external environment by developing the service business, cutting costs, creating firm technological advantages, digitalization, and control over material flows,” Sechin said.

The strategy to 2022 is based on an average crude oil price of USD 47 per barrel and the 2018 business plan does not currently reflect restrictions on oil production as part of the OPEC and non-OPEC countries. The OPEC and non-OPEC agreement to cut oil production will be in effect until March 2018.

“The estimated net effect from the implementation of the strategy will amount to 15%-20% of the company’s current capitalization and will lead to organic production growth of at least 30 million tonnes, as well as generate additional cash flow of more than 180 billion rubles over five years,” Sechin said.

The company said this cash flow refers just to the upstream sector.

Rosneft said it plans to increase investment to RUB 950 billion (USD 16.4 billion) in 2018.

Rosneft’s new development strategy to 2022 will generate additional free cash flow of RUB 420 billion (USD 7.2 billion), he said.

“We have developed a very clear algorithm for implementing this strategy: it is intensification, strict fulfillment of set plans, the active introduction of digitalization and new technologies, as well as standardization of best practices, which will be applied across the whole perimeter of the company.

Rosneft Senior Vice President Pavel Fedorov said the new strategy to 2022 will make it possible to systematize the company’s goals and objectives for the next five years.

“If we’re talking about goals, we wanted to systematize our business a little more and determine key medium-term objectives. After assessing a whole range of alternatives, we settled on the indicator of sustainable growth of return on capital as the key strategic objective,” Fedorov said.

“The strategy on the whole is geared toward unlocking the company’s internal potential. The new strategy provides a new development trajectory. The company will acquire a new quality of development and management,” Fedorov said.

“The growth of production, completion of key projects in refining, increase in the efficiency of trading and the move to a holding structure in retail will make it possible to talk about the effect of improving capitalization,” he said.

“The 2019 figures are higher than those of 2018. This is because we’re coming to the final stage of the implementation of major projects. And the figure will be higher than RUB 1 trillion (USD 17.3 billion),” Fedorov said.

Rosneft plans to complete the modernization of its oil refineries by 2025, according to Alexander Romanov, vice president for refining.

Following their modernization, the company’s refineries will stop producing fuel oil, he said.