NK Rosneft' PAO

LSE:ROSN

Earnings Call Transcript 2020-Q4

[Operator]

Ladies and gentlemen, welcome to the Rosneft Q4 12 Months 2020 IFRS Results Call. My name is Abby, and I'll be coordinating your call today. [Operator Instructions]I will now hand over to the management team to begin. Please go ahead.

[Didier Casimiro, First VP & Member of Management Board]

Well, a good time of day, dear colleagues, and thank you for participating in the conference call on Rosneft's fourth quarter 2020 and obviously operating and financial results. With me today, there's a very good representation of the different blocks of the company. We have the Upstream with Mr. Zeljko Runje, Eric Liron, Andrey Polyakov, [ Alya Givanoff ] and Vladimir Chernov. We have the Downstream representatives with Otabek Karimov and Avril Conroy. We also have representation of HSE with Brian McLeod and Tyrone Kalpee; of the M&A division with Krzysztof Zielicki; and then all our members of the Financial and Control Community, Dmitry Torba, Artem Prigoda, [ Aleksey Salin ], [ Rostislav Latysh ], [ Neo Latypov] , Aleksandr Sokolov and [ Alexander Shubin ].So we will present to you a brief overview of operational and financial results for both the fourth quarter and full year 2020 and will be ready to answer all your questions. Please note that the presentation includes information about future events and forecasts.So we have reported operating and financial results for 2020, a year of unprecedented challenges that the global oil and gas industry had to live through. COVID-19 pandemic led to a major disruption in energy demand in world markets, which in turn resulted in significant volatility of the energy prices.While the price of crude finished the year on a high note, 2020 demonstrated that our company can successfully operate in a very low oil price environment. This became possible due to superior operating and investment efficiency, and in the last quarter of 2020, our lifting costs were just USD 2.6 per barrel of oil equivalent, which is one of the lowest levels in the whole world.2020 was also a transformational year for our company as we embarked on the major project of Vostok Oil. With 50 license areas, 6 billion tonnes of crude oil resources, it is a new milestone in our corporate history. Vostok Oil will unlock a new world-scale oil province, give impetus to the Northern Sea Route and contribute meaningfully to Russian economic growth.At the end of last year, we finalized the corporate structure of the project and welcomed our first international partner. We also added the Payakha cluster of fields, which will become the principal driver of the Vostok Oil development. The project will ramp-up at a very rapid space, and we plan to bring the infrastructure in place in the next few years, launch production in 2024 and reach a plateau of some 2.3 million barrels per day early in the next decade. On this call, our Upstream management will provide additional details of the project's current status and outlook and answer questions that you may have.I would like to state from the start that Vostok Oil will be designed as a low-carbon development with its carbon footprint expected to be near only 1/4 of a typical global greenfield average. This will be possible by fully utilizing all associated gas, maximizing energy efficiency of the project and using wind power to generate carbon-free power.In terms of air quality, Vostok crude has a minimal sulfur content, lower than 0.05%, which is 24x lower than the global average, and this will help reduce sulfur emissions and improve air quality. The project will also incorporate the highest environmental and social standards and sustainability practices during its development and operating phases, compliant with the most stringent ESG standards.As part of this work, we will be conducting an independent strategic environmental and social assessment carried out by recognized external consultants. We will be reporting progress on Vostok Oil and its development in publicly disclosed corporate documents to maximize transparency.Now let's turn to safety and sustainable development, as we always do first. We had fewer Tier 1 and Tier 2 process safety events in 2020 if compared with 2019. The Tier 1 process safety event rate in upstream and both the Tier 1 and Tier 2 process safety event rates in downstream place Rosneft within the top quartile of process safety performance across international oil and gas companies. We also remain committed to our intent to have 0 fatalities at work and ensure no harm to people and environment.We forecast a decrease in our total Scope 1 and Scope 2 direct and indirect greenhouse gas emissions for 2020. Our actual greenhouse gas performance data will be published in the second quarter when we release our 2020 sustainability report. It is important to note that our ESG data is transparent and credible. It's covered by the IFRS reporting perimeter with independent verification. So we prepare our company for a sustainable future and to be resilient to the changes of the energy transition.Rosneft was the first company in the Russian oil and gas sector to develop a carbon management plan, in our case, to 2035. The Board reviewed this plan in December 2020. The plan includes very significant carbon reduction goals, which align the company well with industry benchmarks on a number of metrics. We aim to prevent greenhouse gas emissions of 20 million tonnes of CO2 equivalent that takes into account both emissions from our projected future growth as well as reductions against our current absolute emissions. This equals the yearly energy use emissions from more than 2 million households.We have committed to reduce our upstream greenhouse gas intensity both Scope 1 and Scope 2 by 30%, which gets us to a very competitive performance benchmark. Furthermore, we plan to reduce our methane emissions intensity to below 0.25%, which builds on our 55% reduction in methane emissions since [ 2018 ]. We're also setting 0 routine flaring goal.As you can see, these are very ambitious goals given Rosneft's scale and geographical spread. We have underpinned this plan by a number of programs like the gas investment and energy saving programs or our methane management activities and by strategies, playing to our strengths, including our intent to increase the gas share to over 25% of our total production.The carbon management plan to 2035 also focuses on the development of innovative technology solutions for carbon capture and storage and further development of lower carbon intensity products. In addition, we are considering a large-scale program of forestry conservation and the creation of natural carbon offsets. These are very specific plans, and you will be able to track the company's progress against these targets in our public disclosure.We will continue to look at incremental options that allow Rosneft to remain a sustainable supplier of clean and affordable energy to the world, and at the same time, achieve net 0 by the middle of the century. We will report our 2050 plans in due course.We also recognize that only joint action can bring results in combating climate change and meeting the UN sustainable development goals by 2030. Last week, Rosneft and BP signed a strategic collaboration agreement focused on progressing the carbon management and sustainability activities of both companies, building on years of successful partnership. We are happy that our efforts in these areas continue to win recognition. In December 2020, Rosneft was reconfirmed as a constituent of the FTSE4Good Index Series, praised for its ESG performance and transparency in information disclosure.On this positive note, I would like to hand over to Eric Liron, who will tell you more about achievements in the Upstream segment. Eric?

[Unknown]

Thank you, Didier. Production cut obligations under the new OPEC+ agreement was a key reason behind the company's production performance last year. With those limitations, Rosneft's liquids for output dropped by 11.4% year-on-year to 4.14 million barrels per day. The restrictions were eased in August, Rosneft was able to quickly ramp up its liquids production and demonstrated in 4Q a 1.9% increase quarter-on-quarter to 3.98 million barrels per day.Oil and gas, the total hydrocarbons production in 2020 was 5.19 million BOE per day, a reduction of 10.4% year-on-year.In accordance with our strategic priorities, we continued to focus on expanding the construction of the most efficient high-tech wells. 2020, out of 2,600 newly commissioned wells, 68% were horizontal versus 57% in the previous year. The share of new horizontal wells with multistage fracks went by 10 percentage points year-on-year to 44%. Well flows of horizontal wells are 2.6x higher than those of directional wells.With the situation of production limitations, Rosneft continues to develop its key assets with a special focus on design and rollout of technologies that improve the field development performance and save resources.In accordance with the earlier announced plans, we continued working on development of new projects. Last year, we launched 2 new large projects with a production potential of over 45 million barrels per year, Erginsky license area and North-Danilovskoye field. 2020, Rosneft's share of the total liquid hydrocarbons produced from major projects that have been launched since 2016 was 403,000 barrels per day, which implies an increase of 4.8% year-on-year.We continued to develop infrastructure [ in ] Lodochnoye and North-Komsomolskoye fields for commercial launch, which is scheduled for next year. Our flagship project, Vostok Oil, is taking shape. Investment incentives [ for ] development of infrastructure have provided strong support to an efficient economic model and enabled a prompt launch of the project development. Tax breaks will provide a stable source of cash for financing of the project and ensure accelerated returns on investment.As a result of exploration activities, in 2020, we discovered West Irkinskoye field favorable oil reserves exceed 500 million tonnes and 138 BCM of dissolved gas. Overall, the confirmed liquid hydrocarbon's resource base of the Vostok Oil project is 6 billion tonnes. Vostok Oil development will contribute meaningfully to Russian economic growth. This will be achieved on the back of major infrastructure investments as well as a high level localization of manufacturing of high-tech equipment, 95% utilization, involvement of more than 100 Russian manufacturers and service providers, including manufacturers of equipment, pipes and tankers, construction, engineering and other companies.The project will create up to 100,000 new high-tech jobs. The project will support cargo traffic on the Northern Sea Route of up to 30 million tonnes by 2024. Commissioning of the newly discovered fields and [ pulling ] up the resources, the cargo volume on the route exceeds 100 million tonnes per annum in the medium term.While investing into new and integrated projects, our company also works on performance improvement of the brownfield assets. 28th of January, Rosneft signed an investment agreement on oil production incentives for the Priobskoye license area. This initiative is the continuation of our constructive dialogue with the regulators following a successful application of the incentive measures at the Samotlor field, which resulted in a positive effect for the state in the form of additional budget revenues. MET deduction, RUB 460 billion, for the Priobskoye license area starting this year will be the source of cash for additional investments.We maintain and further expand drilling activities at Priobskoye. Tax breaks will support incremental production in excess of 70 million tonnes in 2021 to 2030. For many years, our company has consistently delivered a high reserve replacement ratio. At the end of last year, our SEC proven reserves stood at 38.6 billion barrels of oil equivalent.The operating assets -- the reserve replacement ratio in 2020 was 138%. Proven hydrocarbon reserve life exceeded 20 years. Last year, exploration drilling success was 85%. Exploration and our appraisal activity resulted in discovery of 208 new deposits in 19 fields with AB1C1+B2C2 hydrocarbon reserves in excess of 2 billion tonnes of oil equivalent.We continue to actively develop our key gas projects. Rospan completed construction of key facilities of the first stage of the gas and condensate treatment unit. Currently, the final stage of commissioning is in progress to ensure that first commercial gas from this project starts flowing in the coming days. In fact, the first pilot flaring happened yesterday. We continue working on construction of the second stage of the facility, which is due onstream in 3Q 2020.Works on the key facility of Kharampur gas treatment unit are fully on schedule. In 2020, the completion rate of construction activities reached 40%. Construction of external gas pipeline and river crossings continues, while the time to Gazprom transportation system completed in 4Q 2020.Within the parameter of our Vostok Oil project, we possess material resources of natural gas and plan to continue large-scale exploration activities. [indiscernible] development that should support large-scale LNG production of up to 50 million tonnes per annum in Sever Bay. Future deliveries to the Asian Pacific and European markets take place along the Northern Sea Route.[ I'll hand back ] the floor to Didier Casimiro.

[Didier Casimiro, First VP & Member of Management Board]

Eric, thank you. So moving to Downstream and marketing now. So let's start with Refining. In 2020, the total volume of crude oil refining at Rosneft's refineries reduced by 6% and amounted to 104 million tonnes. The reduction was a result of the throughput optimization due to reduced demand for oil products in a COVID-19 pandemic environment.Throughout 2020, Rosneft continued to execute the program of in-house manufacturing of catalysts and additives. Use of in-house manufactured vacuum gas oil hydro treatment catalysts for commercial operations started at the Russian refineries of Rosneft in 2020, and we also developed innovative catalysts for production of winter and Arctic grades of diesel.In 2020, eco-lite facilities of the company's plans, first commercial batches of diesel as a dewaxing catalyst was manufactured. In another milestone, the Ryazan refinery rolled out consolidated product quality management IT system. New technical solutions based on a unified LAPS system will reduce the decision-making time and optimize the product quality control. This facility was constructed in line with the target program for automational measurements in quality control as part of the Rosneft 2022 strategy on accelerated technology development of the company's operational assets.In Operating and Marketing Operations, the company utilized diversified crude oil and product supply channels. In 2020, crude oil supplies to the far abroad markets amounted to 109 million tonnes. Of that volume, 62 million tonnes were supplied eastwards to Asian markets, which is 57% of the total far abroad supplies. Additionally, in 2020, Rosneft sold 101.3 million tonnes of refined products. Of that volume, 59 million tonnes were supplied to far abroad markets.In the same year, our company continued to ramp up production and expansion of geography for low sulfur marine fuel, fully compliant with multiple requirements. Overall, in 2020, we supplied around 1.5 million tonnes of low sulfur marine fuel in Russian territorial waters and folks aboard to our end customers, which are both Russian and international ship owners.Moving to Retail. Rosneft's Retail business showed stable performance despite the number of limitations due to the spread of the coronavirus infection. Actually overall, in 2020, retail sales decreased by 9% versus 2019. However, after the epidemic-related restrictions were lifted, the demand demonstrated a rapid recovery and the retail sales in the second half of 2020 went up by 17% compared to the first half of the year.In the International Refining segment in October 2020, the Board of Directors of Nayara Energy Limited made a final investment decision to execute a first phase of development project at Vadinar Refinery in India. It comprises development of a first stage petrochemical product cluster, including construction of new units to produce up to 450,000 tonnes of polypropylene per annum by 2023. With these products, Nayara will enter the Indian petrochemicals market.I'll move to our financials. 4Q 2020 continued to be characterized by challenges of crude oil production limitations and relatively low hydrocarbon prices. However, Rosneft was very successful in countering those negative trends. Following a very dynamic third quarter, in the reporting period, sales of crude oil, petroleum and petrochemical products continued their recovery and they increased by around 6%. In the fourth quarter, the ruble-denominated Urals average price also added more than 6%. So the average export price of petroleum products was up by more than 3% compared, while the average domestic price decreased by more than 1%. So overall, the growth in realized volumes and realized prices contributed almost equally to the sales growth.We were able to demonstrate a high efficiency of hydrocarbons production thanks to the continued control over costs. In 4Q, our unit Upstream segment OpEx was RUB 197 or $[ 2.6 ] per barrel of oil equivalent, which implies a 7% reduction in dollar terms quarter-on-quarter. Full year 2020 in ruble terms, the unit OpEx stayed nearly unchanged at RUB 200 per barrel of oil equivalent. In dollar terms, it fell by almost 10% year-on-year to $2.8 per barrel of oil equivalent.We did see a negative impact of all the costs on our margins, in particular, seasonal increase in costs, continuing negative effect of the damper, the effect of the lag in the domestic market prices to growth in prices on the world market and other nonmonetary items. But the above negative factors fully offset the positive effect of the higher revenues and resulted in a nearly unchanged, therefore, EBITDA quarter-on-quarter. I would like to highlight, in this respect, this follows a more than twofold increase in our EBITDA in the third quarter.The company also continued to cut interest expenses, including capitalized interest. In 2020, they reduced by 24% or by $1.3 billion compared to the same period last year. We expect to continue to benefit from the low interest rate environment also in 2021.In 4Q 2020, we finalized the corporate structure of Vostok Oil, as previously said, and this comprised major M&A activity, which had a net positive effect on our P&L. Acquisition of Taimyrneftegas actually contributed RUB 504 billion to our earnings, and this is partially offset by impairments totaling RUB 371 billion mainly relating to our decision to divest certain tail assets. As a consequence, in 4Q 2020, the company generated a record high quarterly net income attributable to shareholders, RUB 324 billion. For the full year, it amounted to RUB 147 billion, a strong result in a very challenging period.In 2020, we invested RUB 785 billion, by the way, a reduction of 8% year-on-year, fully consistent with our guidance to cut CapEx by more than 20% or by more than RUB 200 billion versus the initial plan. The Russian upstream segment accounts for the bulk of the reduction, mainly due to optimization of brownfield investments.Unit Upstream CapEx was $5.5 per barrel of oil equivalent in 2020, which implies equally here a reduction and this time of 10% year-on-year. Last year, Rosneft generated free cash flow of RUB 425 billion or USD 6.2 billion. This helped obviously reduce our net financial debt and prepayments by $2.9 billion. Additionally, we distributed in form of dividends RUB 235 billion or $3.3 billion to shareholders of Rosneft and its [ subsidiaries ].At the end of last year, the Board also approved the extension of our buyback program till the end of this year, 2021. So last year, we purchased 81 million Rosneft shares from the open market for a total amount of $370 million. The share buyback contributed meaningfully to the overall shareholder cash distribution.Due to the net loss that Rosneft incurred in the first half of 2020, you might remember no interim dividend was paid last year. However, thanks to the positive effect of the Vostok Oil-related M&A activity on the company's P&L, the net income for the full year turned positive. So the management will make a recommendation to the Board of Directors on the size of the 2020 final dividend in full compliance with our dividend policy.2020, as I said, was really truly transformational year for our company. We are embarking on Vostok Oil. We will change the way we operate. Our management's focus will be now almost exclusively focused on very large projects that do not only offer support to the strong volume growth, but are more environmentally friendly, make use of most modern and advanced technologies and contribute meaningfully to the Russian economic growth.You will hear a lot from us in the next few months of Vostok Oil. Rest assured that this, but also our other development projects will be executed in the best interest of our shareholders, taking into account fragile environment and supporting socioeconomic development of the regions in which we operate.A big thank you to all of you for your attention, and we can now proceed with the Q&A session.

[Operator]

[Operator Instructions] The first question comes from Karen Kostanian from Bank of America.

[Karen Kostanian]

[Foreign Language] [Interpreted] Congratulations with finalizing Vostok Oil. I have a question about your tail assets that you are giving over to NMK. Can you please let me know what criteria were used in selecting those assets? And maybe you could give us some potential guidance in terms of what percentage of Rosneft's EBITDA would you lose from those assets?

[Unknown Executive]

[Interpreted] What we did was that we took our overall portfolio and we run a technical and economic analysis in terms of water cuts, depletion, [indiscernible] and the CapEx requirements to make sure we extract profitable oil from the ground. As a result of that, we identified the range that we have in our portfolio, and the tail assets that essentially are 3x lower in terms of their performance per barrel versus the average across our portfolio. We also looked at the possibility to reduce emissions. And we see that as we divest those assets, we will be better performing in terms of our CO2 emission. We expect to have some 4 million tonnes reduction. So again, if I was to highlight, by some 3x NPV per barrel of the tail assets is lower than average across the company.

[Operator]

[Audio Gap] is from Ronald Smith from BCS.

[Ronald Paul Smith, Senior Oil and Gas Analyst]

If you wouldn't mind to talk a little bit more about Vostok Oil. I'm curious as into the status of construction. And what stage is the project in at this point? And what major assets are you working on at this time, airports, sports, pipelines, et cetera?

[Didier Casimiro, First VP & Member of Management Board]

Thank you, Ron. This question will be answered by [Audio Gap], who is the General Director of Vostok Oil. Please, Vladimir.

[Vladimir Nikolaevich Chernov, Member of Management Board]

[Interpreted] The project is now in very active phase, in fact. We are designing the various facilities, including the ones that you have mentioned, infrastructure facilities such as aircraft support and various logistical support. We are developing the transportation and logistical hubs, including based on our own Rosneft assets that we have in Murmansk -- in the city of Murmansk, for example.The company started stepping out into the territory of the project together with contractors. We have signed more than 20 contracts for some initial work to do earth moving works or initially constructed facilities, the unloading base, the storage bases. So essentially, we are approaching a full-scale stage of mobilization and construction resources.We are also continuing active exploration work. It proceeds as planned. It's on track. This year, we plan to drill 5 exploration wells and clearly to obtain additional volumes of geological and field information and to increase our knowledge of the -- those. We are preparing for piloting 9 well pads to, as I said, enhance our knowledge and to understand the best carbon extraction technology recovery.We are working on strategic agreements with large industrial groups to provide material support for the projects, trying to secure best terms, trying to think of various financial interests to make sure that we achieve a fixed financial cost for the long term for the period of project implementation.We are proceeding on -- of the necessary legal documents for land, and here we are getting very good support from regional authorities, in this way demonstrating their commitment [ to the ] project. [Audio Gap] in selecting people for key positions, first and foremost, for the project construction for control functions, et cetera.So the project is in a very active phase of development, and as I said, it's even a bit ahead of plan. If you have any further questions, I will be happy to [Technical Difficulty].

[Operator]

[Audio Gap] from Renaissance Capital.

[Alexander Burgansky, MD and Head of Oil & Gas Research]

[Foreign Language] [Interpreted] I have a couple of questions. First one is about the divestment of your tail assets. Can you please tell us what the total production volume has [ been ]? Can you explain it in 2 ways, please? First, the annual volume of production that you've divested, and secondly, the gross production for 2021, because as I understand not all of those deals have been finalized if I was to follow the media report? And a related question. I wanted to ask if you have finished this, let's say, disposal program or are there any other assets that you're considering to divest?And my second question is about your carbon management plan that you described -- Didier said in his remarks that there will be some -- there might be some further changes as we talk about the period 2050. So my question is whether you have plans to achieve net 0 by 2050 similar to other [ companies ]? Does Rosneft have plans to announce anything like that? And when could we expect that?

[Unknown Executive]

[Interpreted] [Audio Gap] your question. Since Artem has already started talking about the tail assets, let's get back to him again.

[Artem Vladimirovich Prigoda, Head of the Department]

[Interpreted] [Audio Gap] Prigoda speaking. In terms of lost production from the tail assets, indeed, the deal is being closed in phases and I guess our M&A could offer more color on that. But our expectation is that as part of that divestiture there will be loss production of some 10 to 14 million tonnes. But also partly depends on the OPEC agreement environment. So we need to take that into account as well. And again, we need to take into account -- so that was the annual volume that I was telling you about. And so essentially, you take the date when the deal is finalized and divide it by the number of days and you get the loss production.In terms of the free cash flow, we are, in fact, getting that activity. And let me reiterate, to maintain the required efficiency at those fields. In fact, the CapEx was higher than the operating cash benefit that we're getting from those.

[Alexander Burgansky, MD and Head of Oil & Gas Research]

[Interpreted] And your…

[Didier Casimiro, First VP & Member of Management Board]

Tyrone Kalpee -- I mean, the question, obviously, is not so much about the actual plan that we have put forward, which is a 2035 program and plan, but more what are we doing today to actually look at what else can be done, which is really we are on exploration stage of discovering what we can do more for 2050.

[Unknown]

Tyrone Kalpee. And -- I think I'll talk about 2050. I think 2035 plan really is a very, very ambitious plan and we are very proud of it at Rosneft. What that really focuses on is trying to get our operational emissions in line with benchmarks, international benchmarks. Because of that, we have focused extensively over the next 15 years on a scope to emissions. [Audio Gap], what happens between 2035 and 2050. What we are then doing is trying to find what else we can do. So we are looking at -- as you will hear more about our plan in March 1, we're looking at things like hydrogen technologies, carbon storage and utilization, forest sequestration, a number of different areas. And those will represent the next part of our work between 2035 and 2050.So I think it's early days. We want to consolidate the 2020 to [ 2035 ] in the next few months. And after that, we will deal with the next part of our work. But the big point that we want to say is that for a company as the size of Rosneft and scale of Rosneft, these targets are very, very aggressive and ambitious and they benchmark very well with the best in the world.

[Operator]

Your next question comes from Igor Kuzmin from Morgan Stanley.

[Igor Kuzmin, Equity Analyst]

[Foreign Language] [Interpreted] I have 3 questions. First, in Vostok Oil, what CapEx level do you expect in 2021, 2022, 2023? So for the next 2 or 3 years out [Audio Gap] question on that front. My second question is about that project. Can you please disclose whether we should expect any further sales of stakes in that project in the nearest future, that is if you can comment on any agreements that you may [Audio Gap]. The other question is regarding the share buyback, the shares repurchased as part of that initiative. So what are your plans as a company in terms of those repurchased shares? Have you made your mind about those shares yet?

[Didier Casimiro, First VP & Member of Management Board]

[Interpreted] For your first question, let's get back to Vladimir Chernov, the General [ Director ].

[Vladimir Nikolaevich Chernov, Member of Management Board]

[Interpreted] [Audio Gap] for your question. And thank you, Didier, for giving me the floor again. I don't think it would be appropriate to be sharing with you the exact CapEx numbers on a by year basis. You will then be asking on a per month basis breakdown then.Indeed, we have those numbers and [Audio Gap]. We have provided the CapEx numbers for the first stage of the project. I don't want to be mentioning those now. But that CapEx will not be -- stand evenly. It will be frontloaded, will stand more in the beginning than later. Now we'll see -- as we go, we will be in a better position to share it with you later.

[Unknown Executive]

[Interpreted] Vladimir…

[Unknown Executive]

[Interpreted] To M&A activity. What we can say here, our first partner came late last year. This is a strategic asset. We understand that 50% plus, golden share, should be with the government. You understand that 10% has already been sold. So we can continue working with partners. And you have seen that the first partner is Trafigura. It's important for them as an international oil trader. And why? Because they want to understand where future barrels come from.What we hear from many companies is that there won't be any new investments in new production. Here, there will be investments in new production. But importantly, it will be an investment with a low-carbon footprint. That's very important.Next. Many barrels that can be transported from the Northern Sea Route to the west as well as to the east, very high-quality outputs with good API and low sulfur content. That is the second reason why other companies are interested to come on that project as partners. And again, by coming on board now, they are securing then future barrels. That's the first group of potential interested parties.The second group is the companies from geographies where demand is growing. If we were to look at the demand-supply balance out into 2040, well, there's a clear trend that, for example, India will be increasing its imports. And China, even with today's base, that's -- even with today's base, there will be a 40% growth, et cetera, et cetera. So we have 2 groups of interested partners with whom we negotiate.Question number 3 is different from the first 2. So let us ask Andrey Baranov to talk about the share buyback.

[Andrey Baranov, Head of Investor Relations]

[Interpreted] Good afternoon, Igor. Thank you for your question. A couple of words about the program that started in its active phase in March 2020 at the very height of the COVID crisis. Here are some highlights. As of today, we have consolidated a stake of just above 80 million shares, and the current price of that stake exceeds our purchase cost by almost 50%. So the timing chosen by the management and confirmed by the Board of Directors was chosen impeccably. There's nothing to be added here.In terms of [Audio Gap] with that stake. As we explained, it is a decision up to the Board of Directors following the end of the program, which is currently planned for the end of 2021. But clearly, the management would look and recommend some options to the Board of Directors given the market environment and given the programs implemented by our Russian peers and international peers, given all the other conditions, given the liquidity [Audio Gap] because international investors are asking us to increase liquidity.I guess, we'll have better knowledge of that closer to the end of the year. But please make -- rest assured that we'll do it in the best interest of our shareholders.

[Operator]

[Audio Gap] HSBC.

[Ildar Khaziev, Analyst]

[Foreign Language] [Interpreted] A couple of [Audio Gap] on the tail assets. Do I understand it correct that the 4 billion barrels of oil equivalents is attributable to that -- those assets in terms of reserves? And does that number cover the assets that have already been transferred or will be transferred this year? And you also have on your balance sheet a liability of RUB 100 billion. So my question is whether that relates to that deal or is it something else?And my second question is about the carbon. You have given your assessments of the Vostok Oil, but can you give us an idea of your current carbon footprints in upstream? And how much of that relates to APG flaring?

[Unknown Executive]

[Foreign Language] [Interpreted] Thank you, Ildar, for your question. Let's get back to Andrey Polyakov with your first question, our Chief Geologist.

[Andrey Aleksandrovich Polyakov, VP, Chief Geologist & Member of Management Board]

[Interpreted] So as part of the tail assets' rationalization, 200 license areas have been transferred with total recoverable reserves of 1 billion tonnes. As Artem explained, in fact at 2021 [Audio Gap] percent to 14 million tonnes depending on OPEC limitations and some 4 BCM of gas.

[Unknown Executive]

[Interpreted] Let us go to the second question. Over to Dmitry Torba.

[Dmitry Torba;Chief Accountant]

[Interpreted] And thank you for the question. If we were to look at disclosures Note 7 in our financial statements, we tried to be very detailed and transparent as IFRS requires to disclose the -- we will acquire Taimyrneftegas. And here -- that the deal will happen in several stages and the payments would happen in several stages.In 2020, we have already paid part of that amount that's disclosed in the note of the financial statement. And we have a liability to make a further payment of RUB 1 billion in 2021 and also to transfer further assets in 2021 for RUB 82 billion. The respective liabilities are reflected in the financial statements of the company, and they will be discharged as provided for by the parties to the transaction and the company's business plan.

[Unknown Executive]

[Interpreted] And your third question was about carbon footprint. We have [ Rostislav Latysh ] here with us, who will discuss that.

[Unknown Executive]

[Interpreted] Okay, colleagues. I would like to start by saying that looking at average upstream numbers for 2019, for example, would not be a very appropriate approach because the mix of the assets has changed considerably. We have some mature assets in the south of Russia that have a carbon footprint of some 47 kilograms per barrel. Quite a high one.Other assets were developed. Recently, we completed a gas program, where in certain fields such as Komsomolskoye field, for example, we utilized close to 100% of APG. So the difference is very big. We have some best-performing assets with the best utilization level, and there, we see very good performance in terms of emissions, some 10 to 11 tonnes per 1,000 barrels.Then our southern assets, mature assets, old ones, where units emissions would be 50 to 60. That would be my answer. What we are saying is that our most recent unused assets have much better unit efficiency in terms of emissions. Vostok Oil has -- its design phase guarantees us a certain level of emissions that we disclose.

[Operator]

[Audio Gap] from Thomas Adolff from Crédit Suisse.

[Thomas Yoichi Adolff]

I apologize if this question has been asked already. My reception was sort of low earlier on. Can you just remind me for 2021 what the production outlook is for the company as a whole, including the asset sales, whatever outlook you have for the company as a whole?And secondly, just to clarify on the farm-down process in Vostok Oil. You've mentioned that Chinese and Indian buyers may be interested because they have import needs. And then you mentioned that trading companies are potentially interested aside from Trafigura. So can you just confirm that no other international oil companies you are in negotiations with, i.e., the majors in the U.S. or Europe are not interested in?And then finally, Vostok Gas. You talked about potentially some 50 million tonnes of LNG potential at some point in the 2030s. Does it make sense for Rosneft to even consider LNG? You already have, I guess, the capability or the track record in developing LNG.

[Didier Casimiro, First VP & Member of Management Board]

Thank you very much, Adolff. Let's -- first, question 2021 production outlook. Let's go back to Eric.

[Unknown]

Yes. For the question, Thomas, so in '21 if we take into account the divestment of the tail assets, will be a production over here about 5% less than the total production -- commodity production of 2020. And '20 was with tail assets. So see, just minus 5%. Does it answer your question, Thomas?

[Thomas Yoichi Adolff]

Yes.

[Didier Casimiro, First VP & Member of Management Board]

Okay. On the second question -- I mean, again, these are obviously commercial talks and we are bound by confidentiality agreements and so on. I'm trying to give you information, but at the same time, obviously, I need to stick -- I cannot be giving you particular or specific names.So Vostok Oil and Vostok Gas as part of Vostok Oil, one more plan is obviously -- how to say this? -- a project that is of interest. I mean, first of all, why I was talking about the traders. Because I think that those were the first ones to jump onto this bandwagon. Secondly, why I'm talking about the nations. Because -- I mean, again, those nations tend to have a number of large companies, whether they are state-owned enterprises or they are not, but at least they tend to have a number of large companies which are the key players in those markets.And third, yes, of course, there are majors. Again, I'm not going to give any names of who's looking at this asset or not, who are interested in this asset. But again, for the same reasons, right, because you're looking at an asset whereby you will have a low-carbon footprint, which I think is the most important thing today for people that are looking at growing their resource base.Secondly, as we spoke before -- I think I'll hand over on the Vostok Gas question after this to our expert on the matter, [ Alya Givanoff ], who is here. But secondly, you rightfully say so that there is a large availability also of gas. So again, for a person who is looking at the portfolio, apart from looking at crude oil and then the use of associated petroleum gas, which actually brings you indeed to this low-carbon footprint, people are equally very interested in the gas part of this portfolio.So yes, there are other people with whom we are working with today. But again, these are commercial negotiations. We're bound by [ notices ], M&A ethics I would call.So [ Alya Givanoff ], please Vostok Oil, Gas.

[Unknown Executive]

[Interpreted] Thank you, Didier. Indeed, Vostok Gas is a project and the largest gas project globally. We see a unique resource base that is currently focused into clusters at the time and [Audio Gap] base is currently actively being looked at. We have an exploration program in place. We are getting a very good reserve addition.Today those natural gas reserves in those 2 classes are in excess of 5 trillion cubic meters. So based on that resource base, you could have a top-class project. But in addition to the economies of scale, we would have sufficient synergies with the oil parts of the project in terms of pipelines and in terms of port facilities. And after 2030, we see a potential in that project up to 50 million tonnes of LNG. To compare that [Audio Gap] in the U.S. [Audio Gap].

[Operator]

Alexander Donskoy from VTB Capital.

[Alexander Donskoy, Equities Analyst & Oil Analyst]

My question relates to the costs, in particular. In the upstream segment, we see from the financial statement that Rosneft has made a great job in this area and OpEx per barrel in upstream segment in 2020 remains at the level of 2019 in ruble terms, which is a very great achievement, I believe. So in terms of CapEx, could you please elaborate on your efficiency measures in this segment, in particular, in your drilling activities? So how you manage costs in this area?

[Didier Casimiro, First VP & Member of Management Board]

Well, I'll pass the word here to Eric Liron.

[Unknown]

Alexander, thanks for the question. So as we claimed in the previous call, okay, we are improving the efficiency -- drilling efficiency mainly by moving to high-tech wells. What we call high-tech wells is principally horizontal or horizontal with a multilateral design. So you decrease the footprint, which is good for the environment. But you have a bigger bang for the buck.So -- and with this, we are incrementally introducing our new technologies at the same time. So new technologies in tracks, new technology in [Audio Gap] fluid -- sorry, drilling fluid designs. And also new technologies in the directional drilling that we do. We also are developing -- based on the program that we had in Neftegas inherited for a couple of years, which was the easing and reducing the amount of tunnel and it's very significant cost [Audio Gap] the 2-string program beyond Neftegas.Then going to the other subsidiaries as [Audio Gap] and it decreases significantly the price of the well. So it's a combination of all of this. So internal technologies we use for microspheres for drilling fluids, where we typically have circulation losses. We work on the full cycle of the well.As you know, we have -- we're drilling about 206 -- sorry, 2,600 horizontal wells per annum. We have continuous improvement on the technology. And so nothing new. I repeat its incremental technology that we're using. We're very systematic about it.And so in'21, we plan to drill about 13 million meters, all inclusive. We're thinking about development well sidetrack and exploration. That gives us a humongous database to improve point by point, meter by meter, our efficiency. And we are very systematic, very disciplined about [Audio Gap].

[Operator]

Our next question from Ildar Davletshin from Wood.

[Ildar Davletshin, Equity Analyst]

So I'd like to ask some follow-up questions. So on the production outlook that Eric provided just a couple of minutes ago, with a 5% lower output. Can I just -- that's for oil or for hydrocarbons? And assuming you didn't have the tail assets in 2020, how would this performance look like? And also what [Audio Gap] you expect some lifting of the current restrictions when you provided this outlook. So that would be my first follow-up.And then the second question is on Vostok Oil. Just broadly, what do you think could be the biggest weaknesses? Could be shipping logistics? Could it be exploration? Could it be logistics in terms of supply of rigs? Or any areas of risks?And a [Audio Gap] your upstream CFO said that free cash flow would have been negative for the tail assets, or in other words, the impact from the disposal of tail assets is free cash flow positive. I just want to clarify what is sort of the oil price assumption and what is like the CapEx? Is it the -- some sort of requirement in the government? Because I can't imagine how a free cash flow negative asset had that positive NPV value in your transaction. I think you contributed these tail assets for your consideration. So they should have been with a positive NPV. But I understand from your comments they had negative NPV. I just want to clarify that.

[Didier Casimiro, First VP & Member of Management Board]

Thank you, Ildar. Maybe let's first take a question here with [ Rostislav Latysh ], and then we'll be passing back through the business. [ Rostislav Latysh ], if you can start.

[Unknown Executive]

[Foreign Language] [Interpreted] Ildar, if I understand your question correctly, your question is about comparable production in 2021. Is that correct? So in terms of total hydrocarbon, if we were to net -- assets from 2020 -- sorry, total production would have been 5.4%. Have I answered your question?

[Didier Casimiro, First VP & Member of Management Board]

[Interpreted] The other question, let me ask -- yes…

[Unknown Executive]

In terms of assumptions, the assumptions are very similar to the federal budget. That's some USD 45, USD 46 per barrel, [ Urals 2021, 2022 ]. And RUB 72 and RUB 73 to the U.S. dollar is the exchange rate.

[Didier Casimiro, First VP & Member of Management Board]

Part of this answer, Eric Liron.

[Unknown]

Okay. It looks like this I have answered, the production question. So I repeat. The production that I have given is excluding the tail assets and its liquids production. And we compare it to a 2020 number which had our assets and it was liquids also. So the equation is rather simple in this case. Okay. We're going to -- we finished 2020 at 304.5 million. We expect to finish 5% less considering that we have divested tail assets. That's the answer for the whole story. I pass it on to [Audio Gap].

[Unknown Executive]

[Interpreted] Okay. It's -- as Rostislav explained, we are quite conservative in terms of macro assumptions, on the one hand. On the other hand, the valuation at divestiture happens with consensus estimates, which are much more optimistic. So that difference gives the positive NPV. And also, you have to understand that there's a different understanding of the levels of production and the CapEx that are needed given the stringent of standards that Rosneft has in [Audio Gap].

[Unknown]

Sorry to interrupt you. Okay. Just a word. Okay. For the time being, the production that we are forecasting is based on being fully compliant with OPEC+ as given to us by the Russian Federation. Obviously, this could change throughout the year depending on the economical situation and what is happening in the U.S. We're going to follow the guidelines of the Russian Federation.

[Didier Casimiro, First VP & Member of Management Board]

[Audio Gap] very much, again, for clarifying, Eric. Maybe on operational risks if we can pass this question to [ Vladimir Resis ], who is operating the business on a day-to-day. I mean, what operational type risks does he see and how is he actually -- more importance of mitigating these, because that's obviously what we do with any risks we might encounter.

[Unknown Executive]

Thank you for your question, Ildar. Yes, absolutely right. [indiscernible] as in any project, but they can be mitigated [Audio Gap] risks. But again, it can be mitigated with some peak loads and material supplies for the project. That we [Audio Gap] areas. We build in-house logistical centers based on our assets located on the shore with loading and unloading facilities, the building facilities, et cetera, the bedding and moving facilities. And we also engage a third-party, specialized organizations that can provide support for us during those peak periods.[Audio Gap] is quite good, much better -- the logistics conditions are much better than in the Vankor cluster, for example. There is an opportunity to transport goods throughout the year to support construction, including through the Northern Sea Route. And during the summer period, you can also transport by rivers from the Krasnoyarsk region. And there's quite a well-developed fleet there with whom, by the way, we already have long-term contracts.In terms of -- our projections are based on a quite good knowledge. And I've drilled some 25 wells, from which we already have the practical results in terms of well development. And we are quite confident in terms of what we see. The project itself is being developed as a structurally distributed one, which means that it consists on -- of separate segments. Each of the segments would be developed as a stand-alone component to establish whether it's efficient or not. And so far, all those components seem efficient.

[Operator]

Question comes from Alex Comer from JPMorgan.

[Alex Robert John Comer, Research Analyst]

A couple of questions from me. The value of Vostok implied by the 10% is obviously 85 billion. But clearly, not a lot of that is in your stock price at the moment. The value of the Payakha [ sale ] when you revalued it was 18 billion and that Payakha makes quite a big component of Vostok from my understanding. Could you explain the difference in the assumptions used in those valuations and particularly the 16% cost to capital on Payakha and potentially why you seem to see more risk in that project than in the entire project? That's my first question.

[Didier Casimiro, First VP & Member of Management Board]

Yes. I mean you can directly fire your second question as well. So we just take note of the questions, please. Yes.

[Alex Robert John Comer, Research Analyst]

Yes. There's a second question, obviously, just on the ESG. I mean, clearly, you've gone great lengths to point out the low levels of carbon emissions, which I think is absolutely key. But just in terms of the other considerations in the Arctic in terms of the other -- the way you look at developing it, is there anything you're doing to be kind of more environmentally conscious in terms of the wider impact on the area considering that's also a consideration when people are looking at some -- looking at this project?

[Didier Casimiro, First VP & Member of Management Board]

Okay. Thank you very much. Let me then first start by the first question, which I think you're looking at understanding valuations. Yes? I mean, let's first start maybe with Dmitry Torba, our Chief Accountant, to look at it from an accounting perspective.

[Dmitry Torba;Chief Accountant]

Thank you, Didier. Thank you for the question. Understand that the -- it's about how the valuation on the acquired Taimyrneftegas has translated into the sale price of the Vostok Oil share. Indeed, [Audio Gap] assets of Vostok Oil and -- sold and the consideration [Audio Gap] similar to the number that you mentioned.In terms of the value of the asset that we acquired, I want to mention 2 factors. First, the acquisition made by us [Audio Gap] the information provided in the consolidated financial statement is only [Audio Gap] of the assets that have been acquired. The whole project itself includes a number of other assets that also make a very material contribution into the overall project.Second, the valuation shown in our consolidated financial statement does not include the synergy effects arising from the -- and the combination of the existing business in that area and the acquired assets.Thirdly, the valuation that we give in our consolidated financial statement is based on very conservative assumptions. We have a good -- a number of potential unfavorable scenarios. So based on the accounting approach, we try to be as cautious as we can in respect of what we acquired. But even with that, we are getting a very high number, a very high-value for the acquired assets. In accordance with international financial reporting standards to make a final assessment of what we acquired, we have a year. And over that period, we'll continue working with valuation companies. We'll refine the numbers. And in due time, we will provide a very clear and detailed explanation of what we have. I hope that answers your question.

[Didier Casimiro, First VP & Member of Management Board]

ESG. Maybe if we can go back to Tyrone. Tyrone, can you shed the light on the ESG question?

[Unknown]

In terms of the broader ESG agenda, as you say, we are looking beyond the low-carbon impact of the Vostok project. Also we're looking at 0 negative impact in terms of pollution [Audio Gap] land and net positive impact in terms of the water resources and the fragile ecosystem [Audio Gap].Also in ESG, a positive [Audio Gap] ESG impact for the project in terms of deployment opportunities for [Audio Gap] in clean energy for the local [Audio Gap] and obviously [Audio Gap]. The Vostok project, as we stated, is the flagship development project for us. We are exploring options across the whole [Audio Gap].

[Operator]

[Audio Gap] question comes from Henri Patricot from UBS.

[Henri Jerome Dieudonne Marie Patricot, Associate Director and Equity Research Analyst]

A couple of quick ones from me, please. Just on the CapEx guidance for 2021, I'm just wondering if you can give us a sense of what's driving the increase versus 2020? And secondly, how much flexibility you have around that target? Could it be again much lower than the RUB 1 trillion like it was in 2020?

[Didier Casimiro, First VP & Member of Management Board]

Yes. Thank you very much, Henri. I will pass that question to [ Aleksey Salin ].

[Unknown Executive]

[Interpreted] Yes. And thank you your question. You have quite a broad question. Let me reiterate that the 2020 CapEx level was a very good number given the production limitations, the balancing in the market as well as the impacts from the COVID pandemic. That level helped maintain the value of the business, helped achieve certain key metrics and maintained the pace of key projects. So this number is not an end in itself. It is something that helps us achieve our target.2021 CapEx will -- first of all, will be aimed at developing our first-class highly profitable projects depending on the high grading of our portfolio, the market environment as well as Vostok Oil projects and developing of the [indiscernible]. And 2021 CapEx is thus higher than in the periods of worse macroeconomic environment for the reasons that I mentioned.

[Operator]

[Audio Gap] Danilenko from Prosperity.

[Olga Danilenko, Director of Oil and Gas]

[Foreign Language] [Interpreted] I appreciate we have been discussing for almost 90 minutes. But I have a couple. I hope they will be quick ones. You have talked on multiple occasions today about ESG. So in terms of the business partners of Rosneft, not Vostok Oil, but Rosneft, that's Rosneft dealing with -- I mean, BP shareholders, maybe some important lenders, from their part is there -- or are there any special requirements in terms of the climate agenda? And if yes, could you please explain? No, no. And are there any optimization initiatives across portfolio of decarbonization initiatives? So what could change in the future in terms of the requirements from your partners?And my second question, again, you have partly touched on that earlier today. Okay. So the oil price is now -- above 60 now. What is your expectation in terms of OPEC+? I don't know, maybe some internal ideas, what the management thinks. Maybe you could share your personal views. Any views? What OPEC+ could do given the current price level in terms of production quotas?

[Didier Casimiro, First VP & Member of Management Board]

[Foreign Language] [Interpreted] Thank you, Olga, for these questions. We will ask Rostislav -- sorry, Andrey Baranov to handle your first question.

[Andrey Baranov, Head of Investor Relations]

[Interpreted] I want to start -- this is really a multifaceted question about our partners. It's -- as our shareholders and investors, the requirement -- the ESG requirements of major investment funds are getting tighter very quickly and we see what the investors in those funds are thinking. This is a clear trend and we have to match that trend. That is why all the 3 factors that make up ESG are so important for us.You know that we were the first among Russian majors to present a very clear, a very well-articulated urban management plan 2035, not like others do net carbon 0 in 20 or 30 years, but very concrete movements over time of our major parameters already in the midterm. And that has been reviewed by the Board of Directors in [ September ]. Also related to our stakeholders, BP and Qatar. To a less extent, our partners such as Equinor.

[Didier Casimiro, First VP & Member of Management Board]

[Interpreted] Perhaps Tyrone could shed some light here, who is very much engaged in partners like BP with whom we've signed an agreement recently, and Equinor, with whom we are actively working on our major sales. Tyrone, please.

[Unknown]

Yes. I think Didier alluded to the fact that we've just signed a week ago a collaboration agreement with BP, a very wide, broad-based agreement. You asked about requirements of shareholders. But we don't look at it as requirements. What it is really is a partnership as our 2035 plan deals with very similar issues to what many of the majors are dealing with. And what that collective agreement was done -- or that collaborative agreement has done is brought us together to find solutions that both companies can use in order to reduce flaring, reduce our methane emissions, reduce our collective intensities, et cetera.So that -- I'd rather report it as the fact that Rosneft is seen now as very serious about its agenda. Our partners realize that they are serious and we are both serious about the same things, and therefore, we are taking steps together in order to make sure that our progress is fast and accelerated. Hope that helps.

[Didier Casimiro, First VP & Member of Management Board]

Thank you very much, Tyrone. And Olga, maybe just to actually close this question off. I think that any stakeholder -- and I'm looking at the broad stakeholder base -- is actually looking today at the company to, at the one hand, deliver financial and operational performance to do that in a way that actually is HSG (sic) [ ESG ] compliant. And today, as we understand -- and that is a trend that is becoming stronger and stronger in a way that is ESG compliant.I think that actually to deliver any of these 3 components solely will not work, and we are seeing that actually reflected in stock prices. So I think the important thing what the company is doing, and that is where I think the importance is, is indeed -- was told by my colleagues previously, is to have very concrete steps and results on all of these 3 methods. So I think that is where we are focusing. We're understanding the importance of carbon footprint. So that is why we have a program around this. But equally, we understand that if we will not be the low-cost producer of quality hydrocarbons, then actually we can have a fantastic ESG policy. But equally, the question will be: "Okay, where is the financial performance?"So there needs to be a good mix of actually these various elements in the company's strategy, which is obviously something that we are very much focused on. And this is important for all of our stakeholders.So that's on your first question. On your second question, if I may -- and obviously, I'll allow my colleagues to turn in. I mean, when it comes to crude oil pricing, please understand when -- and specifically when it comes to OPEC+ -- the important thing for us when it comes to OPEC+ is Russia as a federation has actually pledged support to OPEC+ and is a very important factor in OPEC+. So therefore, as a company, we have a share, which is dealt by the government. We are obviously looking to make sure that we can, on a directive basis, comply with these requirements.We didn't have many views on what the future oil price is going to be. I think you can check that in actually the consensus on any investment banks or banks with trading activities. We all understand that these will depend not only on supply, but equally on demand balances. So the importance is where is the pandemic going. That is one thing. Slowdown, not slowdown, will there be opening up. A very important thing is obviously travel in this. I mean, travel of both people and free travel of people and goods. So that is clearly going to impact.But secondly, which we have seen in the past, is obviously the constraints that are put into the market, right? I mean, we understand that today there are markets that are constrained in their exports. If for whatever -- by this, I mean, from a perspective of sanctions. If these markets tomorrow open, then again, we will see a different supply and demand balance.So there are many factors here open for which one would need to take a view. So I'd rather just come back to the fact that these factors are there. And the most important for us as a company -- I'll come back to your first question -- is to be able to work in all these environments as we have actually proven to be able to do in 2020.

[Operator]

Ladies and gentlemen…

[Didier Casimiro, First VP & Member of Management Board]

I understand this was the last question in today's investment phone call. And thank you very much, everybody, with -- for your attention, for your questions. It always helps us again to refocus on what is important for you. Again, we are a stakeholder driven company, so your questions and your areas of focus are equally important for us.We hope that -- this was a lot of information, obviously, to process in a short period of time. But I want to be clear, we have a very good and excellent, I would say, yes, Investor Relations department here in our company. So they are always there to follow-up and to follow through on any further questions that you might have, on any comments that you might have, and they are clearly well placed to work with the management of the company to make sure that you get all the answers needed.So allow me to wish you a good end of the day wherever you are and allow me to wish you also an excellent weekend. And for the ones that love -- that -- I mean, the value love or that love value, there is obviously St. Valentine on Sunday. So a great St. Valentine to everybody. Thank you very much. Goodbye.

[Operator]

Ladies and gentlemen, this concludes today's call. Thank you for joining us. You may now disconnect your lines.