Supply chain

Zarubezhneft’s purchasing activities are carried out as per Federal Law No. 223-FZ – Concerning the Purchase of Goods, Work and Services by Certain Types of Legal Entities, and by the Purchasing Policy. In 2018, Zarubezhneft arranged the review by the Tender Committee of 386 goods, works and service purchasing procedures valued at more than RUB 57 billion.

To improve purchasing openness and transparency, an online trading platform system was used and the purchasing information was published in the Unified State Information System and on corporate information resources. As a result, the number of bidders was increased and the Company’s bid selection capabilities under the best conditions were enhanced.

The Company interacts with potential suppliers/ contactors to ensure cost optimization and saving. As per the analysis of the bidders’ technical and commercial offers, where possible reductions of the costs of goods and service were identified, the bidders were given an opportunity to improve their commercial offers to provide a maximum possible discount. Thus, in 2018, a significant cash saving of RUB 1.4 billion was achieved.

The following results were achieved from measures undertaken to provide a wider purchasing access for small and medium business at Zarubezhneft JSC in 2018:

  • public purchasing efficiency audit was provided by means of regular meetings of the Advisory Body to discuss Zarubezhneft’s purchasing efficiency issues;
  • the share of purchasing by small and medium business entities was 62.24%, with a current established target value of 18% (Decree of the Government of the Russian Federation No. 1352 dated December 11, 2014 – Concerning Aspects of Participation of Small and Medium Business Entities in the Purchase of Goods, Work and Services by Certain Types of Legal Entities);
  • the share of purchasing carried out as a result of participation of only small and medium business entities reached 34.25% during the period under review, with a target value of 15%;
  • 26 companies joined the Zarubezhneft Partnership Program, which comprised of small and medium business entities.

In conducting its business, Zarubezhneft follows the Import Substitution Policy adopted by the Government of the Russian Federation, which is one of the strategic focus areas for state-owned companies for the next few years. In this regard, the Company carries out the planned and gradual substitution of foreign products with Russian products on a continuous basis. This results in the share of the purchased products, work and services of foreign origin consistently decreasing. As per the 2018 results, Zarubezhneft JSC cut its share of imported products from 9.34% (RUB 128.51 MM) to 1.61% (RUB 28.59 MM), with the general purchasing volume increasing by 28.97% (from RUB 1,376.13 MM to RUB 1,774.82 MM). The share of products of foreign origin purchased is currently below 1.03%.

White Bears