Investment portfolio management system
In 2018, the formation of the investment planning system was mainly focused on benchmarking and identifying further areas of development. Stress testing of the investment management system allowed to identify such areas of improvement as management of targeted programs and strengthening of control over oil and gas exploration projects.
A separate area of development of the process is optimization of reporting, particularly of investment activities aimed at finding a balance between information content, depth of analysis and ease of use.
In 2018, vectors for further elaboration of the design expertise tooling were also identified, in part to separate the assessment of project elaboration and the quality of the projects in general.
The project appraisal is used as a basis for conducting a project-specific risk analysis and for defining project priorities in terms of their readiness for review by the Group’s Investment Committee.
All projects are additionally ranked in the general project reference system to identify the most attractive initiatives among similar projects in terms of each project’s economic performance and production capabilities.
The main tool for investment portfolio management during the elaboration and implementation of investment projects is project monitoring. Project monitoring is mainly aimed at obtaining accurate information on the results and prospects for the implementation of investment projects to make justified and timely management decisions. All projects approved by the Company’s Investment Committee are subject to monitoring.
A mandatory requirement for maintaining the relevance of project information under investment project monitoring is the provision of an updated financial and economic model for the project. This process allows prompt responses to both changes in the macroeconomic environment of the company’s activities and risk realization in course of investment project management.
The existing investment decision-making system with its high requirements for elaboration of each separate project allows achieving the maximum possible accuracy of cost planning at each stage of implementation of the investment project.
Apart from the quarterly project monitoring, the Company carries out a routine monthly monitoring of the implementation of geological and technical measures (GTM) by analyzing the sustainability of the measures to changes in the macro-environment. Each such GTM is subject to express-evaluation as per the investment analysis principles. The measures provide for a mandatory determination of the minimum viable oil price for a zero economic outcome for each project and the initial screening of projects not capable of positive implementation under targeted macroeconomic conditions.
Combined application of the tools presented allows achieving maximum efficiency of the Company's investment activities at each stage of the investment planning process.