OREANDA-NEWS. November 10, 2011. Earlier this year the President of the Russian Federation issued an instruction that the heads of Federal Ministries and other executive bodies, as well as members of the Presidential Administration, must resign from the Boards of Directors of all large joint stock companies in which the state is a shareholder. In compliance with this instruction, I write to inform you of my resignation as Chairman of the Board of Directors of OAO Sovcomflot. In the near future the Board of Directors will hold a special meeting, which will formally endorse the election of a new Chairman. However, this post will not be taken by a civil servant.

Unlike many state-owned companies, the presence of independent directors on SCF’s Board has been an important and effective element of Sovcomflot’s corporate governance for many years. Independent directors chair committees of the Board and actively participate in their work. I have no doubt that this practice of involving independent directors, in making key decisions for the company, will continue. This increases the level of effectiveness of OAO Sovcomflot’s corporate governance, in line with best national and international practice, and remains an important part of the company’s preparations to access the public capital markets.

We have been working together for many years and have achieved significant results. SCF Group has successfully implemented its development Strategy 2005- 2010 and has evolved, over a relatively short timescale, from a mid-sized regional shipping company into a global energy shipping industry leader. Today the company owns a modern fleet, applying advanced technologies and has built unique expertise in seaborne hydrocarbon transportation in harsh environments and ice conditions. The fleet size has more than doubled, as well as the revenues. The range of services offered to clients has also expanded significantly. The company has entered into new market segments for Russian shipping companies. SCF Group is successfully resolving a strategic task set by its shareholder - the establishment of Sovcomflot as a national contractor, providing integrated services for Russia’s offshore oil and gas projects, which is stipulated by the Energy strategy of the Russian Federation. The scale of this task and its importance to the national economy are clear and endorse, for the foreseeable future, the status of OAO Sovcomflot as a national company of strategic importance.

The development Strategy of the company for 2011-2017, approved by the Board of Directors in September, provides for further growth in the company's value. This is stipulated by the expansion of SCF’s presence in the Arctic and by increasing the Group’s share in servicing Russia's foreign trade, increased exports of transportation services under long-term relationships with major international oil and gas companies, as well as the participation of Sovcomflot in new energy projects with a substantial maritime component.

The development of our strategy, with its focus on providing integrated logistics solutions and the company’s industrial business-development model, is aimed at consolidating Sovcomflot’s leadership within the industry and securing stable financial results, despite the continuing unfavorable situation in the international freight market. The Board of Directors and the Executive Board face the task of implementing the company’s development Strategy 2011-2017, taking into account the growing demand for offshore services and the inevitable recovery phase in the shipping industry’s cycle following a long recession.
In accordance with the resolutions of the Government of the Russian Federation (Sovcomflot’s ultimate shareholder) dated 25 October 2011, the Board members, representing the shareholder, have been advised to recommend the election of Ilya Klebanov as the company’s new Chairman.

Ilya I. Klebanov has many years of experience, gained from the private sector and from having held senior level positions in the government. He also has significant knowledge of the shipping and shipbuilding industries, and is very familiar with the business of OAO Sovcomflot. In the early 2000s, Ilya Klebanov worked on the development of Russia’s shipbuilding sector whilst the Minister of Industry, Science and Technology. He was the author of the idea of creating an integrated shipbuilding company (now – OAO United Shipbuilding Corporation – one of SCF Group’s traditional partners in Russian shipbuilding). For a long time, Ilya Klebanov served as head of the Presidential Plenipotentiary Envoy to the Northwest Federal District, where Sovcomflot is registered and where much of its economic activity is focused. He is very familiar with the development of energy projects in the Arctic region. There can be no doubt that the nomination of Ilya Klebanov, as Chairman of the Board of Directors of OAO Sovcomflot, is both logical and appropriate.

Finally, I should like to thank the members of the Board of Directors, the Executive Board and employees of Sovcomflot for the support I have received whilst Chairman. I wish you all further success in strengthening the company's position in world markets.

My special words of appreciation go to the captains and the crews of SCF Group. I wish you all successful voyages, a safe watch and no less than seven feet under the keel!