Rosneft: Production Results Per Q1 2021

  • May 14, 2021

Sustainable Development (ESG): In February 2021, Rosneft and bp signed a Strategic Cooperation Agreement, which aims to support the activities of both companies in the field of carbon management and sustainable development. The companies agreed to jointly develop new low-carbon approaches and programs, as well as work to identify potential opportunities for reducing greenhouse gas emissions and implementing low-carbon projects.

The issue of preserving life and health, as well as labor safety of employees is the main priority of Rosneft’s activities. In order to protect against COVID-19, in March 2021, Rosneft began vaccinating its employees. First of all, remote large assets of the Company, such as Yuganskneftegaz, Vankorneft, Bashneft Group, as well as facilities with a large number of employees, received the vaccine.

The Company purposefully raises the level of industrial safety and labor protection, guided by the principle of “zero tolerance” for violations by employees of the Company and contractors of the established “Golden Rules of Occupational Safety”. So, thanks to the implementation of measures to prevent accidents and reduce their consequences, in 1 quarter. In 2021, the number of accidents related to the safety of technological processes decreased at the Company’s enterprises. This is evidenced by the decrease in the number of technological safety events PSE-1 by 18% and PSE-2 by 23% compared to Q1. 2020 g.

Production of liquid hydrocarbons in 1 sq. 2021 amounted to 3.75 million barrels. per day (45.5 million tons). At the end of 2020, Rosneft sold a number of low-margin assets in order to improve the quality of the Company’s portfolio. Within a comparable perimeter (excluding disposed assets), the average daily production of liquid hydrocarbons in 1 sq. 2021 increased by about 1% qoq on the back of the start of Phase 2 of easing restrictions under the OPEC + Agreement from January 2021.

Gas production in 1 sq. 2021 in a comparable perimeter (excluding disposed assets) increased by 4.6% qoq and amounted to 166.4 mcm. m per day (14.98 billion cubic meters for the period). The growth in natural gas production was facilitated by the launch of a booster compressor station at the Sibneftegaz Beregovoye field and an increase in sales of gas produced at the Zohr field (Egypt).

As a result, the production of hydrocarbons for 1 sq. 2021 amounted to 4.76 million boe. per day (57.8 million tons of oil equivalent). Within a comparable perimeter (excluding disposal of assets), the average daily production of hydrocarbons for 1 sq. 2021 increased by 1.5% qoq.

The decline in production figures in the actual perimeter quarter-on-quarter is due to the sale of low-margin assets. The decrease in average daily production year-on-year is mainly due to the implementation of the Government’s directives to limit production under the OPEC + Agreement, which has been in effect since May 2020.

Development drilling and commissioning of new wells

Production drilling in Q1 2021 amounted to 2.3 million m, an increase of 5.8% year-on-year. The share of in-house drilling services in the total footage is traditionally maintained at a level of at least 50%.

At the end of 1 quarter In 2021, the number of newly commissioned wells amounted to 622 units, an increase of 12% year-on-year. The number of the most efficient new horizontal wells amounted to 402 units, an increase of 8.6% in relation to Q1. 2020, and their share in the total number of commissioned wells was 65%. The number of new horizontal wells with multi-stage hydraulic fracturing per 1 sq. 2021 amounted to 253 units, and their share of the total number of wells commissioned during the period was 41%, remaining at the level of 1 sq. 2020 Specific production per horizontal well is more than 2 times higher than this indicator for directional wells.

In accordance with the previously announced plans, in 1 sq. 2021 The Company continued to work on the further implementation of production projects.

As part of the project for the development of the Erginsky cluster in the 1st quarter. In 2021, after the completion of the equipment installation, the 1st start-up complex of the oil treatment and transportation facility was launched at the Erginsky license area. As of the end of the 1st quarter. In 2021, 31 km of infield oil gatherings were built, as well as more than 17 km of high-pressure water pipelines for the implementation of design solutions to maintain reservoir pressure. Development drilling, construction of infrastructure facilities, infield pipelines and power transmission lines continues. In the reporting period, production at the fields of the cluster reached 87.7 thousand barrels. per day (1.1 million tons), which is 42.8% higher year-on-year.

Development of the Severo-Danilovskoye field continues. Active development drilling is underway (at the end of Q1 2021, 23 wells were drilled), infrastructure facilities and roads are being built. Construction and installation work is underway at oil treatment and transportation facilities. During the reporting period, production at the field amounted to 8.5 thousand barrels. per day in the Company’s share.

The total production of liquid hydrocarbons at new large projects launched since 2016 (taking into account the Erginsky area and the Severo-Danilovskoye field), in the Company’s share for 1 sq. 2021 amounted to 422 thousand barrels. per day (5.1 million tons), which is 2.6% higher year-on-year. The share of these projects in the total production of liquid hydrocarbons reached 11.3%, which is 2.4 pp. higher year on year.

At Lodochnoye Field 1 , a program of production drilling is being actively implemented, engineering preparation of facilities and construction and installation work at infrastructure facilities, oil and gas production and treatment are underway. At the Severo-Komsomolskoye field, engineering preparation work has been completed and construction and installation work has begun on the main facilities in order to prepare for full-scale development of the field. As part of pilot development, production at the fields for 1 sq. 2021 amounted to 25.5 thousand barrels. per day, which is 1% higher quarter on quarter. The launch of the Lodochnoye and Severo-Komsomolskoye fields is scheduled for 2022.

In pursuance of the task of the President of the Russian Federation to load the Northern Sea Route, the Company has embarked on a comprehensive program for the development of a new oil and gas province in the north of the Krasnoyarsk Territory as part of the Vostok Oil transformation project. As of the end of April 2021, the Vostok Oil project includes 52 license areas, within the boundaries of which there are 13 discovered hydrocarbon fields.

In 1 sq. 2021, 500 sq. km of 3D seismic work, based on the results of which exploratory drilling will be carried out in order to prepare the discovered reserves of the Payakha cluster for further development. In order to select the optimal technical solutions, a program of pilot projects was formed with the start of implementation in 2022.

As part of the project, locations have been identified for the placement of priority well pads for production drilling. A site is being prepared for oil collection and treatment units. Completed design and survey work for the construction of a pipeline and a port in the Sever Bay. Preparatory work continues for the construction of storage bases for material and technical resources in the project areas.

The development of the Vostok Oil project provides for the consistent involvement of licensed areas in industrial development, the construction of the necessary infield infrastructure and the expansion of the trunk system of external transport with an increase in cargo turnover along the Northern Sea Route.

For 1 sq. 2021 more than 3 thousand sq. km of 3D seismic works, completed by testing 13 exploration wells with a success rate of 100%. As a result of geological exploration, 4 new deposits were discovered with AB1C1 + B2C2 hydrocarbon reserves in the amount of 2.5 million toe.

In 1 sq. In 2021, the refining volume at the Company’s Russian refineries increased by 4.5% qoq, to 24.1 mln tons, amid growing demand for petroleum products and decreased by 7.2% yoy due to incomplete recovery of demand to levels prior to the introduction of restrictions related to the COVID-19 pandemic.

The volume of oil refining at refineries in Germany in 1 sq. 2021 amounted to 2.3 million tons, which is 17.5% lower qoq. The decrease in refining volumes is explained, first of all, by the introduction of a second lockdown in Germany due to the COVID-19 pandemic and the subsequent decrease in demand for petroleum products.

As a result, 1 sq. In 2021, the total volume of oil refining by the Company amounted to 26.4 million tonnes, which is 2.1% higher qoq and 8.3% lower year-on-year. At the same time, the refining depth was 74.8% (+1.0 percentage points year-on-year), the yield of light oil products – 57.4% (+0.5 percentage points year-on-year).

In 1 sq. In 2021, oil supplies to non-CIS countries amounted to 22.1 million tons. Of the total oil sales to non-CIS countries, 13.0 million tons, or 58.8%, were delivered to the east.

As part of continuing cooperation with end consumers of oil in the reporting period, Rosneft entered into a new long-term contract with the Polish company PKN Orlen SA for the supply of oil via the Druzhba pipeline to Poland for the period from March 2021 to January 2023.

In 1 sq. 2021 The Company sold 24.1 million tons of petroleum products, of which almost 37% – on the domestic market. Sales of petroleum products in non-CIS countries amounted to 14.4 million tons, in the CIS countries – 0.5 million tons.

In 1 sq. 2021 The Company has more than 2 times exceeded the standards for the sale of motor fuel at the St. Petersburg International Commodity and Raw Materials Exchange. Rosneft is an active participant in trading on the stock exchange and consistently meets the needs of the domestic market.

For 1 sq. 2021, in the territorial waters of the Russian Federation, 307.3 thousand tons of bunker fuel were delivered to the end consumers – domestic and foreign shipowners, including 217.8 thousand tons of marine fuel with a reduced sulfur content of up to 0.5%, completely MARPOL compliant. Of this volume, more than 44% fell on low-sulfur residual marine fuel RMLS 40 (95.2 thousand tons).

As of the end of the 1st quarter. 2021 the retail network of the Company totals 3,049 units. Filling stations / filling stations, including 2 985 filling stations / filling stations in the territory of the Russian Federation.

During the reporting period, the retail business of the Company showed stable performance results. The volume of retail sales at our own filling stations according to the results of the 1st quarter. 2021 recovered from the restrictive measures introduced in 2020 in connection with the COVID-19 pandemic, exceeding the figure for 1Q2021. 2020 g.

All shops and cafes at the Company’s filling stations continue to operate in strict accordance with the recommendations of Rospotrebnadzor for preventive and disinfection measures. The service of contactless remote payment for fuel and related products through the mobile applications Yandex.Fueling, Yandex.Navigator and Yandex.Maps is in active demand from customers: contactless payment for fuel is available at about 1500 gas stations / filling stations, the service for contactless payment for food is available at 50 MAZK bp.

Rosneft makes extensive use of new technologies to develop value-added services in order to improve the quality of service and the convenience of its customers. For example, the Company, together with the All-Russian Regional Development Bank, launched a new service called “Cash with Purchase” at its own filling station network. Customers of the Company’s retail network, when paying for fuel or other related products with Mastercard, Visa or Mir cards of any bank, can withdraw up to 5,000 rubles at the gas station cash desk.

In addition, Mir Privilegiy financial supermarkets continue to open at gas stations in the Moscow region under the Rosneft and BP brands. Customers are given the opportunity to quickly and conveniently issue insurance policies for OSAGO and CASCO, debit cards with loyalty programs bp CLUB and “Privet MIR”, credit cards, consumer loans. As of the end of the quarter, financial supermarkets operated at 35 gas stations in the Moscow region. The company plans to further expand the geography of offering these services at gas stations.

1 The boat field is part of the Vankor cluster, which is part of the Vostok Oil project.