Exploration

Rosneft pays special attention to volume and efficiency of prospecting and exploration work in order to replace hydrocarbon production with new commercial reserves and to ensure sustainable growth of production in the medium and long term.

Rosneft carries out geological exploration in Russia and abroad both independently and as part of joint projects with Russian and foreign partners. The Company is implementing a number of flagship projects, which are currently at the exploration or test production stage, in its key priority areas of Russia’s Far East, Eastern Siberia and the shelves of the Caspian, Black and Azov Seas, as well as in the traditional oil producing areas of Western Siberia, the Volga, Timan-Pechora and Southern Federal District of Russia. In addition, Rosneft is taking part in promising geological exploration projects in Algeria and Kazakhstan.

Rosneft’s active participation in numerous exploration projects ensures access to considerable prospective resources, which will further support the Company’s long-term development. According to the mean estimate by DeGolyer & MacNaughton, total prospective resources in upstream projects with Rosneft involvement were 53 bln barrels of oil equivalent at the end of 2008.

Large amounts of prospecting and exploration drilling and of seismic studies were carried out during 2008 in projects with Rosneft participation, in accordance with license terms. Exploration expenses of Rosneft’s subsidiaries totaled USD 248 mln. Exploration drilling totaled 63,500 meters, 2D seismic exploration was 7,714 linear km, and 3D seismic work was 4,549 square km. The year-on-year decline in exploration drilling volumes was due to the ending of the exploration stage at the Vankor field, as well as suspension of drilling work in the Southern Federal District of Russia so that detailed 3D seismic studies can be carried out to clarify the region’s complex geology. The construction of 34 prospecting and exploration wells was completed. Prospecting and exploration drilling by the Company led to the discovery of 10 fields and 4 new deposits at previously discovered fields.

Exploration works and production drilling gave increases of ABC1 reserves (under Russian classification) of 1.1 bln barrels of oil and gas condensate and 30.5 bln cubic meters of gas (0.93 bln barrels and 30.4 bln cubic meters, respectively, measured by the Company’s stakes in projects). Most of the reserve growth was at fields in Western and Eastern Siberia.

Substantial results from geological exploration work reflect the optimal combination of 2D and 3D seismic studies, professional processing and interpretation of seismic data, and careful positioning of exploration wells. Streamlined exploration operations enabled the Company to reach a reserve replacement ratio of 172% in 2008 (for proved hydrocarbon reserves under PRMS classification).

Exploration activities within projects involving Rosneft