Production and Development

Preliminary production data

Rosneft has twelve fully consolidated production and development enterprises, which produce crude oil in Western Siberia, Eastern Siberia, Timan-Pechora, Central Russia, the southern part of European Russia and in the Russian Far East. The Company also has a 20% stake in the Sakhalin-1 (accounted on proportionate consolidation basis). In addition, Rosneft participates in four production joint ventures (accounted on equity basis).

Yuganskneftegaz and Purneftegaz in Western Siberia, Vankorneft in Eastern Siberia, and Samaraneftegaz in the central part of European Russia are Rosneft’s most important production and development units, collectively accounting for 83% of total crude oil production in 2010.

Company efforts in 2010 were focused on measures to optimize operating and capital expenses, achievement of production targets in the Vankor project, and implementation of programs for improvement of energy efficiency.

The Company produced 847.4 mln barrels of crude oil and gas condensate in 2010 (including 779.1 mln barrels by subsidiaries), which is 6.4% more than in the previous year. The increase was mainly driven by ramp-up of production at the Vankor field.

Output of natural and associated gas was 12.34 bln cubic meters in 2010, which is 2.7% lower than in 2009. Lower production reflects natural exhaustion of the resource base at fields in the Southern Federal District as well as unscheduled repairs to the Luguinetskaya compressor station in Western Siberia.

Company efforts in 2010 were focused on cost control, improving operating efficiency of producing assets, and bringing existing hydrocarbon reserves into production. Upstream production and operating expenses increased by USD 339 mln in 2010 compared with 2009 to USD 2,208 mln (USD 2.83 per bbl produced) due to real ruble appreciation by 11.6% and crude oil production growth.

Production drilling by Rosneft subsidiaries (excluding the Sakhalin-1 project) was 2,726 th. meters in 2010. A total of 837 oil wells were completed and brought into production, which is 14% more than in 2009. Production from new wells was 87.1 mln barrels of oil and gas condensate and 0.8 bln cubic meters of gas. As of December 31, 2010 Rosneft subsidiaries had 17,571 wells producing oil and gas condensate. The decline in numbers from the end of 2008 was due to optimization works including mothballing of wells with low flow rates and high watercut. The average daily flow rate per new production well was 679 barrels, and the average flow rate for all production wells was 125 barrels, which is 10% more than in 2009. The increase reflects rising output at the Vankor field, where average flow rates per well in 2010 were 24 times higher than the average level for the Company.

Development costs of Rosneft’s subsidiaries totaled USD 6,618 mln, up 22% year-on-year. The reduction was primarily due to nominal appreciation of the rouble against the US dollar.

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