Geological Exploration

Rosneft puts much emphasis on 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.

The Company carries out geological exploration in Russia and abroad both independently and as part of joint projects with Russian and foreign partners.

Priority regions for Rosneft with respect to growth of resource potential are Eastern Siberia, the shelves of Russia’s southern seas (the Black, Caspian and Azov Seas) and the ocean shelf in the Far East of Russia. The Company is also carrying out geological exploration work in its traditional oil producing areas: Western Siberia, the Volga Region, Timan-Pechora and the southern part of European Russia. In addition, Rosneft is taking part in promising foreign geological exploration projects in Algeria and Kazakhstan.

Rosneft’s active participation in numerous exploration projects ensures access to considerable prospective resources, which will be the foundation for the Company’s long-term development. According to the mean estimate by DeGolyer & MacNaughton, prospective recoverable resources in upstream projects with Rosneft involvement were over 47 bln barrels (6.5 bln tonnes) of oil equivalent as of the end of 2009.

Substantial amounts of prospecting and exploration drilling and extensive seismic studies were carried out during 2009 in projects with Rosneft participation, in accordance with license terms. Exploration expenses of Rosneft’s subsidiaries totaled USD 325 mln. Exploration drilling was 61,400 meters, 2D seismic exploration was 6,641 linear km, and 3D seismic work was 3,234 square km. The lower volumes of exploration works in 2009 compared with 2008 reflect particularities of work schedules stated by license agreements as well as cost optimization by the Company. A total of 29 prospecting and exploration wells were completed. Prospecting and exploration drilling by the Company led to the discovery of 5 fields and 9 new deposits at previously discovered fields.

Geological exploration work and production drilling gave increases of ABC1 reserves (under Russian classification) of 1.05 bln barrels (143.8 mln tonnes) of oil and gas condensate and 13.0 bln cubic meters of gas (1.03 bln barrels (140.2 mln tonnes) and 13.0 bln cubic meters, respectively, measured by Company stakes in projects). Most of the reserve growth was at fields in Western and Eastern Siberia.

Substantial results from geological exploration work reflect an optimal combination of adequate 2D and 3D seismic studies, professional processing and interpretation of seismic data, and careful positioning of exploration wells. The Company has one of the best records for reserve replacement: this indicator was 163% in 2009.

Exploration activities within projects involving Rosneft