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Igor Sechin Reported on the Company's Performance results and work plans to Dmitry Medvedev

14 August 2015
Photo: Press-service of the Russian Government

Rosneft Chairman of the Management Board Igor Sechin informed the Russian Prime Minister Dmitry Medvedev of the Company's production plans and import substitution plans during the working meeting.

In particular, Rosneft developed and approved an import substitution program until 2025, and started working with the Russian and foreign manufacturers for localization of advanced foreign technologies in the territory of the Russian Federation. The company intends to ensure 70% level of localization for all projects by 2025. Specifically, the plan is to start-up the production of catalysts of up to 600 tonnes at the Angarsk petochemical plant in 2016, which will fully cover the demand of the Russian oil refining for this component and will replace all imported supplies.

Photo: Press-service of the Russian Government

Rosneft CEO noted that Zvezda shipbuilding complex will be the first large-tonnage shipbuilding dockyard in Russia with 330,000 tonnes of metal processing capacity per year. The start-up of the shipyard will enable the construction of vessels and marine equipment to support offshore field development in ice conditions. Rosneft has already worked out and submitted an anchor order for construction of the first vessels and marine platforms. The license agreements for the offshore blocks which are being developed jointly with partners provide for the level of localization no less than 70%. Rosneft also signed the agreement to acquire a 30% participation interest in Helivert, a joint venture between AgustaWestland and Russian Helicopters. After completion of the procedure for entering the JV, the Company will place an anchor order for supply of 150 helicopters.The key element of fulfilling the terms of the agreement is ensuring the 50 % mandatory level of localization of AW189 helicopters production in the territory of the Russian Federation. Rosneft plans to achieve the production level of at least 300 mln TOE by 2020 as Mr. Sechin highlighted.The Company plans to fulfill this objective through the successive commissioning of new production hubs in East Siberia, development of gas projects, and significant increase in drilling volumes at the existing fields along with maintaining the achieved level of operations performance.As the largest production unit of the Company, Yuganskneftegas will have to play one of the key roles in delivering the targets set by the Company. Reserves of Yuganskneftegas amount to over 2 bln TOE, and the drilling progress (development drilling) will increase by more than 70% in 2015 to reach 3.8 thousand line km.This year the subsidiary will produce about 66 mln tonnes of hydrocarbons.Laying the groundwork for production growth for the next 5 years, in first 6 month of the year the Company already increased the volumes of development drilling as the drilling progress increased by 30%, and the number of new wells commissioned went up 10%. In the next five years, the Company plans to grow the drilling progress by 70% (development drilling) and to increase the number of new wells commissioned by over 50%. Igor Sechin reported that the Company has been fulfilling all assignments of the President and the Government of the Russian Federation to reduce unit operating costs and capital expenditures.Based on last year's results, Rosneft capital expenses reduced 9% as compared to the cost increase (15-29%) demonstrated by its competitors.The amount of synergies delivered in 2013-2014, including OPEX and CAPEX reduction, exceeded 112 bln. rubles (by almost 1.5 times higher than was originally estimated in 2012).Rosneft has been implementing the programs to enhance the efficiency of key technological and business processes on the basis of the best internal and industry practices.

Information Division,
August 14, 2015