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OPERATING RESULTS FOR 1Q 2020

15 May 2020
  • AVERAGE DAILY HYDROCARBON PRODUCTION AMOUNTED TO 5.75 MMBOE
  • LIQUID HYDROCARBONS PRODUCTION AMOUNTED TO 4.64 MMBPD UNDER OPEC+ AGREEMENT
  • GAS PRODUCTION CONSTITUTED 16.63 BCM
  • PROGRESS IN THE DEVELOPMENT OF KEY PRODUCTION ASSETS WITH EMPHASIS ON NEW TECHNOLOGIES IMPLEMENTATION
  • REFINING THROUGHPUT AT THE COMPANY’S REFINERIES AMOUNTED TO 28.7 MMT, INCREASING BY 1.4% QOQ AND 6.9% YOY
  • REFINING THROUGHPUT AT THE COMPANY’S REFINERIES IN RUSSIA CONSTITUTED 26.0 MMT, INCREASING 1.7% AND 5.9% QOQ AND YOY, RESPECTIVELY
  • REFINING DEPTH INCREASED TO 73.8%, LIGHT PRODUCTS YIELD INCREASED TO 56.9%
  • IN APRIL THE DEAL TO EXIT ALL VENEZUELAN PROJECTS, INCLUDING PRODUCTION AND OIL-FIELD SERVICE COMPANIES ALONG WITH COMMERCIAL AND TRADING OPERATIONS, WAS COMPLETED

Initiatives to combat the spread of COVID-19

The plan of urgent measures to ensure stability of the Company’s operations in the pandemic period places top priority on people’s health and safety. The Company constantly replenishes its preventive equipment stock. Over 5.6 mln units of personal protective equipment, 2.9 mln liters of disinfectant, over 455 th. liters of hand sanitizer were procured by now. Employees’ rotation period is increased to 90 days, the Company’s business units in distant regions are furnished with observation and isolation rooms with qualified health workers. The products targeted at combating coronavirus are produced the Company’s own facilities and distributed on the domestic market. In particular, ethyl alcohol and acetone (secondary antiseptic), which are used in disinfectant production, are produced in the amount of 15 th tonnes per month. Almost 90% of the central office employees, more than 51 th. Group subsidiaries’ employees work remotely with effective IT support via modern means of communication, which comply with all confidential information protection standards.

Hydrocarbon production

1Q 2020 hydrocarbon production amounted to 5.75 mmboed (70.7 mmtoe), decreasing 1% QoQ and 2.5% YoY. Liquids production amounted to 4.64 mmbpd (57.0 mmt), decreasing by 0.7% and 2.2% QoQ and YoY, respectively, due to continued compliance with OPEC+ Agreement constraints. Gas production amounted to 16.63 bcm, decreasing by 3.4% QoQ and 2.9% YoY.

Development drilling and implementation of modern technologies in upstream

1Q 2020 development drilling footage amounted to 2.2 mln m, while the number of newly commissioned wells reached 555 units. As part of Rosneft-2022 strategy implementation, the Company continues to focus on the construction of high-tech wells, which provide more effective reserve development and greater oil recovery rate compared to directional wells drilling.

Share of newly commissioned horizontal wells grew by 14 p.p. YoY – up to 67% of the total number of newly commissioned wells. In addition, unit production per horizontal well increased by 9% in comparison with 1Q 2019 level. Share of newly commissioned horizontal wells with multistage hydrofracturing reached 41% of the total number of wells commissioned over the period, growing by 7 p.p. vs. 1Q 2019 level.

The Company continues to develop its key assets under OPEC+ Agreement constraints, concentrating on the development and implementation of new technologies, including digital ones, which increase field development effectiveness along with saving resources. The Company considers technological leadership as one of the key factors of competitiveness on the oil market.

A unique unmanned aerial pipeline monitoring system, which combines the advantages of both plane and helicopter type vehicles, was introduced at RN-Purneftegaz. Furthermore, the device mainly operates in the “plane” mode, which is more efficient in comparison with “helicopter” mode.

Upstream projects development

The Company continues to develop its projects in accordance with the previously announced plans. Since 2016 such large greenfields as Suzunskoye, Vostochno-Messoyakhskoye, Yurubcheno-Tokhomskoye, Kondinskoye, Tagulskoye, Russkoye, Kuyumbinskoye fields, 2nd stage of Srednebotuobinskoye field, Zapadno-Erguinskoye field have been launched. In 1Q 2020 the Company’s share in total liquid hydrocarbons production at the abovementioned assets amounted to 5.1 mmt (411 kbpd), which is 17% higher than 1Q 2019 level, while their share in the total liquids production constituted 9%.

The development of Erguinsky cluster is in progress with Kondinskoye and Zapadno-Erguinskoye fields launched as part of the project. In 1Q 2020 daily production at the cluster’s fields increased by 17% YoY and reached 61 kbpd (0.8 mmt over the period). Cumulative production of the cluster's fields amounted to more than 5 mmt of oil since its launch in 2017. The accelerated development of new reserves became possible due to the implementation of modern approaches of production process management at all stages – from wells construction to feedstock transportation. Development drilling is conducted at 11 well pads of the Erguinsky license area along with construction of infrastructure facilities, infield pipelines and electric power transmission lines. Pressure pipeline welding is conducted in order to transport oil to Priobskoye field and Transneft pipeline system afterwards.

As part of Danilovsky oil and gas production cluster development project the Company proceeded with development drilling at Severo-Danilovsky field. As part of the field development project it is planned to drill 95 wells, the majority of which will be horizontal. Drilling works are conducted with implementation of modern technologies and cutting-edge equipment. Application of remote real-time drilling support allows to reduce geological risks and increase drilling works speed. Furthermore, a constant video communication system is created between all the responsible business blocks on the field.

Preparations towards launching Severo-Komsomolskoye field are in progress. In 1Q 2020 development drilling of wells with horizontal section length up to 2 km is continued, building and installation works are conducted at infrastructure facilities and oil treatment units (central production facility, boosting compressor station and others). As part of the pilot commercial field development production doubled at the field vs. 1Q 2019 level and amounted to 14 kbpd (0.2 mmt over the period).

Rospan project’s key facilities construction is in its final stage. The project is planned to be launched this year. It will generate over 21 bcm of gas and over 5 mmt of liquids per annum, along with over 1 mmt of technical propane-butane.

Oil refining and refineries development

The Company’s 1Q 2020 refining throughput amounted to 28.7 mmt, increasing by 1.4% QoQ and 6.9% YoY. In the reporting quarter 26.0 mmt of oil were refined at the Company’s refineries in Russia, which is greater by 1.7% QoQ and 5.9% YoY.

As of reporting quarter end refining depth increased to 73.8%, light products yield - to 56.9%.

Angarsk Petrochemical Company started the production of high-tech mineral hydrocarbon base for drilling liquids in the reporting quarter. Achinsk refinery initiated the production of RMLS low sulphur marine fuel that complies with IMO 2020 requirements. An automated petrol quantity and quality measurement system was put into commercial use at Ryazan refinery.

Crude oil and petroleum products sales

In 1Q 2020 international sales to non-CIS countries amounted to 36.0 mmt of crude oil, which is 12.8% greater YoY. Share of sales via Asian distribution channel amounted to 57.2% of the total international non-CIS sales, which is 7.4 p.p. greater than 1Q 2019 level. Crude export from Russia to non-CIS countries amounted to 28.0 mmt, increasing by 1.6% YoY. Share of crude oil supplies under agreements with more than 1-year duration surpassed 90% of crude export from Russia to non-CIS countries in the reporting quarter.

Rosneft continues to develop cooperation related to oil trading business. The Company signed a long-term agreement with TOTAL OIL TRADING to supply 7.7 mmt of oil via Druzhba pipeline to Germany from April 2020 to May 2022. The Company also started supplying oil to Germany as part of 1-year agreements with Shell and Eni with total amount of 3.9 mmt. Moreover, Rosneft and Indian Oil Corporation Limited signed an agreement to supply up to 2 mmt of oil to India via Novorossiysk Sea Port until the end of 2020. As part of developing cooperation with the Republic of Belarus the Company signed agreements with Naphtan LLC, CJSC BNK, Mozyr Refinery PLC to supply 9 mmt of crude oil from April to December 2020.

Over 1Q 202 the Company sold 28.4 mmt of petroleum products, which is 2.9% greater YoY. International non-CIS sales of petroleum products increased 9.4% YoY and reached 17.4 mmt. Petroleum products export from Russia to non-CIS countries amounted to 12.9 mmt, increasing 6.6% YoY. Share of petroleum products supplies under agreements with more than 1-year duration exceeded 90% of petroleum products export from Russia to non-CIS countries in the reporting quarter.

Rosneft continues to actively trade at Saint-Petersburg International Mercantile Exchange. In 1Q 2020 the Company exceeded the quotas for motor fuel sales volumes on the exchange by more than two times.

In 1Q 2020 the Company continued to increase production and sales volume of RMLS 40 low sulphur marine fuel that complies with IMO requirements introduced since 2020. RMLS 40 marine fuel from Komsomolsk, Achinsk refineries and Bashneft-Ufaneftekhim was supplied to domestic and foreign ship owners in the amount of 112 th. tonnes. Bunkering with this fuel minimizes the negative effects of vessels on the environment.

Retail business

In 1Q 2020 retail business demonstrated stable operational results. Key effort is directed towards maintaining sales volumes predominantly via working with corporate customers, this segment’s sales increased by 5% YoY.

The efforts towards developing contactless payment services are in progress. In the end of 1Q 2020 the number of Mir Privilegii mobile application downloads tripled. The application enables customers to pay for fuel at BP filling stations without exiting their car. It is additionally planned to launch the contactless payment service at Rosneft and Bashneft branded filling station in Moscow and other cities with over 1 million population.

As of the reporting quarter end, the Company’s retail network comprised 3,061 filling stations and complexes, 2,999 of which are located in 66 constituent entities of the Russian Federation.

International operations

In April 2020 the Company closed the deal announced on March 28th. As a result, the Company ceased participation in its Venezuelan businesses, including joint ventures of Petromonagas, Petroperija, Boqueron, Petromiranda and Petrovictoria, as well as oil-field service companies, commercial and trading operations.

Egyptian offshore Zohr field development is in progress, where the planned production level – 76 mmcmpd (100% of the project) – was reached in 2019 during field development works (which were executed ahead of schedule). Another two production wells were drilled at the field in the reporting quarter, one of which is already commissioned. 1Q 2020 gas production amounted to 5.1 bcm (0.9 bcm in the Company’s share).

Key operating results for 1Q 2020:

 1Q ‘204Q ‘19QoQ1Q ‘19YoY
Hydrocarbon production (kboepd) 5,753 5,814 (1.0)% 5,902 (2.5)%
Liquids production (mmt) 56.98 58.03 (1.8)% 57.63 (1.1)%
Gas production (bcm) 16.63 17.22 (3.4)% 17.12 (2.9)%
APG utilization rate 75.9% 77.4% (1.5) p.p. 82.3% (6.4) p.p.
Development drilling (th. km)* 2,214 2,223 (0.4)% 2,495 (11.3)%
2D seismic (linear km)* 112 726 (84.6)% 1,065 (89.5)%
3D seismic (sq. km)* 2,512 1,578 59.2% 4,051 (38.0)%
Oil refining (mmt) 28.72 28.33 1.4% 26.87 6.9%
At Russian refineries 25.95 25.51 1.7% 24.50 5.9%
Outside Russia 2.77 2.82 (1.8)% 2.37 16.9%
Refining depth 73.8% 73.0% 0.9 p.p. 74.4% (0.6) p.p.
Product output in Russia (mmt) 25.07 24.72 1.4% 23.67 5.9%
Gasoline 3.58 3.61 (0.8)% 3.83 (6.5)%
Naphtha 1.61 1.58 1.9% 1.29 24.8%
Diesel fuel** 8.50 8.23 3.3% 8.12 4.7%
Fuel oil 6.36 6.49 (2.0)% 5.83 9.1%
Kerosene 0.77 0.72 6.9% 0.79 (2.5)%
Petrochemicals 0.43 0.42 2.4% 0.43 -
Other 3.82 3.67 4.1% 3.38 13.0%
Product output outside Russia (mmt) 2.93 2.99 (2.0)% 2.50 17.2%
Light products yield 56.9% 56.7% 0.2 p.p. 58.2% (1.3) p.p.
Sales volumes      
Crude oil (mmt) 37.4 41.6 (10.1)% 35.5 5.3%
International sales to non-CIS 36.0 37.9 (5.0)% 31.9 12.8%
CIS - 2.2 (100)% 2.2 (100)%
Domestic market 1.4 1.5 (6.3)% 1.4 -
Petroleum products (mmt) 28.4 29.5 (3.7)% 27.6 2.9%
International sales to non-CIS 17.4 18.0 (3.3)% 15.9 9.4%
CIS 0.9 0.8 0.1% 1.0 (10.0)%
Domestic market 9.7 10.3 (5.8)% 10.0 (3.0)%
Sales of bunker fuel to end-users 0.4 0.4 - 0.7 (42.9)%
Petrochemical products (mmt) 0.7 0.7 - 0.7 -
International sales 0.2 0.3 (11.4)% 0.3 (10.1)%
Domestic market 0.5 0.4 4.9% 0.4 0.1%
Gas (bcm) 14.91 16.05 (7.1)% 16.46 (9.4)%

* According to management data
** Including marine fuel

Information Policy Division
Rosneft
Tel.: +7 (495) 411 54 20
Fax: +7 (495) 411 54 21
May 15, 2020

These materials contain statements about future events and expectations that are forward-looking in nature. Any statement in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements expressed or implied by such forward-looking statements to differ. We assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.