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OPERATING RESULTS FOR 3Q 2021 AND 9M 2021

12 November 2021
  • 3Q 2021 AVERAGE DAILY LIQUIDS PRODUCTION INCREASED BY 9.3% YOY1 TO 3.98 MLN BARRELS
  • 3Q 2021 AVERAGE DAILY GAS PRODUCTION INCREASED BY 23.2% YOY1 TO 182.2 BLN CUBIC METERS
  • 3Q 2021 AVERAGE DAILY HYDROCARBON PRODUCTION INCREASED BY 12.1% YOY1 TO 5.09 MLN BOE 
  • IN 9M 2021, THE NUMBER OF NEWLY COMMISSIONED WELLS EXCEEDED 2.5 TH. UNITS, UP BY 40% YOY
  • 3Q 2021 OIL REFINING THROUGHPUT INCREASED BY 2.8% QOQ UP TO 27.1 MLN TONNES
  • 3Q 2021 REFINING DEPTH INCREASED UP TO 76.9%, LIGHT PRODUCT YIELD AMOUNTED TO 55.8%
  • IN 3Q 2021, THE COMPANY EXCEEDED THE REQUIRED QUOTAS FOR EXCHANGE-TRADED MOTOR FUEL SALES ON THE SPIMEX BY OVER 2.5 TIMES
  • IN 9M 2021, THE RETAIL SALES VOLUME AT THE FILLING STATIONS EXCEEDED THE LEVEL OF 9M 2020 BY 10%
  • THE SALE OF A 5% STAKE IN AUTHORISED CAPITAL OF VOSTOK OIL LLC TO A CONSORTIUM OF COMPANIES HEADED BY VITOL WAS COMPLETED

ESG

Rosneft continues to implement activities under the Carbon Management Plan until 2035. Within the Plan’s framework, in the reporting period, the Company agreed with Equinor, ExxonMobil and Japan's Natural Resources and Energy Agency (part of METI) on cooperation in the area of emissions management. The collaboration includes the study of the prospects for the implementation of new joint projects in the field of CO2 capture and storage (CCS), the development of modern fuels, low-carbon technologies, etc.

As part of the Carbon Management Plan implementation, Rosneft has also expanded the geography of the use of unmanned aerial vehicles (UAVs) equipped with laser scanners and video cameras to control methane emissions at oil and gas treatment and transportation units of key Rosneft’s production subsidiaries. During 3Q 2021, an inspection of 258 infrastructure sites with an area of 32 sq. km and gas pipelines with a length of 1,325 km was carried out.

Rosneft persistently enhances the level of HSE performance, guided by the principle of ‘zero tolerance’ for imposed golden safety rules violations committed by the Company’s employees and contractors. Thanks to the implementation of measures to prevent accidents and mitigate their consequences, in 9M 2021 the number incidents related to the safety of technological processes decreased at the Company's subsidiaries. A decline in PSE-1 by 20% and PSE-2 by 31% YoY testifies this statement.

Rosneft pays priority attention to biodiversity conservation in all regions of the Company’s presence. For instance, in 2021, 2 expeditions (in spring, and in summer-autumn period) arranged by Rosneft’s Arctic Research Institute and Severtsov Institute of Ecology and Evolution of the Russian Academy of Sciences were carried out. The group of scientists departed to the northern part of the Arctic Ocean to monitor the polar bear population and the Atlantic subspecies of walrus in the waters of the Kara and Barents Seas, as well as on the islands of Franz Josef Land.

In September 2021, the Company was included in the Global Compact LEAD initiative due to ongoing commitment to the United Nations Global Compact and its Ten Principles for responsible business. As a result, Rosneft became the only Russian oil and gas company announced as the Global Compact LEAD.

Hydrocarbon production

3Q 2021 liquids production reached 366.1 mln barrels (49.3 mln tonnes), having increased by 3.2% QoQ and by 1.8% YoY due to the gradual restrictions easing under the OPEC+ Agreement. Average daily liquids production amounted to 3.98 mln barrels per day. In a comparable perimeter (including asset disposals in 2020), the production growth amounted to 9.3% YoY.

9M 2021 liquids production amounted to 1,058.2 mln barrels (142.6 mln tonnes) having decreased YoY due to the substitution of low-margin assets with greenfields, as well as production restrictions under the OPEC+ Agreement.

In 3Q 2021, gas production amounted to 16.76 bln cubic meters, having increased by 4.3% QoQ and by 12.0% YoY. The rise is mainly attributed to the increase in natural gas production at the Rospan project. Average daily production reached 182.2 mln cubic meters per day. In the comparable perimeter, average daily production growth amounted to 23.2% YoY. In 3Q 2021, the gas share in total hydrocarbon production increased up to 21.8%.

In 9M 2021, gas production amounted to 47.81 bln cubic meters, up by 2.3% YoY. Average daily gas production increased by 2.6% up to 175.1 mln cubic meters per day. The positive dynamics of the indicator is mainly due to an increase in natural gas production at the Rospan project, an increase in sales of gas produced at the Zohr field (Egypt), as well as an increase in gas production by Sibneftegaz.

As a result, 3Q 2021 hydrocarbon production amounted to 468.2 mln boe (63.0 mln toe), up by 3.4% QoQ and by 3.9% YoY. Average daily hydrocarbon production reached 5.09 mln boe per day. In the comparable perimeter (including asset disposals in 2020), production growth amounted to 12.1% YoY.

In 9M 2021, hydrocarbon production amounted to 1,349.4 mln boe (181.9 mln toe). Average daily hydrocarbon reached 4,943 th. boe per day. In the comparable perimeter, production growth reached 2.4% YoY.

Geological exploration, development drilling and new wells commissioning  

In 9M 2021, the Company conducted 4.8 th. sq. km of 3D seismic works on the Russian onshore, a 22% increase YoY, and tested 53 exploration wells with an 89% success rate. In 9M 2021, total volume of 3D seismic works amounted to 5.8 th. sq. km. As a result of geological exploration, the Company discovered Kederginskoye gas condensate field in the Republic of Sakha (Yakutia), 67 new deposits with AB1C1+B2C2 hydrocarbon reserves amounting to 71.5 mln toe.

9M 2021 development drilling footage exceeded 8.1 mln meters, having increased by 2.6% YoY. The Company traditionally maintains the share of in-house drilling footage at 50% as a minimum.

In the reporting period, RN-Yuganskneftegaz, the Company's largest production asset, drilled a record-long horizontal well among the Company's subsidiaries conducting onshore drilling. Its depth amounted to 6,196 meters, and the length of the horizontal section was 3,034 meters. In order to efficiently develop the productive formation, equipment was installed to conduct a 30-stage hydraulic fracturing.

In 9M 2021, the number of newly commissioned wells exceeded 2.5 th. units, up by 40% YoY. The number of the most efficient new horizontal wells exceeded 1.7 th. units, up by 39% YoY, while their share in total number of newly commissioned wells amounted to 69%. In 9M 2021, the share of newly commissioned horizontal wells with multistage hydrofracturing exceeded 1 th. units, or 42% of the total number of wells commissioned over the period. Unit production per horizontal well overpassed the indicator for directional wells by more than 2 times.

Upstream projects development  

From 2016 to 2020, the Company launched 13 new major exploration and production projects. In 9M 2021, the Company’s share in total liquids production at these projects amounted to 504 th. barrels per day (18.6 mln tonnes), which is 28% higher YoY. The share of these projects reached 13% of the total liquids production, up by 3.6 p.p. YoY.

The Company continues to develop its production projects in accordance with the previously announced plans.

In the reporting period, Rosneft continued to actively implement a large-scale Vostok Oil project in the north of the Krasnoyarsk Region. Design and survey work has been completed in full at the Sever Bay Port oil terminal facilities (including the Payakha – Sever Bay pipeline and infrastructure facilities), as well as the Vankor – Suzun oil transportation system.

The company has started design work and a complex of engineering surveys for key energy facilities, the autonomous power supply of which will be provided through the construction of its own power plants with a total capacity of about 3.5 GW.

The construction of berths has begun on the Yenisei river. As part of the autumn navigation, cargo is being delivered to the project facilities. By the end of the river navigation period, it is planned to deliver 150 th. tonnes of various cargo to the Taimyr bases. Rosneft’s aircraft began operating flights from Norilsk airport to deliver shift workers to facilities under construction. Starting 2022, it is planned to engage 43 aircraft units to arrange air transportation to the project's fields: 33 new helicopters and 10 airplanes.

As of the end of 3Q 2021, the implementation of the geological exploration programme continues: 8 exploration wells are under construction in the Zapadno-Irkinskiy, Irkinskiy, Peschaniy license areas, as well as at fields of the Vankor cluster. Preparations are underway to conduct 3D  seismic work in 2021-2022 winter season.

In July 2021, at the Lodochnoye field (part of the Vankor cluster) 2 mobile oil treatment complexes with a total capacity of 8 th. cubic meters per day were put into operation. In 9M 2021, 17 production wells were drilled and put into operation. The construction of an oil treatment unit is underway. As part of the pilot development, 9M 2021 production at the field amounted to 26.7 th. barrels per day, which is 66% higher YoY.

The company continued to form the corporate structure of the Vostok Oil project, attracting global players of the oil and gas industry. In 3Q 2021, Rosneft and a consortium of companies headed by Vitol S.A. closed the deal for the sale of a 5% stake in the authorized capital of the Vostok Oil LLC.

At the Severo-Komsomolskoye field, work is underway on the main facilities in order to prepare for the start of the field’s full-scale development. The piling and installation works of the technological equipment of the central oil gathering point are in progress, the installation of 2 tanks (with a volume of 10,000 cubic meters) is underway. The underwater crossing of the interfield oil pipeline and gas pipeline has been completed, the linear part of the pipeline is being welded. The assembly of supports and the construction of pile foundations for power supply facilities are underway. In 9M 2021, as part of the pilot development, production at the field amounted to 10.9 th. barrels per day.

Rosneft continues the development of its key gas projects. Thus, at the Kharampurskoye field, work is being carried out in accordance with the schedule. Welding of the linear part of the external transport gas pipeline has been completed. Pneumatic testing of the pipeline is being carried out, as well as hydrotesting of absorbers at a complex gas treatment unit. As of the end of 3Q 2021, construction readiness of the key facilities is over 76%.

Oil refining  

In 3Q 2021, oil refining throughput at the Company’s refineries in Russia amounted to 24.1 mln tonnes, up by 2.8% QoQ and by 7.2% YoY. The growth was due to an increase in plant utilization against the backdrop of growing demand for petroleum products on the domestic market. In 9M 2021, oil refining throughput amounted to 71.7 mln tonnes, up by 2.5% YoY.

In 3Q 2021, oil refining throughput at the refineries in Germany amounted to 3.0 mln tonnes, up by 2.4% QoQ. The growth was due to a gradual increase in demand against the background of restrictive measures easing in the country. In 9M 2021, oil refining throughput at the German refineries amounted to 8.1 mln tonnes.

As a result, in 3Q 2021 the Company’s total refining throughput amounted to 27.1 mln tonnes, having increased by 2.8% QoQ and by 6.4% YoY. In 9M 2021, the indicator amounted to 79.8, up by 2.1% YoY. At the same time, oil refining depth increased by 0.7 p.p. QoQ and amounted to 76.9%, while light product yield was 55.8%.

Modern technologies development

Development of technological potential is one of the key elements of Rosneft's strategy.

In the reporting period, Rosneft received a patent for the invention of a ‘green’ technology for processing drill cuttings based on the principle of waste-free production within the Vostok Oil project. As of the end of 3Q 2021, more than 251 th. tonnes (165 th. cubic meters) of drill cuttings were already utilized at the Vankorskoye, Suzunskoye and Tagulskoye fields. The rationalization project for the processing of drilling waste into a highly environmentally friendly building material has already brought the subsidiary more than Rub 2.2 bln of economic effect.

Experts of the Tyumen Oil Research Center (Rosneft Research and Design Institute) invented and patented the technology for determining volumes of oil and gas in unconventional oil reservoirs using nuclear magnetic resonance (NMR). The new approach significantly increases the accuracy of determining the geological reserves of hydrocarbons and is used to assess the potential in the cavities of rocks containing bitumen, heavy, viscous, paraffinic, resinous hydrocarbons, as well as highly mineralized formation water.

Specialists of the Rosneft United Research and Development Centre and the Angarsk Catalyst and Organic Synthesis Plant (included in the Rosneft perimeter) produced a batch of winter and Arctic diesel fuel with improved low-temperature properties. The fuel is produced using a catalytic system that allows combining the processes of hydrotreating and isodewaxing of straight-run diesel fractions in one reactor.

Crude oil and petroleum products sales

In 9M 2021, crude oil supplies to non-CIS countries amounted to 73.8 mln tonnes. In 3Q 2021 the indicator amounted to 25.4 mln tonnes, including 13.5 mln tonnes supplied eastwards, or 53.1% of the total crude oil supplies to non-CIS countries.

In 9M 2021, the Company sold 75.9 mln tonnes of petroleum products, including 25.9 mln tonnes sold in 3Q 2021, which corresponds to 2Q 2021 level. The domestic market is a priority for motor fuel supplies for Rosneft. In 3Q 2021, the volume of petroleum products sold on the domestic market increased by 14% QoQ. At the same time, Rosneft sold 98% of the produced gasoline of Euro-5 and higher grades in Russia. Year to date, the Company's share in the total volume of exchange sales amounted to 44% for motor gasoline and 42% for diesel fuel.

In 3Q 2021, the Company exceeded the required quotas for exchange-traded motor fuel sales on the St. Petersburg International Mercantile Exchange by more than 2.5 times and sold 2.2 mln tonnes. Rosneft actively trades at the Exchange consistently meeting the needs of the domestic market of the Russian Federation.

In the reporting period, as part of the long-term strategy for the development of the aviation fuel business, Rosneft Aero signed contracts for the execution of into-plane fueling at the airports of Turkey (Istanbul) and China (Urumqi).

In 9M 2021, the Company supplied to end-consumers, namely domestic and foreign ship owners, a total of 1 282 th. tonnes of bunker fuel, including 829 th. tonnes of marine fuel with sulfur content of up to 0.5% fully complying with the MARPOL regulations. Low-sulfur residual marine fuel RMLS 40 accounted for 22% of this volume (282 th. tonnes).

Retail business

As of the end of 3Q 2021, the Company’s retail network comprised 3,035 filling stations and complexes, including 2,974 filling stations and complexes in the Russian Federation. In 9M 2021, the retail sales volume at Rosneft’s filling stations exceeded the level of 9M 2020 by 10%.

The Company’s retail network continues to develop digital services. Thus, corporate clients can use the mobile application ‘RN-Card’, which allows to pay for fuel online without leaving a car, as well as to monitor the history of card transactions. In 3Q 2021, the updated version of the application allows to register a plastic fuel card.

In 3Q 2021, 80 filling stations in 5 regions were connected to the contactless remote fuel payment service via Yandex mobile applications. Thus, contactless payment for fuel via Yandex mobile applications is available at 1,533 filling stations of the Company in key regions of presence. The contactless payment service for related products with delivery to customer's car is available at more than 30% of the filling stations in the Moscow region.

At the end of 9M 2021, additional services at filling stations (parcel stations, equipment for dry-cleaning services) are available at more than 160 filling stations. The Company plans to further expand the range of services provided and increase the number of regions of their implementation.

1 The dynamics are given in a comparable perimeter (including asset disposals in 2020).

Information and Advertising Department
Rosneft
November 12, 2021

These materials contain statements regarding future events and expectations that are forward-looking estimates. Any statement in these materials that is not historical information is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by these forward-looking statements. We assume no obligation to adjust the data contained herein to reflect actual results, changes in underlying assumptions or factors affecting the forward-looking statements.