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Igor Sechin Reported on Rosneft 2014 Operational Results to Vladimir Putin

04 February 2015
Photo credit: Press-service of the President of Russia

The President of the Russian Federation Vladimir Putin held a working meeting on Wednesday with the Head of Rosneft Igor Sechin, who reported on the Company’s 2014 operational results to the President of the country.

The overall hydrocarbons production at year-end was approximately 252 mln toe, which is amounts to a 4.6% organic growth compared to 2013 levels. Daily production level exceeds 5 mln boe, which is by one third higher than ExxonMobil’s level. Gas production increased by 35% - to 56.7 bcm. Liquid hydrocarbon production made around 205 mln tons. Insignificant reduction of production is attributable to efficiency improvement activities and development of in-house service capabilities. Rosneft’s own drilling rig fleet increased from 81 to 213, at the same time the number of own drilling crews increased from 51 to 200. In 2015 Rosneft plans to continue this work and further expand this figure to 230, which will allow meeting the demands of main projects using own resources.

Photo credit: Press-service of the President of Russia

At year-end ABC1+C2 hydrocarbon reserves of the Company amounted to 129 billion of boe (approximately 17 billion toe), investments in geological exploration exceeded twofold 2013 levels. All license obligations are being fulfilled.

As to results of 2014, the company maintained its operating costs per barrel of production at $4 per boe. The achievement was reached thanks to high-performance measures carried out in the Exploration and Production area. This level is 3-4 times more efficient than the operational expenditures level of leading international oil and gas companies.

Primary oil refinement at Company’s assets in 2014 topped 100.1 mln t. 87 mln t were refined at Russian facilities, organic growth made 2 mln t or 2%.

The Company made the most significant contribution to the strengthening of the national currency, which experienced a speculative attack. Throughout the year Rosneft sold at the exchange market USD 93 bln, which was a record-breaking currency-supportive result among Russian exporters. At the same time the Company repaid the loans for a total amount of USD 24.5 bln, which helped to cut the leverage.

Rosneft maintains the status of the largest taxpayer in the Russian Federation that accounts for around a quarter of all tax revenues of the Russian budget. The Company paid around 3 trillion rubles to budgets of all levels, which amounts to more than 57% of Rosneft earnings and exceeds the rate of the last year for 11.8% (2.7 trn rubles in 2013).

Photo credit: Press-service of the President of Russia

Looking back on the year Igor Sechin pointed out that landmark events in the world’s oil and gas industry in 2014 were related to projects implemented with the participation of the Company: “This is the successful exploratory drilling of the northernmost well, named Pobeda. The discovery of the Kara oil and gas province with a resource base comparable with resources of the whole Saudi Arabia. Just the first well allowed to record initial reserves of 130 mln tons of oil 396 bcm of gas. We began production with the unique drilling rig Yastreb at the Northern Chayvo of Sakhalin. Production there in 2014 amounted to 300,000 tons. We completed the drilling and the operation start of the first well at the biggest rig in the world – the Berkut rig in the Okhotsk Sea. Daily oil inflow only of this well is 2,000 tons and cumulative production already amounts 60,000 tons”.

The Head of Rosneft stated that in 2015 the Company will continue working on the enhancement of efficiency of oilfield services and capital expenditures which will be channeled to maintaining production at largest fields, such as Yugansk, Vankor, Samotlor and Taas-Yuryakh. In Q4 the Company is planning to start up the Labaganskoye field in the Nenets Autonomous District. It is planned to reach the output plateau of 10 mln tons of oil at the Uvat group fields. The Company’s business plan was arranged considering a conservative price forecasts of USD 50 per barrel which allows the Company to implement the approved investment program for 2015.

In 2015 the Company will keep increasing the marketing volumes within long-term contracts for oil supplies with world leading trading companies and strategic partners. The volume of oil supplies within such contracts in the eastern direction is expected to be at the rate of 32 mln tons (30% growth compared to 2014) including supplies to China planned to be at the rate of 29 mln tons (27% growth compared to 2014).

In 2015 the preparation works are planned for the offshore drilling in 2016, including preparation of the logistics base at Sakhalin, in the Murmansk Region and in Magadan, geological engineering survey at the Magadan fields. In 2016 drilling of 2 exploratory wells is planned in cooperation with Statoil, drilling of 2 wells is planned in the Black sea.

Answering to the question of the Russian President on the Eastern petrochemical company project execution: “Currently the engineering stage is being implemented. The economic model of the project is subject to verification in terms of the tax maneuver. Anyway the Company will develop the refinement in the region of Far East which is marked by the deficit of refining capacity”.

Rosneft Information Division
Tel.: + 7 (499) 517-88-97
February 04, 2015

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 obligation to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.