ORGANIC GROWTH OF GAS PRODUCTION IN 2015 VS 2014
A JV WITH ALLTECH TO created OPEN A NEW HIGH-TECH GAS PRODUCTION CENTER IN NENETSK AD. THE JV SHALL PERFORM GAS MONETIZATION BY MEANS OF LNG PRODUCTION
Gas production amounts to 20 % of the Company’s total hydrocarbon production. Gas potential development is one of the Company’s strategic objectives and it has recently taken some important steps forward in this area. Rosneft has substantial gas reserves at the initial development stage which supports a high growth potential and steady production expansion. A farther growth is planned in value-added use of associated petroleum gas.
Rosneft produces gas via more than 30 subsidiaries and joint ventures in West and East Siberia, Central Russia, in the south of the European part of Russia, Russian Far East, as well as Vietnam, Venezuela and Canada.
The Company develops significant gas reserves in West and East Siberia and has a unique license portfolio for the development of hydrocarbon resources on the Russian continental shelf. Rosneft’s strategic goal in gas business development IS A long-term increase of the Company’s shareholder value through increased gas production secured by a highly efficient long-term sales portfolio.
The Company’s gas production in Russia in 2015 totaled 62.54 bcm1 with a
10 % organic growth year-on-year.
Recoverable АВС1+С2 gas reserves as at January 01, 2016 reached 7.5 tcm, being 4 % above the previous year. The greatest absolute and percentage growth of gas reserves according to the Russian classification was supported by exploration drilling by PJSC Sibneftegaz, one of the major production companies, and by a joint venture with an Altec Group company using the assets of the Kumzhinskoye and Korovinskoye fields.
Rosneft will continue to expand gas production, improve sales performance and prepare for the launch of its major projects in 2016 to provide for achievement of the set strategic goals.
GAS PRODUCTION
ROSNEFT GAS PRODUCTION IN 2015
APG utilization rate IN 2015
The Company’s total gas production in 2015 was record high 62.541 bcm, including 29.67 bcm of natural gas and 32.87 bcm of associated petroleum gas, with 0.85 bcm of the total gas production (0.64 bcm of natural gas) produced abroad in Vietnam, Venezuela, and Canada, and 61.69 bcm was produced in Russia. Besides a part of gas, produced in Russia, is sent for NGL production. The scope of the Company’s gas production in Russia in 2015, including gas sent for NGL production, amounted to 62.1 bcm.
Based on the 2015 results, Rosneft is rated among the top three gas producers in Russia with its production volume accounting for 9.8% of the total gas production in Russia.
The organic growth of gas productionwas 5.81 bcm, or 10%, year-on-year and driven by the following factors:
- growth of Vankorneft production by 3.39 bcm resulting from natural and associated petroleum gas production increase and improvement of added value use of APG to 88 % after the start-up in Q2 2014 of the gas processing plant, compression station, and gas pipeline to transport gas to Gazprom’s UGSS for future sale;
- 0.86 bcm increase in natural gas production by Sibneftegaz, mainly driven by the start of gas production in the Khadyryakhinsky license area in December 2014;
- 0.76 bcm increase in gas production by RN-Purneftegaz LLC as a result of the start-up of new cluster pads in the Tarasovskoye field and gas pre-hydration and gas-gathering pipeline in Barsukovskoye field;
- 0.67 bcm increase in APG production after the start of the pilot development of the Northern tip in Chaivo field on Sakhalin;
- 0.26 bcm increase in natural gas production by JSC Rospan International as a result of the start-up of new wells and check-out of the 2nd stage of Novo-Urengoi gas and gas condensate processing plant.
The Company aims at long-term gas business development. Sustainable mid-term growth of oil and gas production by the Company is supported by the start-up of new fields with a stably increasing investment scope. It is primarily a large-scale development of Rospan International fields that provides for a gas production increase to almost 20 bcm and hydrocarbon liquids of about 6 mmt after its ramp-up. The first project stage is planned to be started in the Kharampur and Kynsko-Chaselskoye license areas. There are also plans to increase production in Sibneftegaz fields currently yielding 11.8 bcm to 14 bcm by 2020 driven by the development of the Khadyryakhinskoye field and bottom horizons in the Beregovoye field.
Major gas projects will support the fulfillment of the Company’s current contract commitments related to gas supply and are delivered to achieve the goals outlined in the Company’s Long-term Development Program.
West Siberia is the largest gas producing region for Rosneft. Gas production in the region grew by 5 % in 2015 to 44.49 bcm with natural gas production amounting to 24.45 bcm, being mainly from Sibneftegaz, Rospan International, and RN-Purneftegaz fields. Associated petroleum gas production in the region was 20.04 bcm with the main volume from Samotlorneftegaz, RN-Yuganskneftegaz, RN-Purneftegaz, Varyeganneftegaz, RN-Nyaganneftegaz, and Tomskneft fields.
Gas in East Siberia was produced in Vankorneft fields, being the largest fields in the region, as well as Verkhnechonskneftegaz and Taas-Yuriakh Neftegazodobycha. APG and natural gas production in 2015 amounted to 7.95 bcm and 0.98 bcm, respectively. The total production growth in the region of 3.43 bcm in 2015 is significantly above the last year’s figure, which is mostly driven by APG utilization rate increase.
Most gas in Central Russia in 2015 was produced in Orenburgneft and Samaraneftegaz fields.
RN-Krasnodarneftegaz LLC is the main gas producing asset in the south of Russia, leader of natural and associated petroleum gas production.
The main production source of the Russian Far East is APG from Nothern Chaivo field, APG produced by Sakhalin-1, and natural gas produced by RN-Sakhalinmorneftegaz LLC.
Gas was produced abroad under international projects in Vietnam, Venezuela, and Canada.
1. RospanMain growth center for natural gas production in the next five years. Production of 4.24 bcm
in 2015, growth potential to almost 20 bcm per year.
2015 — launch of the second stage of Novo-Urengoi gas and gas condensate processing plant in the check-out mode.
2. SibneftegazProduction of 11.76 bcm in 2015. 2015 — increase in gas production in the Khadyryakhinskoye field.
3. Vankor clusterProduction of 8.71 bcm in 2015. Development of a new production region.
2015 — continued increase of APG utilization rate. Achievement of the designed gas supply volume to gas transport network (GTN) 5.6 bcm per year.
4. PurneftegazProduction of 5.53 bcm in 2015.
2015 — start-up of new cluster pads in the Tarasovskoye field and gas pre-hydration and gas-gathering pipeline in Barsukovskoye field.
5. KrasnodarneftegazProduction of 2.75 bcm in 2015.
The main gas production asset in the south of Russia, leader of natural and associated petroleum gas production. In 2015 the total amount of gas production from the date of commercial operations beginning reached 100 bcm.
6. OrenburgneftProduction of 2.79 bcm in 2015.
Gas refining at Zaikinsky, Pokrovsky and Zagorsky refineries.
7. RN-NyaganneftegazProduction of 1.54 bcm in 2015. 2015 — sustain APG utilization rate above 96%.
8. sustain APG utilization rate above 96%.Production of 3.1 bcm in 2015.
Has free gas and gascap gas reserves.
9. SamotlorneftegazProduction of 5.82 bcm in 2015.
2015 — sustain APG utilization rate above 97%.
10. YuganskneftegazProduction of 4.58 bcm in 2015.
2015 — continued implementation of the APG utilization rate increase program.
11. Otradnensky and Neftegorsky GPP in the Samara Region and Zagorskaya integrated oil and gas treatment unit in the Orenburg RegionCenter for the production of added value products
12. Pechora LNGPromising project: JV with Alltech Group. The goal is the creation of a new gas production center in Nenets Autonomous District involving construction of LNG plant and relevant infrastructure.
13. Far East LNG (part of Sakhalin-1 project)Alternative monetization option of natural gas reserves and resources under Sakhalin-1 and gas from Rosneft’s own offshore projects on Sakhalin.
Engineering and survey costs in December 2015 were included in the 2016 Work Program and Budget under Sakhalin-1 and approved by Sakhalin-1 competent government authority.
14. Kharampur
15. Kynsko-Chaselskoe
16. MinkhovskoyeLong-term gas production in West Siberia.
17. BratskecogasGas supplies to the Irkutsk Region.
18. Urubcheno-Tokhomskaye group of fields
19. Verkhnechonskneftegaz
20. Taas-Yuriakh neftegazodobycha
21. North VeninskoyeLong-term gas production projects in East Siberia and in the Russian Far East.
22. RN-Sakhalinmorneftegaz, North ChaivoGas supplies to the Sakhalin Region and Khabarovsk Territory.
INTERNATIONAL GAS BUSINESS DEVELOPMENT
One of Rosneft’s priorities is to launch into the international gas markets to become a global LNG market player. The Company’s participation in gas production projects abroad will be instrumental in efficient increase in natural gas reserves and creation of a balanced asset portfolio for its sales markets.
The Company determined its target strategic regions, which are South America, Middle East, East Africa, and APR to compete against other global players and have efficient gas sales channels.
Rosneft is currently the operator of an offshore gas production project in Vietnam and is one of the major gas producers in the country.
Achievements in international gas business development in 2015
Rosneft and its partner ExxonMobil were awarded three offshore areas for hydraulic fracturing
(A5-B in the Angoche area and Z5-C and Z5-D in the Zambezi River basin) after the fifth license round in the Republic of Mozambique. Once the gas potential in these areas is confirmed, the Company will be able to implement a large-capacity LNG project in the future.
In June 2015, Rosneft signed a Joint Project Memorandum with PDVSA outlining a series of essential conditions for a joint venture required to implement an offshore gas project in Venezuela.
The Memorandum of Understanding and Roadmap with Petrobras, a state-owned company, signed in 2014 witnessed by Russian and Brazilian Presidents at the BRICS summit continues the efforts aimed at the approval of the best pattern and business model for joint monetization of natural gas reserves of two companies in the Solimões River basin.
