ROSNEFT OIL
ROSNEFT OIL COMPANY (ROSN)
ROSNEFT OIL COMPANY: Operatings results for 4Q and 12M 2020
12-Feb-2021 / 14:00 MSK
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014
(MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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OPERATING RESULTS FOR 4Q AND 12M 2020
? ROSNEFT ANNOUNCED CARBON MANAGEMENT PLAN AND CLIMATE GOALS TO 2035
? 4Q 2020 LIQUIDS PRODUCTION INCREASED BY 1.9% QOQ TO 3.98 MMBPD
? 4Q 2020 GAS PRODUCTION INCREASED BY 7.5% QOQ TO 16.08 BCM
? THE COMPANY LAUNCHED 2 NEW KEY PROJECTS - ERGINSKY LICENSE AREA AND SEVERO-DANILOVSKOYE FIELD - WITH THE POTENTIAL
LIQUIDS PRODUCTION OF 45 MMBPA
? IN 2020, AS A RESULT OF GEOLOGICAL EXPLORATION 208 NEW DEPOSITS AND 19 NEW FIELDS WERE DISCOVERED WITH AB1C1+B2C2
HYDROCARBON RESERVES AMOUNTING TO OVER 2 BLN TOE
? Q4 2020 OIL REFINING THROUGHPUT AT THE COMPANY'S REFINERIES INCREASED BY 1.3% QOQ TO 25.8 MMT
? IN 2020, OIL REFINING THROUGHPUT AT THE COMPANY'S REFINERIES AMOUNTED TO 104 MMT, INCLUDING 93 MMT PROCESSED AT
THE COMPANY'S REFINERIES IN THE RUSSIAN FEDERATION
ESG
In December 2020, the Company's Board of Directors reviewed Rosneft Carbon Management Plan for the period until 2035,
which provides a long-term framework for the Company's development in the context of the transition to a low-carbon
economy. The main objectives of the Plan are to prevent greenhouse gas emissions in the amount of 20 mmt of CO2
equivalent (Scope 1 and 2), reduce the intensity of emissions in oil and gas production by 30% (Scope 1 and 2), achieve
methane emissions intensity below 0.25% and zero routine flaring of associated gas by 2035. The implementation of the
Plan will strengthen Rosneft position as one of the leaders of the global energy market under conditions of the energy
transition process and allow for maximum monetization of the Company's proven reserves.
In 2020, the Strategy and Sustainable Development Committee of the Board of Directors reviewed the Concept of the
Company's Environmental Development for the period until 2030, which defines the main principles of environmental
protection and contributes to the achievement of the UN Sustainable Development Goals, as well as the Russian national
environmental goals for the period until 2030.
Caring for employees and their health, fulfilling their professional and personal potential, creating decent working
and living conditions form a strategic prerequisite for the Company's successful development, which relevance increased
in 2020 amid the pandemic.
The Company has an integrated pandemic emergency response system. Employees undergo regular testing, with the number of
tests exceeding 683 th. As of the end of 2020, the Company acquired over 38.7 mln units of personal protective
equipment, over 6.5 mln liters of disinfectant for offices and workplaces treatment. Psychological support hotline is
in place and receiving calls. Strict compliance with sanitary and hygienic requirements, development of remote
communication forms including contactless payment service, and building widespread awareness of the disease prevention
methods ensure the safety of the Company's employees and customers of the corporate retail network.
In 2020, for the fourth year in a row, Rosneft and the Company's subsidiaries won the competition held by the Ministry
of Energy of the Russian Federation and were recognized as the best socially oriented company in the Russian oil and
gas industry. As part of the Rosneft-2022 strategy, the Company implements a number of significant social initiatives,
including the "Modern Medicine", "Active Longevity", "Affordable Housing" and other programs.
The Company continues to enhance the level of HSE performance, guided by the principle of "zero" tolerance for
violations of imposed rules by employees of the Company and contractors. Thus, thanks to the implementation of measures
to prevent major accidents and mitigate their consequences, in 2020, the number of major accidents related to the
safety of technological processes decreased at the Company's subsidiaries. A decrease in the number of technological
safety events PSE-1 by 9% and PSE-2 by 25% YoY testifies this statement.
Environmental protection measures continue to be among the Company's priorities. Thus, in 2020, the Company
consistently improved the quality of its water resources through the construction and reconstruction of water treatment
facilities at the largest oil refineries in the Samara Region, the Republic of Bashkortostan, and Saratov.
The Company's activities in the field of sustainable development are highly appraised internationally. In December
2020, FTSE Russell, a part of the London Stock Exchange, confirmed that the Company continues to be a constituent in
the FTSE4Good Index Series with strong environmental, social and governance performance, and transparency in
information disclosure. In 2020, Rosneft significantly improved its FTSE Russell Social Score, which takes into account
the corporate performance in the areas of human rights, support of indigenous people, labour standards, health and
safety.
Hydrocarbon production
4Q 2020 liquids production amounted to 3.98 mmbpd (49.46 mmt), up by 1.9% QoQ, amid the easing of production cuts under
the OPEC+ Agreement. 2020 liquids production amounted to 4.14 mmbpd (204.5 mmt), down by 11.4% YoY, against the
backdrop of fulfilling the government's directives to limit production in line with the OPEC+ Agreement.
Having participated in previous production cuts, Rosneft acquired significant technological experience, which allows to
ensure efficient and prompt well stock management. The Company systemically uses the following tools: limiting the flow
rates without well suspension, intermittent well operations, and optimized well-work program at the producing well
stock. This approach allows for flexible management of production capability and prompt production increase, if needed.
In Q4 2020, gas production amounted to 16.08 bcm, having increased by 7.5% QoQ. The production increased primarily due
to planned preventive repairs performed in Q3 2020, seasonal growth in demand in the autumn and winter period, and an
increase in associated petroleum gas production caused by the easing of production cuts under the OPEC+ Agreement. In
2020, gas production comprised 62.83 bcm, a 6.2% decline YoY. The main reasons of these dynamics are a decrease in
associated petroleum gas production amid the fulfilment of the government's directive to cut crude oil production in
Russia, as well as a decline in gas demand amid the COVID-19 pandemic.
As a result, 4Q 2020 hydrocarbon production amounted to 5.05 mmboed (62.7 mmtoe), a 3.1% increase QoQ. 2020 average
daily hydrocarbon production constituted 5.19 mmboed (256.2 mmtoe), a 10.4% decrease YoY.
Development drilling and new wells commissioning
In 2020, development drilling footage reached 10.9 mln m, having increased by 9.1% YoY. The share of in-house drilling
footage is traditionally maintained at the level of not less than 50%.
In October 2020, RN-Yuganskneftegaz, the Company's largest production subsidiary, set a new industry daily drilling
footage record of 27,542 m per day. This figure is 414 m per day higher than the previous record set in July 2017. The
new milestone was achieved with a smaller number of drilling rigs, while the efficiency of operations increased by more
than 6%. The subsidiary is consistently striving to minimize non-productive work time. Round-the-clock monitoring and
control of each well construction process prevents unscheduled downtime and ensures a high level of operations safety.
In 2020, the number of newly commissioned wells amounted to 2.6 th. units. The number of the most efficient new
horizontal wells amounted to 1.8 th. units, up by 5.8% YoY. The Company has been continuously increasing the number to
horizontal wells that reached 68% of the total number of newly commissioned wells in 2020, which is 11 p.p. higher YoY.
In 2020 the share of newly commissioned horizontal wells with multistage hydrofracturing amounted to 1.1 th. units,
while their share in the total number of wells commissioned over the period reached 44% (+10 p.p. YoY). Unit production
per horizontal well overpasses the indicator for directional wells by more than 2.6 times.
Implementation of modern technologies in the upstream
Amid production cuts under the OPEC+ Agreement, the Company continues to develop its key assets, focusing on the
development and implementation of new technologies, including digitalization, which improves the efficiency of field
development and saves costs. Rosneft considers technological leadership as one of the key factors ensuring competitive
edge in the oil market.
In October 2020, RN-Yuganskneftegaz performed 600 hydraulic fracturing operations, which is a record monthly indicator.
Thus, one hydrofracing fleet accounted for 25 operations, which is 22% higher than average. RN-Yuganskneftegaz performs
about 5,000 hydraulic fracturing operations annually. Multistage hydrofracturing (up to 20 stages) including in the
intervals of horizontal sections, is used to increase the area of productive formations coverage. Reserves of
low-permeability reservoirs are brought into development through the application of hydrofracturing technology.
Intelligent well completion systems fitted with oil inflow control devices have been successfully used in
Severo-Komsomolskoye field. This helps minimize potential geological risks. Advanced technologies also enable
extended-reach well drilling with the step-out up to 2 km. In 2020, the record was set with the longest horizontal
section (2,404 m) among single-bore horizontal wells drilled by the Company onshore.
Rosneft and the Siberian Federal University specialists developed the technology of production of environmentally (MORE TO FOLLOW) Dow Jones Newswires
February 12, 2021 06:01 ET (11:01 GMT)
