Rosneft Q1 2016 Operating Results
In Q1 2016 the Company increased its production drilling by 52% against Q1 2015 to 2.08 million meters as established by the targets for the year. The share of in-house services in the total drilling footage consistently exceeds 50%. New wells put into operation grew by 59% compared with Q1 2015 (with horizontal wells share of 30%).
Liquid hydrocarbon production in Q1 2016 returned to the level of Q1 2015 and amounted to 50.2 mmt. The largest contribution to these positive production dynamics was provided by: RN-Uvatneftegaz (+13.2%), RN-Severnaya Neft (+17.6%), Sakhalin-1 project (+23.1%), Samaraneftegaz (+6.0%), as well as the Northern tip of the Chayvo field (+39.4%).
RN-Uvatneftegaz started commercial oil production at a new field of the Uvat project - the West Epasskoe (crude oil ABC1+C2 recoverable reserves exceed 17 mmt). The technological targets of the West Epasskoe field are included in the Eastern Hub in the south of the Tyumen region enabling to gain synergies through the use of existing fields’ infrastructure.
In March 2016, the Company produced 120 mmt of oil at the Vankor field since its commissioning in 2009. The project of drainhole well completion is being successfully implemented at the field. Experience in operating such wells has shown a significant increase in their productivity.
In Q1 2016, Rosneft in cooperation with Statoil successfully completed a pilot project on the selection of efficient technologies PC1 reservoir development in the North-Komsomolsk field (Yamalo-Nenets Autonomous District, operator - RN-Purneftegas LLC). Total ABC1+C2 recoverable reserves of the North-Komsomolsk field amount to 203 mmt of oil and condensate and 197 bcm of gas. We were able to conduct pilot operation of 2 horizontal wells in different operating modes, and perform a number of well tests to update the geological and hydrodynamic field models. The average flow rate during the operation exceeded initial expectations and reached more than 75 tpd. Production potential is estimated at more than 100 tpd per well. Over 7,000 tons of oil was produced during the period of pilot operation.
In Q1 2016, the Company started production drilling at the Tagul field (ABC1+C2 recoverable reserves stand at 286 mmt of oil and condensate and 228 bcm of gas), which is part of the Vankor cluster. The drilling is directional with primarily horizontal completions. During 2016, it is planned to complete drilling about 9 wells and continue with field infrastructure development.
In Q1 2016, gas production amounted to 16.72 bcm, which is 1% above the level of Q4 2015 and 6% above Q1 2015. One of the key factors in gas production growth for the periods indicated is the startup of the 2nd stage of Rospan's Novo-Urengoi comprehensive gas and condensate processing plant in a comprehensive testing mode in Q4 2015. This facility will enable to increase the actual performance of the GPP to 11 million cubic meters of gas per day and 1,700 tons of condensate per day. Another significant factors of the gas production growth are the start of the third and fourth wells at the Northern tip of the Chayvo field and commissioning of the gas processing plant at RN-Purneftegaz's Barsukovsky field in December 2015.
The utilization of associated gas in Q1 2016 grew to 91% compared with 87% in Q1 2015. The improvement of APG utilization is an important element of environmental policy.
At the end of Q1 2016, about 2,000 linear km of 2D seismic and more than 3,000 sq. km of 3D seismic work was carried out onshore which exceeds the Q1 2015 results by 46% and 19% respectively. 5 exploration and appraisal wells tested with a success rate of 100%. 12 new deposits and 1 new field were discovered with ABC1+C2 reserves of more than 26 mmtoe.
The company started 3D seismic operations on the Vostochno-Pribrezhny license block in the Sea of Okhotsk, which will continue during 2016. The results of the research will help to clarify the oil and gas potential and the geological structure of the Vostochno-Pribrezhny area to prepare for further exploration.
Refining, Commerce and Logistics
In Q1 2016, the Company continued to optimize the performance of its refining capacity, as well as implement its modernization program. Refining throughput in the Russian Federation (19.5 mmt) decreased both in relation to Q4 2015 and as compared to Q1 2015 due to unfavorable market conditions and the negative impact of the tax maneuver. Refining throughput of foreign refineries (3.1 mmt) exceeded the levels of both Q4 2015 (+2%), and Q1 2015 (+17%).
As a result of optimization of the Company's refineries, the light product yield in Q1 2016 grew to 55.5%, and the conversion rate to 68.9%. In addition, the Company increased the production of Euro-5 gasoline and diesel fuel in Q1 2016 to 7.1 mmt, up by 11% against the previous quarter and more than 1.7 times the rate of Q1 2015.
The Company successfully continues to diversify supplies between the western and eastern destinations: deliveries were organized for an additional premium destination to China by rail. East-bound supplies in Q1 2016 grew by 12.6% compared to Q1 2015 and reached 10.7 mmt while the share of high-margin channels amounted to 50.2%.
As part of cooperation with its key partners, Rosneft extended the contract with Total in Q1 2016 for the supply of oil via the Druzhba pipeline to Germany for another 2 years, and the contract with Lotos to continue supplies to the Gdansk refinery (Poland) till the end of 2017.
The Company complies with all its obligations to supply petroleum products to the domestic market: in Q1 2016, sales of petroleum products grew by 2.9% compared to the same period in 2015 - up to 7.2 mmt.
The Company fully complies with its contract obligations to supply gas to its consumers. In Q1 2016, the Company's gas sales were 17.8 bcm, while in Q1 2015 – 15.9 bcm; the volume growth of 1.9 bcm of gas was due to supplies under new long-term contracts. The long-term gas balance providing Company customers with supplies in full was formed.
The Company uses a variety of opportunities to optimize its portfolio and balance uneven gas consumption, including purchase of gas generated by processing the Company's APG at third party gas processing plants, as well as buy and sell gas from third parties, including at the exchange. This practice allows optimizing the gas transportation routes and, consequently, increasing the efficiency of sales. The Company continues to participate in trading on the exchange as a seller of gas. 0.7 bcm of gas was sold in Q1 2016.
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