Rosneft’s Exploration and Reserve Replacement

The Company achieved a record high exploration success rate of 86% in 2017, conducting exploration in all subsoil use regions within the Russian Federation, including the Far East, Eastern and Western Siberia, Central Russia, Timan-Pechora, and Southern Russia.

Rosneft’s exploration and reserve replacement
ROSNEFT’S KEY ACHIEVEMENTS IN RESERVE REPLACEMENT

142 bboe of AB1C1+В2C2 hydrocarbon reserves in 2017

184% hydrocarbon reserve replacement ratio in the Russian Federation, as according to the Russian resource classification system

31 fields and 162 new deposits with total reserves of 233 mmtoe discovered through successful exploration activities

1,112 licenses in the Russian Federation, including 55 offshore licenses, 31 subsoil areas acquired from open acreage in 2017, and 26 licenses obtained by the end of 2017. A 100% stake was also acquired in the Kondaneft project (four subsoil licenses for hydrocarbon fields)

12.7
BLN TONNES total oil and gas condensate reserves in Russia
7.9
TCM total gas reserves in Russia
2.1
BLN TONNES onshore oil and gas condensate resources
1.0
TCM onshore gas resources
22.1
BLN TONNES offshore oil and gas condensate resources
21.4
TCM offshore gas resources

Onshore Exploration

The Company’s top priorities are unlocking the resource potential and sustainable use of mineral resources, exercising strict compliance with environmental safety standards, and an extensive application of advanced technologies. The Company has continued its phased deployment of advanced seismic data processing and interpretation technologies to improve its exploration drilling success rate. In particular, the Company deployed advanced near-surface anomaly detection practices in an effort to minimize errors during structural modelling. Finite difference wave field simulations are used to identify optimum parameters for seismic surveys during the design stage.

In 2017, 155 onshore exploration wells were completed and tested in Russia – almost twice as many as in 2016.

The Company has achieved a record high exploration success rate of 86% for the first time in its history. Furthermore, 2D seismic surveys totaled 7,000 linear km, while 3D seismic surveys totaled 10 thousand sq. km, marking a 2.5- and 1.3-fold increase respectively.

Successful exploration led to the discovery of 30 fields and 162 new deposits with a total 148 mmtoe in reserves.

Key onshore achievements within russia

122% – liquid hydrocarbons reserve replacement ratio through exploration

155 exploration wells completed and tested – twice as many as in 2016

86% – a record high exploration drilling success rate

30 fields and 162 new deposits discovered with a total 148 mmtoe of АВ1С1+В2С2148 reserves

RESERVE REPLACEMENT BY REGION

Western Siberia

Rosneft’s reserve increases in Western Siberia and the Far East amounted to 155.8 mmt of oil and gas condensate and 127.1 bcm of gas. 55 exploration wells were completed and tested with a success rate of 91%. 2D seismic surveys totaled over 2 thousand linear km, while 3D seismic surveys totaled over 3 thousand sq. km. Five fields and 38 new deposits were discovered with a total 87.6 mmtoe in АВ1С1+В2С2 reserves.

During 2017, a new oil and gas cluster with reserves of 103 mmt was built in Western Siberia by integrating Kondaneft’s assets with the Erginsky license area acquired from auction. The Erginsky cluster comprises the Priobskoye field situated within the Erginsky license area, as well as the Zapadno-Erginskoye, Kondinskoye, Chaprovskoye, and Novo-Endyrskoye fields. As at 1 January 2018, recoverable reserves (АВ1С1+В2С2) amounted to 256 mmt of oil, and the total size of license areas was over 5 thousand sq. km. The Company conducts exploration in all license areas in order to unlock their full resource potential. In 2017, three wells were completed and tested, and 3D seismic surveys totaled 720 sq. km.

In actively developing its gas business, Rosneft carried out 2D seismic surveys of 2,134 thousand linear km and 3D seismic surveys of 675 sq. km at its gas assets in 2017, as well as completed and tested four wells. The Company performed a regional study of the Gydan Peninsula to allow the preparation of a geological and geophysical basis for identifying priority exploration areas. In 2017, Rosneft’s gas reserves in Western Siberia grew by 127.1 bcm.


Breakdown of Proved Hydrocarbon Reserves (Oil, Gas Condensate, LH) under PRMS Standards, mmt
Breakdown of Proved Marketable Gas Reserves under PRMS Standards, bcm
The Prirazlomnoye field of RN-Yuganskneftegaz The Prirazlomnoye field of RN-Yuganskneftegaz

Central Russia, Timan-Pechora, and Southern Russia

In 2017, reserves in the Volga-Urals region, Timan-Pechora, and Southern Russia increased by a total of 77.1 mmt of oil and gas condensate and 12 bcm of gas. 89 wells were completed and tested, with a success rate of 83%, and 3D seismic surveys totaled over 5 thousand sq. km. 25 fields and 119 new deposits were discovered with a total 45 mmtoe in АВ1С1+В2С2 reserves.

Four new fields and 48 new deposits were discovered in 2017 across Bashneft’s assets in the Volga-Urals region, with АВ1С1+В2С2 reserves of 6.6 mmtoe. A set of measures in preparing geological rationales for selecting exploration targets allowed a significant improvement in success rate, from 65% to 82%. The sharp growth results from developing stronger cases for successful drilling locations upon structures mapped by 3D seismic data, while ceasing the practice of drilling on structures mapped by 2D seismic data. 3D seismic imaging aids the preparation of reliable structural maps for productive horizons and identification of anomalies in near-surface formations causing an adverse effect on seismic forecasting.

Two exploration wells with 100% success rates were constructed on Bashneft’s assets in the Nenets Autonomous Area, including the Titov and Trebs fields. Following exploration drilling at the fields, В1С1 reserves increased by 0.8 mmtoe, while production drilling added another 4.3 mmtoe. Two new deposits were discovered with a total 1.7 mmtoe in АВ1С1+В2С2.

The Company continues its consistent exploration in Southern Russia to replace reserves in the region, carrying out the first 2D ultra-dense seismic surveys of 200 linear km and 3D seismic surveys of 110 thousand sq. km in 2017.

Eastern Siberia and the Far East

Eleven exploration wells were completed with a success rate of 82%. 2D seismic surveys totaled 4.5 thousand linear km, while 3D seismic surveys totaled 1.5 thousand sq. km. Five new deposits were discovered with a total 15.7 mmtoe in АВ1С1+В2С2 reserves. In 2017, total reserve additions in Eastern Siberia and the Far East were 36 mmt of oil and gas condensate and 24 bcm of gas.

Independent International Audit of Reserves

According to the audit performed by DeGolyer & MacNaughton under the SEC (U.S. Securities and Exchange Commission) life-of-field classification, Rosneft’s proved hydrocarbon reserves totaled 39,907 mmboe (5,395 mmtoe) as at 31 December 2017. Hydrocarbon reserves grew by 2,135 mmboe (284 mmtoe), or 6%, year-on-year. In 2017, Rosneft’s organic SEC-proved reserve replacement ratio stood at 184%,Reserve replacement ratio is calculated in tonnes of oil equivalent; Rosneft’s reserve replacement ratio in barrels of oil equivalent was 186%. and its SEC-proved reserve life amounted to approximately 20 years.

For several years, Rosneft has been a leader among major public international oil companies in proved reserve life and proved reserve replacement ratio, as well as in exploration and development costs.

As at 31 December 2017, the Company’s reserves under the PRMS (Petroleum Resources Management System) standards totaled 46,520 mmboe (6,303 mmtoe) of 1P reserves, 83,838 mmboe (11,357 mmtoe) of 2P reserves, and 120,853 mmboe (16,386 mmtoe) of 3P reserves. 1P reserves grew by 1%, 2P reserves grew by 2%, and total 3P reserves grew by 4% in 2017. Reserves are measured in metric units.

Hydrocarbon Reserves under International Standards, mmboe