Western Siberia

Western Siberia is Rosneft’s key oil-producing region. In 2017, Western Siberian assets accounted for 58% of the Company’s oil and gas condensate production. The Company’s key producing assets in Western Siberia include RN-Yuganskneftegaz, which makes up 30% of the Company’s oil and gas condensate production, Samotlorneftegaz (9% of total production) in the Khanty-Mansi Autonomous Area, and RN-Uvatneftegaz (4% of total production) in the Tyumen Region’s south.

The Company is expanding its operations in the region, acquiring a 100% stake in the Kondaneft project in April to develop four license areas, as well as the Erginsky license area from auction. The Company’s license areas within the Khanty-Mansi Autonomous Area hold significant hydrocarbon reserves and are in close vicinity to the Priobskoye field – one of its most resource-rich fields with a well-developed infrastructure. Integrated development of the Kondinskoye group of fields and the Erginsky license area will generate considerable synergies, accelerating development of their resource potential and taking advantage of the existing infrastructure.

Western Siberia is also a major gas-producing region. In 2017, the Company’s gas production grew by 2.1% to 48.5 bcm.

RN-Yuganskneftegaz

RN-Yuganskneftegaz operates 34 licenses with Rosneft as the subsoil user. The bulk of proved reserves (80%) are concentrated in the Priobskoye, Mamontovskoye, Malobalykskoye, and Prirazlomnoye fields. 2017 was a milestone and record high year for RN-Yuganskneftegaz.

RN-Yuganskneftegaz demonstrated accelerated oil production growth in 2017 and broke its 30-year record for average daily oil and gas condensate production in December with a rate of 191 thousand tonnes per day, marking a 10% year-on-year growth. Annual production grew by 4.5% year-on-year, achieving more than 66.5 mmt.

In 2017, the deployment of advanced technologies and successful development of new license areas improved the field’s average annual flow rate from new wells by 10% from 2016.



> 66.5 mmt annual production

The record-breaking results were achieved by the accelerated drilling, construction, and commissioning of new wells and horizontal wells, implementing a range of effective well interventions, as well as deploying cutting-edge technologies.

RN-YUGANSKNEFTEGAZ RECORD ACHIEVEMENTS

Monthly drilling record of 606,439 m (in August 2017), exceeding that of any Russian or Soviet production company in history

A new record-high of 1.7 thousand new wells commissioned in 2017

In August 2017, another new record was set by RN-Yuganskneftegaz, achieving a 606,439 m in monthly distance drilled, exceeding that of any Russian or Soviet production company in history.

RN-Yuganskneftegaz hit a new record-high of 1.7 thousand new wells commissioned in 2017 following their production drilling, surpassing the previous records of 1.4 thousand commissioned wells in 2016 and 1.3 thousand wells in 1986. The record-breaking drilling and commissioning achievements were supported by extensive capital construction of field infrastructure across most of RN-Yuganskneftegaz’s production sites, which are located up to 300 km from one another, from the western-most part of the Priobskoye field to the most distant site in the Kinyaminskoye field’s south-east. In 2017, drilling operations were carried out at 72% of RN-Yuganskneftegaz’s fields, including the mature Ust-Balykskoye and Pravdinskoye fields. In July 2017, the new Kuzovatkinskoye field was commissioned at the Chupalsky license area, its annual production amounting to 0.4 mmt.

Deploying advanced technologies such as real-time geosteering, geomechanical modelling, and MSHF for drilling horizontal wells to construct and develop new production wells at RN-Yuganskneftegaz fields allowed a significant production increase from newly drilled wells. Over 200 new horizontal wells drilled using MSHF were commissioned in 2017, 42% of which were drilled using 8- to 10-stage fracturing compared to just 3% in 2016.

In 2017, RN-Yuganskneftegaz commissioned 7 wells with increased horizontal sections over 1.5 thousand m, one of which is the company’s largest, with a horizontal section of 2,075 m and drilled using 10-stage fracturing. The initial flow rate from the well was 425 tonnes per day, more than double the rate of wells with a standard horizontal section of one thousand m.

Production from the geological-complex Tyumen suite deposits at RN-Yuganskneftegaz fields increased to 12 thousand tonnes per day, a 35% increase year-on-year. The sharp growth is an indication of the extensive research, testing, and subsequent effective drilling and production that took place at the company’s 15 fields.

The enhanced oil recovery and production from RN-Yuganskneftegaz fields was driven through the implementation of an extensive well intervention program across producing and idle wells.

In 2017, RN-Yuganskneftegaz drilled close to 400 sidetracks, including 200 horizontal completions. Horizontal sidetracks are actively introduced at mature fields, some of which have wells with initial flow rates exceeding 200–300 tonnes per day, such as the Yuzhno-Balykskoye and Mamontovskoye fields. Furthermore, horizontal sidetracks drilled using MSHF are being introduced at low-permeability deposits. The company implemented the most ambitious sidetracking program in its history in 2017, surpassing its highest well efficiency achieved in the last five years. The excellent performance across sidetracking programs implemented in 2017 has enabled the company to exceed its targets by a large margin.

The Company’s strategic goal is to ensure stable production and subsequent growth of production from RN-Yuganskneftegaz assets in the medium term.

Samotlornefegaz

Samotlorneftegaz operates 11 licenses (including 10 licenses as the subsoil user). Hydrocarbon production totaled approximately 24.3 mmtoe in 2017, with liquid hydrocarbons production exceeding 19.5 mmt (including Yugraneft Corporation’s production).

Over 98% of Samotlorneftegaz’s proved reserves are concentrated within the Samotlorskoye field, one of the largest in the world. Commercial production at the Samotlorskoye field began in 1969 and peaked at over 150 mmt per year in the 1980s.

Due to the natural depletion of residual reserves and a high water cut, today the field produces oil with a considerable amount of formation water, with about 24 tonnes for every tonne of oil. In 2017, the average water cut amounted to 96.0%.

Samotlornefegaz completed the construction of three wells with a unique trajectory for the Samotlorskoye field in 2017, allowing up to 1.5 thousand m long horizontal sidetracks to be drilled 2.4 thousand m away or more from the wellhead in an approximately 1.7 thousand m deep reservoir. The wells are the first of such complexity in undeveloped marginal areas that were drilled using a Russian stationary drilling rig with top drive and rotary steerable system for drilling horizontal sections. The average well length was 4,740 m with an average initial flow rate of 139 tonnes per day. The tested technology will allow a significant improvement in the coverage of hard-to-reach marginal areas of fields, as well as areas where infrastructure facility construction is not possible.

Due to the considerable costs involved in maintaining existing wells and infrastructure for pumping and treating products containing a high water cut, Samotlornefegaz requires additional fiscal incentives to maintain oil production at the current level.

For more efficient development of the field, in 2016–2017, Rosneft and the Government of the Russian Federation agreed on investment incentives.

Under Federal Law No. 335-FZ On Amendments to Parts One and Two of the Tax Code of the Russian Federation and Certain Legislative Acts of the Russian Federation dated 27 November 2017 annual MET reductions of RUB 35 bln over 10 years were approved for the Samotlorskoye field since 1 January 2018.

Rosneft’s Board of Directors has reaffirmed the Company’s commitment to drill over 2.4 thousand wells between 2018 and 2027, with projections of over 50 mmt of additional oil production. The new tax incentives will enable the Company to fully tap the Samotlorskoye field’s resource potential by boosting on-site operations, with the added bonus of contributing to job creation in the region.

RN-Uvatneftegaz

Around 70% of proved reserves are currently concentrated in the Ust-Tegusskoye, West-Epasskoye, and Urnenskoye fields, which are being developed as part of the Eastern Development Center.

RN-Uvatneftegaz operates 20 licenses (including 19 licenses as the subsoil user) in the Tyumen Region, Omsk Region, and the Khanty-Mansi Autonomous Area.

Hydrocarbon production at the Uvat project fields totaled 9.8 mmtoe in 2017, with liquid hydrocarbons production of 9.6 mmt and following a near-tenfold increase in annual production from 1.2 mmt in 2004 to 11.6 mmt in 2016. The slight decline in 2017 was due to compliance with the terms of the OPEC+ production cut deal.

Despite external limitations, the company continues to deploy advanced drilling and well construction solutions, as well as implement a range of effective well interventions.

In 2017, RN-Uvatneftegaz launched commercial production at three new fields: the Severo-Tyamkinskoye, Severo-Tamarginskoye, and Kosukhinskoye fields, with a combined 54 mmt of recoverable АВ1С1+В2С2 oil reserves as at 1 January 2018 – bringing the total number of commercially producing Uvat project oil fields to 14. The reserves in these new fields are hard-to-recover, their extraction requiring advanced drilling and completion technologies. For example, the Kosukhinskoye field’s development is carried out by drilling horizontal wells using MSHF, allowing a boost in well productivity compared to directional wells drilled with hydraulic fracturing. In 2017, over 60% of production at the Uvat project was derived from fields with hard-to-recover reserves.

Uvat project "RN-Uvatneftegaz"