NEW ROSNEFT-2022 STRATEGY
1
INCREASE PROFITABILITY
AND IMPROVE EXISTING ASSET PERFORMANCE
NEW PERSPECTIVE

Quantum changes in the Company’s business by:

  • accelerating the technological breakthrough
  • adopting new forms of management and business organization
  • increasing margin across the value chain
  • consistently focusing on cutting costs.
2
COMPLETE KEY PROJECTS
ON TIME AND ON BUDGET, ACHIEVE TARGET SYNERGIES
3
TRANSFORM CULTURE AND TECHNOLOGICAL CAPABILITY
TO FURTHER STRENGTHEN ROSNEFT’S COMPETITIVE POSITION
Strategic Initiatives
BECOME A TOP 25% GLOBAL OIL AND GAS COMPANY IN HEALTH, SAFETY, AND ENVIRONMENT
ENSURE ORGANIG GROWTH IN LIQUID HYDROCARBONS PRODUCTION
Strong operational efficiency – the lowest lifting costs per barrel among peers.
ACHIEVE GAS PRODUCTION OF OVER 100 BCM
ENHANCE EXPERTISE AND TECHNOLOGICAL COMPETENCE IN OILFIELD SERVICE BUSINESS
ROSNEFT 2022
DEVELOP PETROCHEMICAL AND GAS CHEMICAL BUSINESSES
ADOPT A HOLDING MANAGEMENT STRUCTURE, PILOT A RETAIL PROJECT
STRENGTHEN THE ON TIME / ON BUDGET INVESTMENT AND PROJECT MANAGEMENT PROCESS
ACCELERATE THE TECHNOLOGICAL BREAKTHROUGH AND DIGITIZE THE ENTIRE BUSINESS
Upstream

STRATEGIC OBJECTIVES AND PRIORITIES


100% liquid hydrocarbons reserve replacement ratio and organic growth


Increase the success rate of exploration drilling onshore Russia


Fast-track the development of new reserves based on viability


Optimize Russian onshore field development (increase the share of new horizontal wells)


Commission large-scale projects on time and on budget


Reduce declines in base production

MORE EFFICIENT SERVICE


Decrease non-productive time


Reduce well drilling time by 10%


Increase the rig utilization rate (by 20%–30%)

IMPROVED PERFORMANCE


Optimize capex (by 10% for similar well construction, by 10% for linear objects)


Optimize opex (by 2%–3% per year on a comparable basis)


Engage in partnerships for capital intensive and high risk projects

TECHNOLOGY AND DIGITALIZATION


Digital field, remote drilling and production control centers, IIoT, Big Data


Enhanced in-house technology capabilities, cable-free seismic systems, advanced MSHF techniques, establishment of a tech park to test technologies

LONG-TERM GOALS


Total LH Production, mmt
+ 30 mmt year-on-year
> 2% annual production growth
~ 20% production at new projects in Russia in total LH production Projects launched starting from 2016 (including Taas-Yuryakh, Trebs and Titov, Rospan projects). by 2022
Production from Hard-to-Recover Reserves, mmt
х2 hard-to-recover reserves production growth

ACHIEVEMENTS


Exploration drilling success rate reached 86%, with a 404 mmtoe growth of reserves driven by exploration.


Production drilling increased by 29.5% year-on-year.


Share of comissioned horizontal wells increased to 36%, while the number of new horizontal wells drilled using multi-stage hydraulic fracturing grew by 67%.


Share of in-house drilling crews within the Company’s total drilling footage was at 60%.


Comprehensive technological testing of oil treatment and transportation facilities started at the Yurubcheno-Tokhomskoye field.


Start-up complex commissioned at the Erginsky cluster (including the Kondinskoye field) in Q4 2017.

Gas

STRATEGIC OBJECTIVES AND PRIORITIES


COMMISSIONING PROJECTS ON TIME AND ON BUDGET


Produce over 100 bcm


Develop major gas production projects including Rospan and Kharampur

IMPROVING THE COST EFFICIENCY OF GAS SALES IN RUSSIA


Create a favorable regulatory environment such as equal access to infrastructure and consumers

INCREASING TECHNOLOGICAL EDGE


Develop Turonian deposits


Increase APG utilization including through the development of captive power generation and petrochemicals


Develop LPG and NGL production

IN THE FUTURE


Monetize gas reserves within Eastern Siberia and the Far East, including through gas-to-chemicals development

LONG-TERM GOALS


Gas Production, bcm
> 100 bcm
> х3 gas EBITDA growth

ACHIEVEMENTS


Gas production grew by 2.0% year-on-year, making Rosneft the leader among independent Russian gas producers by daily production.


Recoverable АВ1С1+ В2С2 gas reserves rose by 4% year-on-year, reaching 7.9 tcm.


Rosneft began gas production as an international consortium member as part of developing the Zohr field offshore Egypt.

Oil Refining and Petrochemicals

STRATEGIC OBJECTIVES AND PRIORITIES


SUBSTANTIAL PROFITABILITY GROWTH


Complete ongoing refinery development projects in Russia to substantially increase profitability


Debottleneck to unlock potential


Improve performance and optimize opex

DEVELOPMENT OPTIONS


Construct modern complexes for converting fuel oil into light products in Russia


Expand on the fast-growing Asian markets (including new construction projects for refining and petrochemical complexes)


Construct major petrochemical greenfield projects in three clusters in Russia (subject to project financing availability)

DIGITAL SOLUTIONS AND MANAGEMENT


Digital Plant


Automation, including use of robots


Global asset performance management system to extend functional operation times between refinery facility repairs


Improved accounting systems to reduce losses and fuel consumption for own operational needs

LONG-TERM GOALS


Production of Motor Fuels Complying with the Technical RegulationsMotor fuels compliant with the Technical Regulations are Euro 5 motor gasoline and diesel fuel, and jet fuel., mmt
+ 55% motor fuels production growth
х2-3 EBITDA growth

ACHIEVEMENTS


Output of motor gasolines and Euro 5 compliant diesel fuels increased by 23% to 38.3 mmt.


Segment investment portfolio ranked to prioritize and fast-track the most efficient projects.


Operational performance improvement program implemented.


Import substitution enhanced, new products developed and launched.

Commerce, Logistics, and Retail

Strategic objectives and priorities


COMMERCE AND LOGISTICS


Improve the cost efficiency of sales and increase access to end consumers (domestic/export sales)


Expand and diversify sales channels (jet fuel, marine fuel, and lubricants)


Adjust the product mix to market trends by marketing new products (bitumen, marine fuels)

RETAIL


Promote strong brands and high service standards at filling stations


Expand non-fuel business (introduce new categories of goods and open new cafés)


Improve performance and optimize costs


Develop the customer service package at filling stations (loyalty program and branded fuel)


Expand small-scale wholesale through differentiated sales channels

DIGITAL SOLUTIONS AND MANAGEMENT


Adopt a holding management structure, launch a pilot in retail business


Start Digital Filling Station and Digital Supply Chain programs


Automation, including use of robots


Improve accounting systems to reduce losses

LONG-TERM GOALS


Growing Share of Related Goods and Services in Gross Margin of Retail Business, %
х1.5-2 growth by 2022

ACHIEVEMENTS


Oil supplies to Eastern countries grew by 10.7% in 2017.


New effective logistics channels established to support petroleum product sales (by river from Bashneft’s refineries).


Existing logistics channels optimized, including the expansion of existing petroleum product shipment channels in the Far East (the Vanino and Ust-Luga ports).

Industrial Safety and Environmental Protection

Strategic objectives and priorities


Become a global leader which provides safe operation, protects the health and safety of its employees and the local residents in regions of its operation, and minimizes its environmental footprint

Achieve leadership and constantly improve injury, integrity, environmental protection, reporting transparency, and road traffic accident KPIs

LONG-TERM GOALS


Tier 1 Process Safety Event Rate (PSER-1)
Lost Time Injury Frequency (LTIF)
Relative Greenhouse Gas Emissions (GHG) Upstream, tonnes CO2 eq. / thousand boe


Health and safety Rosneft puts a strong focus on securing occupational health and safety of its employees