Performance Results

Development of Hard-to-Recover Reserves

The Company’s portfolio of assets with hard-to-recover reserves currently consists of more than 140 fields with 2.9 bt of oil in recoverable reserves. RN-Yuganskneftegaz is Rosneft’s key asset of this type boasting over 1 bt of hard-to-recover reserves. It is followed by such major players as RN-Nyaganneftegaz, Verkhnechonskneftegaz, RN-Uvatneftegaz and Kondaneft, which together with RN-Yuganskneftegaz account for over 80% of the Company’s resource base.

In 2019, the Company added over 260 mmt to its hard-to-recover reserves, a more than sixfold increase year-on-year. The growth was driven by an extensive exploration programme which helped obtain detailed information about formations with low-permeability reservoirs. Successful completion of exploration and pilot development programmes at Rosneft’s licence areas in the Samara Region was among the key contributors to the increase.

The Company consistently develops its hard-to-recover oil reserves. Oil production from deposits classified as hard-to-recover reserves under the applicable laws rose by 12% year-on-year to 20.9 mmt, more than a threefold increase vs 2014. The share of hard-to-recover reserves rose from 8.4% of the Company’s output in 2018 to 9.2% in 2019. In 2019, Rosneft increased the number of production wells at fields with hard-to-recover reserves by 20% year-on-year to 4 thousand wells.

20.9+12% mmt
of hydrocarbon production from hard-to recover reserves in 2019
2.9 bt
of total recoverable reserves in the hard-to-recover category at 140 fields
0.6 bt
of high-viscosity oil in recoverable reserves in Russia

The Company’s recoverable reserves of high-viscosity oil in Russia exceed 0.6 bt, including more than 0.4 bt concentrated within the Russkoye field, a unique asset in terms of its resource base size. Compared to 2018, Rosneft doubled its production of high-viscosity oil reaching 1 mmt in 2019. Put on stream in the fourth quarter 2019, the Russkoye field became the key growth driver.

With a view to doubling production from hard-to-recover reserves in 2017–2022, the Company continued to improve its development technologies, focusing on well stimulation at low-permeability formations, in particular using more sophisticated and longer horizontal wells with a higher number of hydraulic fracturing stages. In 2019, Rosneft drilled over 110 wells at fields with hard-to-recover reserves using multi-stage hydraulic fracturing techniques, with horizontal sections exceeding 1 km (up 10% year-on-year). The use of longer horizontal wells with a higher number of hydraulic fracturing stages enables the Company to effectively develop previously unprofitable deposits.

Based on the current forecast, the bulk of subsidised production from hard-to-recover reserves will be concentrated in the Western Siberian fields with low-permeability formations of the Tyumen suite and the Achimov deposits. Beyond 2022, though, oil production from hard-to-recover reserves will largely depend on elimination of geological and engineering uncertainties related to appraisal and the choice of best development solutions. To this end, the Company implements an exploration programme coupled with pilot projects aiming to develop low-permeability formations, the Bazhenov suite and high-viscosity oil deposits as part of the Target Innovative Projects which will help develop an additional 1.6 bt of recoverable reserves. Target Innovative Projects seek to develop technologies to tackle silty sand deposits (structurally complicated undersaturated ultralow-permeability reservoirs), to bring Bazhenov and Domanic shale plays into production, to introduce thermal recovery methods fit for ultrahigh-viscosity oil fields in the Samara Region, and to develop high-viscosity oil reserves of the Pokurskaya suite formations in Western Siberia.

In 2019, the Company drilled six horizontal wells along with 11 directional wells and sidetracks as part of the Bazhen pilot development programme. RN-Yuganskneftegaz performed a nine-stage hydraulic fracturing operation on the Salymskoye field’s well 921g with a 950 m long horizontal wellbore. The initial flow rate amounted to ca. 60 t per day, on par with international best practices for similar formations. The Company intends to continue exploration and multi-stage hydraulic fracturing operations at the Bazhenov suite in 2020.