Operating results

Production of Liquid Hydrocarbons

2020 Performance Highlights

The key factor affecting the Company's crude oil production in 2020 was the government-ordered production cut as part of the OPEC+ deal taking effect in May 2020. As a result, the 2020 production of liquid hydrocarbons amounted to 4.14 mmb per day (204.5 mmt), down 11.4% year-on-year. In August, the restrictions eased, allowing the Company to quickly increase production and demonstrate a 1.9% quarter-on-quarter growth, to 3.98 mmb per day (49.46 mmt).

Previous production cuts provided Rosneft with invaluable technological expertise that allows it to manage production quickly and efficiently. The Company relies on the following instruments: limiting flow rates without well suspension, intermittent well operation, and optimisation of well interventions at the existing wells. The strategy facilitates flexible production management and prompt increase in production, if necessary.

Production drilling in 2020 amounted to 10.9 mm m, up 9.1% year-on-year. In line with our strategic priorities, we continue to focus on accelerating the construction of the most efficient high-tech wells. 68% of the 2.6 thousand wells commissioned in 2020 were horizontal, compared to 57% a year earlier. The share of horizontal wells drilled using multi-stage hydraulic fracturing techniques increased to 44% (up 10 p.p. year-on-year). The production per horizontal well was 2.6 times higher than per directional well.

Despite external constraints, the Company continues to develop brownfields and maintain leadership in the Russian oil industry in terms of launching new high-margin projects. In 2020, Rosneft launched two new major projects – the Erginsky licence area and the Severo-Danilovskoye field. In 2020, the Company's share in the total production of hydrocarbon liquids as part of new major projects Launched since 2016 (including the Erginsky licence area and Severo-Danilovskoye field). totalled 19.9 mmt (403 kbpd), up 4.8% year-on-year.

In compliance with the Russian President's instruction to increase the cargo flow along the Northern Sea Route, the Company continues comprehensive development of the new oil and gas province in the Krasnoyarsk Territory’s north as part of the Vostok Oil project. Investment incentives for infrastructure facilitated the economic model’s efficiency and allowed Rosneft to begin project implementation.

Innovative technologies for stable production

Key achievements in field development in 2020

The average flow rate per production well increased to 12.0 t per day (up 1.3% year-on-year), with a 1.7% increase in the well stock.

The annual average flow rate of new wells stood at 44.7 t per day (flat year-on-year). Accordingly, the Company retained its leadership in the production drilling efficiency among its Russian peers.

Horizontal wells accounted for 68% of new wells commissioned in 2020 (up 11 p.p. year-on-year), while the share of horizontal wells drilled using multi-stage hydraulic fracturing techniques (MSHF HW ) increased from 34% to 44%.

The Company completed 1.4 thousand sidetracking operations (up 13% year-on-year), thus increasing crude oil production by 4 mmt (up 19% year-on-year).

The production per well attributable to base production recovery was up 6.5% year-on-year, from 1.16 kt to 1.23 kt per well.

In October 2020, RN-Yuganskneftegaz set a new record, performing 600 hydraulic fracturing operations in one month. The annual number of such operations is about five thousand.

Innovative technologies for stable production
Commissioning of new wells
Commissioning of new wells

Rosneft is focused on high-tech wells: 68% out of the 2.6 thousand wells commissioned in 2020 were horizontal vs 57% in 2019. 1.1 thousand new MSHF HWs were commissioned, with their share reaching 44%. Advanced planning, drilling, and development technologies facilitated new wells’ average annual flow rate of 44.7t per day, flat year-on-year, and 15.2 mmt of incremental production.

In 2020, RN-Yuganskneftegaz commissioned 854 new wells producing over 4.7 mmt and reached the eight-years maximum average annual flow rate of new wells (48.9 t per day, up 25% year-on-year). These results were attributable to innovative technologies and streamlined development systems. For example, the percentage of horizontal wells in production drilling increased from 38% in 2019 to 48% in 2020. In 2020, the Group Subsidiary continued to pilot horizontal drilling and completion technologies, commissioned 59 wells with MSHF and a horizontal section of over 1,200 m. The Priobskoye field successfully tested the Perf & Plug technology using Russian-made equipment. Rolling out this technology will increase the number of hydraulic fracturing stages in horizontal wells, ensure the possibility of refracturing, and reduce the well development costs in case of mass implementation.

In 2020, Samotlorneftegaz commissioned 406 new wells, the highest number over the past five years, (up 10% year on year), which resulted in 1.2 mmt of incremental production (up 5.5% year-on-year). The Group Subsidiary makes consistent efforts to pinpoint hidden deposits at the Samotlor field, including through the implementation of its appraisal sidetracking and well deepening programme. Due to these efforts, 16 wells in YuV1 formation with an average initial oil flow rate of 81.3 t per day and eight wells in BV8(1–3) formation with an average initial oil flow rate of 145 t per day were commissioned. The average initial oil flow rate for the field’s new wells stood at 39 t per day.

In 2020, Verkhnechonskneftegaz, operator of Severo-Danilovskoye oil and gas condensate field, started its drilling, which will consist solely of horizontal wells. The optimisation of well construction cycle in 2020 allowed the Group Subsidiary to commission 14 new wells with an incremental oil production of 191 kt.

RN-Uvatneftegaz continued extensive drilling across the Uvat group of fields. To streamline the development of hard-to-recover reserves, the Group Subsidiary increased the percentage of multi-stage hydraulic fracturing horizontal wells in the total number of new horizontal wells from 51% in 2019 to 73% in 2020. The use of advanced technologies coupled with the accelerated commissioning of new wells on the back of the migration of operations to the structurally complicated fields of the Uvat group Central Development Centre, facilitated a 5% increase in incremental oil production from wells commissioned in 2019.

In 2020, Orenburgneft expanded its horizontal drilling programme and commissioned 15 horizontal wells (up +36% year-on-year), including six wells with multi-stage acid and proppant fracturing. The share of new horizontal wells reached 19 %. These technologies make such wells highly productive, with horizontal wells having an initial flow rate of 69.8 t per day, which is almost 1.5 times higher than the average for the Group Subsidiary’s new production wells drilled in 2020 (47.7 t per day).

Samaraneftegaz also increased its horizontal drilling operations in 2020. The Group Subsidiary commissioned eleven horizontal wells (up 83% year-on-year), including six with multi-stage acid fracturing and one with multi-stage proppant fracturing. The share of horizontal wells more than doubled year-on-year, reaching 14%, while the initial flow rate of horizontal wells in 2020 was a quarter higher than the average for all of the facility’s new production wells (67 t and 49,5 t per day, respectively; up 26%).

In 2020, Bashneft-Dobycha set a new production drilling record and commissioned 153 new wells (up 34% year-on-year) with plans underway to increase the annual commissioning rate going forward. Maintaining the focus on high-tech, the Group Subsidiary increased the share of horizontal wells by 12% year-on-year, to 86%. One of the key contributors to the production drilling programme and the share of horizontal wells in particular is the implementation of high-tech acid-proppant MSHF in carbonate Kashira-Podolsk deposits. MSHF HWs account for more than 70% of the new wells commissioning programme (up +22% year-on-year). The MSHF burst port system with cup packers allowed for expanding the range of initiatives aimed at minimising the post-commissioning flow rate decline.

In 2020, Rosneft commissioned
2.6 thousand
new wells,
68%
of which were horizontal
Multilateral wells

Multilateral wells are applied to improve the recovery and reservoir penetration quality for projects with high geological complexity. This method of pay zone penetration was successfully piloted and implemented at the Company’s fields with 116 multilateral wells commissioned in 2020.

At the Vankor cluster’s Tagulskoye field, 27 fishbone multilateral wells were commissioned in 2020, marking a new high for the field and a 12-well increase from the previous record set in 2018–2019.

Tyumenneftegaz continued successful use of multilateral wells at the Russkoye field to increase well productivity and scope of reserves. The Group Subsidiary commissioned 14 wells with one and two sidetracks. The average increase in the initial flow rate was +56% compared to horizontal wells drilled in similar conditions.

Multilateral wells

At the Srednebotuobinskoye field, Taas-Yuryakh Neftegazodobycha commissioned the longest multilateral well having 15 horizontal sidetracks with a total drilling length exceeding 10,000 m across a pay zone. The well’s initial flow rate stood at 402 t per day, 220% above the average rate of the Subsidiary's multilateral and horizontal wells in 2020. Incremental oil production amounted to 122.7 kt, accounting for 15% of the total for all of the facility’s new wells in 2020. The technology is being successfully rolled out, with 36 multilateral wells commissioned at the field in 2020, which is a record high and nine wells above the level of 2019.

Orenburgneft drilled and commissioned its first-ever horizontal multilateral fishbone well (in the carbonate formation of the Pronkinskoye field), with a main wellbore of 811 m and the total length of four sidetracks reaching 1,198 m. The initial flow rate of the new high-tech well stood at 66 t per day, several times higher than the rate of the Group Subsidiary’s traditional directional wells.

To increase exposure to deposits within the pay zone and enhance the oil recovery rate, East Siberian Oil and Gas Company (Vostsibneftegaz) commissioned another high-tech multilateral fishbone well, with an initial flow rate of 281.5 t per day or more than double the target average rate of new wells commissioned in 2020 (126.5 t per day). The well consisting of main wellbore and three sidetracks is 2,200 m long.

SevKomNeftegaz, a joint project with Norway's Equinor, launched pilot drilling of multilateral wells. The first fishbone multilateral well (main bore and three additional sidetracks) was successfully drilled and commissioned in the PK1 formation at the Severo-Komsomolskoye field. The Company plans to use such wells to improve the efficiency of developing thin under-gas-cap zones.

Infill drilling

Along with drilling in new areas, the Company conducts infill drilling to augment production by transforming and expanding the development system.

In 2020, RN-Yuganskneftegaz expanded its infill drilling programme at the Priobskoye, Prirazlomnoye and Malobalykskoye fields. The programme included commissioning of 137 new wells (up 78% year-on-year), including 48 MSHF HWs (five ports per well on average). Going forward, the company intends to roll out the programme to its other fields, with the infill drilling growing at 27% above the approved targets over five years.

To maintain production and improve the quality of reserves recovery at the Samotlor field, Samotlorneftegaz continues its infill drilling programme. 261 infill wells were commissioned in 2020 (64% of all wells commissioned at the field). In addition, horizontal wells with MSHF are constructed.

The Vankor field has been successfully implementing its infill drilling programme. As at the end of 2020, the incremental production attributable to the commissioning of 52 new infill wells totalled 798 kt. In harsh geological conditions, advanced drilling and horizontal well completion technologies ensured an average flow rate of 99 t per day, which is almost three times higher than the average well flow rate across the Company.

Sidetracking
Sidetracking

In order to increase production and achieve target recovery factor the Company carries out sidetracking operations in existing wells. In 2020, such operations covered 1.4 thousand wells, up 13% year-on-year, resulting in an incremental production of around 4 mmt of crude oil (up 19% year-on-year).

Modern approaches and sidetracking technologies allow not only recommissioning of wells that used to be in critical condition but also improved production at mature fields, including those with a long development history. Horizontal sidetracks enable extraction from formation intervals that have not been reached by previously drilled directional wells.

Improving the design of sidetracks by increasing the share of horizontal drilling to 74% vs 71% in 2019 helped to bring the average well flow rate after well workover by sidetracking up from 18.4 t per day in 2019 to 19.5 t per day in 2020.

At RN-Yuganskneftegaz’s fields 398 sidetracking operations were carried out in 2020, including 337 sidetracks with horizontal completion (up +13% year-on-year). The active application of horizontal sidetracks at mature fields, for example in Cretaceous formations of the Mamontovskoye and Ust-Balykskoye fields, results in high initial oil flow rates of up to 450 t per day, though these fields have a more than fifty-year history of development. Due to the use of new technologies, the average annual well flow rate totalled 22.8 t per day, compared to the Company’s average of 19.5 t per day. The appraisal sidetracking programme included the drilling of 33 wells reaching new, currently undeveloped Achimov and Jurassic deposits. The highest initial oil flow rates (up to 244 t per day) were recorded in the Achimov formation of the Kudrinskoye field.

In 2020, Samotlorneftegaz commissioned 513 wells following a workover by sidetracking, a record number for the whole Company. It is also a five-year high for the subsidiary, up 21% year-on-year. The drilling was focused on tight AV4–5 and BV8(1–3) formations with a short construction time and high initial flow rates (44.9 t per day, compared to the Subsidiary’s average of 34.4 t per day). These measures resulted in an additional crude oil production of 844.9 kt, up 9.4% year-on-year.

In 2020, RN-Vankor reached an all-time high of incremental production from sidetracking – 0.55 mmt of oil (up 71% to the previous record set in 2018). The result was solely due to the use of combination string drilling technology, which widens the range of permissible bottom-hole pressure, providing greater flexibility in managing the well operations and extending its life. In 2020, the technology was used to complete the construction of eight wells (out of 50 wells in operation), which accounted for 28% of all incremental production from the annual sidetracking programme. The company also continues well reconstruction by multilateral sidetracking. Six wells of the kind were commissioned in 2020 (up from three in 2019), with the average initial flow rate reaching 129 t per day (up 14% year-on-year).

In 2020, Taas-Yuryakh Neftegazodobycha launched its sidetracking programme partially aimed at resuming operations at previously drilled and abandoned horizontal wells by turning them into multilateral. At the Srednebotuobinskoye field, the first two wells were commissioned following the drilling of several sidetracks.

To increase well productivity and better develop previously undrained reserves, Samaraneftegaz has been actively engaging small-scale downhole pumping equipment in sidetracking since 2016. In 2020, such equipment was used in more than 75% of cases, ensuring the maximum average increase over the past five years at 28.1 t per day.

In 2020, Bashneft-Dobycha performed a record number of sidetracking operations, commissioning 126 wells and achieving an incremental oil production of 223.5 kt, more than double the 2019 level (53 operations, 112.5 kt).

In order to increase production and achieve the target oil recovery factor, RN-Uvatneftegaz more than doubled the number of sidetracking operations, resulting in 131.5 kt of incremental oil production, three times higher than in 2019.

Well interventions for incremental and recovered production
Well interventions incremental

In line with its approved Strategy, the Company keeps improving the efficiency of its well interventions. In 2020, the Company performed 4,473 well interventions for incremental oil production (excluding production drilling and sidetracking). The well interventions translated into 5.1 mmt of incremental oil and gas condensate production.

Over 8.8 thousand well interventions were performed in 2020, resulting in a recovered production of 10.8 mmt. The production per well attributable to base production recovery was up 6.5% year-on-year, from 1.16 kt to 1.23 kt per well. Production per well following well interventions increased primarily due to higher efficiency of bottom-hole zone treatment and well optimisation. In 2020, Rosneft performed 3,743 bottom-hole zone treatment operations with a total production recovery of 3.3 mmt (up 3% year-on-year), and 3,212 well optimisations with a total production recovery of 5.5 mmt.

Monitoring and managing well operations in harsh geological conditions
Monitoring and managing well operations in harsh geological conditions

To minimise the risks of early gas blowout from the gas cap or underlying water and to be able to restrict and control the flow of gas with a coupling, the Company uses inflow control devices to restrict fluid inflow into certain horizontal well sections.

In 2019, Taas-Yuryakh Neftegazodobycha successfully piloted inflow control devices in horizontal and multilateral wells at the Srednebotuobinskoye field. 2020 saw gas-oil ratio stabilisation without restricting well operations, and higher crude oil production. For horizontal wells, GOR decreased four times and the flow rate doubled, while for multilateral wells, GOR reduced six times. Following the pilot operations, the company intends to roll out the technology to 41 wells of the field.

In 2020, the Group Subsidiary continued to use autonomous inflow control devices and completion systems with shiftable sleeves in horizontal wells of SevKomNeftegaz as part of pilot development of PK1 formation at the Severo-Komsomolskoye field. The pilot development also involved the commissioning of 50 wells, including 42 with inflow control devices.

In 2020, Tyumenneftegaz also piloted the technology at five wells. According to preliminary modelling, levelling inflow profile will increase cumulative oil production by up to 25%. The company plans to start full-scale implementation of this technology in 2022–2024.

In 2020, the Group Subsidiary introduced marker diagnostics to monitor inflow profiles at three wells of the Vankor field. This technology allows monitoring of the flow profiles in horizontal and multilateral wells without suspending production and downhole operations. If successful, the tests will provide information on the underground well operations for a timely and targeted response to any complications.

At Vostsibneftegaz’s Yurubcheno-Tokhomskoye field, seismic and geological analysis and detailed interpretation of geotechnical survey at the design stages, geological support of drilling and well completion helped to identify potential gas and bottom water inflow intervals. Following the tests, the company piloted the use of segmented liners to preventively seal the intervals of potential inflow of unwanted fluids with swellable packers. Rosneft intends to apply this experience at Slavneft-Krasnoyarskneftegaz's Kuyumbinskoye field.

Drilling geological support centre

In 2020, Rosneft's drilling geological support centre supervised the drilling of 3,018 horizontal wells and sidetracks, the highest number since the centre was launched in 2008. Over the past five years, the centre’s operations have tripled. The high performance was achieved due to new technologies and improved methodology, better corporate IT solutions, and training initiatives for the centre’s employees (corporate geo-steering school, annual workshop on geological support and geomechanics).

The centre’s staff demonstrated their qualifications at the Russian and international geosteering championships, requiring the participants to simulate a drill of horizontal wells with different difficulty levels and penetrate an oil reservoir as far as possible. Rosneft won the team classification of the Russian championship, beating the teams of four other major companies. At the World Championship, a Rosneft employee took the first place from among more than 250 participants from 60 companies and 20 countries.

In 2020, the Company continued to develop geological support activities. Geosteering, log data interpretation, and geomechanical modelling are now combined with seismic and geological support for drilling complex wells.

Development of in-house well logging service

In 2020, Bashneft-Petrotest engaged its specialists in high-tech well logging at Bashneft-Dobycha sites, continued to perform downhole logging and blasting and perforating operations in Bashkortostan and the Krasnodar Territory, and supported the piloting of new logging technologies at Varyeganneftegaz, Samotlorneftegaz, Orenburgneft, Bashneft-Dobycha, etc. It also initiated a new line of business for Bashneft-Petrotest – petrophysical support of drilling at RN-Yuganskneftegaz and Rospan International sites.

In 2020, Rosneft and Rosatom signed an agreement to cooperate in improving the processing and interpretation of data from AINK-PL equipment. The agreement will perfect the methodology for open and closed wells and to test the AINK-PL equipment to check its performance in various geological and technical conditions.

Enhancing corporate software

The Company is expanding the range of its proprietary application software related to geology and field development. In 2020, Rosneft finalised and successfully tested the first version of its RN-Geosim simulator designed for geological modelling and analysis of hydrocarbon deposits using three-dimensional geological models. The Company continues the development of RN-PetroLog well logging interpretation software suite with modules which can be used to upload, store and visualise logging data in the project tree, harmonise petrophysical project data for further multi-well processing, edit data interactively in graphical mode, and see statistics of a petrophysical project.

RN-KIM hydrodynamic simulator and RN-KIN information system for mining data analysis and development monitoring were further upgraded. At the end of 2020, 85% of models were created using the corporate hydrodynamic simulator.

Operational Efficiency Improvement System

The Company has put in place a comprehensive Operational Efficiency Improvement System (OEIS) intended to identify and implement the most promising efficiency initiatives at Rosneft subsidiaries with potential to significantly improve production processes across the Group while also cutting the budgeted costs. Each efficiency improvement project goes through a rigorous selection process that includes technical and economic studies. If successfully implemented, it is then rolled out across the Group. In 2020, over 400 efficiency improvement projects were approved, with more than 650 projects green-lighted since the OEIS launch in 2018. The economic effect from the implementation and roll-out of these projects stood at about RUB 20 bln in 2020 and approximates RUB 35 bln since launching the system.