OPERATING RESULTS FOR 1Q 2021

• 1Q 2021 LIQUIDS PRODUCTION AMOUNTED TO 3.75 MLN BARRELS PER DAY. IN A COMPARABLE PERIMETR, DAILY LIQUIDS PRODUCTION GROWTH AMOUNTED TO 1% QOQ
• 1Q 2021 GAS PRODUCTION AMOUNTED TO 14.98 BLN CUBIC METERS. IN A COMPARABLE PERIMETR, DAILY GAS PRODUCTION GROWTH AMOUNTED TO 4.6% QOQ
• 1Q 2021 OIL REFINING THROUGHPUT AT THE COMPANY'S REFINERIES IN RUSSIA INCREASED UP TO 26.4 MLN TONNES
• REFINING DEPTH INCREASED UP TO 74.8%, LIGHT PRODUCTS YIELD ROSE TO 57.4%
• THE COMPANY EXCEEDED THE REQUIRED QUOTAS FOR EXCHANGE-TRADED MOTOR FUEL SALES ON THE SPIMEX BY OVER 2 TIMES
• IN 1Q 2021, THE RETAIL SALES VOLUME AT ROSNEFT'S FILLING STATIONS RECOVERED AND EXCEEDED THE LEVEL OF 1Q 2020

ESG

In February 2021, Rosneft and bp signed a Strategic Collaboration Agreement focused on supporting carbon management and sustainability activities of both companies. They have agreed to cooperate in developing new low carbon solutions and programs, as well as to identify greenhouse gas reduction opportunities and implement low carbon activities.

Protecting life and health, as well as securing labor safety are the main priorities for Rosneft. To prevent the spread of the COVID-19 infection the Company has commenced vaccination of its employees. The vaccine was primarily distributed at Rosneft's largest and remote subsidiaries, such as Yuganskneftegaz, Vankorneft, Bashneft, as well as at the most populous enterprises.

The Company persistently enhances the level of HSE performance, guided by the principle of 'zero tolerance' for imposed golden safety rules violations committed by the Company's employees and contractors. Thus, thanks to the implementation of measures to prevent incidents and mitigate their consequences, in 1Q 2021, the number of accidents related to the safety of technological processes decreased at the Company's subsidiaries. A decrease in the number of technological safety events PSE-1 by 18% and PSE-2 by 23% YoY testifies this statement.

Hydrocarbon production

1Q 2021 liquids production amounted to 3.75 mln barrels per day (45.5 mln tonnes). At end of 2020, Rosneft sold a number of low-margin assets in order to improve the quality of the Company's portfolio. In a comparable perimeter (excluding the assets sale), 1Q 2021 daily liquids production increased by c. 1% QoQ amid the start of Phase-2 as part of the OPEC+ Agreement easing restrictions from January 2021.

In 1Q 2021, in a comparable perimeter (excluding the assets sale) gas production amounted to 166.4 mln cubic meters per day (14.98 bln cubic meters over the period). Natural gas production increased as a result of the launch of a booster compressor station at the Sibneftegaz's Beregovoye field, as well as due to an increase in gas sales from the Zohr field (Egypt).

As a result, 1Q 2021 hydrocarbon production amounted to 4.76 mln boe per day (57.8 mln toe). In a comparable perimeter (excluding the assets sale), 1Q 2021 daily hydrocarbon production increased by 1.5% QoQ.

Lower production in an actual perimeter QoQ resulted from the sale of the low-margin assets. Decrease in production YoY was mainly attributed to fulfilling the government's directives to limit production in line with the OPEC+ Agreement effective since May 2020.

Development drilling and new wells commissioning

1Q 2021 development drilling footage reached 2.3 mln meters, having increased by 5.8% YoY. The share of in-house drilling footage is traditionally maintained at the minimum level of 50%.

In 1Q 2021, the number of newly commissioned wells amounted to 622 units, up by 12% YoY. The number of the most efficient new horizontal wells amounted to 402 units, up by 8.6% YoY, while their share in total number of newly commissioned wells reached 65%. In 1Q 2020, the share of newly commissioned horizontal wells with multistage hydrofracturing amounted to 253 units, while their share in the total number of wells commissioned over the period was 41%, remaining at the 1Q 2020 level. Unit production per horizontal well more than doubled the indicator for directional wells.

Upstream projects development

In 1Q 2021, the Company continued to develop its production projects in accordance with the previously announced plans.

As part of the Erginsky cluster development project, in 1Q 2021, following the equipment installation, the 1st start-up complex of the oil treatment and transportation facility was launched at the Erginsky license area. As of the end of 1Q 2021, 31 km of infield oil collection lines as well as over 17 km of high-pressure water pipelines have been built to implement the design solutions for maintaining reservoir pressure. Development drilling, construction of infrastructure facilities, infield pipelines and power transmission lines are underway. In the reporting period, production at the cluster fields reached 87.7 th. barrels per day (1.1 mln tonnes), which is 42.8% higher YoY.

The Company continues to actively develop the Severo-Danilovskoye field. Development drilling is underway (as of the end of 1Q 2021, 23 wells have been drilled), infrastructure facilities and roads are being built. Construction and installation work continues at oil treatment and transportation facilities. In the reporting period, the Company's share in the field's production amounted to 8.5 th. barrels per day.

In 1Q 2021, the Company's share in total liquids production at the new major projects launched since 2016 (including the Erginsky license area and the Severo-Danilovskoye field) amounted to 422 th. barrels per day (5.1 mln tonnes), which is 2.6% higher YoY. The share of these projects reached 11.3% of the total liquids production, up by 2.4 p.p. YoY.

Development drilling, facilities engineering preparation, construction and installation work at infrastructure, oil and gas production and treatment facilities are underway at the Lodochnoye field[1]. At the Severo-Komsomolskoye field, engineering preparation work has been completed and construction and installation work has begun on the key facilities to prepare for the full-scale development of the field. As part of the pilot development, 1Q 2021 production at the fields amounted to 25.5 th. barrels per day, which is 1% higher QoQ. The launch of the Lodochnoye and Severo-Komsomolskoye fields is scheduled for 2022.

Pursuant to the task of the President of the Russian Federation to load the Northern Sea Route and as part of the transformational Vostok Oil project, the Company embarked upon the implementation of a comprehensive development program of a new oil and gas province in the north of the Krasnoyarsk Region. As of the end of April 2021, the Vostok Oil project comprised 52 license areas, within the boundaries of which there are 13 discovered hydrocarbon fields.

In 1Q 2021, 500 sq. km of 3D seismic work were conducted at the Zapadno-Irkinsky license area. Based on their results exploratory drilling will be carried out in order to prepare discovered reserves of the Payakha cluster for further development. In order to select optimal technical solutions, the Company elaborated a program of pilot operations that will start to be implemented in 2022.

Locations for the placement of priority well pads for production drilling have been identified. A site is being prepared for oil collection and treatment units. Design and survey work for the construction of a pipeline and a port in the Sever Bay have been completed. Preparatory work for the construction of material and technical resources' storage facilities in the areas of project implementation is underway.

The Vostok Oil project development plan provides for the sequential development of the license areas, construction of the necessary infield infrastructure, and expansion of the trunk system of external transport along with an increase in cargo turnover via the Northern Sea Route.

Geological exploration

In 1Q 2021, the Company conducted over 3,000 sq. km of 3D seismic works on the Russian on-shore, and tested 13 exploration wells with 100% success rate. As a result of geological exploration, Rosneft discovered 4 new deposits with АВ1С1+B2С2 hydrocarbon reserves amounting to 2.5 mln toe.

Oil refining

In 1Q 2021, oil refining throughput at the Company's refineries in Russia increased by 4.5% QoQ to 24.1 mln tonnes against a backdrop of rising demand for petroleum products and decreased by 7.2% YoY due to an incomplete demand recovery to the levels preceding the introduction of the pandemic-related restrictions.

In 1Q 2021, oil refining throughput at the refineries in Germany amounted to 2.3 mln tonnes, which is a 17.5% decline QoQ. The repeated lockdown in Germany due to the COVID-19 pandemic followed by a drop in the demand for petroleum products was the main reason for the decline in the indicator.

As a result, in 1Q 2021, the Company's total refining throughput amounted to 26.4 mln tonnes, 2.1% up QoQ and 8.3% lower YoY. At the same time, the refining depth constituted 74.8% (+1.0 p.p. YoY), while the light products yield amounted to 57.4% (+0.5 p.p. YoY).

Crude oil and petroleum products sales

In 1Q 2021, crude oil supplies to non-CIS countries amounted to 22.1 mln tonnes. Crude supplies eastwards amounted to 13.0 mln tonnes, or 58.8% of the total crude oil supplies to non-CIS countries.

Enhancing cooperation with end consumers of oil, in the reporting period, Rosneft entered into a new long-term contract with the Polish company PKN Orlen SA for the supply of crude oil through the Druzhba pipeline to Poland for the period from March 2021 to January 2023.

In 1Q 2020, the Company sold 24.1 mln tonnes of petroleum products, of which 37% were sold at the domestic market. Petroleum products sales to non-CIS countries amounted to 14.4 mln tonnes, and export to CIS countries amounted to 0.5 mln tonnes.

In 1Q 2021, the Company exceeded the required quotas for exchange-traded motor fuel sales on the St. Petersburg International Mercantile Exchange by more than two times.  Rosneft actively trades at the Exchange consistently meeting the needs of the domestic market of the Russian Federation.

In 1Q 2021, in the territorial waters of the Russian Federation, the Company supplied to end-consumers, namely domestic and foreign ship owners, a total of 307.3 th. tonnes of bunker fuel, including 217.8 th. tonnes of marine fuel with sulfur content of up to 0.5% fully complying with the MARPOL regulations. Low-sulfur residual marine fuel RMLS 40 accounted for 44% of this volume (95.2 th. tonnes).

Retail business

As of the end of 1Q 2021, the Company's retail network comprised 3,049 filling stations and complexes, including 2,985 filling stations and complexes in the Russian Federation.

In the reporting period, the Company's retail business demonstrated stable performance. In 1Q 2021, the retail sales volume at Rosneft's filling stations recovered from the COVID-19 restrictive measures of the previous year and exceeded the level of 1Q 2020.

All the stores and cafes at the Company's filling stations continue to operate in strict accordance with the recommendations of Rospotrebnadzor for preventive and disinfection measures. The service of contactless remote payment for fuel and related products through the Yandex.Fuel, Yandex.Navigator and Yandex.Maps mobile applications meets a ready market: contactless fuel payment service is available at about 1,500 filling stations and complexes, while contactless food payment service is available at 50 bp multi-purpose filling stations.

To enhance the quality of the rendered services and for the convenience of its clients, Rosneft makes extensive use of new technologies to develop additional services. For instance, the Company, together with VBRR bank, launched a new 'Cash with Purchase' service at its own filling station network. Customers of the Company's retail network, when paying for fuel or other related goods with Mastercard, Visa or Mir cards of any bank, can withdraw up to RUB 5,000 at the filling station cash desk.

Moreover, the Company continues to launch World of Privileges financial supermarkets at filling stations in the Moscow region under the Rosneft and bp brands. Customers are given the opportunity to quickly and conveniently issue insurance policies for OSAGO (compulsory third party car insurance) and CASCO (fully comprehensive insurance), debit cards with bp CLUB and 'Hello Mir' loyalty programs, credit cards, consumer loans. As of the end of the reporting quarter, financial supermarkets operated at 35 filling stations in the Moscow region. The Сompany plans to further expand the geography of rendering these services at filling stations.

 

Rosneft Information Division

Tel.: +7 (495) 411 54 20

Fax: +7 (495) 411 54 21

May 14, 2021

 

These materials contain statements about future events and expectations that are forward-looking in nature. Any statement in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements expressed or implied by such forward-looking statements to differ. We assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.

 

[1] Lodochnoye field forms part of Vankor cluster included in the Vostok Oil project.