Production of Liquid Hydrocarbons

In 2018, Rosneft production of hydrocarbons amounted to 285.5 mmtoe (5.80 mmboe per day), up 1.3% year-on-year.

Production of liquid hydrocarbons totaled 230.2 mmt (4.67 mmb per day), an average daily production increase of 2.1% year-on-year. The key growth factors are the record-high production volume at the Company’s largest asset, RN-Yuganskneftegaz; the launch of large greenfields and agile maneuvering in development of brownfields in the context of the Company’s obligations on production cuts under OPEC+ Agreement.

Once the production limitations were cancelled, the Company managed to quickly increase volumes due to correct strategical selection of assets and pre-arranged potential of additional output. Optimal – in relation to technologies – management of high watercut and marginal wells in mature fields accompanied by the improved market conditions allowed the Company to entirely restore the production rates to pre-OPEC+ ageement level (October of 2016), as well as to ramp up production on new projects.

Under OPEC+ agreement, Rosneft made the greatest contribution to production cuts on the part of the Russian Federation. In December 2018, the Company showed a 4.7% year-on-year growth of oil and gas condensate daily average production in Russia.

Production drilling in 2018 stayed at the level of 2017 and exceeded 12 mln m, while the scope of drilling the complex multilateral and high-productive multihole wells doubled.

The number of new wells brought into operation increased by 3.5% to over 3.4 thousand wells. The share of horizontal wells grew to 48%, and the number of new horizontal wells drilled using multi-stage hydraulic fracturing (MSHF) grew by 51%. In-house drilling continued to account for more than 50% of total drilling volumes.

A pool of new assets has still been developed according to the stated plans. Total production of liquid hydrocarbons in 2018 at the Suzunskoye, East Messoyakhsky, Yurubcheno-Tokhomskoye, and Kondinskoye fields, which were launched in 2016, exceeded 75 mmb. In the reporting year, the Company provided for phased commissioning of the Tagulskoye, Russkoye, Kuyumbinskoye fields and the second phase of the Srednebotuobinskoye field with plateau production above 140 mmb.

Application of New Technologies

The most advanced technologies of downhole operations are applied by Rosneft. The technologies are offered by high-tech companies, being the leaders in oilfield services in the Russian Federation and providing in-house and out-house services.

One of the most efficient well interventions is hydraulic fracturing. Considering a great variety of mining and geological conditions in the regions of the Company operations, different technological solutions are required to obtain maximum technical success and economic efficiency.

Multi-stage hydraulic fracturing technologies are being actively integrated. Testing and development of hydraulic fracturing technology have been performed for selective and repeated hydraulic fracturing on new wells and wells in service to reduce well commissioning time.

Every year, the Company conducts about 10 thousand of hydraulic fracturing operations, requiring design modelling and analysis of actual performances by special software. In order to have technological independence in relation to HF design software, Rosneft has developed RN-GRID, an import-substituting hydraulic fracture simulator, which passed pilot testing at LLC RN‑Yuganskneftegaz, JSC Samotlorneftegaz, PJSC Varyoganneftegaz, and JSC RN‑Nyaganneftegaz. In those subsidiaries, LLC RN-GRP internal service has shifted to 100% application of RN-GRID for all hydraulic fracturing operations. From the moment of RN-GRID introduction, more than five thousand hydraulic fracture designs have been developed and used for over 2.5 thousand well operations with the entire design cycle provided by the corporate simulator.

Application of Modern Technologies for Maintaining the Production Output

Well interventions are a key tool in maintaining the oil and condensate production levels, primarily drilling and commissioning of new wells. Successful application of horizontal wells with MSHF at mature fields, as well as active horizontal drilling at greenfields (including multilateral wells) allowed to increase commissioning of new wells post production drilling by 3.5% year-on-year (from 3,366 to 3,484 wells) and raise additional production from new commissioned wells from 19.5 mmt to 20.4 mmt, including:

• JSC Samotlorneftegaz: new wells commissioning increased by 44%, while additional production increased by 34% year-on-year due to efficient application of MSHF HW and investment incentives;
• JSC RN-Nyaganneftegaz: new wells commissioning increased by 24%, while additional production increased by 56% year-on-year due to optimization of MSHF HW completion technology.

MSHF HW technology significantly boosts well productivity and scope of reserves under development, while reducing the wells stock and raising the economic efficiency of the projects. In 2018, the development system of the Kondinskoye field was optimized to increase the efficiency of the reserves recovery. As a result, a share of horizontal wells in JSC Kondaneft increased from 23% to 42% year-on-year that led to a 55% increase in annual average flow rate.

Moreover, further implementation of the decisions taken in relation to development allowed to increase the number of MSHF HW across the Company by 51% year-on-year (more than one thousand wells were commissioned in 2018), while a share of all horizontal wells in a total volume increased from 36% to 48%.

Apart from growing the number of MSHF horizontal wells, the Company conducts pilot works on optimization of structures by means of an extended horizontal section and increased number of hydraulic fracturing stages, which boosts wells productivity and enlarges the development coverage.

Over 30 extended horizontal wells with eight and more HF stages were commissioned at RN-Yuganskneftegaz (more than 1.2 km). The average initial flow rate of these wells is 50% above the wells with a standard length and a regular number of stages.

Over 20 extended horizontal wells with eight and more HF stages were commissioned at JSC Samotlorneftegaz (more than 1.2 km). The average initial flow rate of these wells is 16% above the wells with a standard length and regular number of stages.

Testing and implementation of multilateral technology are still undergoing on the fields with complex geologic structure, in particular - on formations with underlying water and/or gas cap. More than 70 new multilateral wells were commissioned in 2018, including 39 multilateral wells in the fields of the Vankor cluster.

LLC Taas-Yuryakh Neftegazodobycha completed construction of six multilateral wells at the Srednebotuobinskoye field, including the wells with a total length of above 5.2 km in the target formation. The initial flow rate of this well is five times higher than at conventional horizontal wells.

JSC Tomskneft VNK implements multilateral wells program at formations with complex geological structures. 19 multilateral wells were commissioned in 2018 with an average initial flow rate of 39 tonnes per day, that is over 40% more than the standard wells with horizontal completion.

In 2018, RN-Yuganskneftegaz drilled close to 400 sidetracks, including 250 horizontal completions. The program is actively introduced at mature fields, for example, BS10 facility of the Mamontovskoye and South Balykskoye fields have wells with initial flow rates exceeding 200–300 tonnes per day. Furthermore, horizontal sidetracks drilled using MSHF are being introduced at low-permeability deposits. For example, at the Priobskoye field flow rates up to 100 tonnes per day were obtained in certain cases.