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New Age of PetroleumPresentation by Igor Sechin�President, Rosneft oil company CERA Week 2013
March, 2013
Important notice
The information contained herein has been prepared by the Company. The opinions presented herein are based on general information gathered at the time of writing and are subject to change without notice. The Company relies on information obtained from sources believed to be reliable but does not guarantee its accuracy or completeness.
These materials contain statements about future events and expectations that are forward-looking statements. 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 our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. 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.
This presentation does not constitute an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities and nothing contained herein shall form the basis of any contract or commitment whatsoever. No reliance may be placed for any purposes whatsoever on the information contained in this presentation or on its completeness, accuracy or fairness. The information in this presentation is subject to verification, completion and change. The contents of this presentation have not been verified by the Company. Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its shareholders, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation. None of the Company nor any of its shareholders, directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith.
New Age of PetroleumPresentation by Igor Sechin�President, Rosneft oil company
2
Global petroleum industry requires advanced technologies to meet growing demand
Source : IHS Herold, IHS CERA, Platts.
$/BOE$/bbl
Brent
120
100
80
60
40
20
0
Growth of finding and development costs by exploration and oil price Global oil and gas consumption will grow
MMboe/day
103
gasoil
109121
135144
157169
179191
204
3
Source: IHS Herold. Transactions over $ 20 billion.
$ bln
+ТNK-BP
57
91
39
63
45
31
20
3241
21
56
21
36
BP A
moc
o
Exxo
n M
obil
BP A
RCO
Tota
l Elf
Aqui
tain
e
Chev
ron
Texa
co
Cono
co P
hillip
s
Chev
ron
Unoc
al
Cono
coPh
illips
Bu
rling
ton
Stat
oil H
ydro
Exxo
nMob
il XT
O
Sunc
orPe
troCa
nada
CNOO
CN
exen
1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20121999
Acquisition of TNK-BP opens new wave of industry consolidation
Major transactions in global oil and gas industry
Сash considerationEquity consideration 4
High efficiency exploration
Major public companies exploration efficiency
Note: Exploration results onlySource: IHS Herold.
5
10
15
20
25
30
350 50 100 150 200 250
2009-2011 average Reserve Replacement Rate of oil and gas (SEC), %
Industry Average
2009
-201
1 av
erag
e Fi
ndin
g &
Deve
lopm
ent C
osts
(SEC
), $/
boe
0
5
Exploration and Production
•New methods of geophysical research¤(microseismics, monitoring wells by fiber-optic systems)
•Technology of development and exploitation of carbonate-clay-siliceous reservoirs of Bazhenov formation
•Localization of oil reserves in low-permeability reservoirs
•Development of low-permeability oil reservoirs using horizontal wells with longitudinal and transverse fracture
Scientific potential
•Over 650¤employees¤with PhD¤and doctoral degree
•11 engineering institutes
•Arctic Research and Development Centre for offshore exploration and development
•United Research and Development Centre — modern development centre in the field of gas and petrochemical industry
Refining and Marketing
•Gas-to-Liquids technology development
•Preparation of natural and associated gas by supersonic¤gas separation technology
•Composite material based on polydicyclopentadiene
Technology development is our priority
6
0 10 20 30 40 50 60
Vankor — the biggest new project in post-soviet Russia
•The biggest oil & gas project in Russia for the last 20 years
•Reserves (3Р) — 3.9 bln boe•Production — 400 Mbpd
•The project becomes the center of a new oil province
•Satellite fields reserves: 2.7 bln boe (3P), significant exploration potential
SEVERO-CHARSKIY
PENDOMAYAKHSKIY
VADINSKIY
VANKOR PL.
NORTH VANKOR BLOCK
TUKOLANDSKIY
ZAPADNO-LODOCHNIY
Rosneft
Oil pipelinesGas pipelinesPlanned pipelines
VOSTOCHNO-LODOCHNIYLODOCHNOE
САМОЕДСКИЙ УЧ.БАЙКАЛОВСКОЕ
БАЙКАЛОВСКИЙ УЧ.
ЯМАЛО-НЕНЕЦКИЙ АВТОНОМНЫЙ ОКРУГ
NORILSK
КРАСНОЯРСКИЙ КРАЙ
7
0 10 20 30 40 50 60
Successful development of the Sakhalin shelf
Sakhalin-1 is the largest operating offshore project in Russia
The record-long ERD well with total distance of 12 km, drilled by theunique onshore drilling rig — Yastreb
Astrakhanovskoe-more-Nekrasovskiy
Veninsky
Chayvo
Sakh
alin
Isla
nd
Arkutun-Dagi
gas
oil
Lebedinskiy North Odoptu
Odoptu
Sakhalin - 5
Sakhalin - 1
Sakhalin - 3
Kaigansko-Vasyukansky
Rosneft’s production profile on Sakhalin*
Mbo
epd
2005 2006 2007 2008 2009 2010 2011 2012
350
300
250
200
150
100
50
0
* Sakhalinmorneftegaz + 100% of Sakhalin-1 project.
7 467 m
•Satellite fields reserves: 2.7 bln boe (3P), significant exploration potential
8
Rosneft holds the largest license portfolio on the Russian offshore
Diversified Portfolio of Assets
•41 licenses for exploration and production on the shelf of the Russian Federation•Recoverable resources – 275 bln boe•Exploration program – drilling of 96 wells
Strategic cooperation with ExxonMobil, Eni, Statoil
•Exploration financed by the partners •Exchange of technologies, staff, and best practices•Carry investment by partners within the initial exploration phase
for at least $14 billion
Total RecoverableResources, bln BOE
47 bln BOE
103 bln BOE
23.3 bln BOE
30 bln BOE
71 bln BOE
275 bln BOE
Black, Azov and Caspian Seas
Okhotsk Sea
Barents Sea
Kara Sea
East Siberian, Chukchi and Laptev Seas
oil gas
oil gas
oil gas
oil gas
oil gas
oil gas
9
Rosneft has already started full-scale operations in the Arctic
Drilling success will open a new oil province in the Russian Arctic offshore
•5300 km of 2D seismic and 3800 sq km of 3D seismic were performed in 2012
•Universitetskaya structure selected for first wildcat drilling, scheduled for 2014
•Well depth – 2 500 m, sea depth – 80 m
•Semi-submersible drilling rig contracted
KARA SEANOVAYA ZEMLYA
10
0 10 20 30 40 50 60
Russian offshore to meet rising global LNG demand
Global LNG demand, million tons
America-10%
World
Asia
Europe+12%
Source: Wood Mackenzie.
+93%
2010 2020
2010 2020
2010 2020
2010 2020
+62%
LNG ProducersExistingDevelopingPossible
LNG ConsumersExistingDeveloping
САМОЕДСКИЙ УЧ.
11
0
50
100
150
200
250
300
0 50 100 150
Production time, daysLi
quid
flow
rat
e, m
3 /da
y
Horizontal well with multistage hydrofracturingVertical well with traditional hydro-fracturing
Technology Applied by Yuganskneftegaz Demonstrates 3.5 times Higher�Production Rate
Bazhenov formation has comparable properties �to U.S. shales and is likely to reach comparable recovery
Bazhenov formation resources alone are about 40% of U.S. shale oil by amount
•Rosneft has successful experience in the development of low-permeability reservoirs
•Implementation of the technology of horizontal wells with multistage hydrofracturing at the oil fields in YuganskU.S. shales
Bazhenov formation
Eagle Fordformation
Bazhenovformation
Average depth, m 3 000-3 500 2 700-3 100
Reservoir thickness
Permeability
Porosity
Recovery ratio
30
0,5 mD
7%
<10%
20-30
<1 mD
2-6%
?
0 10 20 30 40 50 60
Recoverable resources, billion barrels
New production growth from development of tight oil in Russia
22
50
12
Tax and export duties incentives
New tax policy provides incentives for developing new categories of reserves
•The state made a strategic decision on provision of incentives for development of new reserves categories: offshore, tight oil and Eastern Siberia region
•Tax initiatives enabled profitable development of new categories of reserves and formation of new oil and gas production provinces
•Unprecedented high level of investments and balanced local content policy create the unique opportunity for the global leaders of the service industry and equipment manufacturing to enter the new promising market
Source: Ministry of Energy of Russian Federation.
Bazhenov formation
Export duty Mineral extraction tax (MET) Revenue net of MET and export duty
New fields Sakhalin
Current taxationsystem
Crude Oil ¤price ($/bbl) Hard-to-recover
reservesEast Siberia Continental shelf
Kara Sea
+20+47 +54 +64
13
Reserves, billion boe
1999
2012
2013
Prod
uctio
n, m
illion
boe
pdAcquisition of TNK-BP makes Rosneft �the largest public oil and gas company in the world
Reserves and production of oil and gas in 2012
+
Source: Companies’ data. Note: Including oil, gas condensate and bituminous sands. Reserves are presented by SEC classification.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
0 5 10 15 20 25 30
14
Joint use of infrastructure
•New fields in Krasnoyarsk region (including use of infrastructure of Vankor field)
•Verkhnechonskoe field and assets in Irkutsk region
Logistics, Trade and Sales
• Optimizing logistics of crude and oil product supplies; swap operations
Optimizing Expenses
•Consolidated procurement on tender basis
•Reduction of overheads
•Simplifying the structure and scheme of ownership
Gas
• Consolidation of natural gas sales efforts
• Coordination of development of gas assets of Rosneft, TNK-BP (Rospan) and Itera in Yamal-Nenets region
Combined synergies to exceed 10 billion dollars
Sources of synergies in TNK-ВР acquisition
0 10 20 30 40 50 60
15
•Delivery on existing strategic partnerships and creating new ones – offshore, hard-to-recover oil, gas, downstream
•Technological partnerships with service companies
•Joint work on harmonization of regulatory and tax environment
•Long-term supply contracts, �participation in infrastructure development
•Asset exchanges with global players
New Rosneft – new opportunities
0 10 20 30 40 50 60
16