Russian Federation

LLC “JC “RUSVIETPETRO”

Ownership Structure, %

LLC “JC “RUSVIETPETRO” is the major Russian production asset held by Zarubezhneft JSC..

Hydrocarbon production activities have been carried out from the assets in the Central Khoreyver Uplift in the Nenets Autonomous Area since September 2010.

Development and production

In 2018, hydrocarbon production by LLC “JC “RUSVIETPETRO” amounted to 3,202 thousand tons of oil equivalent, which is higher than the previous year level by 3% and the planned level by 0.3%. The production was carried out at Central Khoreyver Uplift fields: North-Khosedayu, Visovoye, Verkhnekolvinskoye, West-Khosedayu, Sikhoreyskoye, East-Sikhoreyskoye, North- Sikhoreyskoye, North-Oshkotynskoye, Syurkharatinskoye, South- Syurkharatinskoye, Urernyrdskoye, and East-Yanemdeyskoye.

To fulfill the production plan in the reporting period, geotechnical jobs program was implemented with additional production of 397 thousand tons; incl. 23 new wells were put into operation. The production drilling volume amounted to 73.6 thous. m. 20 wells were drilled, 19 wells were completely constructed, and 1 well was reconstructed.

Development drilling, thous. m
Hydrocarbon production, MTOE

Financial indicators

LLC “JC “RUSVIETPETRO” sells the extracted oil in the domestic and foreign markets through commission contracts, and also supplies oil for the in-field process needs under direct contracts. Due to constant monitoring of the market condition in the international and domestic oil markets, the Company is receptive to changes in demand, increasing its profitability.

Revenue, MM RUB
EBITDA, MM RUB
Capital investment, MM RUB
The Company moved to completion phase of drilling the fields of Block No. 4, therefore the costs for drilling and geological exploration increased while the costs for the development of new fields of the western and north-western directions reduced.

In 2018, LLC “JC “RUSVIETPETRO” revenue amounted to RUB 72,717 million. (excluding the export duties), which is higher than in 2017 due to the positive influence of macroparameters, extension of export duty privileges, increase in turnover (+3%). The increase in EBITDA was preconditioned by the same factors.

Traditionally, the implementation of LLC “JC “RUSVIETPETRO” production program is carried out in close relation to the companies in “Service and other assets” segment: RMNTK Nefteotdacha JSC covers the demand for integrated services in drilling wells and the workover at Central Khoreyver Uplift fields, Zarubezhneftestroymontazh LLC performs construction and installation work on the arrangement of oil fields, VNIIneft JSC and Giprovostokneft JSC carry out R&D works on searching for new technologies and reagents to improve the efficiency and reservoir recovery in Central Khoreyver Uplift conditions.

Prospects

In the medium term, the Company is mainly focused on reserves increment and increase in oil recovery, reliability of power supply to production facilities.

The goal of maintaining the production at the level of over 3 million tons is planned to be achieved through the implementation of an extensive geotechnical jobs program, which in 2019 includes 51 activities at the production well stock, including the commissioning of 13 new wells. It is also planned to conduct pilot works on testing new technologies for reservoir recovery enhancement.

Kharyaga PSA

Ownership Structure, %

Zarubezhneft JSC entered into the Kharyaga PSA project with a 20% participating interest on January 1, 2010.

As per the Addendum No. 3 to the Agreement on development and oil production at the Kharyaga field under production sharing terms dated August 1, 2016, the Total E&P Russie has assigned 20% of its participating interest and operatorship in the project to a subsidiary of Zarubezhneft JSC – ZARUBEZHNEFT-Production Kharyaga LLC. As a result, the participants of Kharyaga PSA are as follows: Statoil Kharyaga AS (30%), Zarubezhneft JSC (20%), ZARUBEZHNEFT-Production Kharyaga LLC (20%), Total E&P Russia (20%), Nenets Oil Company JSC (10%).

Development and production

In 2018, ZARUBEZHNEFT-Production Kharyaga LLC reached its maximum production over the past five years - 1,564 thousand tons of oil equivalent. The result obtained is higher than the level of 2017 by 1.4% and higher than the planned figure by 5%. High results are a consequence of the performed work on optimization of the flooding system, which allowed reducing the rate of well watering, the integrated management of the formation-pressure maintenance system, and using enhanced oil recovery technology (EOR) for pumping polymer compositions to increase the sweep ratio.

In the reporting year, 4 new wells were put into operation with an additional production of 51 thousand tons and the first stage of EOR technology implementation for the injection of polymer compositions was completed to increase the sweep ratio with an additional production of 55 thousand tons.

Reserves production at the end of the reporting year was 45%, with an average water cut of 50%.

Development drilling, thous. m
Hydrocarbons production, MTOE

Commissioning

In 2018, ZARUBEZHNEFT-Production Kharyaga LLC completed the construction, installation and commissioning works and the main capital construction objects were put into operation:

  • well pad EP-2;
  • high-pressure water conduit Central Production Facility-pad EP-2, DU 200;
  • HL (CL) 6kV "Central Production Facility-New shift camp".

In addition, work was completed on further assembling the facility “Substation 35/6 kW”, the cable rack was installed throughout the substation territory, Chemical and Analytical Laboratory building and the reagent warehouse were assembled.

Financial indicators

At the end of 2018, an improvement was recorded in all economic indicators.

Taking into account the increase in sales volumes (+71 thousand tons) and the increase in oil prices, the revenue for the reporting period was higher than that of the previous year by RUB 14.4 billion. Taking into account the continuation of the successful implementation of improving efficiency and cost optimization program in terms of EBITDA, a high result was also obtained (+6.4 billion RUB):

Prospects

One of the main tasks of the Company for the medium term is the maintenance of production levels above 1,400 thousand tons. To this end, a corresponding geotechnical jobs program has been developed, it is planned to continue work on the optimization of the flooding system and the use of EOR technologies.

The work has been under way on the implementation of the Gas Program, it is planned to achieve the level of APG usage of 95% by 2022.

Revenue, MM RUB
EBITDA, MM RUB
Capital investments, MM RUB
The actual level of capital expenditures amounted to RUB 8.5 billion, which generally corresponds to the approved 2018 Production Program. The main factors of cost escalation in the reporting period in relation to the level of 2017 are an increase in the rate of infrastructure facilities construction, as well as the implementation of the well drilling and reconstruction program using the sidetracking method.
Total revenues of the state, MM RUB
OPEX, RUB/t
Structure of the state’s revenues, MM RUB
State revenues 2017 2018
Royalties 2,076 3,749
State profitable oil 10,391 16,383
Profit tax 2,099 3,310
Total 14,566 23,442

Ul’yanovskneftegaz LLC

Ul’yanovskneftegaz LLC is an oil-producing asset concerned with prospecting, exploration and production in 5 licensed areas located in the Ul’yanovsk region. The production is conducted from Lower and Medium Carboniferous deposits, predominantly represented by terrigenous reservoirs.

The Ul’yanovskneftegaz LLC reserve recovery rate stands between 4% and 16% at the Kondakovskoye and Sulakskoye fields and is between 45% and 95% at the Slavkinskoye and Ruzhevskoye fields; the average oil water-cut from the fields ranges from 33.6 to 87%.

Hydrocarbons production, MTOE
Ownership Structure, %

Financial indicators

The Company’s revenue for 2018 amounted to RUB 1,196 million, which is RUB 466 million higher than in 2017 due to an increase in sales and in oil price. EBITDA for the reporting period is 2 times higher than in 2017.

Program implementation to improve the efficiency and optimize costs in the reporting year was carried out by optimizing the staff number, reducing the time needed for production plants repair, reducing the cost of materials used in repairs, and reducing the cost of chemicals, fuel and lubricant materials.

Prospects

The main Company’s task is to implement measures aimed at keeping the achieved hydrocarbon production volumes and further work to reduce the operating costs.

Revenue, MM RUB
EBITDA, MM RUB
OPEX, RUB/t
According to the results of the Company's activities in 2018, the unit operating costs decreased by 3% compared to 2017.

Orenburgnefteotdacha JSC

Orenburgnefteotdacha JSC is an oil-producing asset that is engaged in prospecting, exploration and production at 3 license areas located in the Orenburg region. The production is conducted from Lower Carboniferous and Upper Devonian deposits represented predominantly by carbonate reservoirs.

The reserve recovery rates of Orenburgnefteotdacha JSC’s fields vary from 7% in the Chernovskoye field to 23% in the Kirsanovskoye field and 46% in the Pashkinskoye fields, with an average oil water-cut of 3–50%.

Hydrocarbons production, MTOE
Ownership Structure, %

Financial indicators

The Company's revenue in 2018 amounted to 2 505 million RUB, which is 49% higher compared to 2017. The main factors contributing to the increase are sales volume and oil prices growth.

Taking into account improving efficiency and cost optimization program, the EBITDA for 2018 is higher than the previous year by RUB 241 million.

Prospects

The main Company’s task is to implement measures aimed at keeping the achieved hydrocarbon production volumes and further work to reduce the operating costs.

Revenue, MM RUB
OPEX, RUB/t
EBITDA, MM RUB
Due to the commissioning of the Preliminary Water Discharge Unit at Pashkinskoye field and the increase in expenditures for maintenance, the specific ОРЕХ for 2018 increased by 14% compared to the previous period.

Severo-Karasevskoye Petroleum Enterprise LLC

The Lutseyakhskoye oil field, with an area of 360.8 km2, is located in the Nadym district of the Yamal-Nenets Autonomous Area in the Tyumen Region. The field was discovered in 2011 as a result of drilling of prospecting and appraisal well No. 70-Lutseyakhskaya.

A subsoil use license dated March 1, 2013, belongs to the Severo-Karasevskoye Petroleum Enterprise LLC. A Sales Agreement was signed between Dedaci Enterprises Limited and Zarubezhneft JSC (Zarubezhneft – Dobycha Samara LLC) in June 2016 to sell 100% participating interest in the Severo-Karasevskoye Petroleum Enterprise LLC.

Ownership Structure, %
Capital investments, MM RUB

Prospects

A further work program provides for geological exploration to clarify the geological structure of Lutseyakhskoye field, including CDPM 3D seismic exploration to the extent of 270 km2 and drilling of 2 exploration wells (No. 71, 72), as well as the work on the preparation of an arrangement project for the trial operation period, drilling wells during the pilot production period