Common Economic Space in Eurasia: Open Borders ...€¦ · Rosneft performance over Q1 2015 Source:...
Transcript of Common Economic Space in Eurasia: Open Borders ...€¦ · Rosneft performance over Q1 2015 Source:...
Common Economic Space in Eurasia:
Open Borders, Partnership, Flow of Resources,
Capital and Technologies
Verona / 22 Oct. 2015
Igor Sechin
Chairman of Rosneft Management Board
Information herein has been prepared by the Company. The presented conclusions are based on the general information collected
as of the date hereof and can be amended without any additional notice. The Company relies on the information obtained from the
sources which it deems credible; however, it does not guarantee its accuracy or completeness.
These materials contain statements about future events and explanations representing a forecast of such events. Any assertion 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 such statements.
This presentation does not constitute an offer to sell, or any solicitation of any offer to subscribe for or purchase any securities. It is
understood that nothing in this report / presentation provides grounds for any contract or commitment whatsoever. The information
herein should not for any purpose be deemed complete, accurate or impartial. The information herein in subject to verification, final
formatting and modification. The contents hereof has not been verified by the Company. Accordingly, we did not and do not give on
behalf of the Company, its shareholders, directors, officers or employees or any other person, any representations or warranties,
either explicitly expressed or implied, as to the accuracy, completeness or objectivity of information or opinions contained in it. None
of the directors of the Company, its shareholders, officers or employees or any other persons accepts any liability for any loss of any
kind that may arise from any use of this presentation or its contents or otherwise arising in connection therewith.
2
Disclaimer
2 q
2015
3
-10
-5
0
5
10
15
20
1 q
2000
4 q
2001
3 q
2003
2 q
2005
1 q
2007
4 q
2008
3 q
2010
2 q
2012
1 q
2014
Germany Italy USA China
%, y/y
20
30
40
50
60
70
Китай США Еврозона China USA Eurozone
Global economy shows stable economic growth
Sources: ОECD, National Bureau of Statistics of China; Bloomberg, Markit
PMI in Eurozone, US and China GDP growth in developed economies and in China
Developed global economies show upward GDP trend over QI-II 2015
The Chines economy despite a minor slowdown continues to show a high growth rate of 7 % (in QII 2015 YOY)
The EU and US Purchasing Managers' Index (PMI) continues to exceed 50 points thus evidencing the confidence of
developed economy company managers in economic growth
Despite current downturn EU remains Russia's main trading
partner
Sources: Federal Customs Service (FCS), trademap.org
4
In 2000-2013 the trade volume of Russia and EU
countries grew more than 5-fold to $413 bln and fell by
10% in 2014
EU rate in the Russia's external trade in 2014 was 48%
Over 8 months 2015 the trade volume of Russia and EU
countries fell by 39%
The trade volume of Russia and Eurasian Economic
Union and APEC countries showed a smaller reduction
of 26 and 30% accordingly
Reduction of Russia trade volume over 8 months
2015 by country groups Russia and EU trade volumes
0 10 20 30 40 50
ЕС
АТЭС
ЕАЭС
%
an average of 34.4%
25
40
55
70
0
150
300
450
% $ bln
Товарооборот России и ЕС-28 (левая шкала)
Доля ЕС-28 в товарообороте России
Goods turnover Russia and EU-28 (LHS)
EU-28 share in Russian goods turnover
EAEC
APEC
EU
1
2
3
4
5
6
7
8
9
9,5
10
10,5
01.2012 07.2012 01.2013 07.2013 01.2014 07.2014 01.2015 07.2015
Crude oil production Crude oil export (RHS) Oil products export (RHS)
Russia's oil sector demonstrates stability
Sources: JODI; FCS
5
Oil production in Russia keeps growing giving rise to
larger exports
In January-February 2015 Russian petroleum product
export grew up significantly (by 5.7%)
Italy is the second largest route of Russian oil and
petroleum product exports outpacing China and
Germany
Key routes of Russian oil and petroleum product
exports, 2014, mmt
Russian production and exports of oil and petroleum
products, mmbd
Low oil price
period
0 25 50 75 100
Japan
South Korea
Poland
Belarus
Germany
China
Italy
Netherlands
Crude oil
Oil products
Rosneft performance over Q1 2015
Source: Rosneft
6
Indicator H1 2015 H1 2014 change
Hydrocarbon production (mbpd) 5,175 5,075 2.0%
Sales of oil, petroleum products and
petrochemicals (mmt) 106.2 104.6 1.5%
Gas sales (bcm) 29.2 25.76 13.4%
APG utilization (%) 87 77.2 12.7p.p.
3D seismic, km2 4,483 4,497 -0.3%
2D seismic, line km 2,084 889 134.4%
In H1 2015 hydrocarbon production amounted to 126.5 mmtoe which is 2.0% higher than 124.0 mmtoe produced in HI 2014.
The production growth was ensured by successful exploration, drilling of new wells and the use of up-to-date technologies,
along with cost optimization.
In H1 2015 the Company increased the footage in development drilling by more than 30% YOY and commissioned more
than 800 new wells
The number of horizontal wells in HI 2015 exceeded 30% of the total development well drilling scope (more than 260 wells).
The number of own drilling rigs reached 215 as of the middle of this year with the number of crews being 203.
1,7
2,4
2,7
2,8
3,2
3,3
4,2
4,2
5,2
HC reserves(1)
Rosneft – world leader in reserves volume, production and
efficiency
(1) Rosneft reserves are listed according to the Russian classification ABC1 + C2 as of 01.01.2015; Lukoil reserves are given as reported as of 01.01.2015 including proven, probable and possible
reserves; for the rest of the companies reserves are given on the basis of Wood Mackenzie reserves estimates, including commercial and sub-commercial reserves
(2) Daily production in Q1 2015. (3) Production costs of the companies are shown for 2014; Rosneft, Lukoil and Petrobras - for H1 2015. Source: companies' data
HC production costs(3) HC production(2)
23
28
40
46
49
54
65
79
129
Жидкие УВ Газ
bboe mmboepd $/boe
7
Gas Liquid
HC
18
16
15
14
13
13
12
5
2,8
FX rate in Russia – key compensatory macroeconomic variable
*Consolidated budget and Governmental off-budget funds Sources: EIA, oanda.com; Federal Service for State Statistics (RosStat), Federal Treasury
**When exporting crude oil and specific petroleum products from the Republic of Belarus outside the Customs Union 8
Oil and gas revenues as % of the budget* income Profile of oil price, dollar exchange rate, ruble
denominated oil bbl price
Since 2011 the ruble denominated price of an oil barrel has been remaining within the 3-4 thous. RUR/bbl range despite
severe fluctuation of oil prices balanced by the changing rate of the national currency
In Russia the priority is given to sustaining budget stability and nominal level of population income. This results in high
stability of ruble revenues from the oil and gas industry, the main source of fiscal revenues.
0
10
20
30
40
50
60
70
80
0
5
10
15
20
25
30
35 Таможенная пошлина*
Вывозные таможенные пошлины на нефтепродукты
Вывозные таможенные пошлины на газ
Вывозные таможенные пошлины на нефть
Акцизы на нефтепродукты
НДПИ на газ
НДПИ на нефть
ВВП, текущие цены (правая шкала)
% trn RUR
Customs duty**
Export duty on oil
products
Export duty on gas
Export duty on oil
Excise on oil
products
MET on gas
MET on oil
GDP, current prices
(RHS)
1000
1500
2000
2500
3000
3500
4000
4500
5000
0
50
100
150
200
250
300
Ruble/dollar exchange rate
Brent price
Oil price, RUR/bbl (RHS)
January 2008 =100% RUB/bbl
3-4 thous. RUR/bbl range
-16
-14
-12
-10
-8
-6
-4
-2
0
2
CR
C
Contin
enta
l
SM
Cabot
New
fie
ld
South
weste
rn
Energ
en
Range
EP
Pio
neer
Cim
are
x
Concho
Murp
hy
Encana
Ante
ro
EO
G
Whitin
g
Mara
thon
Devon
Hess
Noble
Chesapeake
Apache
Occid
enta
l
Anadark
o
ConocoP
hill
ips
H2 2015
2016
2017
Ликвидность
$ bln
Forecast of demand for
liquidity by years
Risk hedging levers and loan liquidity to be raised by the
American shale companies by 2017
*scenario assumptions: $37/bbl of WTI oil and $2.4/cf (H2 2015), $41/bbl of WTI oil and $2.7/cf (2016)
Source: Wood Mackenzie 9
Forecast hedging gain, % of revenues Level of loan liquidity accessible for shale companies and
predicted demand for it*
Hedging ceases to be an important source of liquidity for the shale companies.
One of the conditions underlying the "survivability" of shale companies is that they get loans from banks per a specific field
(RBL – Reserve Based Lending). Such loans can be renewed and prolonged on the pledge of proved reserves
RBL is the only chance for small and medium-size companies to raise necessary funds to maintain the business. This
scheme will be effective in low oil price environment till at least 2017
potential strain
on liquidity in 2017
-20% 0% 20% 40% 60%
Apache
ConocoPhillips
Hess
Murphy
Anadarko
Marathon
Cabot
CRC
Noble
SM
Devon
Range
Energen
Сценарий "Высокие цены"
Сценарий "Базовый"
Сценарий "Низкие цены"
H2 2015
-20% 0% 20% 40%
EOG
Apache
ConocoPhillips
Cabot
Occidental
Cimarex
CRC
Anadarko
Whiting
Encana
Newfield
Pioneer
Antero
2016
2015:$73/bbl of WTI oil, 2016: $79/bbl
2015:$55/bbl of WTI oil, 2016: $60/bbl
2015:$37/bbl of WTI oil, 2016: $41/bbl
availability of credit liquidity
Low Price scenario
High Price scenario
Base case
Changes in crude oil global production
by 2030 Full lifting cost of new oil produced by 2030*
Changes in global production and anticipated lifting cost
* ~ 75% of expected new oil production
Source: IHS 10
Analysis of ~75% new oil lifting costs till 2030 (around 33 mmbpd) demonstrates that the last 3 mmbpd of
production will account for expensive oil with a lifting cost of $85-98/bbl in 2015 prices. The lifting cost of ~28
mmbpd new production will not exceed $75/bbl in 2015 prices
0
10
20
30
40
50
60
70
80
90
100
0 5 10 15 20 25 30
Middle East Algeria China Brazil Kazakhstan Tar sands of Canada (drilling) Russia (incl. export duty) West Africa North America- challenged oil USA - Gulf of Mexico Norway and UK Iraq Venezuela
New oil production by 2030, mmbpd
Full
lifting c
ost of new
oil
в in 2
015 p
rices, $/b
bl
0 30 60 90
Crude production in 2030
New supply additions by 2030
Field declines to 2030
Crude production in 2014
Global crude production,
mmbpd
European refining facilities and their utilization rate Share of shut down facilities as of end 2014 vs 2008
European refining business has long been facing hard times
Source: IHS
11
After the 2008 downturn 15 European refineries were
shut down to a total capacity of 2 mmbpd (12% of the
total refining capacity in Europe)
As a result, the Europe refining capacity utilization rate
averages 75-80%
The biggest losses have France and the Great Britain.
These countries shut down 30% of their facilities each
(0.6 and 0.57 mmbpd accordingly)
Italy shut down 22% of the facilities (0.48 mmbpd) but
still has the second largest refining capacity in Europe
50
60
70
80
90
14
15
16
17
18
1985 1990 1995 2000 2005 2010
Refining capacity, end of year
Utilization rate (RHS)
mmbpd %
0
5
10
15
20
25
30
35
UK France Italy Germany
%
2014
Share of Asia and Europe in global primary energy consumption
Sources: IEA, ВР, Rosneft
12
Liquid HC consumption in the EU, China, India, and
Japan
Share of Asia and Europe in global primary energy
consumption
The share of Europe (including Russia) in global primary energy consumption declines from 32% in 1985 to 19% in 2015 and
16% in 2030. At that the share of Asia increases from 32% to 50% and 54% accordingly
In liquid HC consumption the three largest consumers in Asia, i.e. China, India, and Japan, outpaced the EU countries in
early 2000s
0
2
4
6
8
10
12
14
16
18
20
0
10
20
30
40
50
60
1970 1985 2000 2015 2030
btoe %
Мировое потребление первичных энергоресурсов (правая шкала)
Европа
Азия
forecast
0
200
400
600
800
1 000
1 200
1 400
1970 1985 2000 2015 2030
mmt
Китай
Индия
Япония
Евросоюз
forecast
China
India
Japan
EU
World consumption of
primary resources (RHS)
Europe
Asia
Oil shortage in Eurasia is mainly covered by supplies from African
countries
*under 2013 results
Sources: IEA, ВР, Rosneft; EIA, trademap.org 13
Key crude oil suppliers to Eurasia in 2014 Oil production, consumption, and shortage in Eurasia
Despite such major oil producers in Eurasia as Russia, Saudi Arabia, UAE, Iran, and Iraq, there has been physical shortage
of oil in the mainland since late 2000s
Oil shortage will increase in Eurasia and may reach 400 mmt by 2030
A source to cover the shortage is supplies from North and West Africa and Latin America
0 20 40 60 80
Алжир
Венесуэла*
Ливия*
Ангола
Нигерия
mmt
Nigeria
Angola
Libya*
Venezuela*
Algeria 0
200
400
600
800
0
1
2
3
4
1990 2000 2010 2020 2030
mmt bln t
Shortage (RHS)
Output
Consumption
forecast
Drop in oil industry investments
Source: Rystad Energy
14
Investments to new oil production projects Exploration and production costs in the world
According to Rystad Energy assessments, exploration and production costs in the world in 2015 will be reduced by $180 bln
vs last year
Capes will be reduced by nearly 20% and new project investments will drop by 40%
0
200
400
600
800
1000
1200
2010 2011 2012 2013 2014 2015 2016
$ bln
Разведка
Операционные расходы
Капитальные затраты
2014, yoy
2%
6%
2%
2015, yoy
–17%
–1%
–18%
0
20
40
60
80
100
120
0
50
100
150
200
250
300
350
400
450
500
2000 2005 2010 2015 2020
$/bbl (in 2014
prices)
$ bln (in 2014
prices)
Инвестиции в новые нефтедобычные проекты в мире
Цена нефти сорта Brent (правая шкала)
forecast
Exploration
OPEX
CAPEX
Investments in new oil production projects worldwide
Brent price (RHS)
The increased oil production in Saudi Arabia in 2015
does not only result in more exports but additional
throughput at two major refineries at 0.8 mmbpd started
up in 2014-2015
Saudi Arabia oil production and export*
Saudi Arabia ramps up oil production
* the chart shows three-month moving averages of production and export volumes
Sources: Baker Hughes, JODI 15
Number of rigs, oil production, and share of Saudi
Arabia in global production
Drilling activity of Saudi Arabia started to grow back in
autumn 2013, more than 6 months before oil prices
slumped
In September 2015 Saudi Arabia crude oil production
grew up to 10.2 mmbpd exceeding the previous year
figures by 0.5 mmbpd
8
10
12
14
60
100
140
180
220
260
Доля Саудовской Аравии в мировой добыче нефти (правая шкала)
Добыча нефти
Количество буровых
January 2011 = 100% %
4
5
6
7
8
9
10
6
7
8
9
10
11
12
Добыча Экспорт (правая шкала)
SATORP refinery startup
(0.4 mmbpd)
YASREF refinery startup
(0.4 mmbpd)
mmbpd mmbpd
Saudi Arabia share in
world’s oil production (RHS)
Oil production
Number of rigs
Production Exports (RHS)
Rosneft investment program related to procured materials, works
and services
* 1456 bln in rubles, based on the average Euro rate over 9 months 2015 at 66.5 RUB/Euro
Source: Rosneft 16
Total scope of materials, works and services procured by Rosneft for the Subs in 2015 equals € 21.9 bln*
Rosneft conducts its procurement activities in compliance with Federal Law dated 18.07.2011 №223-FZ "On Procurement".
All information on procurement, including the procurement plans, the requirements for accreditation, procurement records,
protocols of the decisions are placed on the official website zakupki.gov.ru and on the corporate website
zakupki.rosneft.ru
Разведка и добыча
Переработка
Коммерция и логистика
Прочие
€ 21,9 млрд
Rosneft purchases in 2015 by areas of focus and product range
0 1 2 3 4
Текущий и капитальный ремонт скважин
Гидроразрыв пласта
Сопутств. услуги при бурении и зарезке боковых стволов
Транспортные услуги
Трубная продукция
Услуги при поставке нефти, газа, нефтепродуктов
Строит.-монтажные и проектно-изыскат. работы
Бурение и зарезка боковых стволов
€ bln
Other: €6.9 billion
Exploration
and production
Refining
Commerce and
logistics
Other
Drilling and sidetracking
Construction, installation
Oil supply services
Pipe products
Transportation services
Auxiliary services for drilling
Hydrofracs
Repair and overhaul of wells
Annual anchor order of Rosneft
* 1056 bln in ruble equivalent, **306 bln in ruble equivalent, based on the average Euro rate over 9 months 2015 at 66.5 RUB/Euro
Source: Rosneft 17
Structure of the anchor order for materials Annual anchor order
According to the Business Plan, total
demand of Rosneft for materials in 2016-
2018 will achieve € 15,9 bln* In particular,
the following product ranges will be required:
Over 2.5 mmt of casing and tubing
Over 800,00 t of chemicals, additives
and other chemical products
Over 47,000 km of downhole cable
Over 17,000 downhole pumps for
production
Over 2800 transformer substations
Other: €0.74 billion 0 0,4 0,8 1,2
Продукция кабельная
Контрольно-измерит. приборы и средства автоматизации
Оборудование буровое, нефтепромысловое и запчасти
Арматура промышленная трубопроводная
Оборудование насосно-компрессорное
Оборудование химическое, нефтегазоперерабатывающее
Оборудование энергетическое и электротехническое
Продукты химические, масла, присадки
Трубы металлические
€ bn
Metal pipes
Chemicals, lubes,
additives
Electric power
equipment
Chemical, refining
equipment
Pumps and
compressors
Pipeline fittings
Drilling, oilfield
equipment and spare parts
Instrumentation and
automation means
Cables
Annual anchor order for materials - average scope of the
Company’s annual demand for the most sought-for materials.
In the last 3 years, the anchor order was € 4.6 bln p.a.**
Imports of oil and gas equipment is much higher than the scope of
its production in Russia
* Catalysts and cable products that are also largely imported are not considered
Sources: Rosneft, Federal Customs Service, IEF, Federal Service for State Statistics 18
Largest state-owned companies and corporations in
terms of investment programs in 2014
Products shipped by the industrial enterprises, RUR
bln
Largest state-owned companies and corporations in
terms of investment programs in 2013-2014, RUR
bln
Imported equipment for oil and gas sector in 2014, $
mln
According to the Trade Ministry of the Russian Federation, the consumption of oil and gas engineering products* in 2014
amounted to 450 billion rubles, of which 60% was imported (i.e. 270 billion rubles.)
The key import items are: pump and compressor equipment, column equipment and tanks and fittings for pipelines and tanks
0 200 400 600 800 1000
Трубы обсадные, бурильные
Аппараты для дистилляции и ректификации
Буровые установки и их части
Реакторное оборудование
Компрессоры
Арматура для трубопроводов, котлов, резервуаров
Оборудование для фильтрования и очистки газов
Насосы центробежные
0
20
40
60
80
100
120
140
160
180
200
2010 2011 2012 2013 2014
Насосы для перекачки жидкостей
Трубопроводная арматура
Газогенераторы, аппараты для дистилляции, очистки жидкости и газов
Воздушные и газовые компрессоры
Металлические цистерны, резервуары и прочие емкости
Liquids pumps
Pipe valving
Gas generators, gas and
liquids distillation and
purification units
Air and gas compressors
Metal tanks, barrels and
other vessels
Centrifugal pumps (ESP)
Gas filtering and stripping
equipment
Valving for pipes, boilers,
tanks
Compressors
Reactor equipment
Drilling rigs and parts
Distillation and rectification
units
Casing, drill pipe
Europe needs oil deliveries with good prices
from Russia:
Ready infrastructure in Russia for oil
delivery to Northern Europe, Central Europe
and the Mediterranean (pipelines, sea
terminals)
Absence of bottlenecks and "danger
spots" on the logistic way from Russia to
Europe
Configuration of European refineries
optimized for the refining of Russian oil
Building the market share with non-market
methods carries potential risks for the
European refining:
How long and how much can the Middle East
provide discounts, in the presence of the
growing Asia-Pacific market alternative?
Who's gonna pay for the investment to
change the oil refineries configuration?
Russia means safe and reliable energy supplies
Sources: Rosneft
Other
Azerbaijan
Kazakhstan Europe
Northern Sea
Middle East
Africa Russia
2014 oil supplies = 636 mmt*
19
Long-term contracts with Russian partners will help ensure the
competitiveness of the European refining
Sources: Fuel and Energy Complex Central Dispatch Department, Rosneft
Shipment
destination Counterparty
Average
volume,
mmtpa
Total
supplies,
mmt
Contract
term, years
Novorossiysk,
Primorsk/Ust-
Luga
Glencore, Vitol,
Trafigura 13,2 66 5
Germany Total, RTSA 6,2 27 3-5
Poland
Orlen,
Mercuria,
Grupa LOTOS
S.A
10,5 38 3-6
Belorussia Mozyr refinery,
Naftan 8 23 3-6
Czech Orlen 3,2 9,6 3
Asset /
Rosneft share Country
Refinery in the
country
Share in
JV
refinery
Capacity,
mmt
ROG / 50% Germany
Gelsenkirchen
PCK Schwedt
MiRO
Bayernoil
100%
37,5%
24%
25%
12,8
11,5
14,9
10,3
Saras / 12% Italy Sarroch 100% 15,0
Long-term contracts for crude supply to Europe
Rosneft refining assets in Europe
20
Direct supplies via Druzhba
pipeline
Trans-Alpine pipeline
Tanker deliveries
RF exports to Europe, mmt
Shareholder cooperation with Pirelli – an example of the business
bridge between Europe and Asia
Source: Rosneft
21
competition
Trade
+
Competition
Joint business
management
Rosneft and ChemChina are shareholders of Pirelli
BoD updated: now it includes the reps of Rosneft,
ChemChina, Pirelli, independent directors
Joint projects in Russia and China under review
New partners involved, e.g. Synthos Group (Poland)
Oil supplies
Tires retail
Research and development
Feedstock
Technologies Market
22.10.2015
26/1 Sofiyskaya Embankment, Moscow 117997
Russia
Tel: +7 (499) 517-88-99
Fax: +7 (499) 517-72-35
E-mail:[email protected]
Contacts
Thank you for your attention!