24 April 2012 GAZPROM G4T LNG bunker supply and infrastructure development by Gazprom.
Investor Day - Gazprom Neftir.gazprom-neft.com/fileadmin/user_upload/... · results of operations...
Transcript of Investor Day - Gazprom Neftir.gazprom-neft.com/fileadmin/user_upload/... · results of operations...
Investor Day presentation
11 July 2014, St. Petersburg
| 2GAZPROM NEFT
AGENDA
Vladimir KonstantinovHead of Economics and Investment Department,
Refining and Marketing Division
HIGHLIGHTS, FINANCIALS
UPSTREAM & STRATEGY
DOWNSTREAM
Alexey Yankevich Member of the Management Board, CFO
Sergey VakulenkoHead of Strategic Planning Department
| 3GAZPROM NEFT
DISCLAIMER
This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Gazprom Neft and its consolidated subsidiaries
All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements.
Forward-looking statements include, among other things, statements concerning the potential expo-sure of Gazprom Neft to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘probably’’, ‘‘project’’, ‘‘will’’, ‘‘seek’’, ‘‘target’’, ‘‘risks’’, ‘‘goals’’, ‘‘should’’ and similar terms and phrases.
There are a number of factors that could affect the future operations of Gazprom Neft and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, inclu-sively (without limitation):
(a) price fluctuations in crude oil and oil products;(b) changes in demand for the Company’s
products; (c) currency fluctuations; (d) drilling and production results; (e) reserve estimates; (f) loss of market and industry competition; (g) environmental and physical risks; (h) risks associated with the identification
of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions;
(i) economic and financial market conditions in various countries and regions;
(j) political risks, project delay or advancement, approvals and cost estimates; and
(k) changes in trading conditions.
All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on these forward-looking statements. Each forward-looking statement speaks only as of the date of this presentation. Neither Gazprom Neft nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information.
| 4GAZPROM NEFT
Sector-leading growth and financial performance, sound business model
FINANCIAL HIGHLIGHTS
| 5GAZPROM NEFT
* Including GPN share in EBITDA of associates and joint ventures
Operational Progress in FY2013FY2013 Financial Performance
Average daily sales per site in Russia, tpd
Premium sales
Hydrocarbon production
+7.8% Y-o-Y
+4.3% Y-o-Y
+4.8% Y-o-Y
Adjusted EBITDA*, US$.
Revenue, US$ +1.7% Y-o-Y
+0.4% Y-o-Y
10,573 mln
Net Income, US$
-1.5% Y-o-Y
5,586 mln
39,799 mln
HIGHLIGHTS
| 6GAZPROM NEFT
GAZPROM NEFT IS ONE OF RUSSIA'S LEADING OIL COMPANIES IN PRODUCTION GROWTH AND FINANCIAL PERFORMANCE...
+3.4%
GPN LukoilRosneft
Hydrocarbon production 2013 vs. 2012 Adjusted EBITDA 2013 vs. 2012
-1.6%
+1.7%
-5.1%
GPN Lukoil Rosneft
+4.3%
Adjusted net income, US $/boe ROACE
11.4%
17.4%
12.8%
GPN LukoilRosneft
12.812.4
6.9
LukoilGPN Rosneft
Note: 2012 Rosneft data include TNK-BP. Company data excludes non-recurring items. Source: Company reports
+1.4%
| 7GAZPROM NEFT
...DRIVING SUPERIOR SHAREHOLDER RETURNS
TSR* Dividend yield*
6.5%
GPN Lukoil Rosneft
9.5%
12.4%
Free cash flow, US $/boe Operating cash flow, US $/boe
11.
5.6
0.83.0
LukoilGPN Rosneft
22.621.4
14.2
LukoilGPN Rosneft
5.0%3.0%
LukoilGPN Rosneft
* Based on RUB dividend during 2013 and RUB share prices on MICEX at January 1, 2013. GPN data includes a one-off effect from payment of first interim dividend in 2013 (based on 1H2013 results). Note: 2012 Rosneft data include TNK-BP. Company data excludes non-recurring items. Source: Company reports
-3.9%
9.4%
6.5%
| 8GAZPROM NEFT
DIVERSIFIED DEBT PORTFOLIO
» Net debt/EBITDA 0.57x vs. target <1.5x » Increased average debt maturity from 3.81 years in 4Q12 to 5.15 years in 4Q13 » Increased average interest rate from 3.48% at December 31, 2012 to 3.68% at December 31, 2013 » Diversified debt portfolio: bank loans, bonds, LPN (loan participation notes)
Debt maturity profile at the end of FY2013and comparison of profile’s structures 2013 vs. 2012
Net Debt / EBITDA as of 31.12.2013,
1 year 1-2 years 2-5 years Over 5 years Lukoil GPN Novatek Rosneft
■ Other borrowings ■ Bank loans ■ Bonds ■ LPN
from 31%
to 15%
unchanged
13%
from 31%
to 38%
from 25%
to 34%
0.48 0.57
2.11
1.26
| 9GAZPROM NEFT
DISCIPLINED CAPITAL SPENDING TO DRIVE FUTURE SUCCESS
2,354
2,734
3,253
783
837
571
1,388
2,417
856
550
458193
2013 2014E
■ M&A■ Other■ Marketing and distribution■ Refining■ Upstream greenfield■ Upstream brownfield
M&A includes increase in SeverEnergia and Nortgas ownership and increase in shares of subsidiaries
Increase in other investments reflects the continued IT business solutions integration and property development projects
52% Y-o-Y increase in marketing capex due to continued reconstruction and expansion of the Group retail sites in Russia and abroad
Refining capex 9% Y-o-Y decrease due to the completion of quality program at all refineries
Active development of Novoport field, Orenburg cluster and offshore projects drove 35% Y-o-Y increase in greenfield capex
16% Y-o-Y growth in brownfield capex due to increase in use of new technologies at legacy fields
6,827
9,566
Investments, US $ mln
| 10GAZPROM NEFT
Major projects and new technologies deliver production growth
UPSTREAM
| 11GAZPROM NEFT
UPSTREAM STRATEGIC GOALS 2025
Maximize commercial hydrocarbon recovery from existing resource base
Build leading hydrocarbon production position in northern Yamal Nenets AO
Strengthen current position on Arctic Shelf through execution of existing projects
Develop new production centers to sustain production levels to 2025
Consolidate capabilities and resources to deliver growth internationally
Create new growth centers by applying advanced technologies to unconventional resources
Reach 100 MMtoe of production by 2020 and sustain this level
through 2025
| 12GAZPROM NEFT
ESPO
OIL & GAS EXPLORATION AND PRODUCTION
Eastern SiberiaKuyumba2P reserves: 1,083 MMboePeak: 274 kboepd at 2030Start up: 2018
ChonskiyRecoverable reserves*: 1,362 MMboePeak: 68 kboepd at 2022Start up: 2017
Offshore projects
Central and Eastern Europe
PrirazlomnoyeRecoverable reserves*: 427 MMbblPeak: 104 kbpd at 2021Start up: 2014
DolginskoyeRecoverable reserves*: 516 MMbblPeak: 96 kbpd at 2027Start up: 2021
Exploration projects in Serbia, Hungary, Romania, Bosnia and Herzegovina
North of YANAO
Brownfield production Consolidated hydrocarbon production 1.3 MMboed at over 100 fields in YANAO, KHMAO, Krasnoyarskiy Kray, Tomsk region, Omsk region, Tyumen region, Orenburg region and Serbia
Pipeline Greenfield projects
Pipeline under construction ESPO
Junin 6 Rec.reserves: 10.9 BlnbblPeak: 458 kboepd at 2019Start up: 2012
Venezuela
Kurdistan (Iraq)Resources: 1,810 MMbblPeak: 224 kboepd at 2024Start up: 2014
Badra (Iraq)2P reserves: 874 MMboePeak: 193 kboepd at 2018Start up: 2014
Iraq
China
MongoliaKazakhstan
*For the purpose of this presentation recoverable reserves calculated as C1+50%*C2 reserves under Russian reserves classification
Novoport2P reserves: 921 MMboePeak: 174 kbpd at 2021Start up: 2015
SeverEnergia2P reserves: 7,577 MMboePeak: 838 kboepd at 2021Start up: 2012
Messoyakha2P reserves: 966 MMboePeak: 225 kbpd at 2023Start up: 2016
| 13GAZPROM NEFT
REASSESSING PRODUCTION OUTLOOK AS WE IMPLEMENT NEW TECHNOLOGIES
PRIOBSKOE
1999 336.5MMTonnes
12.1MMTonnes in 2014
Start-up Reserves Peak
VYNGAPUROVSKOE
1982 99.6MMTonnes
3.8MMTonnes in 2010
Start-up Reserves Peak
KRAINEYE
1986 14.8MMTonnes
1.3MMTonnes in 1989
Start-up Reserves Peak
2009 profile2013 profileactual production
2000 2005 2010
11,896
2015 2020 2000 2005 2010
3,759
2015 2020 2000 2005 2010
582
2015 2020
| 14GAZPROM NEFT
THREE MAIN SOURCES OF OIL FROM MATURE REGIONS
EOR
HARD-TO-RECOVER RESERVES (HTR)
UNCONVENTIONALS
| 15GAZPROM NEFT
140
120
100
80
60
40
20
WHAT’S SO HARD ABOUT HTR?
146324
314387
400
300
200
100
0
4 mD 2 mD 1 mD 0.5 mD
600
400
200
0 102219
387504
>10 m 6-10 m 2-6 m <2 m
400
300
200
100
0110153
248387
20% 50% 70% 90%
Accumulated production over 20 years, 000 barrels Production rate comparison
Permeability effect
Payzone thickness effect (effective thickness)
Watercut effect
Traditional reservoir, tpd Bazhenov rock
2 year1 year 3 year 4 year 5 year 6 year 7 year 8 year
Bazhenov and other HTRs are much less prolific than
traditional reservoirs
Traditional reserves HTRs
Reve
nue
Reve
nue
Taxe
s
Taxe
s
Cost
s
Cost
s
NPV
NPV
Similar costs, but drastically
lower revenues
| 16GAZPROM NEFT
MAIN DRIVER FOR HTR AND SHALE – REDUCING COST OF CONTACT WITH A UNIT OF PORE SPACE
Produce more at the same cost
of the well –drill more
sophisticatedwells
Produce the same at a
lower well cost –trivialize
sophistication
AS A RESULT PUSH THE BOUNDARY OF PROFITABILITYINTO LESS PROLIFIC ZONES, INVOLVE MORE RESERVES
INTO PRODUCTION
REDUCING COST OF CONTACT WITH A UNIT OF PORE VOLUME
Increasing the length of horizontal sections
Increasing number of horizontals per one vertical wellbore (multilaterals)
Increasing drainage area with further reaching and more numerous fracs
1
2
3
| 17GAZPROM NEFT
TECHNOLOGICAL EVOLUTION OF GAZPROM NEFT
Share of horizontal wells
Length of horizontal leg in meters and numberof fracking stages
Share of hi-tech wells
Share of edge zones drilling
42%35%
13%
2011
Best practice
2013
2012
20112014 2014
2014
2013 2013
2013
2012 2012
2012
100% 100%
100%
0% 0%
0%
Horizontal wells, units
Edge zones drilling
Multi-stage fracs Multilaterals
4%
33%
57%
10%
37%
55%
8%
50%
43%
7%
97%
3%
Up to 40 stages 2,000
1,030
800
300
9-10 stages
5-6 stages
3
76%64%
43%
| 18GAZPROM NEFT
k - permeability, mDH – payzone thickness, m
NEW PRODUCTION FROM GAZPROM NEFT'S MATURE FIELDS COMES FROM MORE DIFFICULT ZONES –BUT AT THE SAME INITIAL PRODUCTION RATE
Quality distribution of reserves Average newly-tapped reserves quality measure, kH
Oil production of new wells, bpd
Quality distribution of reserves, kH
Produced reserves, bln barrels Remaining reserves, bln barrels
25
205
34
247
49
239
72
233
81
232
2014
2014
2013
2013
2012
2012
2011
2011
2010
0
2.0
Reserves, bln. bbl
1.5
1.0
0.5
> 1000 < 1000 < 600 < 300 < 200 < 100 < 50 < 30 < 20 < 10
2010
actual Forecast (risked)
-50%
| 19GAZPROM NEFT
REASSESSING PRODUCTION OUTLOOK AS WE IMPLEMENT NEW TECHNOLOGIES
PRIOBSKOE
1999 336.5MMTonnes
12.1MMTonnes in 2014
Start-up Reserves Peak
VYNGAPUROVSKOE
1982 99.6MMTonnes
3.8MMTonnes in 2010
Start-up Reserves Peak
KRAINEYE
1986 14.8MMTonnes
1.3MMTonnes in 1989
Start-up Reserves Peak
additional new tech production
2009 profile2013 profileactual production
2000 2005 2010
11,896
2015 2020 2000 2005 2010
3,759
2015 2020 2000 2005 2010
582
2015 2020
» Introduced integrated field development plan
» Started drilling horizontal wells with multistage hydrofracs
» Target for horizontal wells to account for 25% of total wells drilled by 2016
» Increased drilling of horizontal wells with multistage hydrofracs
» 75% of total wells drilled in 2013 were horizontal wells with multistage hydrofracs
» Started drilling horizontal wells with multistage hydrofracs, nearly doubling production in 2013
» Expect to develop at least 3 MMTonnes additional reserves from Jura layers
| 20GAZPROM NEFT
» Bazhenov is a low-permeability, but highly hydrocarbon-saturated layer in West Siberia. Characteristic depths are below 2000 meters, with 10 to 40 meters thickness. This layer is spread over 1 mln sq. km.
Keys to unlock Bazhenov: » Developments in hi-res seismic and geomechanical modeling to localize the
reserves and hotspots » Substantial cost reduction for long-outstep (1000 meters and more) horizontals
with 10 or more fraccing stages » Reasonable tax regime » Possibly tertiary recovery methods, such as in-situ retorting and burning to unlock
liquids from kerogen rock
BAZHENOV PILOT ACTIVITIES IN PROGRESS: POTENTIAL TO DEVELOP 150-400 BBOE OF RECOVERABLE RESERVES
2012 2013 2014 2015 2016 2017 2018 2019 2020Evaluation Concept selection Definition Development
» Core and fluids studies
» Geological modeling
» Confirmation of commercial potential of the prospect
» Development of uncertainty reduction plan
Technical feasibility studies
» Studies and tests of 15 various well designs
» Confirmation of feasibility of >100 wells drilling
» Design and development of the full-scale project
» Full-field production potential – more than 100 MMboe until 2035
Additional studies
» Exploration and seismic re-evaluation
» Studies on in-situ burning
Tax regime negotiations
| 21GAZPROM NEFT
GAZPROM NEFT - RUSSIAN LEADER IN TERTIARY RECOVERY
EXPERIMENTSON CORE
SAMPLES2009
TESTEDONE WELL
2009
PILOTPROJECT
2009-2015
FULLIMPLEMENTATION
2018+
USE IN WESTERN SIBERIA
2018+
ENGINEERING – 2013CONSTRUCTION – 2014ASP INJECTION – 2015OIL – 2016
LABORATORYTESTS 2008
PROJECTDOCUMENTATION
2013
7 WELLSTO BE DRILLED
2014
CONSTRUCTIONOF BLENDING UNIT
2014
Alkaline Surfactant Polymer (ASP) flooding at Salym JV with Shell
Example of ASP implementation vs. base production
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
two-fold increase
Additional production from ASP projectUncommercial tail of base productionBase project
| 22GAZPROM NEFT
NEW OIL FROM MATURE REGIONS MAY DOUBLE OR TRIPLE RUSSIA'S RESERVES
74
15.6
86
6.4
28
1.5
22
2.2 25.7
Economic reserves by international classification
Uninvolved HTRs EOR potential Bazhenov and other shales
Total
Conservative estimates
2P PRMS** HTR EOR* Bazhenov pilots Total
210
Russia
Gazprom Neft
Economic effect for Russia » Total possible new production – 136 bln bbl
ASP Pilot » Field tests conducted on West Salym in 2010-2016
Pilot projects in Bazhenov
Project Total production Plateau rate Peak year
Upper-Salym field
84 MMbbl 70 kbpd 2018
Potential growth of economic reserves in Russia and Gazprom Neft, bln bbl
3-fold
+10.0 bln boe
| 23GAZPROM NEFT
Improving product quality, growth in premium channels
DOWNSTREAM
| 24GAZPROM NEFT
DOWNSTREAM STRATEGIC GOALS 2025
Improve quality by upgrading Group refineries
Increase depth of processing by upgrading Group refineries
Increase operational efficiency in refining
Distribute 100% of the output of Company
Distribute motor fuels by expanding the Group’s retail and small-wholesale networks
Refine 40 MMtonnes annually in Russia by 2025, with 80% light product yield
| 25GAZPROM NEFT
HIGHER VALUE PRODUCT MIX AND EXPANDED REFINING THROUGHPUT
7.5 MMTonnes (151 kbpd) Yaroslavl
Refining throughput, MMTonnes
Peer comparison – Refining throughputgrowth (CAGR) 2013 vs. 2009*
11.1 MMTonnes (222 kbpd) Moscow
1.1 MMTonnes (21 kbpd) Mozyr, Belarus
20.2 MMTonnes (406 kbpd) Omsk
2.7 MMTonnes (55 kbpd) NIS, Serbia
■ NIS ■ Slavneft ■ Moscow ■ Omsk
* Source: Company data, INFOTEK
Gazprom Neft
Rosneft
Lukoil
Bashneft
Surgutneftegas
6.3%
5.9%
1.2%
0.8%
-0.8%
2009 2010 2011 2012 2013
33.4
18.4
5.8
6.8
2.4
37.9
19.0
8.9
7.2
2.9
40.5
19.9
10.8
7.4
2.4
43.3
20.9
10.7
9.6
2.142.6
20.2
11.1
8.62.7
+10%
+92%
+26%
+15%
+28%
2013
/200
9 y
-o-y
gro
wth
-3%
+4%
-10%
+28%
-2%
| 26GAZPROM NEFT
GAZPROM NEFT BEGAN PRODUCTION OF CLASS 4&5 FUELS TWO YEARS AHEAD OF REGULATORY DEADLINE
Class 2
Class 3
Class 4
Class 5
2016
Technical regulations
2 years
2009 2010 2011 2012 2013 2014 2015
2010 » Omsk: Isomerization unit
2011 » Yaroslavl: Izomerization unit » Yaroslavl: FCC gasoline hydrotreater
2012 » Omsk: FCC gasoline hydrotreater » Omsk: Diesel hydrotreater » Moscow: Diesel hydrotreater
2013 » Moscow: Izomerization unit » Moscow: FCC gasoline hydrotreater » Yaroslavl: Diesel hydrotreater
High-octaine gasoline yield, % Diesel yield, %
19.30.8
10.9
69.0
51.1
12.6
19.0
17.3
42.0
26.8
80.5
19.5
28.0
3.2
+52.5pp +51.7pp
+6.7pp -22.5pp
-8.1pp
■ Class 5■ Class 4■ Class 3■ Other
2012 2013 2012 2013
■ Class 5■ Class 4■ Class 3■ Other
| 27GAZPROM NEFT
CONVERTING GROUP REFINERIES TO ADVANCED OIL PROCESSING CENTERS
2013 2014 2015 2016 2017 2018 2019 202061.3 Light product yield, % 67.1 80.679.2 Depth of refining, % 82.5 94.236.5 Product output, MMTonnes 36.7 37.9
Licensor choice
Base project
FEED development
Operational documentation
Equipmentdelivery
Construction&installation
Omsk
Deep processing unit*CDU/VDU unitDelayed coking unit
✔
✔
✔
✔
✔
✔
✔
✔
Mos
cow
Complex processing unit** Deep processing unit***
✔
✔
✔
✔✔
Yaro
slav
l
Gasoline pool****, diesel fuel dewaxing 3rd group lube base stock
✔
✔
✔
✔ ✔
✔
✔✔ ✔
NIS Delayed coking unit
3rd group lube base stock Novi Sad refinery ✔
✔
✔
✔
✔
✔ ✔ ✔ ✔
* Hydrocracking, hydrogen and sulphur units** CDU/VDU, diesel hydrotreating and reforming units
*** Hydrocracking and flexicoking unit, energy block **** Reconstruction of FCC, alkiliation and MTBE units
Y2013✔
Omsk Moscow Yaroslavl NIS
| 28GAZPROM NEFT
HIGHLY SUCCESSFUL REBRANDING AND MARKETING EFFORT
2. Benchmarking 3. Loyalty program
4. Accompanying goods and services
1. Retail metrics
Retail metrics Benchmarking, tpd
(Avg. daily sales/site in RU)
Loyalty program, mln members Non oil sales, 1,000 RUB/sq.m.
947
0.89.1
181
1,043
1.912.3
202
1,060 3.3 14.9
205
1,1114.3
16.7
228
2010 2010 201020102011 2011 201120112012 2012 201220122013 2013 20132013
■ Russia network, units ■ CIS network, units ◆ Avg. daily sales per site in RU, tpd
10.3◆
14.2◆
17.6◆
19.0◆
■ Gazprom Neft ■ Lukoil ■ Rosneft
4
8
12
16
20
x2.4
35%74%
21%
27% 10%
| 29GAZPROM NEFT
AVIATION
*includes Ministry of Defenсe market share
2013 Key events: Geographical expansion
» Sales volume increased: +15.5% vs. 2012
» Market share increased by 1.6pp vs. 2012 to 22.9%
» Expanded international presence to 125 airports ( +37 airports in 2013)
» Number of own refueling complexes reached 11 ( + 2 in 2013 Kemerovo and Orsk)
» Increased number of Russian and foreign contractors to 70
» Awarded Emirates Airlines certificate for “Recognition of High Service Level at Airports in the Russian Federation”
Market share in Russia* in 2013
Airports, unitsPremium sales volumes, MMTonnes
Own refueling complexes, units
1.0730
71.64 77
82.07127 92.39
170 11
2010 2010 20102011 2011 20112012 2012 20122013 2013 2013
22.9%
| 30GAZPROM NEFT
BUNKERING
2013 Key events: Geographical expansion
Market share in Russia in 2013
Ports, unitsPremium sales volumes, MMTonnes
Bunker tankers, units
» Premium sales increased: +11.4% 2013 vs. 2012 » Market share in Russia is 18.6% » Active growth of Black Sea bunker market: +57% 2013 vs. 2012 » Expansion in Far East market: +43% 2013 vs. 2012 » Finalized acquisition of Estonian bunkering operator AS Baltic Marine Bunker and
Romanian bunkering operator Marine Bunker Balkan SABegan » Commissioned 2 new bunker tankers in Far East and Black Sea region » Conducted first bunkering operation in the ports of Sochi and Nizhnekamsk » Long-term contracts with major container carriers ZIN, MSC, MAERSK » Acquired terminal in Novorossiysk
1.43 14
102.16
26
5
2.8931
7
3.22 3310
2010 2010 20102011 2011 20112012 2012 20122013 2013 2013
18.6%
Black Sea Region NovorossiyskTuapseKavkazTamanSochi
International Ports TallinnRigaGoteborgConstanta
Northwest Region Saint PetersburgKaliningradBaltiyskMurmanskArkhangelskPrimorskUst-Luga
Inland waterways MoscowYaroslavlKazanVolgogradRostov-on-DonAstrakhanUst-KutSamaraNizhniy NovgorodSheksnaNizhnekamsk
Far East NakhodkaVladivostokVostochniySakhalinKozminoVanino
| 31GAZPROM NEFT
EXPANDING MARKET SHARE DRIVES VOLUME GROWTH
Deliveries, 2013
Lubricants / 2013 Key events
Completion of construction and launch of lubricants
production
Sales of G-Family products growth
To Libya, Nigeria, Turkmenistan, Uzbekistan,
Hungary, Dominican Republic and Afghanistan, bringing total number
of foreign countries to 42
Omsk 26% Y-o-Y
Bitumen / 2013 Key events
» Began production at KAZAKHSTAN bitumen plant
» Created a JV with Total to produce polymer-modified bitumen under G-Way Styrelf brand
» Concluded acquisition of Russia’s largest polymer modified bitumen plant
Premium sales volume, MTonnes
81121
152 170
2010 2011 2012 2013
Premium sales volume,MTonnes
1626
2012 2013
Market share in Russia in 2013
12.5%
Market share in Russia in 2013
30%
+7
| 32GAZPROM NEFT
Questions & Answers
| 33GAZPROM NEFT
SUPPLEMENTAL MATERIALS
| 34GAZPROM NEFT
Palyanovskoye
FRACTURED
HYBRIDSMATURITY
Bolshoi Salym
Niobrara
SPD
Sredne Nazymskaye
Eagle Ford Wolfcamp
Structural map, 2008
Re-interpretation, 2013
Structural map, 2013
Structural map withfissures clusters, 2013
CURRENT FOCUS: DEVELOPING BETTER UNDERSTANDING OF GEOLOGY AND RESERVES
| 35GAZPROM NEFT
Goal Frac design Multi-stage frac interval
Goal Frac design Multi-stage frac interval
CUSTOMIZING FRAC DESIGNS TO MEET DIFFERENT CHALLENGES
Unconventional tight reservoir
Traditional tight reservoir
Increase drainagearea by creating efficientsystem of fissures
Compromisebetween fissureopening and halflength,depending onpermeability andunderlying waterpresence
100-200 meters,depending onpermeability
Create a fissureto connect isolated oil-saturatedlayers of the reservoir
Maximise halflength,taking intoaccount proppantproperties andgeomechanicalcharacteristics ofreservoir rock
50 -100 meters based ontechnical constraints
50 – 100 м
100 – 200 м
| 36GAZPROM NEFT
THE PHYSICS OF ALKALI SURFACTANT POLYMER FLOODING
» Surfactant reduces sur-face tension at oil-water interface, increasing oil mobility
» Alkali reduces surfactant bonding with rock matrix; reaction with oil creates some additional surfactant reducing the need to inject
» Residual oil saturation of pores is reduced to 10-15%
» Highly viscous polymer ensures a uniform sweep
» Sweep efficiency increases from 70-80% to 85-90%
CAPILLARY IMMOBILIZATIONUNEVEN DISPLACEMENT OF OIL
UNEVEN DISPLACEMENT
ASP FLOODING RAISES OIL RECOVERY FACTOR MORE THAN 1.5 TIMES, COMPARED TO TRADITIONAL WATERFLOOD
Rock
Bound water
Reservoir before start of production
Water breakthroughs
Trapped oil
Reservoir after traditionalproduction methods
Vertical heterogeneity
Oil becomes mobile
Alkaline+surfactant unlock oil
Polymer action
Oil
Polymer
Water
Prod
ucer
Inje
ctor
Prod
ucer
Inje
ctor