Rosneft intends to increase production of hydrocarbons by 30% by 2020
By 2020, Rosneft is to increase the production of hydrocarbons by 30%; its gas business will increase two times to 100 billion cubic meters per year.
By 2020, Rosneft plans to launch more than ten large fields (the Suzunskoye, Russkoye, Yurubcheno-Takhomskoye and other fields are among them), most of which are located in Eastern Siberia, president of Rosneft, Igor Sechin told the shareholders at the annual meeting in Khabarovsk. The production in the Far East and Eastern Siberia is 32 million tons now, and could reach 50 million tons after 2020. This will allow Rosneft to increase its production by over 30% to 6.4 million barrels per day. In 2013, it was 4.9 million barrels per day (4.2 million barrels of them were oil and liquid hydrocarbons).
The company’s gas business will grow quickly, he said. The gas production will increase more than two times to 1.8 million barrels per day (about 100 billion cubic meters. meters per year). I.e. the Rosneft’s production may be about 230 million tons of oil by 2020 (+10% as compared with 2013). Previously, Rosneft forecasted the annual production growth by 1% in 2014-2016, and by 3-4% per year after 2017. According to senior analyst of Alfa Bank, Alexander Kornilov, the risk of failure of oil production plans is tied with the tax regime, which changes quite often in Russia.
"According to our estimates, by 2020 Rosneft will become the second largest gas producer and the largest independent player at the Russian market with a share of over 20%," - he said. The strategy of Novatek (which is now the second-largest producer after Gazprom), which was published in 2011, spoke of production of over 100 billion cubic meters in 2020. Taking into account new acquisitions and new fields, the plans of the Rosneft’s gas production look realistic, says Kornilov. It will be difficult to pass ahead of Novatek. There are no objective conditions for Novatek to revise its strategy, the analyst thinks.
Sechin noted that in 2013 the company reduced the historical rates of the oil production decline in several key regions of Western Siberia by more than two times. More than a third part of the Rosneft’s production falls on the assets of Yuganskneftegaz. In the first quarter of 2014, the oil and liquid hydrocarbons production decreased by 3.3% as compared with the fourth quarter of 2013 to 16.2 million tons and by 1.9% as compared with the first quarter of 2013, the company reported in its accounting for the first three months of 2014. Head of Rosneft’s subsidiary was discharged because of failure of the production plans, Sechin said at the meeting. "If someone works ineffectively, he must give way to another, who works effectively," - he said.
The rates of the decline at other enterprises of Western Siberia were higher: 5.9% at Purneftegaz (as compared with the fourth quarter of 2013), 5.5% at Samotlorneftegaz, 5.3% at Tomskneft, 7.8% at Varieganneftegaz. In the future, the company plans to reduce the rate of the production decline to 2-3% per year, said the Rosneft’s president. If the fall exceeds the expectations, it could seriously hamper the company to implement the plan, said Kornilov. Sechin thinks that launch of fields with difficult reserves will help to compensate for the decline in the production in the region. Their production potential is 10-15 million tons in the next 5-7 years, he said.
