Public Joint Stock Company Rosneft Oil Company, together with its subsidiaries, engages in the exploration, development, production and sale of oil and gas, as well as the production, transportation and sale of petroleum products in Russia and abroad.
Rospan and Kharampur are major gas projects viewed as the top contributors to the company's near-term hydrocarbon production growth.
The company is developing vast gas reserves in Western and Eastern Siberia and holds a unique licence portfolio for hydrocarbon development on the Russian continental shelf. As of January 1, 2020, ??1?1+?2?2 recoverable gas reserves were estimated at 7.7 tcm.
The company produces gas through more than 35 subsidiaries and joint ventures in Western and Eastern Siberia, Central Russia, the south of European Russia, the Russian Far East, as well as in Egypt, Vietnam, and Canada.
In 2019, the company’s gas production both in Russia and abroad totalled 66.951 bcm, including 32.77 bcm of natural gas and 34.18 bcm of associated petroleum gas. The company’s international projects, mostly in Egypt, Vietnam and Venezuela, accounted for 4.97 bcm of the total gas output, including 4.90 bcm of natural gas, while its domestic output stood at 61.98 bcm. Some of the Russian gas was processed into liquid hydrocarbons. In 2019, the company’s gas output in Russia, including the gas processed into liquid hydrocarbons, totalled 62.36 bcm.
Development of International Projects in Oil and Gas Regions
The company is a global energy company with a diversified portfolio of international assets. Operating in regions, such as South America, North and East Africa, the Middle East, and the Asia-Pacific Region, the company actively develops local partnerships that are aimed at mutually beneficial implementation of development projects.
The Zohr Project in Egypt
Brazil: Through its subsidiary, Rosneft Brasil E&P Ltda, the company engages in a prospecting and exploration project at licence areas in the Solimões River Basin (state of Amazonas), holding a 100% stake and operatorship in these licences. Its efforts resulted in a number of gas discoveries. In 2019, the company drilled the fourth prospecting well, which helped detail the geological structure and the oil and gas bearing potential of the basin. The company is considering monetisation options for the newly discovered gas reserves.
Iraq: Bashneft International B.V. is the project operator and owns a 100% stake in the hydrocarbon exploration and production agreement for Block 12. In December 2019, the second exploration well, Salman-2, was completed and tested by the company at Block 12 in Iraq’s south, which confirmed the initial estimate of oil reserves at the Salman field. In late 2019, the company submitted to the Iraqi side an application for potential commercial discovery and a further exploration programme for the next two years.
Iraq (Kurdistan): Since 2017, the company has been running a hydrocarbon exploration and production project in Iraqi Kurdistan. The company is the project operator, holding an 80% stake in five production sharing agreements (PSA). In February 2019, oil production was piloted at the Bejil field. In 2019, the company started 3D seismic surveys, getting ready for exploration drilling.
Offshore Projects in Mozambique
The company participates in the consortium for exploration of three offshore blocks (?5-?, Z5-C, and Z5-D) in Mozambique, which were obtained following the fifth licensing round.
Myanmar: Bashneft International B.V. is the project operator at Block EP-4, holding a 90% stake in the PSA. Its efforts helped identify a number of targets for prospecting drilling. The first well is scheduled for 2020.
Offshore Projects in Vietnam
The company participates in exploration projects and a joint gas and condensate production project at Block 06.1 in the Socialist Republic of Vietnam (Rosneft Vietnam B.V. as the project operator holds 35%, ONGC Videsh Ltd. (India) – 45%, PVN – 20%). The project is implemented in line with the PSA. Block 06.1 contains three gas condensate fields, specifically Lan Tai, Lan Do, and PLD (Wild Orchid). The fields are located 370 km offshore in the Nam Con Son Basin.
Actual production in 2019 (100% of the project) totalled 4.16 bcm of gas and 0.04 mmt of gas condensate (the company’s share: 0.78 bcm of gas and 0.01 mmt of gas condensate).
The company also participates in the offshore Nam Con Son pipeline project (Rosneft Vietnam Pipelines B.V.– 32.67%, Perenco– 16.33%, and PVN– 51%), which involves the transportation of gas and gas condensate produced at offshore blocks in the Nam Con Son Basin to the onshore processing facility and then to gas turbine power plants for electricity generation. The pipeline has a capacity of 7.7 bcm per year, carrying ca. 7 bcm of gas in 2019, including the gas produced from Block 06.1 and other operators in the Nam Con Son Basin. Its operational efficiency is 100%.
Downstream (Refining and Commerce)
The company operates 13 large refineries, which processed over 100 mmt of oil in 2019. In 2019, the company’s Russian refineries processed 100.1 mmt of oil. The total oil refinery throughput (including foreign assets) stood at 110.2 mmt. In the fourth quarter of 2019, Russian refineries’ throughput amounted to 25.5 mmt, with the year-on-year change attributable to the repair cycle.
The company continued to expand its range of environmentally-friendly fuels. In May 2019, the Ryazan Refinery launched the production of AI-95-K5 Euro-6 gasoline to supply the Moscow Region with greener fuel. The Komsomolsk and Ufa refineries started producing RMLS, a low-sulphur marine fuel compliant with the IMO standards that went into effect in early 2020.
The company operates the largest oil refining capacities in Russia and controls refineries in the key regions of the country. In 2019, the company's domestic refineries processed 100.1 mmt of oil.
In Germany, the company’s subsidiary, Rosneft Deutschland GmbH, holds interest (24% to 54%) in three refineries, controls more than 12% of the country's oil refining capacities, and processing up to 12.8 mmtpa. In Belarus, the company indirectly holds a 21% stake in the Mozyr Refinery.
The company also holds a 49% stake in India’s second-largest high-tech refinery in Vadinar with a total processing capacity of 20 mmtpa. The company joined effort with its partners in the Asia-Pacific to design a refinery with a petrochemical complex in Indonesia and finalize a refinery project in China.
International Oil Refining Projects
The company indirectly holds a 21% interest in Mozyr Refinery, Belarus, through Slavneft. The company’s share in the throughput of the Mozyr Refinery amounted to 2.1 mmt in 2019. In 2019, the company supplied a total of 5 mmt of oil to the refinery, while completing its investment project for the construction of a heavy residue hydrocracking unit.
Refinery and Petrochemical Complex Construction in Tuban
The project is implemented in cooperation with Pertamina, Indonesian oil and gas company, through the establishment of a joint venture named ?? Pertamina Rosneft Pengolahan dan Petrokimia (the company holds 45% and Pertamina– 55%) in 2017. PT Pertamina Rosneft Pengolahan dan Petrokimia, a joint venture by the company and Pertamina, Indonesian state oil and gas company, signed a contract with Spanish Tecnicas Reunidas SA on the basic (BED) and front-end engineering design (FEED) for an oil refining and petrochemical complex in Tuban, Java, Indonesia. The final investment decision (FID) on the project will probably be made after the completion of BED and FEED and will be based on the results of fundraising. The plant is expected to become one of the most hi-tech facilities globally. Its design capacity will be up to 15 mmtpa for primary oil refining, over 1 mmtpa for ethylene production and 1.3 mmtpa for aromatic hydrocarbons production.
Nayara Energy Limited
In 2017, the company closed the deal to acquire 49.13% of shares in Nayara Energy Limited, an Indian company that owns the country’s largest refinery situated in Vadinar and a retail network of filling stations across India. The Vadinar refinery has a capacity of 20 mmtpa and ranks second in the Indian market by throughput. It is highly flexible as it can process heavy and extra-heavy crudes, which account for over 90% of its annual throughput.
Nayara Energy Limited runs a large network of filling stations under the Essar brand in India, which included 5,628 operating stations as of December 31, 2019. The company has three own oil depots and 13 under rent. Nayara Energy Limited operates in 27 out of 28 states of India, its market share by sales being around 5.3%. The company is planning to increase the number of filling stations to 7.3 thousand by 2022 selecting the territories for development.
Nayara Energy Limited is implementing a phased development programme for its Vadinar refinery. During the first phase, the company will reconstruct the catalytic cracking facility and build new polypropylene production units with an annual capacity of up to 450 kt.
PetroChina-Rosneft Orient Petrochemical Company, Tianjin (Joint Venture)
The company owns 49% of the Tianjin Refinery. The refinery’s design capacity is 16 mmtpa.
Kurdistan Pipeline Company Pte. Ltd.
In 2019, a concession agreement on the operation of crude oil export pipeline in Iraqi Kurdistan came into effect. The pipeline’s design capacity will be nearly 950 kbpd. The company's share in the project is 60%.
Oil Refining Assets in Germany
Rosneft Deutschland GmbH (RDG): The company entered the German petroleum product market in 2011 when it acquired a 50% stake in Ruhr Oel GmbH (ROG) joint venture.
In December 2019, Rosneft Deutschland closed the deal to acquire 3.57% of shares in Bayernoil Raffineriegesellschaft mbH Refinery from BP Europa SE, increasing its stake to 28.57%. As a result, the company saw its share in the refining capacities of the Bayernoil Refinery grow to almost 3 mmtpa, its total throughput in Germany reaching 12.8 mmtpa, which strengthened its positions both in Bavaria, one of the largest industrial regions of Germany, and Austria.
The company is the third largest player in the German oil refining market. Operating activities are carried out by its subsidiary, Rosneft Deutschland GmbH, which was established in 2017. The company supplies almost a quarter of crude oil imports to Germany– ca. 23 mmtpa.
In January 2019, Rosneft Deutschland GmbH initiated the direct sales of petroleum products manufactured at the three German refineries partially owned by the company. The product mix includes motor gasoline, diesel fuel, light heating oil, jet fuel, liquid petroleum gas (LPG), bitumen, heavy marine fuel and petrochemical products. The company is a leader in the German petroleum wholesale market. Apart from direct supplies from its refineries, the company uses over 30 export terminals to deliver petroleum products by road, rail, and river.
The company’s customer base includes more than 500 enterprises in Germany, Poland, the Czech Republic, Switzerland, Austria, and France. In 2019, Rosneft Deutschland increased sales of polymer-modified bitumen (PMB) Alfabit by 37.5% year-on-year. Alfabit is a high-tech material featuring high elasticity and wear resistance. Rosneft Deutschland began supplying Alfabit to German consumers in 2018, shortly after the start of sales and marketing of bitumen in the country.
The company also established a supply chain for PMB in Germany using feedstock from the PCK, Bayernoil, and MiRO refineries. In 2019, Rosneft Deutschland supplied Alfabit PMB and other bitumen products to KUTTER GmbH & Co. KG for the construction of an extended runway at the Memmingen (Allgäu) Airport in Bavaria. The products were used to lay about 57 kt of asphalt on 165 thousand sq m of airport land. Apart from that, Rosneft Deutschland signed contracts on into-plane fuelling with airports in Munich and Berlin (Tegel and Schönefeld) as part of its jet fuel market share expansion in Germany. Rosneft Deutschland owns a share in the PCK Refinery in Brandenburg, which produces 300 ktpa of jet fuel, accounting to almost a half of the total kerosene consumed at Berlin airports.
The company’s petrochemical complex comprises Angarsk Polymer Plant, Novokuybyshevsk Petrochemical Company, and Ufaorgsintez. The company also has petrochemical production lines at BashneftUfaneftekhim (an aromatic hydrocarbon production complex) and the Angarsk Refinery (methanol, butyl alcohol, and amine production units).
Angarsk Polymer Plant: The plant’s main products include ethylene, high-density polyethylene, propylene, benzene, butylene-divinyl fraction, ethylbenzene, styrene, polystyrene, etc. As of December 31, 2019, the Angarsk Polymer Plant was the polystyrene and high-density polyethylene manufacturer in Eastern Siberia. The plant’s annual output includes over 200 kt of ethylene, over 100 kt of propylene, and 60 kt of benzene. Ethylene is partially supplied to Sayanskkhimplast as feedstock, while the remainder is used to produce high-density polyethylene and other petrochemicals. The plant uses straight run gasoline and hydrocarbon gases mainly produced by the Angarsk Refinery as feedstock. In 2019, the Angarsk Polymer Plant processed 719.3 kt of hydrocarbon feedstock, while its output of high value added marketable products amounted to 550.4 kt.
Novokuybyshevsk Petrochemical Company: Novokuibyshevsk Petrochemical Company is one of the largest gas processing, petrochemical, and organic synthesis companies in Russia and Eastern Europe. Its product mix comprises over 30 items, including tert-amyl methyl ether (TAME), synthetic phenol, synthetic ethanol, and acetone for industrial application, LPG, and para-tertiary butylphenol (PTBP). The company produces 300 ktpa of high-octane additives for TAME motor fuels and has PTBP production facilities unrivalled in Russia and the CIS. It is also the only synthetic ethanol manufacturer in the country. In 2019, the company processed 1,013.3 kt of feedstock, while its output amounted to 969.1 kt of marketable products. The company is carrying out a project to build a pilot plant for the production of synthetic polyalphaolefin base oils characterised by high viscosity and low freezing point, the first of its kind in Russia.
Ufaorgsintez: Ufaorgsintez is one of the largest petrochemical enterprises in Russia focusing on the production of phenol, acetone, high-density polyethylene, polypropylene and its copolymers, synthetic rubber, and other organic synthesis products. The plant produces over 30% of Russia’s total phenol output and is a leading producer of acetone. Ufaorgsintez has a capacity of more than 850 ktpa. The company’s products are widely used to manufacture plexiglass, phenol formaldehyde resins, alkylphenols, plastic films, and other products for industrial and agricultural application, and industrial rubbers. Ufaorgsintez’s products are of high demand in mechanical engineering, consumer goods, healthcare, electronics, and electrical engineering sectors. Some of its organic synthesis products are unrivalled in Russia. The company’s ethylene propylene diene monomer rubber (EPDM) is a component of various industrial rubber products, including those used in the defence industry, and wire and cable insulation in electrical appliances. In 2019, the company processed 685.3 kt of feedstock, its output being 617.3 kt of marketable products.
The company’s gas processing assets process the associated petroleum gas from the company’s oil and gas production facilities, and their output is mainly utilized as feedstock for the company’s petrochemical subsidiaries.
The company’s gas processing assets include Otradnensky Gas Processing Plant (OGPP), Neftegorsky Gas Processing Plant (NGPP), Tuymazinskoye Gas Processing Plant (TGPP), Shkapovskoye Gas Processing Plant (ShGPP), and RN-Buzulukskoye Gas Processing Plant (BGPP).
Otradnensky Gas Processing Plant: In 2019, the OGPP processed 255.5 mmcm of associated petroleum gas derived from the oil and gas fields of Samaraneftegaz and Orenburgneft. Its main products are dry stripped gas, natural gas liquids (NGLs), ethane fraction, and industrial sulphur. The plant continues a comprehensive programme involving the upgrade and replacement of worn-out and obsolete equipment with advanced modular units, which will improve operational efficiency and increase automation.
Neftegorsky Gas Processing Plant: In 2019, the NGPP processed 456.1 mmcm of associated petroleum gas derived from the oil and gas fields of Samaraneftegaz and Orenburgneft. Its main products are dry stripped gas, NGLs, ethane fraction, and industrial sulphur. The plant continues a comprehensive programme involving the upgrade and replacement of worn-out and obsolete equipment with advanced modular units, which will improve operational efficiency and increase automation.
Tuymazinskoye Gas Processing Plant: In 2019, the TGPP, part of Bashneft, processed 26.5 mmcm of associated petroleum gas derived from the oil and gas fields of Bashneft-Dobycha (Oil and Gas Production Board (OGPB) Tuymazaneft), and 92.5 kt of NGLs using its own or third-party products. Its main products are liquefied gases, such as industrial propane/butane mixture, isobutane fraction, and normal butane fraction, as well as stable natural gasoline and industrial sulphur.
Shkapovskoye Gas Processing Plant: In 2019, the ShGPP, part of Bashneft, processed 46.2 mmcm of associated petroleum gas derived from the oil and gas fields of Bashneft-Dobycha (OGPB Ishimbayneft and OGPB Ufaneft), and 72 kt of NGLs using its own or third party products. Its main products are liquefied gases, such as industrial propane-butane, motor propane, isobutane fraction, and normal butane fraction, as well as stable natural gasoline.
Buzulukskoye Gas Processing Plant: In 2019, the BGPP, which includes two standalone production facilities, the Pokrovskaya Gas Treatment Unit and the Zaykinskoye GPP, processed 1,054.8 mmcm of associated petroleum gas and unstable gas condensate derived from the oil and gas fields of Orenburgneft. Its main products are combustible natural dry stripped gas, liquefied gases, such as industrial propane-butane, motor propanebutane, industrial propane, and industrial butane, as well as stable natural gasoline and industrial sulphur. An investment project is under way to build a 1.2 mmcm gas desulphurisation unit at the Zaykinskoye GPP, which will enable the BGPP to process additional volumes of sulphur associated petroleum gas from the prospective licence areas of Orenburgneft.
Commerce and Logistics
In 2019, the company supplied about 100.1 mmt of oil to Russian refineries. In addition to shipments to its refineries in Russia during 2019, the company supplied 2.8 mmt of own oil to German refineries where it holds a stake. The total sales to third parties in 2019 amounted to 155.0 mmt, including 5.6 mmt of oil sold domestically.
As of December 31, 2019, the company’s retail chain comprised 3,069 filling stations, including 63 in Belarus, Abkhazia, and Kyrgyzstan. The company’s own and leased filling stations operated 2,079 shops. Over the same period, the company had 132 oil depots with a combined capacity of 2.2 mmcm and approximately a thousand gasoline tanker trucks in operation. In 2019, the company closed a deal to acquire a 100% equity stake in Petersburg Fuel Company.
As of December 31, 2019, the company automated measurements at 81 oil depots and more than 2,900 filling stations and provided measuring instruments for 99% of material flows at filling stations and 79% at oil depots.
Aircraft Refuelling Business
In Russia, jet fuel is sold through a chain of the company’s refuelling facilities at 21 airports and third-party refuelling facilities at 22 airports. The company also sells jet fuel at seven airports in Germany, Georgia and Mongolia.
Key customers of the company are Aeroflot Group, S7 Group, Ural Airlines, Pegas Group, Volga-Dnepr Group, Yamal Airlines, NordStar Airlines, Turkish Airlines, and Lufthansa Group.
The company’s bunker fuel is sold in all major Russian sea and river ports and a number of foreign destinations. Bunker fuel sales in 2019 amounted to 2.85 mmt, including bulk sales to foreign consumers (operators of transcontinental container shipping lines) at sea ports in the Russian Far East.
Public Joint Stock Company Rosneft Oil Company was founded in 1993.