GAZPROM NEFT

Company profile Strategic report Performance Technological development Gazprom Neft digital system Governance system identifies new oil strata Sustainable development in the Yamalo-Nenets Appendices Autonomous Okrug

Geological prospecting and oilfield development

The company is developing projects More than 12 million tonnes of ARCO complex of field oil-rims united grouped into large clusters on the (Arctic) oil have now been produced by a single infrastructure. The Yamal Peninsula, in Eastern and over the six years in which the fields currently being developed Western Siberia, in the Orenburg Prirazlomnaya platform has been in include Pestsovoye, En-Yakhinskoye Oblast, as well as through joint continuous operation, with 19 wells and Zapadno-Tarkosalinskoye, ventures with foreign partners. having been drilled. Three further with exploration activities under wells will be built and commissioned way at the Yamburgskoye field. In 2019, Gazprom Neft expanded at Russia’s first ever project on the Furthermore, in July 2019 Gazprom its resource base primarily through Russian Arctic Shelf in 2020. Neft secured development rights to organic growth at its existing assets. the Urengoyskoye field and Achimov This involved drilling 59 exploration gas-condensate deposits at the wells (including joint ventures). The Pestsovoye field. total drilling in 2019 (including joint mt ventures and projects) reached 167.7 Of those projects mentioned kilometres. According to Russian 12 above, Yamburg is set to become assessment standards, the success the largest new project in the rate for exploration drilling in 2019 of ARCO oil produced Arctic; estimated oil reserves of was 76%. the Achimov deposits within the licence block exceed four billion Two-dimensional (2D) seismic tonnes. Gazpromneft-Zapolyarye surveys covered 15,757 linear LLC has concluded long-term risk- kilometres in 2019 – a 2.9-fold 19 based operatorship agreements increase on 2018 – including with Gazprom subsidiaries; these 14,377 kilometres offshore, with a wells drilled have enabled the company to start record volume of seismic surveys developing the Achimovsky strata undertaken in the Arctic (the Chukchi at the Yamburgskoye oil and gas- Sea) using only one vessel without A key area in Gazprom Neft's condensate field, as well as oil- icebreaking support and covering development strategy is its rim deposits at the Pestsovoye 8,377 kilometres. Three-dimensional engagement in oil-rim development. and En-Yakhinskoye fields. The (3D) seismic surveys covered 3,886 The company has both the latest company plans to start developing square kilometres, including 515 technologies and extensive oil-rim deposits at the Pestsovoye square kilometres offshore. competencies, as well as valuable and En-Yakhinskoye fields at experience in developing such the end of 2021, and the start of The “Yuzhny Yamal (Southern Yamal)” complex reserves. commercial hydrocarbon production is one of the key exploration projects from the Achimovsky strata at the in the YaNAO initially comprising the The reporting year of 2019 marked Yamburgskoye field is scheduled Surovy and Yuzhno-Novoportovsky an important milestone in the for 2024 or 2025. Annual production licence blocks. In December development of Gazprom Neft's volumes could reach up to 10 mtoe. 2019, the scope of the project was projects at the assets of its parent expanded following Gazprom Neft’s company, Gazprom Group. Currently, In Eastern Siberia, Gazprom Neft is success in the licensing round for Gazprom Neft-Zapolyarye LLC is developing a new production cluster the Khambateysky licence block. developing nine fields on the basis of where a key element will be an oil In 2019, 2D seismic investigations long-term risk operator agreements, deposit at the Chayandinskoye oil were undertaken at the Yuzhno- with subsoil rights to these fields and gas-condensate field in the Novoportovsky licence block. In 2020, being owned by Gazprom PJSC and its Sakha Republic (Yakutia). This field a 2D seismic survey will be conducted subsidiaries. is unique in terms of the size of at the Surovy licence block and, in its reserves in place, estimated at 2021, field geological exploration will Accordingly, the Nadym-Pur- 263 mt. The Chayandinskoye field, start at the Khambateyskoye field. Tazovsky region comprises a whole at the same time, is characterised by a complex geological structure,

58 ANNUAL REPORT 2019 'Geological exploration of the future is a safe, technology-intensive Gazprom Neft’s digital and efficient business' tools will improve (interview) drilling

with the presence of a gas cap and account the specifics of logistics, % exceptionally low formation pressure infrastructure and technological 76 and temperatures. complexity. prospecting The company is developing the Gazpromneft-GEO has put in place a oil rim at this field under an matrix-based organisational model and exploration drilling- operating agreement with Gazprom that best matches the specifics and success rate in 2019 Dobycha Noyabrsk (a subsidiary challenges of geological exploration. of Gazprom that holds the licence This structure enables Gazpromneft- for the field). This subsidiary GEO to manage employees’ is currently developing the gas workloads efficiently, form project portion at this asset and Gazprom teams quickly when initiating new Over the past few Neft intends to develop the oil exploration projects, and apply years, the company portion. In late 2019, Gazprom accumulated knowledge and best has significantly Neft moved into pilot development practices in all exploration projects in expanded its portfolio of the field, and dispatched the the company portfolio. of exploration projects, first batch of marketable oil. Full- in terms of both scale development of this oil-rim Improving the efficiency of geological volume and value. will continue in 2020. The central exploration depends largely on the The portfolio structure processing facility (CPF) which has development of employees’ skills. has also changed a planned capacity of one million 2019 saw the launch of the GEO a great deal. tonnes per year, is expected to be Academy, a training project for Currently, the portfolio expanded and modernised by 2022. exploration specialists. This is a includes projects multilevel integrated environment with a whole new level for competency development; it of risk and complexity Gazpromneft-GEO includes a system that enables for the company. specialists, experts, methodologists In the industry, The Gazprom Neft Group’s projects and supervisors to share experience projects of this kind are managed on a turnkey basis by in this professional area. are called frontier the Gazpromneft-GEO Competency exploration projects. Centre, which is implementing about 20 projects. Its task is to enable the company to continuously replenish its Yuri Masalkin resource base with viable reserves, Director for Geological and to maximise the efficiency of Prospecting and Resource equity financing. Base Development, Gazprom Neft The Gazpromneft-GEO approach to exploration is based on: – managing a portfolio of major exploration projects; – concentrating financial and managerial exploration resources in a single centre; – optimising the transition of prepared business cases for further development; and – assessing each project in terms of geology and investment attractiveness, taking into

03 PERFORMANCE REVIEW 59 GAZPROM NEFT

Company profile Strategic report Learn more: Performance Gazprom Neft Technological development is starting to develop Governance system the Achimov Sustainable development Formation Appendices

Top five projects in Gazprom Neft’s exploration technology project portfolio

“Cognitive Vega 2.0 Exploration Digital Twin “The 365” Geologist” Designer for Seismic a project enabling year- Modelling an AI-based platform ​a system designed a project to enhance round prospecting and designed to speed up to support decision the efficiency of a project for building exploration drilling. geological data analysis making during exploration and digital twins of fields and support decision geological and eliminate geological that shortens lead making. economic assessments uncertainties. times along the full of new projects. cycle of processes, from an investment decision to creating a geological model.

A technology centre for developing Achimovsky deposits The Achimovsky stratum is an oil- and equipment and software producers, reserves in the Achimovsky strata gas-bearing formation overlying the academic institutions, research under current licences held by Bazhenov Formation in the central part organisations and innovation centres. Gazpromneft-Noyabrskneftegaz. The of the West Siberian Basin. Its complex A test-site will be established on the project is implemented together with structure, great depth and abnormally basis of Achimovsky deposits of the Gazpromneft-GEO and the Gazprom high formation pressure demand Yamburgskoye field. The company Neft Science and Technology Centre. the use of innovative exploration and also plans to create an integrated production techniques. More than half information platform and a data A range of geological exploration of these reserves are concentrated in centre in order to facilitate experience works are to be undertaken at the the Yamalo-Nenets Autonomous Okrug sharing. four most promising licence blocks: (YaNAO). Novoromanovsky, Sugmutsky, Gazprom Neft has already built the Sutorminsky and Severo-Yangtinsky. In 2019, Gazprom Neft and the industry’s first digital model of the Processing and interpretation of 3D Government of the Yamalo-Nenets Achimovsky strata covering the seismic data, core surveys, testing of Autonomous Okrug embarked on the entire territory of Western Siberia. existing wells and drilling of several establishment of a technology centre In 2019, the company launched new ones, and the building of a local for developing Achimovsky deposits. Achimovka NNG, a major new project geological and petrophysical model to This centre will enable cooperation involving comprehensive geological confirm resource potential, are all due between subsoil licence holders, exploration of hard-to-recover to be completed by 2023.

The “Bolshaya Achimovka” project

million billion mtoe ~ 1km2 >60 tonnes 20–40 total area reserves in place hydrocarbons production potential

60 ANNUAL REPORT 2019 Use of UAVs for hydrocarbon prospecting Gazprom Neft is the first company in Magnetic prospecting is traditionally from −30 to +40°C; they have made Russia to use unmanned aerial vehicles performed both on the ground, and flights of up to 90 minutes, covering (UAVs) successfully in multilevel from the air using aeroplanes and 35 to 55 kilometres. It is expected that magnetometrical surveys, allowing the helicopters. UAVs that enable the this technology will be used further company to obtain initial information company to conduct prospecting in exploring northern territories of on rock structure by measuring the surveys in hard-to-reach areas Western Siberia: in the Yamal, Taymyr geomagnetic field at the surface. throughout the year have been tested and Gydan Peninsulas. at the Novoportovskoye field. The UAVs can operate at temperatures ranging × × km2 10 2 100 speed improvement cost reduction compared covered compared to on-ground to piloted aerial surveys by testing methods

New enhanced oil recovery techniques for the Bazhenov Formation The “Bazhenov formation” refers to a Gazprom Neft acting as a production has facilitated a 66% increase in specific geological stratum identified in partner. hydrocarbon production at those wells the centre of Western Siberia, running on which it was tested. to depths of 2,000–3,000 metres and In 2019, specialists from the Bazhenov with a thickness of 30 to 80 metres, Technology Centre (a Gazprom Neft Xanthan gum is an alternative to covering an area of approximately one subsidiary) successfully tested a unique traditional guar-gum gels. It dissolves million square kilometres. Best-case new enhanced oil recovery technique completely in water after hydraulic estimates suggest that oil reserves at at the Bazhenov Formation, using a fracturing is completed. the Bazhenov formation (categorised as xanthan-gum-based fracking fluid. non-traditional reserves) could amount This is a water-soluble polysaccharide to as much as 18–60 billion tonnes. One produced through bacterial For more information of the largest research consortiums fermentation of any high-sugar p. 108 on the Bazhenov Technology in Russia was established in order to material, such as corn, wheat, dairy Centre explore the Bazhenov formation, with waste, etc. Using this new technology +66 % 19-stage 12 m3 hydrocarbons high-speed injection production increase hydraulic fracturing rate per minute at the well

03 PERFORMANCE REVIEW 61 GAZPROM NEFT

Company profile Strategic report Performance Technological development Governance system Sustainable development Appendices

PROJECT PORTFOLIO – FUTURE OUTLOOK

Current projects Southern Yamal Meretoyakha Yenisei (2019–2023) 101 332 306 mtoe mtoe mtoe Medium-term projects (2024–2026 ) Long-term projects (202+)

Southern Orenburg Ouryinskoe field Zima Otdalennaya group Chona Sakhalin 36 4 60 of fields (OGF) 60 115 mtoe mtoe mtoe 20 mtoe mtoe mtoe / 1 / Under long-term risk operatorship agreements with Gazprom.

* На основании рисковых операторских договоров с Газпромом.

62 ANNUAL REPORT 2019 Russia develops a new oil blend from West Siberia’s “tight” reserves

Non-traditional reserves

Bazhenov Domanic Palaeozoic

Current projects Southern Yamal Meretoyakha Yenisei mtoe (2019–2023) 101 332 306 550 mtoe mtoe mtoe Medium-term projects (2024–2026 ) Oil rim reserves1 Long-term projects Pestsovoye (202+) En-Yakhinskoye Zapadno-Tarkosalinskoye Orenburgskoye Chayandinskoye 145 mtoe

Neocomian-Jurassic deposits1

Kharasaveyskoye Bovanenkovskoye 766 mtoe

Achimovsky strata1

Urengoyskoye Yamburgskoye mtoe Southern Orenburg Ouryinskoe field Zima Otdalennaya group Chona Sakhalin 787 36 4 60 of fields (OGF) 60 115 mtoe mtoe mtoe 20 mtoe mtoe mtoe

* На основании рисковых операторских договоров с Газпромом.

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