OIL AS A COMMODITY AND MAIN DRIVERS FOR ITS

DEVELOPMENT AND ROLE

Igor Sechin

Chairman of Management Board

Rosneft Oil Company

OIL AS A COMMODITY: DEMAND, AVAILABILITY AND FACTORS AFFECTING

CONDITIONS AND PROSPECTS OF THE MARKET

Singapore, 6 - 7 September 2015

Disclaimer

The information contained in this presentation is prepared by the Company. The conclusions presented here are based on

general information collected at the time of preparation and are subject to change without notice. The Company relies on the

data obtained from the sources, which it believes to be reliable; however, it does not guarantee its accuracy or completeness.

The materials contain statements about future events and explanations, which represent the forecast on such events. Any

assertions in these materials not being statements of historical facts are forward-looking declarations associated with known

and unknown risks, uncertainties and other factors, owing to which our actual performance, results and achievements may

significantly differ from any future performance, results and achievements expressed or anticipated in the forward-looking

statements. We do not assume any commitments to update any forward-looking declarations contained herein in order to

reflect actual results, changes in assumptions or factors affecting these statements.

This presentation does not constitute an offer to sell, or any solicitation of any subscribe, purchase or securities offer. It is

understood that nothing in this report / presentation creates a basis for any contract or commitment whatsoever. The

information contained in this presentation should not be in any ways relied on in terms of its completeness, accuracy or

unbiased assessment. The information in this presentation is subject to review, finalizing and change. The contents of this

presentation have not been verified by the Company. Accordingly, we have not given and do not give on behalf of the

Company, its shareholders, directors, officers or employees, or any other persons any representations or warranties both

clearly expressed or implied, as to the accuracy, completeness of the information or opinions contained herein. None of the

Company Directors, shareholders, officers or employees or any other person assumes responsibility for any loss of any kind

that may arise from any use of this presentation or its contents, or otherwise arising from this presentation.

Different commodities price dynamics’ behavior is similar;

this points to the fact that demand is the first priority factor

20

40

60

80

100

120

140

1980 1985 1990 1995 2000 2005 2010 2015 2020

Энергоносители

Металлы

Сельскохозяйственные товары

2010=100 (steady $)

Forecast

Energy carriers

Metals

Agricultural Commodities

Sourceи: World Bank, International Monetary Fund, IEA 3

Energy carriers, metals and agricultural

commodities price dynamics

GDP, industrial production and oil consumption

dynamics

Following V-shape restoration in 2010-2013, agricultural

commodities and metals prices took downward trend,

and energy consumption joined the trend in the course

of impetuous oil market meltdown in 2014.

Starting from 2011, the global economy is facing

smooth deceleration, especially in industrial

production

-15

-10

-5

0

5

10

15

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

% %

ВВП

Потребление нефти

Промышленное производство (правая шкала)

GDP

Oil consumption

Industrial production (right axis)

0 20 40 60 80 100

Нефть

КРС

Пшеница

Соя

Золото

Хлопок

Медь

Алюминий

Никель

Жел. руда

%

Китай

Развивающиеся страны (без Китая)

Развитые страны Developed countries

Developing countries (without China)

China

Iron ore

Nickel

Aluminium

Copper

Cotton

Gold

Wheat

Soy

Cattle

Oil

4

China’s GDP structure and its share in global

economy growth

Regional structure of global metals,

agricultural goods and oil consumption

It is expected that by 2030 China contribution to global

economy rate will be about 30% per year and on the

wane afterwards

Metals markets are most dependent on demand in

China. China contribution to global copper, aluminum

and ore consumption is about 45-60%.

China contribution to global oil consumption is 12%.

China economy is key global economy and commodities price growth factor

Source: World Bank, IEA

8,9

19,4

28,6 30,6

24,6 22,1

0

2

4

6

8

10

12

0

5

10

15

20

25

30

35

1980-1989 1990-1999 2000-2009 2010-2019 2020-2029 2030-2040

% %

Вклад Китая в прирост мирового ВВП

Рост ВВП Китая (правая шкала)

China share in global GDP growth

China GDP growth (right scale)

China economy has most significant effect on the growth of global demand for metals and energy carriers

0

20

40

60

80

19

75

19

80

19

85

19

90

19

95

20

00

20

05

20

10

20

15

Китай Индия Остальной мир

mln.bbl/day

China India Rest of the world

0

10

20

30

40

50

60

19

75

19

80

19

85

19

90

19

95

20

00

20

05

20

10

20

15

mln.t.

Китай Индия Остальной мир China India Rest of the world

0

300

600

900

1200

1500

19

75

19

80

19

85

19

90

19

95

20

00

20

05

20

10

20

15

mln.t.

Китай Индия Остальной мир China India Rest of the world

Oil consumption Non-ferrous metals consumption Grain consumption

Source: World Bank

Non-ferrous metals demonstrated the highest growth of demand in China over the last decade

The next, in terms of growth rate, is oil demand– during recent years China secured up to 2/3

of global oil demand growth. Therefore, in the eyes of analysts, oil demand growth in the world

and in China matches.

5

Growth rate in industry and power consumption in China are decelerating

-10

-5

0

5

10

15

20

25

30

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

%

Промпроизводство Выработка электроэнергии

YoY, 3-moths average moving

Industrial production Power production

6

Dynamics of industrial production and power

production in China

Dynamics of real GDP growth in China’s

economy sectors

China industry growth is slowly decelerating– in July it

grew by 6,0% (in June the growth rate was 6,8%)

Power production in July decreased by 2%

First of all, commodities consuming sectors are

decelerating

At the same time, the share of services sector in

China economy is growing

Source: National Bureau of Statistics of China

0

2

4

6

8

10

12

14

16

18

2004 2006 2008 2010 2012 2014

%

Первичный сектор (сельское и лесное хозяйство и т.д.)

Вторичный сектор (промышленность, строительство)

Третичный сектор (услуги, торговля, транспорт, финансы)

YoY

Primary sector (agriculture, forestry, etc.

Secondary sector (industry, construction

Tertiary sector (services, trade, transport, finances

Slowdown Has a Controllable Character: The stock market role in the ecomony is not too big, the housing market is under

control

Stock market capitalization Dynamics of investments in residential

development and new housing supply volumes

Sources: National Statistical Office of the PRC, Bloomberg, IEF

The stock market is poorly connected with the real

sector: On the financial markets less than 3% of

the capital investment is financed due to attarction,

while over 70% due to own funds. Only 6% of the

population have stock market investments.

The real estate market has a significantly greater

importance: in 2014, 6% of GDP, 19% of all

investments and 20% of bank credits fell thereon.

The pace of investments growth in residential

development in China is gradually decreasing

since 2013.

21

38

45

48

77

86

95

152

0 20 40 60 80 100 120 140 160

Russia

China

Germany

Indonesia

India

South Korea

Japan

USA

% GDP

2014 2010

-20

-10

0

10

20

30

40

50

янв.0

6

ию

л.0

6

янв.0

7

ию

л.0

7

янв.0

8

ию

л.0

8

янв.0

9

ию

л.0

9

янв.1

0

ию

л.1

0

янв.1

1

ию

л.1

1

янв.1

2

ию

л.1

2

янв.1

3

ию

л.1

3

янв.1

4

ию

л.1

4

янв.1

5

ию

л.1

5

%

Завершенное строительство

Инвестиции в строительство жилья

year to year

Completed residential development

New housing supply

7

22 10

China's reserves to

monthly import

9

-78%

2

Inflation in China, %

13

3

Surplus of China’s

current account, $100 mln

Share of China's

GDP in the world, % • The Asia-Pacific Region countries

today are much stronger than in

the late 1990s and much less

susceptible to currency

speculations

• Growth of the world economy

depends more on China and the

Asia-Pacific Region and, hence,

other countries will adapt in order

to support their trading partners

• Currency reserves, low interest

rates and inflation (both in the

Asian countries and other regions)

give a significant flexibility in

response measures on crisis

prevention

• Taking into account the crises in

the Middle East, Latin America and

Europe, the market get used to

volatility and work in the time of

uncertainty

China's debt is mostly internal

• The current account of the balance of

payments is essentially superfluous

Importance of Asia in the world has

increased, and the other countries take

this into account in their policy (e.g., the

US monetary policy)

• The total reserves of China are

22 times higher than monthly import

Inflation is low, which gives flexibility of

manoeuvre for Central Bank of China

1

2

3

4

5

China’s debt to GDP, %

-72% 87 142 +63%

- 2015 - 1997

Asian economies today are much more stable than in 1997 - 1998

Sources : World Bank, CNBC, Morgan Stanley 8

External Internal

Fundamental demand for oil on the part of China has a stable

character

Sources: EIA, IHS, World Bank, MEA, Rosneft Oil Company 9

Global liquid hydrocarbons consumption in China, the USA and rest of the world Oil consumption in China until 2030

In addition to growing demand for liquid hydrocarbons in

China in 2015-2016, significant growth of consumption

is expected in the USA and a number of new fast

growing economies (India and others)

In 2014 oil consumption in China exceeded 500 mln.t,

and the share of import in consumption - 60%

In 15 years, according to our estimates, China will

consume 850 mln. tons of oil, i.e., 350 mln. tons of oil

more than now, at that, internal production growth is

insignificant

78

80

82

84

86

88

90

92

94

96

-2

-1

0

1

2

3

4

2008 2009 2010 2011 2012 2013 2014 2015 2016

Остальной мир США Китай Мировое потребление (правая шкала)

прогноз

mln.bbl./day mln.bbl./day

Global oil consumption (right axis)

China

The USA

Rest of the world

0

10

20

30

40

50

60

70

80

90

100

0

100

200

300

400

500

600

700

800

900

2000 2005 2010 2015 2020 2025 2030

% mln.t

Потребление нефти в Китае

Доля импорта (правая шкала)

2014

Oil consumption in China

Share of import (right axis)

Oil and petroleum products price reduction has led to accelerated growth

of demand for liquid hydrocarbons both in developed and developing

countries

Sources: EIA, Ministry of economy, trade and industry of Japan, National Bureau of Statistics of China, Ministry of oil and gas of India, JODI, MEA

10

Growth of liquid hydrocarbons consumption Forecast vs actual values of global liquid

hydrocarbons consumption

Rate of demand for liquid hydrocarbons in consuming

countries has was growing in the first half of 2015

Accelerated rate of demand was evidenced both in

developed and developing countries

The leading energy agencies are revising their

forecasts on the global oil consumption towards

upside

According to EIA estimate made in August, global oil

consumption will be at the level of 94,2 mln.bbl./day

(+1,6 mln.bbl./day YoY), which is 980 thous. bbl./day

higher compared to January 2015 forecast.

-15%

-10%

-5%

0%

5%

10%

15%

янв.14 апр.14 июл.14 окт.14 янв.15 апр.15

Индия США ЕС-28

Япония Китай

Jan.14 Apr.14 July 14 Oct.14 Jan.15 Apr.15

India The USA India EU-28

China Japan

2012

2013

2015

2014

89

90

91

92

93

94

95

2011 2012 2013 20142015

mln.bbl./day

2015

forecast– punctum,

actual– direct line

In the Longer term run oil will keep the key role in the global power

balance

According to majority of power agencies, the demand for liquid hydrocarbons in the long-term period will steadily grow

Liquid hydrocarbons will make about ¼ of the world power balance within the next 15-20 years.

Sources: EIA, OPEC, IEA, ExxonMobil, IHS CERA

90

95

100

105

110

115

120

125

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

20

39

20

40

mln bbl/ day

WEO 2014 (МЭА) WOO 2014 (OPEC)

IEO 2014 (EIA) ExxonMobil 2015

IHS CERA

（MEA）

Forecast of the global demand for liquid hydrocarbons

11

Fundamental cause of low oil price is excess of oil production over its end consumption

Source: EIA 12

Excess of global oil production over

consumption Surplus of global supply oil production

Steady excess of global oil production over consumption

appeared in 2014, which has resulted in fall in prices

In 2015 oil offer exceeds the demand by 1,5-3

mln.bbl./day

The global hydrocarbons production during recent

years was growing primarily at the expense of the

USA and Canada, where “shale revolution” occurred

-3

-2

-1

0

1

2

3

4

0

20

40

60

80

100

120

140

янв.1

1

апр.1

1

ию

л.1

1

окт

.11

янв.1

2

апр.1

2

ию

л.1

2

окт

.12

янв.1

3

апр.1

3

ию

л.1

3

окт

.13

янв.1

4

апр.1

4

ию

л.1

4

окт

.14

янв.1

5

апр.1

5

ию

л.1

5

$/bbl

Превышение добычи над потреблением нефти в мире

Цена нефти сорта Brent (левая шкала)

mln.bbl./day

Excess of global oil production over consumption

Brent oil price (left axis)

Ja

n.1

1

Ap

r.1

1

Ju

l. 1

1

Oc

t.11

Ja

n.1

2

Ap

r.1

2

Ju

l. 1

2

Oc

t.12

Ja

n.1

3

Ap

r.1

3

Ju

l. 1

3

Oc

t.13

Ja

n.1

4

Ap

r.1

4

Ju

l. 1

4

Oc

t.14

Ja

n.1

5

Ap

r.1

5

Ju

l. 1

5

20

25

30

35

40

45

50

55

60

5

7

9

11

13

15

17

19

21

янв.1

1

апр.1

1

ию

л.1

1

окт

.11

янв.1

2

апр.1

2

ию

л.1

2

окт

.12

янв.1

3

апр.1

3

ию

л.1

3

окт

.13

янв.1

4

апр.1

4

ию

л.1

4

окт

.14

янв.1

5

апр.1

5

ию

л.1

5

США и Канада Россия Саудовская Аравия Остальной мир (правая шкала)

mln.bbl./day mln.bbl./day

USA and Canada

Russia

Saudi Arabia

Rest of the world (right axis) J

an

.11

Ap

r.1

1

Ju

l. 1

1

Oc

t.11

Ja

n.1

2

Ap

r.1

2

Ju

l. 1

2

Oc

t.1

2

Ja

n.1

3

Ap

r.1

3

Ju

l. 1

3

Oc

t.13

Ja

n.1

4

Ap

r.1

4

Ju

l. 1

4

Oc

t.14

Ja

n.1

5

Ap

r.1

5

Ju

l. 1

5

Drilling activities all over the world are slowing down Exclusion: Saudi Arabia

Source: Baker Hughes 13

Number of drilling rigs (except for North America and CIS) Number of drilling rigs in the USA

All over the world under influence of low oil prices the

drilling activities is reducing since mid-2014.

Drilling activities in Saudi Arabia were growing during

past few months, and the total number of drilling rigs

increased by 20 %.

Owing to reduction of drilling cost, the number of

operating drilling rigs In the USA has stabilized after

sharp reduction in the second half of 2014.

In general, the number of drilling rigs in the USA in the

1st half of 2015 reduced 2 - 2,5 times.

251

83

73

268

0

100

200

300

400

500

600

700

ию

н.1

4

ию

л.1

4

авг.1

4

се

н.1

4

окт

.14

ноя.1

4

де

к.1

4

янв.1

5

фе

в.1

5

ма

р.1

5

апр.1

5

ма

й.1

5

ию

н.1

5

ию

л.1

5

авг.1

5

шт. Permian

Eagle Ford

Williston Basin

Прочие

Jan

.14

Ju

l. 1

4

Au

g.

14

Sep

. 14

Oct.

14

No

v.1

4

Dec.

14

Jan

.15

Fe

b.1

5

Mar.

15

Ap

r.15

May 1

5

Ju

ne

15

Ju

l. 1

5

Au

g.

15

60708090

100110120130140150

янв.1

3

ма

р.1

3

ма

й.1

3

ию

л.1

3

се

н.1

3

но

я.1

3

янв.1

4

ма

р.1

4

ма

й.1

4

ию

л.1

4

се

н.1

4

ноя.1

4

янв.1

5

ма

р.1

5

ма

й.1

5

ию

л.1

5

Саудовская Аравия Ост. Ближний Восток Африка АТР Европа Латинская Америка

Jan. 2013 =100

Ja

n.1

3

Ap

r.1

3

Ju

l. 1

3

Oc

t.13

Ja

n.1

4

Ap

r.1

4

Ju

l. 1

4

Oc

t.14

Ja

n.1

5

Ap

r.1

5

Ju

l. 1

5

Saudi Arabia

Africa

Europe

Rest of Far East

Asia Pacific

Latin America

Due to reduction in oil prices and drilling activities, the production of liquid hydrocarbons in the USA is falling

Source: EIA 14

Crude oil production in the USA Revision of crude oil production in the USA

in Q2 2014

According to the EIA estimate made in the end of

August, crude oil production in the USA was reducing

from May to June 2015, having completely

compensated the growth of January to April 2015.

During last three months the actual data on oil

production in the USA were revised towards downside.

EIA revises not only the forecast estimations, but also

historical data, “adapting" them often to the current

conjuncture.

All above-mentioned undermines credibility of such

publications and creates preconditions that unfair

market participants create the corrupted

representation of its dynamics.

8,6

8,8

9,0

9,2

9,4

9,6

9,8

ию

л.1

4

авг.1

4

се

н.1

4

окт

.14

ноя.1

4

де

к.1

4

янв.1

5

фе

в.1

5

ма

р.1

5

апр.1

5

ма

й.1

5

ию

н.1

5

Данные от 30.06.2015

Данные от 31.07.2015

Данные от 31.08.2015

mln.bbl./day

Data of

Data of

Data of

Ju

l. 1

4

Au

g.

14

Sep

. 14

Oct.

14

No

v.1

4

Dec. 14

Jan

.15

Feb

.15

Mar.

15

Ap

r.15

May 1

5

Ju

ne 1

5

0

20

40

60

80

100

120

8,25

8,30

8,35

8,40

8,45

8,50

8,55

8,60

8,65

ию

л.1

4

авг.1

4

се

н.1

4

окт

.14

ноя.1

4

де

к.1

4

янв.1

5

фе

в.1

5

ма

р.1

5

$/bbl

Добыча нефти

Brent на дату выхода отчета (прав.)

mln.bbl./day

Ju

l. 1

4

Au

g.

14

Se

p. 1

4

Oc

t. 1

4

No

v.1

4

De

c. 1

4

Jan

.15

Feb

.15

Ma

r. 1

5

Oil Production

Brent as of the date of issue of the publication (right axis)

A number of factors may delay balancing of the world oil market

Sources: EIA, Bloomberg 15

Non-planned downtime of oil producers Crude Oil Production in OPEC

Gradual removal of sanction from Iran will lead return to

the market of no less than 0,6 mln.bbl./day oil from this

country

In case of settlement of Libyan conflict, the market will

get another 1,0-1,2 mln.bbl./day oil

0

1

2

3

4

янв.1

2

апр.1

2

ию

л.1

2

окт

.12

янв.1

3

апр.1

3

ию

л.1

3

окт

.13

янв.1

4

апр.1

4

ию

л.1

4

окт

.14

янв.1

5

апр.1

5

ию

л.1

5

Иран Ливия Нигерия Ирак Прочие страны

mln.bbl./day

Ja

n.1

2

Ap

r.1

2

Ju

l. 1

2

Oc

t.1

2

Ja

n.1

3

Ap

r.1

3

Ju

l. 1

3

Oc

t.1

3

Ja

n.1

4

Ap

r.1

4

Ju

l. 1

4

Oc

t.1

4

Ja

n.1

5

Ap

r.1

5

Iran Libya Nigeria Iraq Other countries

28

29

30

31

32

янв.1

1

апр.1

1

ию

л.1

1

окт

.11

янв.1

2

апр.1

2

ию

л.1

2

окт

.12

янв.1

3

апр.1

3

ию

л.1

3

окт

.13

янв.1

4

апр.1

4

ию

л.1

4

окт

.14

янв.1

5

апр.1

5

ию

л.1

5

Добыча в ОПЕК Квота

mln.bbl./day

OPEC Production Quota

Ja

n.1

2

Ap

r.1

2

Ju

l. 1

2

Oc

t.1

2

Ja

n.1

3

Ap

r.1

3

Ju

l. 1

3

Oc

t.1

3

Ja

n.1

4

Ap

r.1

4

Ju

l. 1

4

Oc

t.1

4

Ja

n.1

5

Ap

r.1

5

Ju

l. 1

5

Currently the total volume of oil production by OPEC

countries exceeds significantly the official quota of 30

mln barrels per day.

A number of OPEC member-countries express their

growing concern of low prices, which threatens their

stability, and put forward relevant initiatives.

CHINA IS A MAJOR DEFICIT PE MARKET IN 2020; EXPORT FROM ALL SURPLUS

REGIONS OF THE WORLD, PRIMARILY FROM THE MIDDLE EAST AND NORTH AMERICA

Source: IHS 16

Forecast for production, consumption, and main flows of (high and low pressure) polyethylene trade in 2020 in case of implementation of all announced projects, million ton

Polyethylene production, million ton Polyethylene consumption, million ton Export, million ton

Global production in 2020 is 110.5 million ton

China import structure until 2020

Russia /CIS

Russia / CIS

North-East Asia

South-East Asia

100% = 13 million ton

Middle East

North America

Share of Russia may significantly increase up to 15-20%

From North America To Europe To China

To India China

Europe

Africa

India South-East Asia

S. Korea

Japan

South America

North America

Malaysia

Indonesia

Vietnam

Thailand

Singapore South-East Asia

Pre-requisites: • All of the announced projects are accounted for • Global PE consumption in 2013-2020 will grow by 4,5% p.a., in Asia – by 6,2% p.a.

-4

-3

-2

-1

0

1

2

3

2016 2015 2014 2013 2012 2011 2010

M bbl/day

Fact/ Estimate Forecast

Surplus Surplus Balance Deficit

Peak of surplus supply

because of investment

decisions made during

deficit period

Cut in

investments will

balance the

market

Beginning of

the current oil

price crisis

The world oil market has been in the deficit for 4 years, now – slight surplus

The investments made into production still bring volumes to the market,

but decreased investment is already taking its toll

Investments made during the period of oil shortage explain the W-shape of the price curve

Source: IHS 17

Costs of exploration and production in the world

0

20

40

60

80

100

120

0

50

100

150

200

250

300

350

400

450

500

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

$/bbl (in prices of

2014)

$ bln (in prices of

2014)

Инвестиции в новые нефтедобычные проекты в мире

Цена нефти сорта Brent (правая шкала)

forecast

Investments in new oil production projects in the world

Brent price (right scale)

Investments in the new oil production projects

Based on Rystad Energy evaluations, E&P costs in the world in 2015 will decrease by $180 bln vs the previous year.

The highest rate of decrease is observed in the North America, mostly in the US.

CAPEX will decrease by almost 20%, and investments in the new projects well go down even more - 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%

Exploration

OPEX

CAPEX

forecast

18 Source: Rystad Energy

Decrease of investments in production: in 2015 – by $137 bln, down to $200-250 bln by 2016

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Full costs

Opex

Spot price for Brent

(FOB)

$ / bbl (nominal prices) As soon as the market

is balanced, prices will

bounce back to the

level of full costs

When the market is balanced, the prices will return to the full cycle costs level

Spot prices, opex and full costs of oil suppliers

We should remember about the price limits:

Oil price should exceed the OPEX level of suppliers bearing maximum costs (marginal suppliers)

The balanced market implies that oil price exceeds full costs of production

In the periods of deficit the price, naturally, may exceed all costs

Current oil prices are at the level of OPEX. This is not enough for sustainable production

Sources: EIA, Bernstein 19

Hi-tec oil resources will be in greater demand and will determine the limits of full costs in future

Source: IHS 20

Structure of newly discovered oilfields

depending on formation depth*

Forecasted structure of liquid HCs global

production

Percent of more expensive deep fields grew up

significantly. Such oil will prevail in future discoveries

too.

Oil industry technological development plays a key

part in ensuring of its competitive ability.

Traditional oil will be replaced with hi-tec oil, the

percent of which will kite, approaching to 30%-40% in

2040. Note: * not accounting for the onshore fields in Canada and the US

(below 48 parallel) and shallow fields in the US

Hi-

tec o

il T

rad

itio

na

l o

il

77

56 45

36 29

23

0

14

18

19 19

21

1 6

10 14

16

14 16 16

17 17 18

2 2 2 4 5 6

6 6 7 6 5

4 6 7 8 9 11

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2020 2025 2030 2035 2040

Действ. местор. Разраб. местор.

Неоткрыт. местор. NGL

Рост КИН Нефть низкопр. колл.

CTL+GTL+EHOB

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

198

4

198

6

198

8

199

0

199

2

199

4

199

6

199

8

200

0

200

2

200

4

200

6

200

8

201

0

201

2

201

4

Ультраглубоководные (более 5000 футов)

Глубоководные (1000 -5000 футов)

Мелководье (до 1000 футов)

На суше

Ultra-deep water (more than 5000 feet)

Deep water (1000-5000 feet)

Shallow water (up to 1000 feet)

Onshore

Hig

h c

ost

Lo

w c

ost

Producing fields

Non-discovered fields

Oil recovery index growth

CTL+GTL+EHOB

Fields under development

NGL

Low-permeability rock oil

20

10

20

15

20

20

20

25

20

30

40

20

30

10

0

M bbl/d

production

27% 57%

16%

Shallow water

Deep water

Onshore

Asia demand is growing

fast, however,

production forecast is

falling far behind

Asian discoveries in

2015 were mostly

expensive and

technically complicated

in deep waters

Sustainable growth

required uninterrupted

supply for decades

Transportation distance

for supplies from

Russia to partners in

AP is less than from

other oil producing

regions

Deficit of own oil resources in Asia is growing, new Asian discoveries

are expensive, while supply security is extremely important

Source: IHS 21

M bbl/d

Asia highly depends on oil import from regions where supply

is either exhausted or a serious risk of delivery failures exists

Asia’s need for import

is growing

Field discoveries in Asia

are mostly deep water and

expensive

Comments

Depleted reserves

Lack of reliable

infrastructure

Africa

Middle East

APR

Russia

N-W Europe

Military conflicts

APR offer

Other offers

48,8

34

24,5

17,5

105

8,2

6,1

5,6

5,1

4,5

90-2204

3-10

3-4

10-14

40-62

6-15

3-4

4-5

2-3

6-23

Russia

Iran

Qatar

Turkmenistan

USA

Saudi Arabia

UAE

Venezuela

Nigeria

Algeria

Proved reserves Recoverable reserves

22

2981

267

1742

158

150

131

102

98

49

443

29-95

187-323

20-29

35-293

103-345

367-506

117

59

10-37

122-155

Venezuela

Saudi Arabia

Canada

Iran

Iraq

Russia

Kuweit

UAE

Libya

USA

Proved reserves Recoverable reserves

Top-10 countries in terms of gas reserves, trln m3 Top-10 countries in terms of oil reserves, bln bbl

Sourceи: BP Statistical Review 2015, EIA, RF Ministry of Natural Resources, USGS, Zarubezhgeologiya, Rosneft

Countries with large oil and gas reserves

Note: (1) incl.257 bn bbl of ultra-heavy oil (2) incl.170 bn bbl of bitumen (3) incl.10 bn bbl of shale oil

Note: (4) incl. shale gas (5) incl.4.5 tn m3 of shale gas

Profit/investment ratio

0,0

0,5

1,0

1,5

2,0

2,5

Чаянд

инско

е

Ковы

ктинско

е

Ванко

рско

е

Мессояхско

е

Юруб

че

но-

То

хом

ско

е

Сред

неб

о-

туоб

инско

е

Сузу

нско

е и

Та

гул

ьско

е

Верхнечо

нско

е

Сахал

ин-1

Сахал

ин-2

Wheats

tone L

NG

Queensla

nd L

NG

AP

LN

G

Arr

ow

LN

G

Gre

ate

r S

unrise

Ta

ngguh L

NG

Sa

nga S

anga

Pu

guang

D6

MB

A

SH

WE

Vie

tnam

Gas

Россия Австралия Индонезия Китай Индия Мья нма

Вье тнам

2012 2015Average for projects group (2012)

Chay

andi

nsko

ye

Kovy

kta

Vank

or

Mes

soya

kha

Yuru

bshe

no-

Tokh

omsk

oye

Sred

ne B

otuo

bins

koye

Suzu

n an

d Ta

gul

Verk

hnec

hons

koye

Sakh

alin

-1

Sakh

alin

-2

Russia Australia Indonesia China India Myanmar

Vietnam

Chay

andi

nsko

ye

0%

10%

20%

30%

40%

50%

Чаянд

инско

е

Ковы

ктинско

е

Ванко

рско

е

Мессояхско

е

Юруб

чено-

Тохом

ско

е

Сред

неб

о-

туоб

инско

е

Суз

унско

е и

Тагу

льско

е

Верхнечонско

е

Сахал

ин-1

Сахал

ин-2

Wh

eats

ton

e L

NG

Qu

ee

nsla

nd

LN

G

AP

LN

G

Arr

ow

LN

G

Gre

ate

r S

un

rise

Tan

ggu

h L

NG

San

ga

San

ga

Pug

ua

ng

D6

MB

A

SH

WE

Vie

tnam

Gas

Россия Австралия Индонезия Китай Индия Мья нма

Вье тнам

Chay

andi

nsko

ye

Kovy

kta

Vank

or

Mes

soya

kha

Yuru

bshe

no-

Tokh

omsk

oye

Sred

ne B

otuo

bins

koye

Suzu

n an

d Ta

gul

Verk

hnec

hons

koye

Sakh

alin

-1

Sakh

alin

-2

Russia Australia Indonesia China India Myanmar Vietnam

Internal rate of return

Average for projects group (2015)

Sources: Economy and Finance Institute,Goldman Sachs

Production projects in East Siberia are more competitive than other AP projects

23

The more actively we develop the potential of Russia’s East, the more secure are oil supplies to APR

Russia is a reliable partner for oil supplies to

AP

Russia is open for cooperation in upstream

with international partners

The existing tax treatment for different fields

increases investment appeal

There are possibilities for joint development

of diverse portfolio of fields:

• Conventional onshore fields

• Offshore fields

• Arctic fields

Vast internal market and export capabilities

ensure high potential of oil refining and

petrochemistry

24

Source: Rosneft

Angarsk

Petrochemical

Company

Sakhalinmorneftegas

Komsomolsk

Refinery

FEPCO

APR

China

Verkhnechonskoye

Sakhalin-1

Severnoe Chayvo

Taas-Yuryakh

Kuyumbinskoye

Yurubcheno-

Tokhomskoye

Achinsk Refinery

Angarsk Polymer

Plant

Lodochnoye

Russkoye

Vankor Suzun

Tagul

Angarsk Catalysis and

Organic Synthesis Plant

Rosneft License Blocks

Rosneft key fields and producing assets involved in

supply to the countries of APR

07.09.2015

117997, Moscow, Sofiyskaya Embankment 26/1

Tel.: +7 (499) 517-88-99

Fax: +7 (499) 517-72-35

E-mail: postman@rosneft.ru

Contact information

Thank you for your attention!