ROSN.L Regulatory News (ROSN)

OPERATING RESULTS FOR 12M AND Q4 2018

· AVERAGE DAILY HYDROCARBON PRODUCTION AMOUNTED TO 5.80 MLN BOE IN 2018 AND 5.94 MLN BOE IN Q4 2018, DEMONSTRATING A 1.3% AND 3.9% YOY GROWTH RESPECTIVELY

· AVERAGE DAILY LIQUIDS PRODUCTION REACHED 4.67 MLN BOE IN 2018 AND 4.79 MLN BOE IN Q4 2018 INCREASING BY 2.1% AND 5.3% YOY RESPECTIVELY

· Q4 2018 GAS PRODUCTION WAS UP BY 4.2% QOQ TO 17.31 BCM

· REFINING THROUGHPUT IN RUSSIA GREW BY 2.8% TO 103.3 MMT IN 2018 AND BY 5.6% TO 26.8 MMT YOY IN Q4 2018

Upstream

Hydrocarbon production amounted to 285.5 mln toe (5.80 mmboed) in 2018, exceeded 2017 levels by 1.3%. Q4 2018 hydrocarbon production amounted to 73.7 mln toe (5.94 mmboed), which exceeded the Q3 2018 result by 1.8%.

The Company produced 230.2 mmt of liquid hydrocarbons (4.67 mmbpd) in 2018 increasing its average daily production by 2.1%. The key drivers of production growth included record performance at the Company's largest asset, RN-Yuganskneftegaz, launch of greenfields and contingent development of brownfields within the scope of the OPEC+ Agreement restrictions.

Average daily production of liquid hydrocarbons in Q4 2018 amounted to 4.79 mmboed, which outperformed the Q3 2018 results by 1.4%. Moreover, Rosneft managed to promptly increase production in Q4 2018 after the abovementioned restrictions easing on the back of prearranged potential of additional output. The Company was able to fully recover production volume to levels prior to the OPEC+ Agreement (October 2016) by optimizing high watercut and marginal wells on brownfields (RN-Nyaganneftegaz, Varyoganneftegaz, RN-Purneftegaz, Orenburgneft, Tomskneft) in the improving market environment and raising production from greenfield projects.

Growth in average daily production of oil and gas condensate in Russia in the past year amounted to 182 th. bbl, over half of which was contributed by Rosneft. Furthermore, the Company's average daily production in Russia in December 2018 increased by 4.7% YoY.

In 2018 development drilling footage was maintained at 2017 level and amounted to over 12 mln meters, while the complex multilateral and high productivity multi-hole wells construction volume increased 2 times. The number of new wells commissioned grew by 3.5% - up to over 3.4 th. units. Horizontal wells share reached 48% and the number of new horizontal wells with multistage fracturing increased by 51%. The share of in-house drilling footage level is maintained at more than 50%.

Annual production at the Company's largest asset, RN-Yuganskneftegaz, exceeded 70 mmt for the first in the recent history (5.5% growth vs. 2017 level). In the end of 2018 the subsidiary established an all-time record (since the subsidiary's creation in 1964) of daily crude output of 197.5 ktpd (1.46 mmbpd). Such strong performance was achieved on the back of enhancing the hard-to-recover reserves development methods at the Middle Ob area, implementation of advanced drilling and wells completion technologies, systematic resource base growth, commissioning of infrastructure facilities and employees' contributions.

RN-Yuganskneftegaz continuously sets new industry benchmarks in drilling footage and new wells commissioning from exploratory drilling - over 5 mln meters of hard formations were drilled, over 1.6 th. new wells were commissioned, 25% of which were horizontal wells. Drilling of horizontal wells with increased horizontal section length and number of multistage hydrofracs was continued, over 50 wells were constructed with innovative light double casing string technology. A horizontal well with a unique combined production casing string with total length of 4.7 th. meters including 1.5 th. horizontal section length was constructed in 13.4 days.

In 2018 the commercial development of East Salym license area was initiated by launching Sorovsk field, which is developed by RN-Yuganskneftegaz. During the development of the field synergies were achieved through joint use of processing facilities at Sorovsky CPF with consecutive crude delivery to the Transneft oil pipeline system.

RN-Uvatneftegaz continues to successfully sustain the production plateau at more than 10.5 mmt (over 213 kbpd) on the back of implementing a range of initiatives, which includes production at new fields. In 2018 Taltsiyskoye field was launched. The field produces about 2.8 ktpd (~21 kbpd).

Development of new projects is carried out as planned. Total liquids production in 2018 at Suzun, East-Messoyakha, Yurubcheno-Tokhomskoye and Kondinskoye fields, launched after 2016 amounted to 75 mmbbl. In accordance with the approved plans, the Company ensured gradual commissioning of Tagulskoye, Russkoye, Kuyumbinskoye and Srednebotuobinskoye (2nd stage) fields.

Second stage facilities were launched at the Srednebotuobinskoye field (oil pipeline, central gathering facility, crude oil delivery and acceptance point), which facilitate treatment and delivery of up to 5 mmtpa of crude. The infrastructure and field facilities construction is ongoing. Horizontal and multilateral wells drilling program is being implemented. In 2018 field oil production amounted to 2.9 mmt. Expected production plateau of ~5 mmtpa will be reached in 2021.

As a result of successful pilot production stage Tagulskoye field was put into operation. In 2018 the production volume with mobile oil treatment facilities use amounted to 1.3 mmt, which corresponds to the field's initial development plan. Construction and installation works are continued on the 1st start-up complex of crude processing unit with 2.3 mmtpa project capacity as well other facilities on the field (wellpads, oil pipelines and others). Production plateau of over 4.5 mmtpa is expected to be achieved after 2022.

Russkoye field is commissioned with the use of modern technologies high-viscosity oil production. Power supply equipment works and pressure pipeline Russkoye CPF - Zapolyarnoe CODAP testing are both completed, construction and installation works and preparation for the technological launch of key infrastructure units is in progress, as planned. As of 2018 year end over 190 wells were drilled on the field with over 11 ktpd production potential. Production plateau of over 6.5 mmtpa is expected to be reached after 2022.

1st start-up complex of Kuyumbinskoye field is commissioned via technological launch of the key facility - CPF. In 2018 33 wells were completed, 34 km of in-field pipelines and rotational camps were constructed. The works to expand the capacity of CPF and set up field infrastructure facilities are in progress. Production plateau of over 1.5 mmtpa (in the Company's share) is planned to be reached after 2021.

Gas production in 2018 amounted to 67.26 bcm. Gas production in Q4 2018 amounted to 17.31 bcm increased by 4.2% QoQ. Production growth was associated with the finalization of scheduled preventative repairs on Sibur gas processing plants, which allowed for increased production of APG; with Rospan production growth and deliveries from Egyptian offshore Zohr project capacity increase.

Key stage of infrastructure facilities set up is in progress at Rospan, hydro-testing of the spherical storage tank was conducted on the propane-butane warehouse. Installation of technological equipment on the 2nd stage methanol recovery unit on Eatern-Urengoy license area gas and condensate processing plant is completed. Spherical storage tanks installation and thermal treatment works on the rail terminal and discharge rack hook up are in progress. The project is planned to be launched in 2019 with consecutive growth of gas production to >21 bcm and liquids production to >5 mmtpa.

The Company continues to develop the Kharampur fields's gas option, which is the second most promising gas project after Rospan with respect to production volume. 43 of 61 wells were drilled, 32 of 156 km of linear pipeline was laid on the external transport pipeline. Development of gas infrastructure of Cenomanian deposit and construction of gas and condensate processing plant is planned in the near future. The project is planned to be launched in 2020 with consecutive production plateau at ~11 bcmpa.

Egyptian offshore Zohr project development is progressing ahead of schedule, where production of gas started in 2017. Within under a year after the production start at the field the production reached ~57 mmcmpd (100% of the project). This was made possible due to the prompt commissioning of 7 new development wells in 2018 along with optimal capacity use at 5 technological units of gas processing facility (GPF) and 2 gas transport pipelines from the field to the GPF. In 2018, gas production amounted to 12.2 bcm (100% of the project, 2.2 bcm in the Company's share).

In 2018 the Company continued to process and interpret significant share of seismic data from offshore projects received in 2016-2017. Three successful infield geological expeditions were conducted in the Pechora Sea aquatic area, on Sakhalin Island and the Black Sea area of Caucasus.

About 5.5 th. linear km of 2D and over 10 th. sq. km of 3D onshore seismic works were conducted in 2018. The Company carried out the large-scale seismic operations in the strategic regions of presence - the Khatanga cluster, Urals-Volga region and continued implementation of the projects in Yakutia. Currently the processing and interpretation of the obtained data are in progress, following which exploration and appraisal drilling will be performed.

In accordance with the approved Strategy, the Company aimed at drilling quality and exploration and appraisal drilling success rate improvement. In 2018 the testing of 142 exploration and appraisal wells was completed with an 84% success rate. 230 new deposits and 23 new fields were discovered with АВ1С1+B2С2 reserves amounting to 250 mmtoe. АВ1С1 reserves addition from exploration amounted to 454 mmtoe.

According to the hydrocarbon reserves audit conducted by DeGolyer&MacNaughton, Rosneft's SEC proved hydrocarbon reserves as of 31.12.2018 grew by 4% up to 41 bn boe, proved reserves replacement ratio amounted 173%1. According to the PRMS classification as of 31.12.2018, 1Р hydrocarbon reserves stood at 47 bn boe, 2Р - 84 bn boe, 3Р - 121 bn boe.

Downstream

2018 oil refining throughput at the Company's refineries in the Russian Federation amounted to 103.3 mmt (2.8% growth vs. 2017 level). Including the foreign assets on the back of improving market environment refining throughput increased by 2.0% as - up to 115.0 mmt. Q4 refining throughput at the Company's refineries in Russia amounted to 26.8 mmt (growth of 0.1% QoQ and 5.6% YoY).

Refining depth in 2018 amounted to 75.1%, light products yield - 58.1%.

In 2018, in accordance with the earlier approved Rosneft-2022 strategy, large-scale programs of technical refurbishment of Oil and Petroleum Products Test Center at Syzran refinery were implemented. The Komsomolsk Refinery control room was equipped with advanced digital equipment in H2 2018, which made it possible to improve the control over the performance of key technological facilities: two crude units, distillate hydrotreating unit and sulfur recovery unit. The implementation of modern IT solutions allowed the Company to increase the efficiency of technological process, ensure the stability of the equipment, enhance the product quality control, improve the industrial safety level along with engineering staff efficiency. In May 2018 at JSC Ufaorgsintez a major isopropylbenzol (cumol) production unit modernization investment project was completed. The new technological process provides safe and environmentally clean production, reduces feedstock and energy usage. It is the first time such technology is applied in Russia.

In April 2018 the Ufa group of the Company's refineries started commercial production of improved high-octane gasoline AI-95 of Euro-6 class, which is significantly superior to currently produced in the Russian Federation Euro-5 fuel with respect to environmental and performance indicators. Moreover, Saratov refinery started the industrial production of Euro-6 high-octane petroleum in September 2018. The fuel received positive reviews from customers in the regions of its distribution - Bashkortostan and Krasnodar Krai.

In March 2018 The first batch of high octane fuel of Pulsar-100 was released at Ryazan refinery. The fuel provides allows for unleashing the potential and improving the effectiveness of high demand engines and offers improved environmental qualities. Pulsar-100 is the official Russian Circuit Racing Series fuel and is distributed among the majority of filling stations in Moscow.

In H2 2018 the Company commissioned an environmental facility at the Novokuibyshevsk Refinery - a post-treatment unit with membrane bioreactor at the wastewater treatment facilities. This unit ensures a high level of treatment and return of water to the production cycle, thus minimizing water resources consumption.

As part of the import substitution program, the catalysts purchased for the hydrogen unit of Kuibyshevsk and Ryazan refineries were substituted with catalysts produced by the Angarsk Plant of Catalysts and Organic Synthesis.

In December 2018 installation works for column replacement on gas fractionation unit were completed at Angarsk Refinery. The unit produces components of petroleum fractions and fuel gases, which allow for improvement of production process reliability along with increasing the environmental and industrial safety.

In 2018 Rosneft continued to actively develop the cooperation with international partners with respect to oil and petroleum products trading. Long term supply contracts were signed to deliver oil to Poland in the amount from 6.4 to 12.6 mmt with Grupa Lotos and to Germany in the amount from 4.8 to 10.8 mmt with TOTAL OIL TRADING. Furthermore, year-long contracts were signed with Shell and Eni to supply feedstock to Germany in the amount of 3.9 mmt and with SOCAR Trading for the delivery of oil to Turkish refinery in the amount of 1 mmt. In November 2018 Rosneft signed an agreement with ChemChina to supply ESPO blend from February 2019 to January 2020 in the amount of 2.4 mmt via Kozmino port.

As part of developing the cooperation with Republic of Belarus the Company signed agreements with OJSC "Naftan", OJSC "Belarusian Oil Company" and OJSC "Mozyrsky Oil Refinery" to supply oil in the amount of 8.7 mmt.

Thereby the Company continues to successfully diversify oil distribution channels along with increasing its export in the Eastern direction: in 2018 supplies reached 59.2 mmt (24.1% growth), where 16.1 mmt were supplied in Q4 (2.6% growth QoQ).

As part of expanding the cooperation with end-users a contract was signed with Japanese JXTG Nippon, which involves over 0.7 mmt natural stable gas supplies in 2019.

The Company signed a long term contracts for petroleum and diesel supplies with the largest Mongolian petroleum products importers on the XXII St. Petersburg International Economic Forum in Q2 2018. Contracts are valued at $2.1 bn. These contracts will enable Rosneft to sustain its steady positions in the high-margin Mongolian petroleum product markets and strengthen its cooperation with Mongolian partners.

The Company complies fully with its obligations to provide the internal petroleum products market with sustained supplies by acting within the framework of the Agreement "On the measures to stabilize and develop the internal petroleum products market" established with the Ministry of Energy and FAS of Russia. Thereby, Rosneft, being the leading supplier of petroleum products to the internal market, increased motor fuels sales on the internal market up to 28.1 mmt, 3.7% higher than 2017 level. In addition, the Company exceeded the guidelines for gasoline sales via exchange more than 2 times, diesel sales - by over 1.5 times.

In 2018 petroleum product sales via retail channel grew by 16% with respect to 2017 level, revenue from non-fuel sales increased by 6%, mostly on the back of the introduction of the new product mix policy on all filling stations including cafés' product-line expansion. Gross revenue from café business in 2018 increased by 14% vs 2017 level.

In 58 regions of the Russian Federation the work continued towards increasing the number of participants in "Family team" and "BP Club" loyalty programs. As of 2018 year end 10.3 mln participants were involved.

The Company received "Product of the year" prize for introducing the Pulsar fuel. The reward was received in "The most popular novelty product" nomination in the "Fuel" category. A comprehensive work was conducted to introduce the new fuels line-up with ACTIVE technology under BP branding in all regions of their filling stations presence.

The fuel quality control is being conducted constantly at tank farms and filling stations using stationary and mobile laboratories. More than 8 th. inspections were conducted at filling stations in 47 regions of the Russian Federation with the use of own mobile laboratories. Fuel quality tests at tank farms and filling stations were carried out in all regions of the Company's presence. Such control allows for elimination of risks of selling fuel with quality deviations.

Rosneft has efficient control system of fuel sales accuracy, that provides one of the best offers on Russian petroleum retail market.

In pursuance of the alternative fuel supply development, the works had been completed and 10 stations in Ulyanovsk, Voronezh, Saratov and Stavropol Krai had been put into pilot operations, where compressed natural gas (CNG) is sold as a motor fuel. Two more filling stations will be launched in Saratov and Ulyanovsk in the near future.

International operations and attraction of partners

In December 2017 Rosneft and BP announced a project in exploration of the subsoil resources at the Company's subsidiary, Kharampurneftegaz (BP's share - 49%). In accordance with the agreements achieved in Q2 2018, the parties started the project implementation.

As part of the Agreement signed in September 2017 between Rosneft and Equinor, the deal to sell a 33.33% stake in Sevkomneftegaz (a subsidiary conducting the development of Komsomolskoye field in Yamal-Nenets Autonomous District) to Equinor was closed in January 2019.

Rosneft and Beijing Gas in the framework of the I Russian-Chinese Energy Business Forum signed an Agreement to set-up a joint venture for the construction and operation of the chain of 170 automobile CNG filling stations in Russia. In addition, the option of using LNG as motor fuel will be considered. Beijing Gas will receive a 45% stake in the JV. The development of CNG filling station network corresponds to the Rosneft-2022 strategy and the President of the Russian Federation message on the necessity of the active development of natural gas motor fuel market.

Rosneft Deutschland, a Rosneft subsidiary, in 2018 completed the preparations to start the direct sales of petroleum products from PCK, Bayernoil and MiRO refineries in Germany and neighboring countries. The Company produces around 60 petroleum product items in total, including gasoline, diesel, heating oil, LPG, bitumen, fuel oil and petrochemical products. In 2018 corresponding product delivery contracts and fuel terminals lease contracts were signed. The Company actively developed the logistical aspect of autonomous deliveries via railroads and river transport across Germany. In 2018 Rosneft Deutschland started marketing and selling bitumen in Germany and neighboring countries along with setting up the production and distribution network of polymer modified bitumen "Alphabit", which is produced with the Company's own mixture. In 2018 the subsidiary supplied products to more than 130 enterprises within the country.

Key operational indicators in 12M and Q4 2018:

*According to management data

**Including marine fuel

Information Policy Division

Rosneft

Tel.: +7 (495) 411 54 20

Fax: +7 (495) 411 54 21

February 5, 2019

These materials contain statements about future events and expectations that are forward-looking in nature. Any statement in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements expressed or implied by such forward-looking statements to differ. We assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.