ROSN.L Regulatory News (ROSN)

OPERATING RESULTS FOR 2Q 2021 AND 1H 2021

ESG

Protecting life and health, as well as securing labor safety are the main priorities for Rosneft. In March 2021, to prevent the spread of the COVID-19 infection the Company commenced vaccination of its employees. In total, approximately 90% of employees of the Company's headquarters and about 71% of employees of subsidiaries took part in the vaccination program. Despite herd immunity achieved as a result, the Company has taken the decision to continue the vaccination program.

Rosneft persistently enhances the level of HSE performance, guided by the principle of 'zero tolerance' for imposed golden safety rules violations committed by the Company's employees and contractors. Thanks to the implementation of measures to prevent accidents and mitigate their consequences, in 1H 2021 the number incidents of related to the safety of technological processes decreased at the Company's subsidiaries. A decrease in the number of process safety events PSE-1 by 45% and PSE-2 by 42% YoY in upstream segment testifies this statement.

The Company continues to strengthen its position in international ESG ratings. Following the June review, Rosneft was reconfirmed as a constituent of the FTSE4Good index series with a high score on ESG performance and transparency in disclosure. Furthermore, in April 2021, an international Sustainalytic agency improved the Company's ranking: Rosneft was the best among Russian oil and gas companies with a 33.9 score.

Hydrocarbon production

2Q 2021 liquids production reached 354.7 mln barrels (47.8 mln tonnes) having increased by 5.1% QoQ due to the gradual restrictions easing under the OPEC+ Agreement. Average daily liquids production amounted to 3.90 mln barrels per day.

1H 2021 liquids production amounted to 692.1 mln barrels (93.3 mln tonnes). The fulfillment of the OPEC+ Agreement that had come into force on May 1, 2020, as well as the substitution of low-margin assets by greenfields affected the indicator. Average daily liquids production amounted to 3.82 mln barrels per day.

In 2Q 2021, gas production amounted to 16.07 bln cubic meters having increased by 7.3% QoQ. The rise is mainly attributed to the increase in natural gas production at the Rospan project.

1H 2021 gas production amounted to 31.05 bln cubic meters, average daily gas production reached 171.5 mln cubic meters per day. In a comparable perimeter (excluding the assets sale), the indicator growth amounted to 9.1% YoY.

As a result, 2Q 2021 hydrocarbon production amounted to 452.6 mln boe (61.1 mln toe), a 5.6% increase QoQ, while 1H 2021 hydrocarbon production amounted to 881.2 mln boe (118.9 mln toe).

Geological exploration, development drilling and new wells commissioning

In 1H 2021, the Company conducted 4.3 th. sq. km of 3D seismic works on the Russian onshore, and tested 28 exploration wells with a 93% success rate. The total volume of 3D seismic works in 1H 2021 amounted to 4.9 th. sq. km, a 45.5% increase YoY. As a result of geological exploration, Rosneft discovered 17 new deposits with АВ1С1+B2С2 hydrocarbon reserves amounting to 13.9 mln toe.

1H 2021 development drilling footage exceeded 5.1 mln meters, having increased by 5.8% YoY. The Company traditionally maintains the share of in-house drilling footage at 50% as a minimum.

In 1H 2021, the number of newly commissioned wells exceeded 1.5 th. units, up by 36% YoY. The number of the most efficient new horizontal wells exceeded 1 th. units, up by 39% YoY, while their share in total number of newly commissioned wells amounted to 69%. In 1H 2020, the share of newly commissioned horizontal wells with multistage hydrofracturing amounted to 627 units, or 41% of the total number of wells commissioned over the period. Unit production per horizontal well overpassed the indicator for directional wells by more than 2 times.

Upstream projects development

In 1H 2021, the Company continued to develop its production projects in accordance with the previously announced plans.

Particularly, Rosneft continues to actively implement a large-scale Vostok Oil project in the north of the Krasnoyarsk Region. In order to prepare the resource base for further development, processing and interpretation of the 3D seismic data shot in winter at the Zapadno-Irkinsky licence area that covered over 500 sq. km were continued. The interpretation results will underpin new locations for exploration drilling in 2022. As of the end of 2Q 2021, 6 exploration wells were under construction at the Zapadno-Irkinskiy, Irkinskiy and Peschaniy license areas.

During the XXIV St. Petersburg International Economic Forum, Rosneft signed over 50 contracts concerning the project implementation and totaling RUB 558.8 bln. Among other things, the Company signed agreements for the construction of hydraulic structures for marine terminal in Sever Bay Port, as well as for stages 2 and 3 of its construction to ship up to 100 mln tonnes of oil in 2030. The Company concluded survey and design contracts to underpin construction of stage 1 power generation facilities, as well as agreements to supply metallurgical products, special and road-building equipment, and render logistic services. Moreover, the Company agreed with partners on the possibility of using joint low-carbon solutions within the framework of the Vostok Oil project.

Furthermore, in 2Q 2021, Rosneft and a consortium headed by Vitol S.A. signed heads of terms for a transaction providing for the sale of a 5% stake in the authorized capital of OOO Vostok Oil. The deal will be closed after the parties receive the necessary regulatory and corporate approvals.

In 1H 2021, the Company's share in total liquids production at the new major projects launched since 2016 amounted to 485 th. barrels per day (11.9 mln tonnes), which is 23% higher YoY. The share of these projects reached 12.7% of the total liquids production, up by 3.6 p.p. YoY.

Rosneft continues the development of its key gas projects. Thus, construction and installation works under the project of the development of Cenomanian and pilot production of Turonian gas deposits continue at the key facilities of the Kharampur field. As of the end of 1H 2021, the construction readiness of the integrated gas treatment unit was estimated at over 70% and of external gas pipeline at nearly 75%.

Oil refining

In 1H 2021, oil refining throughput at the Company's refineries in Russia amounted to 47.6 mln tonnes. In 2Q 2021, 23.5 mln tonnes of oil were processed, a 2.5% decrease QoQ due to seasonal maintenance. The maintenance works did not affect stable fuel supply to the domestic market, since the Company had built up reserves of gasoline and diesel in advance and, during the peak demand period, adjusted the maintenance schedule for its largest refineries in order to increase fuel sales on the domestic market.

In 1H 2021, oil refining throughput at the refineries in Germany amounted to 5.2 mln tonnes. In 2Q 2021, 2.9 mln tonnes of oil were processed at the German refineries, which is a 26.9% rise QoQ attributed to an increase in demand amid the gradual restrictions easing within the framework of the previously enforced lockdown in the country.

As a result, in 1H 2021 the Company's total refining throughput amounted to 52.7 mln tonnes. In 2Q 2021, the indicator amounted to 26.4 mln tonnes also remaining at the level of the preceding quarter. At the same time, oil refining depth increased by 1.4 p.p. and amounted to 76.2%, while light products yield increased up to 57.6%.

Crude oil and petroleum products sales

In 1H 2021, crude oil supplies to non-CIS countries amounted to 48.4 mln tonnes. In 2Q 2021 the indicator increased by 18.9% and amounted to 26.3 mln tonnes, including 13.6 mln tonnes supplied eastwards, or 51.7% of the total crude oil supplies to non-CIS countries.

In 1H 2021, the Company sold 50 mln tonnes of petroleum products, including 25.9 mln tonnes sold in 2Q 2021 (a 7.5% increase QoQ).

Rosneft's priority for motor fuel supplies is the domestic market. In 1H 2021, the Company sold 97% of the produced Euro-5 and higher motor fuel grades domestically. Rosneft's share in the total volume of exchange sales amounted to 46% for motor gasoline and 42% for diesel fuel. At the same time, the volumes of motor fuel supplied by Rosneft to the exchange traditionally significantly exceed the required quotas. So, in 1H 2021 Rosneft sold at the St. Petersburg International Mercantile Exchange 25% of the gasoline produced (with a 11% quota) and 15% of the diesel produced (with a 7.5% quota). Fuel sales to non-CIS and CIS countries are carried out within the framework of intergovernmental agreements, as well as to supply its own enterprises abroad.

In the reporting period, as part of Rosneft's long-term jet fuel retail sales development strategy in Germany, Rosneft Deutschland GmbH, a Rosneft subsidiary, commenced into-plane fueling in Nuremberg Airport. Refueling is also in place at other German airports, namely Berlin, Munich and Stuttgart.

In 1H 2021, the Company supplied to end-consumers, namely domestic and foreign ship owners, a total of 796 th. tonnes of bunker fuel, including 499 th. tonnes of marine fuel with sulfur content of up to 0.5% fully complying with the MARPOL regulations. Low-sulfur residual marine fuel RMLS 40 accounted for 37% of this volume (186 th. tonnes).

Retail business

As of the end of 2Q 2021, the Company's retail network comprised 3,046 filling stations and complexes, including 2,985 filling stations and complexes in the Russian Federation.

In the reporting period, the Company's retail business continued to demonstrate stable performance. In 1H 2021, the retail sales volume at Rosneft's filling stations fully recovered after the restrictions introduced in 2020 because of the COVID-19 and exceeded the level of 1H 2020 by 12%.

Customer focus, provision of in-demand services and a high level of service are the key priorities of the Company's retail business development. Thus, in the reporting period, Rosneft launched a pilot project Apteka Auto at 4 of the Company's filling stations in the Northwestern Federal District, offering its customers medical supplies, impulse demand medicines, hygiene products, medical cosmetics, and health products.

Moreover, the Company expands the service of the World of Privileges financial supermarkets across its filling stations. As of the end of 2Q 2021, financial supermarkets operated at 171 filling stations, which is 4 times more than in the previous quarter.

The Company is constantly expanding its branded fuels sale program. In 2Q 2021, sales of Pulsar gasoline began at 12 filling stations in 4 regions. As a result, as of the end of 2Q 2021, Pulsar fuel was sold at more than 1,160 filling stations of the Company in 33 regions of Russia.

Key operating results for 2Q and 1H 2021:

* According to management data

Rosneft Information DivisionTel.: +7 (495) 411 54 20Fax: +7 (495) 411 54 21August 13, 2021