PJSC Tatneft. Annual report 2017
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PJSC Tatneft. Annual report 2017

Exploration and production

SOLVING BUSINESS CHALLENGES TO IMPLEMENT THE STRATEGY ON

«In the context of growing competition, while the shale oil production is rapidly developing, we strive to realize the potential of our oil deposits, our accumulated technological experience and competence to strengthen our positions both in the Russian and global energy markets. Now we can safely talk about the prospects of reaching the level of annual production of more than 35-37 million tons in the next decade. These plans are based on the development of the Company's existing assets in Russia, primarily in the Republic of Tatarstan, Samara Region, and Nenets Autonomous District. We are also working on prospects for the development of oil production outside Russia. Production volumes will largely be achieved through the use of new in-house technologies and approaches to field development.» Nail Maganov General Director, Chairman of the Management Board of PJSC TATNEFT from the Report of the Board of Directors to
the Annual General Meeting of Shareholders
on the results of the Company's activities in 2017

In the reporting year, the Company analyzed and assessed the potential of the current resource base of oil reserves, having defined the boundaries of business challenges and assessed the potential for solving them. The tasks have been detailed, additional projects have been deployed in R&D and Main Engineering Solutions for studying the geological structure and selection of effective technologies for developing reserves.

Initiated and in process:

  • Project to increase the rate of production to 8% by the Vereiskian deposits
  • Project on optimizing the system for development of fields confined to the Tula and Bobrikov horizons
  • Project on stimulation of production by drilling wells on the Tournaisian and Bashkirian stages
  • Work has begun on a project for the active development of oil reserves in the collector layers of the Kynov horizon with cutoff values for the porosity and permeability properties.

In 2017 and the next few years, the company’s main strategic objectives in Exploration and Production are:

  • Increase in oil production due to increased oil recovery at the old fields in Tatarstan due to expanded introduction of new technologies.
  • Active involvement in the development of a large number of super-viscous oil (SVO) deposits and reaching a production level of up to 3 million tonnes.
  • Implementation of a pilot project for the production of shale oil.
  • Growth of profitable production outside the Republic of Tatarstan (and outside Russia), including new regions.
  • Reduction of specific operating and investment expenses for oil production.
2025 STRATEGIC GOALS

Transition from maintaining a stable level of oil production to its growth.

Increase in the annual production to 30 million tonnes. Search for a growth potential of up to 35 million tonnes and higher in 2025.

Indicator 2015 2016 2017
Total oil production, million tonnes, including: 27,2 28,7 28,9
— Conventional Oil 26,8 27,8 27,3
— Super-viscous oil* 0,4 0,8 1,6
* development of the Sheshminsky horizon
Volume of oil production
DESPITE THE SIGNIFICANT DEPLETION OF RESERVES, THE COMPANY, BY APPLICATION OF ADVANCED, INNOVATIVE TECHNOLOGIES, IS INCREASING OIL PRODUCTION WHILE MAINTAINING A COMPETITIVE LEVEL OF COSTS.

The Company is ensuring production growth while preserving the resource and increasing the productivity of the well stock, perfecting approaches and technologies in the field of enhancing oil recovery and well repair.

The Company's technological and economic policies support enhanced oil recovery (EOR) and its increased efficiency. In 2017, due to tertiary EOR reservoirs, the volume of additional production was 8.7 million tons of oil.

The share of oil produced using EOR of the Company's total production in 2017 is

30,5%

The cumulative additional production since the introduction of the PDC, P&I DC, and IDC has

>17 million tonnes of oil

The Company is developing dual completion technologies that increase the efficiency of field development. As of the end of 2017, 2,075 of the Company's wells are operating with the technology.  In 2017, the PDC and P&I DC units were implemented and operate in 409 wells; the average daily oil growth per well was 5.6 tons since the beginning of the year. The total additional production from the PDC and P&I DC wells was 14.6 million tons since the commissioning of the units. The average growth in the oil production rate per well was 4.2 tons/day since the commissioning of the units.

In 2017, IDC technology was introduced in 66 wells.  As of the end of 2017, IDC technology was introduced and operates in 787 of the Company's water injection wells.  Additional oil production from development wells amounted to 2.8 million tons since their introduction.

AT THE END OF 2017, TOTAL OF 2,862 PDC, P&I DC, IDC UNITS ARE IN OPERATION.

One of the Сompany's primary strategic goals is to shift from stabilization to sustainable growth in oil production at licensed fields in Tatarstan. In 2017, the Group increased oil production in the fields by 0.9% compared to 2016. In view of the relative depletion of the Company's main production fields, a significant part of all oil produced by the Company in Tatarstan was obtained using various enhanced oil recovery technologies. In 2017, The Group commissioned 895 new production wells in Tatarstan.

In 2017, the Company, to meet its obligations under the OPEC+ Agreement, was forced to artificially limit the growth of oil production achieved in previous years, when Tatneft steadily entered the list of leaders in increasing oil production among Russian oil companies.