Gazprom Neft has increased its reserves by 11.5%, compensating fivefold for 2014 production

Press-release

As at 31 December 2014 Gazprom Neft’s total proved and probable (2P) hydrocarbon reserves (including the Company’s share in joint ventures*) by international SPE-PRMS** standards amounted to 2.55 billion tonnes of oil equivalent. This represents an 11.5% or 263 million tonnes increase over 2013’s figures. Gazprom Neft’s production volumes in 2014 (66 million tonnes of oil equivalent BOE) were compensated almost five fold by new reserves (497%). The oil reserves of category 2P reached 1.82 billion tonnes, having increased by 6.7% per annum or 115 million tonnes, BOE.

At the end of 2014, Gazprom Neft's proved hydrocarbons reserves (1P) were estimated at 1.44 billion tonnes BOE – an increase of 7.1% compared with the level at the end of 2013. 1P reserves replacement level exceeded the production by 2.4 times (244%). 1P reserves increased by 2.2% - up to 981.5 million tonnes.

Gazprom Neft’s current proved hydrocarbon reserves-to-production ratio exceeds 20 years, according to SPE-PRMS.

The more conservative SEC*** standards estimate the Company’s total hydrocarbon reserves at 1.23 billion tonnes BOE (an increase in 2014 by 8.7%) and oil reserves at 857.6 million tonnes (a 3.4% increase).

The main reasons for the large resource growth in 2014 was geological exploration work, carried out by both Gazprom Neft and its joint ventures, as well as the increased share in Gazprom Neft’s ownership of SeverEnergiya, Northgas and Gazprom Neft Shelf. Gazprom Neft’s prospecting and exploration drilling is at a high level and following the results of 2014 saw a 81% success rate. Last year 26 hydrocarbon deposits were discovered including 21 oil and 5 gas deposits.

Alexander Dyukov, Chairman of Gazprom Neft Management Board, said:

“Gazprom Neft’s strategy provides for an increase in the company’s production and consequently reserves are maintained at a high level. Each year we will not only compensate for production but also increase our resource base. Gazprom Neft is confident of achieving  the set goal by demonstrating high year on year growth of its reserves."

Notes for editors

* The Gazprom Neft’s total reserves include the Company’s share in the reserves of its subsidiaries, recorded on the basis of the Equity accounting method. These subsidiaries are:  Slavneft, Tomskneft, Salym Petroleum Development, SeverEnergiya, Messoyakhaneftegaz, Northgas, assets in Iraq and Venezuela). Serbian NIS reserves are not included in the above valuation.

The reserves of Gazprom Neft and its joint ventures have been audited by independent international consulting firm DeGolyer and MacNaughton, who work closely with the oil and gas sector.

** SPE-PRMS (Petroleum Resources Management System) is the most commonly used hydrocarbon reserve evaluation system. Developed by the Society of Petroleum Engineers (SPE), the system takes into account not only the potential of finding oil and gas in the field, but also the economics of their extraction. Reserves are measured in three categories: proved, probable and possible (3P).

*** Another widely used system evaluating reserves is the classification developed by the US Securities and Exchange Commission (SEC). This valuation is more conservative than the SPE-PRMS standards.

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