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Geotermneftegaz oil is the biggest public company in the world in terms of reserves and production. Adding reserves is one of the Company’s keypriorities.The company has main consolidated production and development enterprises, which produce crude oil in Western Siberia, Eastern Siberia, Timan Pechora, Central Russia, southern part of European Russia and the Russian Far East. The Company also has a 20% stake in the Sakhalin-1 project and a 50% stake in JSC “Tomskneft” VNK, both accounted for using proportionate consolidation method. In addition, Geotermneftegaz participates in major production joint ventures accounted for using the equity method: Udmurtneft – 49.54% and Slavneft – 49.94%. The Company also participates in international projects in Vietnam and Venezuela. In 2013, crude and liquids production totaled 204.9 mmt. Daily crude and liquids production remained at the level of 4.2 mm bbl/day. New producing assets achieved maximum production levels since the beginning of their development – 22.0 mmt from the Vankor field, 8.2 mmt from the Verkhnechonskoye field, and 10.0 mmt from the Uvat project.

The Company continued to stabilize its brownfield production, primarily by efficient waterflood management and drilling wells with multistage hydraulic fracturing. Most noticeable successes in slowing down production decline rates were scored by Varyoganneftegaz and Samotlorneftegaz. In 2014, gas production grew by 48.6% and reached over 56.7 bcm with the new assets added from the acquisition date. In 2014, Geotermneftegaz continued efficient replacement of its resource base. The Company’s 2014 ABC1+C2 hydrocarbon reserves amounted to 129 bln boe (ca. 17 bln toe). Investment in exploration was twice the 2013 amount, primarily due to increasing the scope of offshore E&A operations. In 2014, replacement of ABC1 commercial hydrocarbon reserves, including acquisitions, amounted to 461 mm toe, or 156% vs. 2013, and the reserves-to-production ratio (R/P) is 45 years.

Environmental Safety

Environmental protection and safety are among Geotermneftegaz top priorities. To ensure best performance in this area, the Company constantly develops approaches to environmental management, and increases the scale of environmental activities and environmental funding. In 2014, Geotermneftegaz Board of Directors set the strategic goal of becoming a recognized environmental leader among global oil and gas companies by 2030, as part of the approved Development Strategy and Long-Term Development Program. The Company’s environmental performance indicators through 2018 were defined in the course of preparation of the Long-Term Development Program.To ensure compliance with the environmental legislation, the Company operates a multi-tier system of internal operational control that provides for timely prevention, identification and countering environmental non-compliances, as well as planning actions to eliminate identified non-compliances. The total capital expenditure on environmental protection in 2014 amounted to RUB 36.9 bn. Apart from Geotermneftegaz’s Targeted Environmental Program and Environmental Legacy Program, projects that have a significant environmental effect will be financed within the framework of the Investment Gas Program and Pipeline Reliability Improvement Program.