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Videoconference marking the start of drilling at the Tsentralno-Olginskaya well

April 3, 2017

Vladimir Putin, via videoconference, launched the start of drilling at the Tsentralno-Olginskaya-1 well on the Khatangsky block, the northernmost well on the Russian Arctic shelf.

President of Russia Vladimir Putin: Good afternoon.

(Addressing Chief Executive Officer and Chairman of the Board of Rosneft Igor Sechin) Mr Sechin, I would like to wish success to you and all of your colleagues, the engineers, workers, and all the specialists actively launching this major project.

We spoke last week in Arkhangelsk about developing the Arctic’s mineral resources, and now, in the eastern Arctic, in the Laptev Sea, your big development and production project is beginning. True, production is still a long way off, but we are seeing the start of work to develop a whole oil and gas province, which preliminary data suggest contains a vast quantity of energy resources, millions of tonnes of oil and gas.

I know this work is difficult. You spoke about it when you briefed me in person recently. Horizontal drilling is a complex and high-tech operation. This is just the first well. There is much more work ahead. I would like to wish you good luck and I hope for this undertaking’s success.

You have the floor.

CEO and Chairman of the Board of Rosneft Igor Sechin: Thank you very much.

Mr President, we are on the Khara-Tumus Peninsula in the Dolgano-Nenets District, above the 73rd parallel, 250 metres away from the Laptev Sea coast. It is 350 kilometres to the nearest town of Khatanga. Through the snowstorm behind me, you can glimpse the drill rig. Today, when you give the command, the company will start drilling the first exploratory well in the eastern Arctic, the Tsentralno-Olginskaya-1 well.

The preparation work for the start of drilling was completed within a very short time. As you recall, with your support, we gained the right to work on the Khatanga block just over a year ago. We carried out unprecedented geological exploration work within a very short period. We completed 21 linear kilometres of seismic studies that revealed the existence of 114 promising oil and gas-bearing structures, so-called ‘traps’. Preliminary estimates suggest that the Laptev Sea’s total potential geological resources could come to 9.5 billion tonnes of oil equivalent.

The logistics operation to prepare for today’s drilling took eight months. The considerable distance from the support base and the difficult climatic conditions complicated this work.

Reinforced polar-class vessels brought the drilling equipment, residential modules, and the necessary equipment and technology from Arkhangelsk, 3,600 kilometres away. This all came to 8,000 tonnes of materials.

The drilling will be done from the coast, as this makes it possible to considerably reduce the construction costs of this well. The design depth is up to 5,000 metres with a subsequent horizontal leg. The technology we have enables us to drill with a vertical deviation of up to 15,000 metres. This technology makes it possible to save money, ensures economic efficiency, and meets high environmental standards. Our company is one of the world leaders today in developing offshore fields.

As you may recall, Mr President, we started working in the Kara Sea in 2014, acting on your instructions, and discovered a very important field – the Kara oil and gas-bearing province. This year, after starting on the Khatanga block, we will be drilling in the Black Sea. Next year, we will drill in the Barents Sea, and in 2019, we will return to the Kara oil and gas field, and will continue our work in the eastern Arctic.

Mr President, as you noted at the conference in Arkhangelsk, work and investment in the Arctic have a seven-fold multiplier effect. This work involves close coordination with the energy sector, construction and transport, air and sea transport. Without your support, we would not have been able carry out the preparations for this drilling and begin today’s work.

We would like to thank you for your support and trust. Rosneft will always live up to your trust, Mr President.

This ends my report. Mr President, if you do not mind, I would like to play this short video about preparations for the drilling.

Vladimir Putin: Yes, please.

(Video is played)

Vladimir Putin: Thank you.

Igor Sechin: Mr President, I ask you to give the command to start drilling the first exploratory well in the eastern Arctic.

Vladimir Putin: Begin.

Igor Sechin: Drilling operator, begin drilling.

Reply: I copy that. Begin drilling.

We have begun.

Igor Sechin: Mr President, the drilling has begun. We will keep you updated on the work. Thank you very much.

Vladimir Putin: Thank you.

Mr Sechin, I know that our oil sector in general and Rosneft in particular have always placed a lot of emphasis on environmental safety. I assume that in this case, especially in the Arctic, where the ecosystem is very vulnerable to outside interference, these principles and rules will be respected and you will give this aspect your utmost attention.

As we have said, we know that we have tremendous untapped offshore and coastal reserves in the Arctic. Given the tremendous value and importance of these reserves of hydrocarbons and other minerals, we have allowed only companies in which the state holds a majority stake to take part in this work. Licences have been accorded only to Rosneft and Gazprom. Rosneft should undoubtedly make the best possible use of these privileges.

I want to wish you all the very best.

Igor Sechin: Yes, sir, Mr President. Thank you very much.

April 3, 2017