annual report 2013 new horizons... 1 generating new sources of business growth see page 34 for more...

CONTENTS

ANNUAL REPORT 2013

NEW HORIZONS

1www.gazprom-neft.com

GENERATING NEW SOURCES OF BUSINESS GROWTHSEE PAGE 34 FOR MORE DETAILS

1

OPERATING ACTIVITIES

Exploration & production of crude oil & gas ...............................52

Geological.surveying..for.exploration.purposes.................54Licensing...........................................56Hydrocarbon.production.................58Projects.in.Russia............................65International.projects.......................76

Oil refining ...........................................80Omsk.refinery...................................82Moscow.refinery..............................84NIS.refining.facility...........................86Oil.refining.at.third-party..refineries...........................................88

Sales of petroleum products ............90Retail.sales........................................92Commodity.exchange.sales............96Exports.of.crude.oil.&..petroleum.products.........................98Premium.business.segments.......102

Innovation ..........................................114

Investment activities ........................119

Industrial, environmental, and occupational health and safety (HSE)...............................132

Energy consumption and efficiency....................................136

Human resource development .......138

Internal communications ................142

Regional policy and local community development .................144

Home towns program ......................146

Charitable activities and volunteer programs ..................148

Public and Government relations (PR and GR).......................149

Review of financial results of operations ....................................121

Results of operations ......................122

Liquidity and capital resources ......126

Financial appendix ...........................128

Financial data ...................................128

Corporate governance ....................152

General meeting of shareholders ................................154

Board of directors ............................155

Management board ......................... 161

Total compensation to Members of the Board of Directors and Members of the Management Board ..............165

Internal audit department ...............166

Compliance with the corporate code of conduct ................................168

Interaction with investors and equity capital .............................170

Debt portfolio management & credit ratings..................................... 176

Key risk factors ................................ 179

SUSTAINABLE DEVELOPMENT

FINANCIAL RESULTS

CORPORATE GOVERNANCE

GAZPROM NEFT 2013.ANNUAL.REPORT

HOW TO USE THIS REPORTIn.addition.to.the.usual.navigation.tools.in.printed.reports,.this.Annual.Report.contains.a.set.of.hyperlinks.and.interactive.tools..This.year.a.new.interactive.tool.is.provided.to.help.create.an.augmented.reality:.by.revealing.further.information.from.the.pages.you.are.looking.at..To.access.these,.you.will.need.an.iOS.or.Android.mobile.device.with.a.camera.function..You.will.also.need.to.install.the.application.developed.specifically.for.this.Annual.Report.by.downloading.it.from.the.QR-link.below..After.that,.open.or.log.in.in.the.application.installed.and.point.your.mobile.device.at.the.Report.cover.page.

CONTENTSCOMPANY PROFILE

PAGE 28

COMPANY STRATEGY

PAGE 4

ADDRESS BY THE CHAIRMAN OF THE BOARD OF DIRECTORS

PAGE 2

KEY PERFORMANCE INDICATORS

PAGE 6

ADDRESS BY THE CHAIRMAN OF THE MANAGEMENT BOARD

Key events 2013 ...................................................8

Company mission ................................................12

Company history .................................................14

Business structure ..............................................16

Business model ...................................................18

Operating geography ..........................................24

Competitive position ...........................................26

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The report contains several unique links to more information that can only be accessed by using the interactive Annual Report application :

3D.diagram.of.the.Prirazlomnaya.Platform

Interactive.diagram.of.the.Group.structure

Oil.refining.assets.charts

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Hyperlink.to.this.report.page.

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ON-LINE ANNUAL REPORT 2013

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2 GAZPROM NEFT 2013 ANNUAL REPORT

CONTENTS

336,752+4.2 %

Adjusted EBITDA, mn RUB

2012 323,106

2011 300,077

2010 220,812

2009 191,512

2013 336,752

208,611+23.3 %

Capital investments4, mn RUB

2012

2011 130,788

2010 100,247

83,590

2013

169,213

208,611

2009

34.06+0.9 %

Oil refining at own refineries, mn t

2012

2011 33.10

2010 30.75

26.61

2013

33.76

34.06

2009

1,343+11.9 %

Hydrocarbon reserves (PRMS-SPE), mn TOE

2012 1,200

2011 1,130

2010 1,023

2009 1,018

2013 1,343

45.74+3.9 %

Sales of petroleum products, mn t

2012

2011 41.50

2010 37.10

33.00

2013

44.03

45.74

2009

KEY PERFORMANCE INDICATORS1

2012 1,232,649

2011 1,029,803

2010 793,871

2009 641,378

2013 1,267,603

1,267,603+2.8 %

Sales revenue, mn RUB

177,917 +0.9 %

Net income relating to Gazprom Neft, mn RUB

2012 176,296

2011 160,362

2010 95,692

2009 95,994

2013 177,917

276,736+11.7 %

Net cash from operations, mn RUB

2012 247,695

2011 180,871

2010 163,718

2009 110,999

2013 276,736

62.26+4.3 %

Hydrocarbon production, mn TOE

2012 59.71

2011 57.25

2010 52.81

2009 50.17

2013 62.26

KEY PERFORMANCE INDICATORS

CONTENTS NEXT CHAPTER


CONTENTS

Key Financial Ratios

2013 2012 2011 2010 2009

Change 2013/2012

Base.and.diluted.income.per.common.share,.RUB.per.share .37.71. .37.37. .33.99. .20.35. .20.30. 0.9%

Dividend.per.share,.RUB . .9.30. .7.30. .4.44. .3.57.

Adjusted.EBITDA.margin,.% .26.57. .26.21. .29.14. .27.81. .29.86. 1.3.p.p.

Adjusted.EBITDA.per.barrel.produced,.RUB/BOE .736.20. .735.97. .711.69. .566.99. .520.58. 0%

Net.profit.margin,.% .14.73. .14.94. .16.28. .12.05. .14.97. –1.4.p.p.

Net.profit..per.barrel.produced,.RUB/BOE .388.96. .401.57. .397.66. .268.16. .267.43. –3.1%

Return.on.equity.(ROE),.%. .19.99. .23.03. .24.99. .17.91. .19.84. –13.2.p.p.

Gearing,.% .18.25. .15.90. .20.76. .20.48. .22.31. 14.8.p.p.

Current.ratio .2.08. .1.75. .1.98. .1.44. .1.15. 19.p.p.

Key Operating Ratios

2013 2012 2011 2010 2009

Change 2013/2012

Reserve.replacement.ratio,.% 367 219 286 110 271 52.p.p..

Refining/production.ratio,.% 84 85 81 76 70 –1.2.p.p.

Key Operating Indicators

2013 2012 2011 2010 2009

Change 2013/2012

Hydrocarbon.reserves.(PRMS-SPE),.mn.TOE .1,343. .1,200. .1,130. .1,023. .1,018. 11.9%

Hydrocarbon.production.mn.TOE .62.26 59.71 57.25 52.81 50.17 +4.3%

Oil.refining,.including: .42.63. .43.34. .40.49. .37.90. .33.43. –1.6%

at.contracted.refineries,.mn.t .8.57. .9.58. .7.39. .7.15. .6.83. –10.5%

at.own.refineries,.mn.t 34.06... 33.76... 33.10... 30.75... 26.61... 0.9%

Oil.export,.mn.t .12.39. .16.69. .16.10. .18.90. .18.90. –25.8%

Sales.of.petroleum.products,.mn.t 45.74... 44.03... 41.50... 37.10... 33.00... 3.9%

Export.of.petroleum.products,.mn.t .19.90. .18.88. .17.20. .16.60. .15.60. 5.4%

Number.of.operating.filling.stations.(own,.leased.and.franchised) .1,747. .1,609. .1,670. .1,596. .1,546. 8.6%

Average.sales.of.petroleum.products.per.filling.station.(RF),.tonnes.per.day .19.0. .17.60. .14.23. .10.30. .9.13. 7.8%

1. Since.January.01,.2013,.Gazprom.Neft.has.been.applying.a.number.of.new.IFRS.standards,.such.as:.IFRS.10.“Consolidated.Financial.Statements”,.IFRS.11.“Joint.Arrangements”,.and.IFRS.12.“Disclosure.of.Interests.in.Other.Entities”..As.a.result.of.the.application.of.these.standards,.particularly.IFRS.11.“Joint.Arrangements”,.the.Group.replaced.the.method.of.equity.share.in.Tomskneft.and.SPD.by.the.proportional.consolidation.of.assets.and.liabilities.with.respect.to.these.companies..The.operational.information.was.restated.(including.previous.periods).so.that.it.can.be.com-pared.with.the.financial.information..Detailed.information.on.the.application.of.IFRS.11.is.available.in.Note.2.to.the.consolidated.financial.statements.for.the.year.ended.December.31,.2013.

2. IFRS.financial.indicators.(RUB.statements).3. US.GAAP.financial.indicators.(USD.statements)..Yearly.indicators.are.expressed.in.RUB.at.an.average.annual.exchange.rate..Year-end.indicators.are.expressed.in.RUB.at.the.exchange.rate.as.of.

the.date.4. The.Capital.Investment.figure.is.subject.to.changes.in.the.advance.paid.out.and.capital.project.materials.

. The.Report.can.contain.inaccuracies.relating.to.share,.percentage,.and.amounts.calculation.due.to.rounding.estimate.values..The.data.presented.in.the.Annual.Report.can.insignificantly.deviate.from.the.previously.published.data.due.to.rounding.differences.of.the.values.

Key Financial Indicators

20132 20122 20112 20103 20093

Change 2013/2012

Sales.revenue,.mn.RUB 1,267,603 1,232,649 1,029,803 793,871 641,378 2.8%

Adjusted.EBITDA,.mn.RUB 336,752 323,106 300,077 220,812 191,512 4.2%

Net.income.relating.to.Gazprom.Neft,.mn.RUB 177,917 176,296 160,362 95,692 95,994 0.9%

Net.cash.from.operations,.mn.RUB 276,736 247,695 180,871 163,718 110,999 11.7%

Capital.investments4,.mn.RUB 208,611 169,213 130,788 100,247 83,590 23.3%

CONTENTS NEXT CHAPTER



CONTENTS

ADDRESSES

A YEAR OF NEW OPPORTUNITIESADDRESS BY THE CHAIRMAN OF THE BOARD OF DIRECTORS

Dear shareholders and investorsThe.Board.of.Directors.of.Gazprom.Neft.is.pleased.to.announce.another.year.of.steady.financial.and.operating.growth.for.the.Company.in.2013..These.results.confirm,.once.again,.that.the.Company.is.successfully.implementing.its.strategic.projects.and.plans.and.remains.one.of.the.most.efficient.companies.in.the.industry.

Last.year,.Gazprom.Neft.once.again.reported.industry-leading.growth.per.BOE.produced.and.adjusted.operation.profit.subject.to.the.performance.of.joint.ventures..Gazprom.Neft’s.operating.and.net.profit.also.demonstrated.growth.at.year-end,.despite.a.higher.tax.rate,.an.increase.in.interest.rates.and.a.decline.in.international.oil.prices.

PREVIOUS CHAPTER NEXT CHAPTER


CONTENTS

ALEXEY MILLERChairman.of.the.Board.of.DirectorsOJSC.Gazprom.Neft

The.Company.continues.to.implement.large.projects.that.will.become.a.platform.to.enable.Gazprom.Neft.to.achieve.the.goals.of.its.development.strategy..One.of.last.year’s.most.significant.projects.was.the.start.of.commercial.development.at.the.Prirazlomnoye.field..This.event.is.truly.historic,.as.we.became.the.first.company.ever.in.Russia.to.produce.oil.on.the.Arctic.shelf..All.field.production.operations,.such.as.drilling,.oil.production.and.storage,.preparation.and.shipment.of.finished.products,.are.made.possible.by.the.Prirazlomnaya.ice-resistant.offshore.stationary.platform..This.is.the.first.international.hydrocarbon.production.project.on.the.Arctic.shelf.to.use.a.stationary.platform..The.Prirazlomnaya.platform.is.designed.to.operate.under.extreme.climatic.conditions,.meets.the.strictest.safety.requirements.and.is.able.to.withstand.the.maximum.ice.load.

The.Company’s.achievements.in.refining.are.also.impressive.–.it.has.switched.to.Class.5.fuel.production.over.two.years.ahead.of.the.deadline.set.by.the.Technical.Regulations..This.is.especially.important.for.large.cities.where.the.use.of.this.fuel.will.have.a.beneficial.effect.on.the.environment..The.next.stage.will.involve.the.implementation.of.deeper.refining.projects.at.Gazprom.Neft.refineries:.we.aim.to.achieve.a.refining.depth.of.95%.by.2025.

The.Company’s.sales.segment.is.also.actively.developing.–.GAZPROM.filling.stations,.which.were.first.launched.outside.Russia.at.the.end.of.2012,.expanded.last.year.into.Bulgaria,.Bosnia.and.Herzegovina,.and.their.number.is.growing.in.Romania.and.Serbia..By.the.end.of.2015,.the.GAZPROM.chain.in.the.Balkans.will.number.at.least.250.filling.stations.

We.would.like.to.acknowledge.the.efforts.of.Gazprom.Neft.management.in.their.contribution.to.the.financial.performance..With.worsening.market.conditions.and.an.increasing.tax.burden,.the.profit.growth.demonstrated.by.Gazprom.Neft.at.the.end.of.2013.was.only.possible.due.to.the.optimization.of.commodity.flows.and.expenses,.as.well.as.other.management.actions.aimed.at.improving.the.Company’s.efficiency.and.overall.performance.

Another.achievement.was.our.shareholders’.dividend.yield,.which.remains.the.highest.among.our.industry.peers..A.new.Company.dividend.policy.was.also.approved.last.year..The.payout.will.be.25%.of.net.income,.as.calculated.under.IFRS..Gazprom.Neft.was.the.first.company.to.start.paying.interim.dividends..This.decision.will.enable.the.Company.to.follow.best.corporate.practices,.while.Gazprom.Neft.shareholders.will.be.able.to.obtain.their.share.in.the.Company’s.profit.in.less.time..

In.2013.we.set.new.milestones.for.the.further.development.of.Gazprom.Neft.and.approved.the.Company’s.strategy.up.to.2025..Gazprom.Neft.intends.to.maintain.production.level.at.100.million.tonnes.of.oil.equivalent.per.year,.and.keep.the.current.reserves.level,.which.is.currently.about.20.years..Gazprom.Neft’s.production.priorities.until.2025.remain.the.same:.retain.its.leading.positions.when.implementing.projects.in.the.North.of.the.YaNAD,.develop.shelf.operations,.use.non-conventional.reserves.through.the.application.of.high-end.technology.and.develop.actively.overseas..After.an.intensive.modernization.program,.the.Company’s.Russian.refining.facilities.will.reach.global.configuration.standards..This.will.enable.Gazprom.Neft.to.actively.continue.increasing.its.shareholder.value.

“In 2013, Gazprom Neft met all its business plan targets and continued to work towards attaining its strategic objectives. The.Company’s.two.key.strategic.focus.areas.are:.the.continuing.modernization.of.refineries.in.order.to.ensure.industry-leading.positions;.and.the.development.of.fields.in.new.regions,.including.the.Arctic.shelf.

Gazprom.Neft.remains.one.of.the.leaders.in.the.oil.industry.in.terms.of.efficiency.and.ranks.first.by.key.indicators.such.as.return.on.capital.and.total.shareholder.yield.”




CONTENTS

ADDRESSES

A YEAR OF NEW OPPORTUNITIESADDRESS BY THE CHAIRMAN OF THE MANAGEMENT BOARD

Dear shareholders and investors2013.was.a.successful.year.for.Gazprom.Neft.across.all.its.business.lines..Despite.challenging.macroeconomic.conditions.–.higher.tax.rates.and.natural.monopoly.rates.subject.to.the.same.oil.prices.–.the.Company.performed.very.well.against.its.key.financial.and.operating.indicators.

By.optimizing.existing.fields,.actively.implementing.new.technology.and.increasing.its.asset.portfolio,.production.increased.by.4.3%.to.more.than.62.million.tonnes.of.oil.equivalent..A.significant.event,.not.only.for.our.Company.but.also.for.the.whole.international.oil.industry,.was.the.first.ever.production.of.oil.on.the.Arctic.shelf:.as.a.project.operator,.Gazprom.Neft.started.commercial.development.of.the.Prirazlomnoye.filed.in.the.Pechora.Sea.

Gazprom.Neft.continues.to.develop.its.new.production.cluster.in.the.North.of.the.YaNAD.and.the.Yamal.Peninsula..Preparations.are.well.under.way.to.develop.new.large.fields.–.the.Novoportovskoye.and.Messoyakhskoye.fields.(the.second.project.is.implemented.jointly.with.our.partner,.Rosneft)..We.increased.our.share.in.SeverEnergia.by.over.40%.last.year.



CONTENTS

The.Company.is.actively.employing.new.technology.to.develop.hard-to-recover.reserves.at.brown.fields.that.were.previously.considered.inefficient..Gazprom.Neft’s.hard-to-recover.reserve.program.approved.in.2012.will.add.another.300.million.tonnes.of.reserves.to.its.development.portfolio.by.2020..At.year.end.2013,.over.22.million.tonnes.of.hard-to-recover.reserves.were.already.in.development..The.active.implementation.of.innovative.techniques.in.this.area.is.clearly.demonstrated.by.the.fact.that.the.share.of.high-technology.wells.of.the.total.volume.of.drilled.wells.has.increased.from.4%.to.35%.over.the.last.two.years,.making.the.Company.one.of.Russia’s.oil.&.gas.leaders.with.respect.to.this.indicator.

We.continue.to.build.up.our.resource.base.and.were.able.to.increase.proven.reserves.to.1.34.billion.tonnes.of.oil.equivalent.at.year-end.2013..This.means.that.during.the.past.year.we.have.increased.proven.reserves.by.almost.12%,.with.a.reserve.replacement.ratio.of.333%.

Gazprom.Neft’s.international.projects.also.made.good.progress.last.year..We.produced.the.first.oil.in.the.Badra.field.in.Iraq.and.took.part.in.a.new.project.in.the.North.of.the.country,.in.Kurdistan.

In.the.refining.segment,.the.most.important.event.was.the.completion.of.the.quality.program.at.all.of.the.Company’s.refineries.and.the.switch.over.to.the.production.of.higher.class.fuels.to.Euro.5.emission.standards..It.is.notable.that.the.Company.switched.over.to.the.production.of.Euro.5.fuel.quickly.–.2.5.years.earlier.than.required.by.law..In.the.refinery.segment,.our.focus.is.now.turning.to.the.implementation.of.a.deeper.refining.program..As.a.result,.within.a.few.years,.the.refining.depth.will.increase.to.95%.and.the.share.of.light.products.will.be.77%.

At.the.end.of.the.past.year,.the.average.daily.sales.at.filling.stations.grew.by.more.than.8%.to.19.tonnes,.a.record.for.the.Russian.industry..This.was.made.possible.due.to.the.rebuilding.and.rebranding.of.the.filling.station.chain.and.the.implementation.of.our.loyalty.programme.

We.also.extended.the.line.of.G-Drive.premium.fuels.and.G-Energy.and.G-Profi.premium.motor.oils.with.improved.environmental.characteristics..We.are.actively.developing.new.premium.products,.particularly.the.production.of.high.quality.bitumen.materials..Today,.our.Company.is.the.largest.Russian.producer.of.polymer-bituminous.binding.materials.

The.dividend.yield.of.Gazprom.Neft.remains.at.a.steady,.high.level..We.have.the.highest.dividend.yield.in.the.industry.and,.despite.the.growth.of.our.investment.activity,.the.Company.intends.to.maintain.dividend.payments.at.25%.of.consolidated.profits,.as.calculated.under.IFRS..In.2014,.we.will.continue.our.work.to.implement.advanced.technology.to.maintain.production.levels.in.our.traditional.operating.regions,.implement.new.large-scale.projects.both.in.Russia.and.abroad,.continue.to.modernize.our.refineries.and.develop.the.retail.chain...These.actions.will.help.us.to..ensure.further,.sustainable.growth.in.the.Company`s.shareholder.value.

ALEXANDER DYUKOVChairman.of.the.Management.BoardOJSC.Gazprom.Neft

“Over.the.past.year,.Gazprom.Neft.has.continued.to.strengthen.its.operational.and.financial.performance..The.Company’s.results.achieved.in.2013.made.it.one.of.the.industry.leaders.in.terms.of.operating.profit.per.BOE.produced.and.growth.of.adjusted.operation.profit,.subject.to.the.performance.of.its.joint.ventures..

Using the most modern and high-tech methods, we have achieved production growth not only at our new projects, but also at mature fields in traditional regions..Our.main.goals.for.2014.include.our.continuing.refinery.modernization.program,.the.start.of.production.at.the.Badra.field.in.Iraq,.and.further.expansion.of.our.premium.distribution.channels.”




CONTENTS

KEY EVENTS 2013

JANUARY

The.Gazpromneft-Aero.aircraft.fuelling.complex.commenced.operations.at.Scheremetyevo.international.airport..In.March,.the.International.Association.of.Air.Transport.(IATA).rated.this.facility.as.the.best.service.provider.of.quality.jet.fuel.supply,.thus.allowing.it.to.fuel.aircrafts.without.any.restrictions.

APRIL

Gazprom.Neft.began.well.tests.at.the.Badra.oil.field.in.Iraq..A.total.of.seven.tests.are.scheduled.at.the.site,.six.of.which.will.concentrate.on.the.productivity.potential.of.each.individual.horizon,.while.the.seventh.test.will.look.at.their.combined.productivity.

MARCH

Gazpromneft.Lubricants.began.selling.motor.oils.under.the.Gazpromneft.brand..The.brand,.previously.used.for.industrial.equipment.oils.only,.was.expanded.to.include.synthetic,.synthetic.blends,.and.conventional.oils.for.gasoline.and.diesel.engines.in.cars.and.trucks,.as.well.as.transmission.oils,.lubricants,.and.technical.fluids..

Gazprom.Neft’s.bunker.business.expanded.into.international.markets..Gazprom.Neft.Marine.Bunker.’s.first.international.asset.was.Marine.Bunker.Balkan.S.A.,.a.Romanian.company.operating.in.the.Constanta.port.of.the.Black.Sea..

The.Board.of.Directors.of.Gazprom.Neft.approved.the.Company’s.2020.Innovation.Development.Program..In.order.to.achieve.its.strategic.goals,.Gazprom.Neft.plans.to.use.leading-edge.technology.from.top.Russian.and.international.companies,.as.well.as.to.develop.fundamentally.new.solutions.in.partnership.with.leading.Russian.R&D.centers.and.universities..The.completion.of.the.corporate.knowledge.management.system,.which.involves.the.following,.sharing,.and.creation.of.new.best.practices,.will.become.yet.another.important.focus.of.the.Company’s.work.

KEY EVENTS

ADDITIONAL MATERIALS AND VIDEOS


http://www.gazprom-neft.com/press-center/media/


CONTENTS

JUNE

Gazprom.Neft.started.the.restructuring.of.its.regional.sales.network,.a.move.intended.to.separate.the.wholesale.and.retail.side.of.the.business.at.all.levels..The.main.purpose.of.the.project.is.to.strengthen.sales.and.corporate.governance,.in.particular,.by.simplifying.and.integrating.the.sales.structure.and.separating.the.financial.results.of.the.wholesale.and.retail.businesses.

MAY

Gazprom.Neft.completed.its.first.season.of.oil.shipments.from.the.Novoportovskoye.field..A.total.of.over.10,000.tonnes.of.crude.oil.was.shipped.from.the.field.during.the.winter.roads.operating.period..Oil.from.the.field.was.delivered.by.truck.to.Payuta.railway.station,.located.200.kilometers.from.Novy.Port,.and.from.there.it.was.shipped.by.rail.

Gazpromneft-Aero.expanded.its.overseas.presence.to.over.100.airports..The.airport.in.the.Italian.city.of.Reggio.di.Calabria.became.a.milestone.on.the.Company’s.operational.map.

In.the.Noyabrsk.region,.Gazprom.Neft.completed.Phase.1.of.the.project.to.improve.the.utilization.rate.of.associated.petroleum.gas.(APG)..The.two.vacuum.compressor.stations.launched.in.the.Vyngapurovskoye.fields.improved.the.utilization.rate.to.over.95%,.and.to.90%.on.average.for.the.Company..This.exceeded.Gazpromneft’s.average.APG.utilization.by.80%,.with.the.previous.rate.at.between.30–40%..

The.Board.of.Directors.of.Gazprom.Neft.approved.the.Company’s.2025.Development.Strategy..The.document.builds.on.the.2020.strategy,.taking.into.account.both.the.changing.industry.environment.and.the.state.of.the.global.economy..The.Company.plans.to.maintain.production.at.100.million.tonnes.of.oil.equivalent.annually.and.to.maintain.the.current.reserve.level.at.20.years..The.Company’s.priority.in.the.refining.segment.is.improved.operational.efficiency.and.the.implementation.of.refining.asset.modernization.programs..These.will.enable.Gazprom.Neft.to.achieve.the.following.targets.in.2025:.oil.refining.–.40.million.tonnes.per.year.in.Russia;.refining.depth.–.95%.in.Russia;.and.light.petroleum.products.output.–.77%.in.Russia..The.Company’s.main.objective.for.the.petroleum.product.sales.segment.is.for.its.sales.to.be.covered.100%.by.the.Company’s.own.production.

JULY

Gazprom.Neft.and.Total.signed.an.agreement.to.create.a.joint.venture.for.the.production.of.modified.bitumen.and.bitumen.emulsions..A.special.production.facility.will.be.built.on.the.Moscow.Oil.Refinery.site.

The.first.petrol.stations.were.launched.in.Bulgaria.and.Bosnia.and.Herzegovina.under.the.GAZPROM.brand..At.the.end.of.2012,.premium.GAZPROM.petrol.stations.had.been.opened.in.Serbia.and.Romania..By.the.end.of.2015,.more.than.250.GAZPROM.petrol.stations.will.have.been.built.in.the.Balkans.

The.Yuzhno-Priobskaya.compressor.station.(CS).in.KhMAD.produced.its.first.associated.petroleum.gas..The.launch.of.the.facility.will.allow.APG.to.be.supplied.from.the.Yuzhno-Priobskoye.field.to.the.Yuzhno-Balyksky.gas.processing.complex.

Catalytic.cracking.gasoline.hydrotreatment.and.light.naphtha.isomerisation.units.were.commissioned.at.the.Moscow.Oil.Refinery..This.allowed.the.refinery.to.change.over.completely.to.the.production.of.Euro.5.petrol..All.of.the.Company’s.refining.assets.have.now.switched.over.to.production.of.Euro.5.fuels.




CONTENTS

SEPTEMBER

Gazprom.Neft.launched.a.new.G-Drive.98.fuel.product..Its.introduction.was.a.follow-up.to.the.branded.fuel.project..At.filling.stations.where.G-Drive.95.is.sold,.the.G-Drive.95’s.share.of.sales.reached.30.percent.in.two.years..

A.horizontal.well.with.10-stage.fracturing,.a.technique.used.for.the.first.time.in.Russia,.was.commissioned.in.Gazprom.Neft’s.Vyngapurovskoye.field.in.KhMAD..The.rate.of.the.yield.obtained.–.over.135.tonnes.per.day.–.is.approximately.one.third.higher.than.those.obtained.in.horizontal.wells.with.a.lower.number.of.fracturing.stages.

AUGUST

Gazprom.Neft.acquired.a.bunker.company.in.Estonia..AS.Baltic.Marine.Bunker.became.Gazprom.Neft.Marine.Bunker.’s.second.international.asset.

OCTOBER

Pilot.drilling.was.completed.at.the.Novoportovskoye.field..Gazprom.Neft.plans.to.begin.a.full-scale.drilling.program.in.2014.in.preparation.for.the.beginning.of.commercial.production.at.Novoport.

Gazpromneft-Aero.supplied.more.than.one.million.tonnes.of.aviation.kerosene.to.the.Russian.Ministry.of.Defence;.this.landmark.volume.was.achieved.in.just.2.5.years.

KEY EVENTS 2013 (CONTINUED)

EVENTS FOLLOWING THE REPORTING DATE JANUARY 2014 Gazprom.Neft.produced.its.first.oil.at.the.Badra.oilfield.in.Iraq..Gazprom.Neft.reported.the.successful.completion.of.well-testing.at.its.BD4.well.at.the.end.of.December,.2013...

Gazprom.Neft.acquired.100%.of.the.share.capital.of.LLC.Syntaz.Oil,.which.owns.CJSC.Ryazan.Pilot.Petrochemical.Plant.(ROZNKhP)..This.asset.will.help.the.Company.to.gain.leadership.in.the.production.of.polymer-bituminous.materials.for.road.construction.in.Russia.

.

.

.Gazprom.Neft.increased.its.stake.in.SeverEnergia..Once.the.transaction.is.completed,.Gazprom.Neft’s.stake.in.SeverEnergia.will.increase.to.40.2.%..The.company.began.commercial.production.of.gas.in.April.2012,.and.a.200,000-tonne-capacity.oil.treatment.facility.was.put.into.operation.at.the.Samburgskoye.field.at.the.end.of.2013.

KEY EVENTS



CONTENTS

DECEMBER

Gazprom.started.producing.oil.at.the.Prirazlomnoye.field..This.is.Russia’s.first.project.to.develop.the.Arctic.shelf.and.the.first.of.Gazprom’s.large-scale.activities.to.create.a.large.hydrocarbon.production.center.in.the.region..Gazprom.Neft.is.in.charge.of.the.project..

Gazpromneft.Marine.Bunker,.which.runs.Gazprom.Neft’s.bunker.business,.acquired.the.assets.of.LLC.Novorosnefteservis.and.LLC.Novorossiysk.Oil.Transhipment.Complex.to.provide.storage.and.transhipment.of.marine.oil.sold.by.the.company.in.the.Black.Sea.region.

The.GAZPROM.retail.brand.used.by.Gazprom.Neft.in.the.SEE.region.was.recognized.as.the.best.retail.brand.in.Serbia.and.Bosnia.and.Herzegovina.

NOVEMBER

Gazprom.Neft.opened.a.new.business.center.in.Saint-Petersburg.at.the.headquarters.of.its.three.subsidiaries:.Gazpromneft-Aero,.Gazpromneft-Shelf.and.Gazpromneft-Development..The.state-of-the-art,.prestigious.office.named.“Energy”.is.situated.in.the.center.of.the.Northern.Capital,.near.the.Peter-and-Paul.Fortress.

MARCH 2014 JSC.Gazprom.Neft.has.been.the.first.among.Russian.companies.to.join.the.Arctic.Oil.Spill.Response.Technology.Joint.Industry.Programme.which.is.being.implemented.by.the.largest.world.oil.and.gas.companies.

Gazpromneft-Khantos.has.obtained.a.license.to.carry.out.geological.exploration.of.the.deep.oil-saturated.prospective.horizons.in.the.Achimovskaya.and.Bazhenovskaya.formations.of.the.southern.Priobskoye.field.

.

.

.In.2013,.JSC.Gazprom.Neft.appeared.in.the.best.Russian.employers.rating.(prepared.by.HeadHunter.company).for.the.third.time..More.than.700.companies.applied.to.be.listed..Gazprom.Neft.was.fifth.in.the.final.list.of.employers.(6th.in.2012,.and.8th.in.2011).

APRIL 2014 Omsk.Refinery.has.proved.its.industry-leading.status.by.obtaining.a.patent.for.a.new.method.to.develop.catalysts.with.a.low.concentration.of.rare.earth.elements.(REE).for.oil.fraction.cracking.

Gazprom.Neft.has.launched.a.website.for.its.“Home.Towns”.social.investment.program.(http://rg.gazprom-neft.ru/).which.contains.all.the.latest.information.about.the.Company’s.major.social.projects.in.the.regions.in.which.it.operates.



12 12www.gazprom-neft.comGAZPROM NEFT 2013.ANNUAL.REPORT

CONTENTSCONTENTS


READ MORE

12

COMPANY PROFILE:.

ONE OF THE FASTEST-GROWING OIL PRODUCERS IN RUSSIA

Gazprom Neft is a major player in today’s energy market.The Company produces and supplies a wide range of products for a variety of industries both in Russia and around the world.

OJSC Gazprom Neft (together with its subsidiaries) is a vertically integrated oil company (VIOC), whose.main.activities.include.the.exploration,.development,.production.and.sale.of.crude.oil.and.gas,.as.well.as.oil.refining.and.the.marketing.of.petroleum.products..As.per.the.SPE.(PRMS).classification,.the.Company’s.proven.reserves.of.hydrocarbons.amount.to.more.than.1,343.billion.TOE,.placing.Gazprom.Neft.in.the.top.20.global.producers.of.crude.oil.

The.Company.operates.in.Russia’s.largest.oil-.and.gas-producing.regions:.the.Khanty-Mansiysk.and.Yamal-Nenets.Autonomous.Districts,.and.the.Tomsk,.Omsk.and.Orenburg.Regions..The.Company’s.main.refining.facilities.are.located.in.the.Omsk,.Moscow.and.Yaroslavl.Regions,.and.also.in.Serbia..In.addition,.OJSC.Gazprom.Neft.has.production.projects.outside.Russia,.in.Iraq,.Venezuela.and.elsewhere.

SEE P. 16 FOR MORE DETAILS SEE PP. 51-89 FOR MORE DETAILS

COMPANY MISSION

To offer consumers high quality energy resources, to conduct business fairly and responsibly, to take care of our employees, and to be a leader in efficiency, guaranteeing long-term, stable growth for the Company.


PREVIOUS CHAPTER NEXT CHAPTERCONTENTS


14 GAZPROM NEFT 2013.ANNUAL.REPORT

CONTENTS

Siberian.Oil.Company.(“OJSC.Sibneft”).was.established.by.Decree.of.the.President.of.the.Russian.Federation..The.state.acted.as.the.Company’s.founder,.contributing.to.its.authorized.capital.portfolio.of.state-owned.shares.in.some.of.the.country’s.largest.oil.companies:.OJSC.Noyabrskneftegaz,.OJSC.Noyabrskneftegazgeofizika,.OJSC.Omsk.Refinery.and.OJSC.Omsknefteprodukt.

1995

COMPANY PROFILE

COMPANY HISTORY

OJSC.Sibneft’s.controlling.interest.(75.68.%).was.acquired.by.Gazprom.Group..On.May.13,.2006,.the.Company.was.renamed.Open.Joint.Stock.Company.(OJSC).Gazprom.Neft..The.new.strategic.objectives.of.Gazprom.Neft.were.to.become.a.global.company.with.regionally.diversified.assets.along.the.entire.value.chain.

2005

2007

Business.units.were.set.up.within.the.Company.to.focus.on.activities.in.specific.segments:.Gazprom.Neft.Nefteservis,.Gazprom.Neft.Marine.Bunker,.Gazprom.Neft-Lubricants,.and.Gazpromneft-Aero..In.December.2007,.in.order.to.expand.its.resource.base.further,.Gazprom.Neft.acquired.a.50%.stake.in.Tomskneft,.a.company.producing.oil.and.gas.in.the.Tomsk.Region.and.the.Khanty-Mansiysk.Autonomous.District.

2006

Gazprom.Neft.entered.the.retail.market.in.Central.Asia.by.creating.a.subsidiary.–.Gazprom.Neft.Asia.–.to.sell.the.Company’s.petroleum.products.in.Kyrgyzstan,.Tajikistan.and.Kazakhstan..In.the.same.year,.the.Company.took.part.in.government-level.international.projects.for.the.first.time.after.becoming.a.shareholder.(jointly.with.JSC.Rosneft.and.JSC.Transneft).in.the.Burgas-Alexandroupolis.Trans-Balkan.Oil.Pipeline.construction.project.

2008

Gazprom.Neft,.Rosneft,.Lukoil,.TNK-BP.and.Surgutneftegaz.signed.a.Memorandum.of.Understanding.regarding.the.cooperation.and.joint.participation.in.projects.in.Venezuela.and.Cuba,.as.part.of.the.National.Oil.Consortium.

1996–1997

The.Russian.Government.privatized.Sibneft.as.part.of.a.program.to.develop.the.market.economy..Private.investors.bought.49%.of.Sibneft.stock.at.auctions.in.1996..In.1997.the.Financial.Petroleum.Company.won.the.state.share.in.Sibneft.at.auction,.as.part.of.the.Government’s.Shares.for.Loans.program.

1998–2004

The.Company.developed.rapidly.owing.to.its.high.resource.potential,.efficient.refining.capacities.and.professional.management..Sibneft.management.focused.on.modernizing.production,.introducing.the.latest.technology.and.optimizing.business.processes..A.proactive.acquisition.policy.allowed.the.Company.to.expand.its.production.territory.rapidly.(in.the.Tomsk.and.Omsk.Regions,.and.the.Chukotka.Autonomous.District).and.its.sales.network.(in.the.Sverdlovsk.and.Tyumen.Regions,.the.Krasnoyarsk.Territory,.and.the.cities.of.St..Petersburg.and.Moscow)..One.of.the.Company’s.major.purchases.during.this.period.was.its.acquisition.of.49.9%.of.the.shares.in.JSC.Slavneft.Oil.Company,.which.produced.oil.and.gas.in.Western.Siberia.and.the.Krasnoyarsk.Territory.

Gazprom.Neft.acquired.new.assets.for.its.resource.portfolio.and.refinery.capacities:.the.Serbian.oil.company,.NIS,.and.a.controlling.stake.in.Sibir.Energy..The.latter.acquisition.increased.the.Company’s.ownership.stake.in.the.Moscow.Refinery.and.provided.access.to.the.Salym.oilfields..In.April.2009,.the.Company.concluded.a.deal.with.Chevron.Global.Energy.to.purchase.the.Chevron.Italia.S.p.A..oils.and.lubricants.production.plant.in.Bari.(Italy)..Another.significant.development.for.Gazprom.Neft.was.the.launch.of.a.large-scale.program.for.the.rebranding.of.the.Company’s.filling.station.chain.

2009

1995

20011998 20041996 200219991997 20032000



CONTENTS

Gazprom.Neft.expanded.its.presence.in.the.global.oil.and.gas.market..The.Company.completed.a.deal.to.acquire.the.production.division.of.STS-Service,.owned.by.Sweden’s.Malka.Oil..Gazprom.Neft.signed.a.contract.to.develop.the.Badra.field.in.Iraq,.containing.more.than.2.bn.bbl.of.oil.reserves..Gazprom.Neft.became.the.leader.of.a.consortium.of.Russian.vertically.integrated.oil.companies.in.a.project.to.develop.the.Junin-6.oil.block.in.Venezuela;.it.also.joined,.on.a.production.sharing.basis,.an.offshore.project.in.Equatorial.Guinea.at.a.geological.exploration.stage,.and.acquired.stakes.in.an.offshore.geological.exploration.project.in.Cuba..Gazprom.Neft.joined.a.project.to.develop.fields.under.a.development.license.held.by.SeverEnergia.(via.subsidiaries)..A.retail.filling.station.chain.was.acquired.in.Kazakhstan..The.Company.also.commissioned.two.Cenomanian.gas.deposits.at.the.Muravlenkovskoye.and.Novogodneye.fields.in.Russia.

2010

2011

Gazprom.Neft.improved.its.operating.performance.substantially.by.purchasing.new.assets.and.increasing.the.efficiency.of.existing.fields..The.Company.purchased.5.15%.of.NIS.shares,.bringing.its.stake.to.56.15%,.and.also.became.the.sole.shareholder.of.Sibir.Energy;.it.also.acquired.the.Tsarichanskoye.and.Kapitonovskoye.fields.in.the.Orenburg.Region,.as.well.as.the.Eastern.part.of.the.Orenburgskoye.field..The.Company.started.drilling.at.the.Badra.field.in.Iraq..This.year.was.also.marked.by.highly.successful.oil.refining.and.petroleum.product.campaigns..Gazprom.Neft.commercialized.Euro.4.and.Euro.5.fuels.at.its.refineries.and.launched.sales.of.a.new.premium.class.of.motor.fuel.under.the.brand.G-Drive.through.its.own.filling.station.chain..Gazprom.Neft.expanded.the.geographic.reach.of.its.filling.stations.by.entering.the.market.in.Russia’s.Southern.Federal.District..Gazpromneft-Aero,.a.subsidiary.of.the.Company,.began.the.refuelling.of.aircrafts.at.12.Ministry.of.Defence.airfields,.obtaining.the.status.of.exclusive.jet.fuel.supplier.and.aircraft.fuelling.service.provider.to.the.Russian.Armed.Forces..It.also.started.aircraft.refuelling.operations.at.the.international.airports.of.Bishkek.and.Manas.in.Kyrgyzstan..The.Omsk.Refinery.started.producing.bituminous.polymer.materials.

2013

This.year.was.marked.by.a.number.of.significant.steps.towards.the.achievement.of.the.Company’s.strategic.goals:.as.part.of.the.development.of.the.Arctic.shelf.resources,.the.first.oil.was.produced.at.the.Prirazlomnoye.field;.Gazpromneft-Total.PMB,.a.joint.venture,.was.established.for.the.production.of.modified.bitumen.and.bitumen.emulsions.and.Khanty-Mansi.Oil.and.Gas.Union.was.created.jointly.with.Shell.to.carry.out.new.shale.oil.deposit.exploration.and.development.projects.in.KhMAD..The.100%.stake.in.CJSC.Gazprom.Neft.Orenburg.was.consolidated.

The.Board.of.Directors.of.Gazprom.Neft.approved.the.Company’s.development.strategy,.having.extended.the.planning.horizon.to.2025..The.bunker,.aviation.fuel.and.oil.business.development.strategies.were.likewise.updated.to.the.year.2025.

Gazpromneft-Khantos.found.the.first.oil.in.the.Yuzhno-Kinyamskoye.field.in.KhMAD..In.January.2013,.the.licensed.block.was.moved.into.commercial.development..

The.Company.obtained.the.right.to.use.the.sub-soil.of.the.Yuzhno-Pudinskiy.block.located.in.the.Parabel.district.of.the.Tomsk.Region.

The.Company.completed.the.pilot.drilling.programme.at.the.Novoportovskoye.field.–.one.of.the.largest.Yamal.fields.under.development.

Catalytic.cracking.gasoline.hydrotreatment.and.light.naphtha.isomerisation.units.were.commissioned.at.the.Moscow.Oil.Refinery..This.allowed.the.refinery.to.complete.a.full.switch.over.to.production.of.Euro.5.gasoline..Now,.all.refining.assets.of.the.Company.have.switched.over.to.production.of.Euro.5.fuels.

Gazprom.Neft’s.bunker.business.moved.into.international.markets:.it.acquired.Marine.Bunker.Balkan.S.A.,.operating.in.the.Black.Sea.region,.and.AS.Baltic.Marine.Bunker,.operating.in.the.Baltic.region..Gazpromneft-Aero.moved.into.new.territories.and.increased.its.international.operations.to.100.airports..In.2013,.the.Company.continued.implementing.its.strategy.to.develop.its.filling.station.chain.in.the.Baltic.region..In.addition.to.filling.stations.opened.earlier.under.the.GAZPROM.premium-class.brand.in.Serbia.and.Romania,.the.first.filling.stations.were.launched.in.Bulgaria.and.Bosnia.and.Herzegovina.

Gazprom.Neft.became.one.of.Russia’s.largest.volume.producers.and.refiners,.and.established.itself.as.the.industry.leader.in.efficiency..The.Company.started.crude.oil.production.in.a.pilot.operation.project.at.the.Vostochno-Messoyakhskoye.field,.and.also.began.first.stage.commercial.operations.at.the.Samburgskoye.oil-gas.condensate.field,.owned.by.Russian-Italian.company,.SeverEnergia..It.continued.to.develop.a.production.cluster.in.the.Orenburg.Region,.which.included.the.Baleykinskoye.field.and.the.Uranskaya.area,.following.the.acquisition.of.LLC.Zhivoy.Istok..At.the.end.of.the.year.the.Company.acquired.the.Novoportovskoye.field.and.took.part.in.some.new.hydrocarbon.reserve.exploration.and.development.projects.in.Iraq..Gazprom.Neft.acquired.LLP.Bitumniy.Zavod,.a.new.asset.for.the.production.of.modified.bitumen.and.bitumen.emulsions.in.Kazakhstan..The.Company’s.Moscow.Refinery.started.producing.Euro.4.Ai-92.and.Ai-95.automotive.gasoline,.and.the.Omsk.Refinery.began.production.of.Euro.4.and.Euro.5.Ai-92.and.Ai-95.automotive.gasoline.and.Euro.5.diesel.fuel..Joint.venture,.OJSC.Slavneft-YaNOS,.completely.switched.over.to.the.production.of.high-octane.Euro.5.Ai-92.and.Ai-95.automotive.gasoline..Gazprom.Neft.also.gained.access.to.refining.assets.in.the.Republic.of.Belarus.and.proceeded.with.the.development.of.a.distribution.network.in.Ukraine.under.the.Gazpromneft.brand.and.in.Europe.(Serbia.and.Romania).under.the.GAZPROM.brand.

2012

2008

20122005 2009

20132007 20112006

2010 2014




CONTENTS

COMPANY PROFILE

BUSINESS STRUCTURE

PRODUCTION

.� OJSC.Gazpromneft-Noyabrskneftegaz

.� LLC.Gazpromneft-Khantos

.� LLC.Gazpromneft-East

.� LLC.Archinskoye

.� OJSC.Meretoyakhanefteg

.� LLC.Zapolyarneft

.� LLC.Gazprom.Neft-Angara

.� LLC.Gazpromneft-Sakhalin

.� OJSC.Oil.Company.Magma

.� CJSC.Gazprom.Neft.Orenburg

.� ОJSC.Yuzhuralneftegaz

.� CJSC.Centre.for.Science-Intensive.Technologies

.� LLC.Zhivoy.Istok

.� LLC.Gazprom.Neft.Novy.Port

.� CJSC.Khanty-Mansi.Oil.and.Gas.Union.(JV)

.� ОJSC.Oil.and.Gas.Company.Slavneft.(JV)

.� OJSC.Tomskneft.VNK.(JV)

.� LLC.SeverEnergia.(JV)

.� CJSC.Messoyakhaneftegaz.(JV)

.� OJSC.Artikgaz.(JV).

OIL FIELD.� OJSC.Gazpromneft-Noyabrskneftegazgeofizika

.� LLC.Gazpromneft-Nefteservis

.� LLC.Gazpromneft-NoyabrskNefteGazAvtomatika

.� LLC.Noyabrskteploneft

.� LLC.Noyabrskenergoneft

.� LLC.Noyabrskneftenazsvyaz

REFINING.� OJSC.Gazpromneft-Omsk.Refinery

.� OJSC.Gazpromneft-Moscow.Refinery

.� OJSC.Slavneft-YaNOS.(JV)

.� LLP.Gazprom.Neft-Bitumen.Kazakhstan

.� LLC.Gazpromneft-Total.PMB.

.� LLC.Yuzhno-Priobskiy.GPP.(JV)

.� LLC.NPP.Neftekhimia.(JV)

.� CJSC.Sibgazpolymer.(JV)

SALES OF PETROLEUM PRODUCTS

.� OJSC.Gazpromneft-Omsk

.� CJSC.Gazpromneft-Kuzbass

.� LLC.Gazpromneft-Centre

.� CJSC.Munai-Myrza

.� LLC.Gazprom.Neft.Asia

.� OJSC.Gazpromneft-Tyumen

.� LLC.Gazpromneft-Chelyabinsk.

.� LLC.Gazprom.Neft-Krasnoyarsk

.� OJSC.Gazprom.Neft-Ural

.� CJSC.Gazprom.Neft-.North-West

.� OJSC.Gazpromneft-Yaroslavl

.� OJSC.Gazprom.Neft-Transport..

(former.OJSC.Gazprom.Neft-Ivanovo)

.� OJSC.Gazprom.Neft-Novosibirsk

.� FLLC.Gazprom.Neft-Belnefteprodukt

.� LLC.Gazprom.Neft-Tajikistan

.� LLP.Gazprom.Neft-Kazakhstan

.� LLC.Alliance-Oil-Asia

.� LLC.Gazprom.Neft.Corporate.Sales..

(former.LLC.Gazprom.Neft-Nizhniy.Novgorod)

.� CJSC.Gazprom.Neft-Mobilnaya.Karta

.� LLC.Mosnefteprodukt

.� OJSC.Gazprom.Neft-Moscow.Oil.and.Gas.Company

.� OJSC.Gazprom.Neft-South

.� LLC.Gazprom.Neft.Regional.Sales

.� CJSC.Gazprom.Neft-Alternative.Fuel

LUBRICANTS .� CJSC.Gazprom.Neft.Moscow.Lubricants.Plant .� Gazprom.Neft.Lubricants.Italia.S.p.A. .� LLC.Gazprom.Neft.Lubricants.Ukraine .� LLC.Gazprom.Neft-Lubricants

EXPORTS .� Gazprom.Neft.Trading.Gmbh

AIRCRAFT REFUELLING

.� CJSC.Gazpromneft-Aero

.� LLC.Gazpromneft-Aero.Murmansk

.� LLC.Gazpromneft-Aero.Ulyanovsk

.� LLC.Gazpromneft-Aero.Kemerovo

.� LLC.Gazpromneft-Aero.Scheremetyevo.(JV)

.� LLC.Fuelling.Company.North-West.(JV)

.� CJSC.Sovex.(JV)

.� LLP.Gazpromneft-Aero.Astana.(JV)

.� LLC.Gazpromneft-Aero.Dushanbe.(JV)

.� LLC.Gazpromneft-Aero.Tomsk

.� LLC.Gazpromneft-Aero.Bryansk

.� LLC.Gazpromneft-Aero.Kyrgyzstan.(JV).

.� LLC.Fuelling.Company.Yenisei.(JV)

.� LLC.TOA

SHIP BUNKERING.� LLC.Gazpromneft.Marine.Bunker

.� LLC.Gazpromneft-Shipping

.� LLC.Gazpromneft.Terminal.SPb .� GAZPROMNEFT.MARINE.BUNKER.BALKAN.S.A.ООО.

.� AS.BALTIC.MARINE.BUNKER

.� LLC.Novorossiysk.Oil.Transhipment.Complex

.� LLC.Novorosnefteservis

OTHER ACTIVITIES

.� CJSC.Okhta.Public.and.Business.Centre

.� LLC.Gazpromneftfinance

.� LLC.Gazpromneftenergo

.� LLC.Gazpromneft-3S

.� LLC.Gazpromneft.NTZ

.� LLC.Gazprom.Neft.Invest

.� LLC.Gazprom.Neft.Business.Service

.� LLC.Complex.Galernaya.5

.� LLC.Gazprom.Neft.Development

.� LLC.Gazprom.Neft.Logistics

.� SIBIR.ENERGY.LIMITED

.� LLC.ITSC.(JV)

.� LLC.Gazprom.Neft.Procurement

.� CJSC.Publishing.House.Blagovest

.� LLC.TK-BA.(JV)

.� LLC.National.Oil.Consortium.(JV).

COMPANY’S INTERNATIONAL ACTIVITY.� Gazprom.Neft.North.Africa.B.V.

.� Gazprom.Neft.Badra.B.V.

.� Gazprom.Neft.Finance.B.V.

.� Gazprom.Neft.Middle.East.B.V.

.� Gazprom.Neft.International.S.A.

.� Gazprom.Neft.Projects.B.V.

.� Gazprom.Neft.Downstream.B.V.

.� Gazprom.Neft.Adria.Ltd.

.� Gazprom.Neft.Business.Service.B.V.

.� Salym.Petroleum.Development.N.V.

MULTIBUSINESS COMPANIES .� NIS.a.d..Novi.Sad

INTERACTIVE DIAGRAM OF THE GROUP STRUCTURE



http://ar2013.gazprom-neft.com/company-profile/business-structure/


CONTENTS

COMPANY PROFILE

BUSINESS MODEL

Gazprom Neft is a vertically integrated oil company, whose main activities include hydrocarbon-field exploration, the production and sale of crude oil and gas, as well as the production and sale of petroleum products. The Company is focused on growing its business by expanding its resource base, stimulating production and modernizing its refining facilities.

PROSPECTING AND PRODUCTION

Due.to.the.optimization.of.its.existing.fields,.the.active.implementation.of.new.technology.and.the.expansion.of.its.asset.portfolio,.Gazprom.Neft’s.total.production.rose.by.4.3%.in.2013,.to.62.26.million.tonnes.of.oil.equivalent.The.Gazprom.Neft.Group’s.proven.hydrocarbon.reserves.as.of.December.31,.2013.were.1.34.billion.TOE,.an.11.9%.year-on-year.growth.

Hydrocarbon production, million TOE

2013 62.26

2012 59.71

2011 57.25

2010 52.81

SEE PAGE 52 FOR MORE DETAILS

PRODUCTION

AIRCRAFT REFUELLING

LUBRICANTS

COMPANY’S INTERNATIONAL ACTIVITY

REFINING

SHIP BUNKERING

EXPORTS

MULTIBUSINESS COMPANIES


OTHER ACTIVITIES

OIL FIELD

JOINT VENTURES

INTERACTIVE DIAGRAM OF THE GROUP STRUCTURE


http://ar2013.gazprom-neft.com/company-profile/business-model/overview/


CONTENTS

SALES OF PETROLEUM

OIL REFINING PREMIUM BUSINESS SEGMENTS

Gazprom.Neft.refines.about.80%.of.the.oil.it.produces..The.Omsk.Refinery,.the.Company’s.largest.plant,.is.one.of.the.most.advanced.in.the.country.and.the.largest.in.the.world..The.Company.also.operates.the.Moscow.and.Yaroslavl.Refineries.and.a.refining.complex.of.NIS,.a.Serbian.company..The.oil.refining.volume.in.2013.was.42.63.million.tonnes..In.2013,.all.the.Company’s.refineries.switched.over.to.production.of.Euro.4.and.Euro.5.fuels.

One.of.the.Company’s.key.business.lines.is.the.development.of.its.filling.stations.and.it.owns.one.of.the.most.developed.sales.networks.in.Russia..In.2013,.the.Company.reinforced.its.position.further.in.the.retail.petroleum.market.when.it.became.the.largest.supplier.of.light.petroleum.products.in.the.regions.where.it.operates.with.a.21%.share..The.Company’s.filling.station.chain.comprises.1,747.filling.stations.in.Russia,.CIS.and.the.Eastern.Europe..At.the.beginning.of.2014,.the.number.of.Gazprom.Neft.filling.stations.in.Russia.and.CIS.was.1,339..Sales.of.petroleum.products.via.Russian.filling.stations.grew.by.11%.to.7.3.million.tonnes..The.average.daily.sales.of.petroleum.products.per.filling.station.in.the.country.reached.19.tonnes.per.day,.and.increased.by.7.8%.

Gazprom.Neft.has.clear.goals.to.increase.the.petroleum.product.sales.efficiency.for.each.sub-segment.of.its.petroleum.product.business:.aviation.fuel.sales,.ship.bunkering,.production.and.marketing.of.lubricants,.bituminous.materials,.and.petrochemicals.Consisting.of.38.own.fuelling.complexes.in.Russia.and.CIS,.Gazpromneft-Aero.has.the.largest.sales.network.among.Russian.vertically.integrated.oil.companies.and.is.the.uncontested.leader.in.Russia.for.aviation.fuel.retail.sales..Gazpromneft.Marine.Bunker.has.an.18.6%.share.of.the.Russian.bunker.market..In.2013,.‘direct-to-ship’.sales.of.fuel.rose.by.28%.and.reached.2.3.million.tonnes.

Crude oil refining by the Company’s refineries, million tonnes

2013 42.63

2012 43.34

2011 40.49

2010 37.90

Sales of automotive fuel via the filling station chain in Russia and CIS, million tonnes

2013 8.40

2012 8.10

2011 6.17

2010 4.53

Sales of petroleum products in premium business segments, million tonnes*

2013 5.78

2012 5.11

2011 3.90

2010 2.60

SEE PAGE 80 FOR MORE DETAILS SEE PAGE 90 FOR MORE DETAILS SEE PAGE 102 FOR MORE DETAILS

*. Excluding.the.sales.of.bitumen.products.and.petrochemicals.




CONTENTS

COMPANY PROFILE BUSINESS MODEL

BUSINESS MODEL

68.0mn TOE

8.3mn t

0.2mn t45.3

mn t

24.3mn t

SALES OF HYDROCARBONS

The difference of 1 mn TOE between the hydrocarbon production

and refining and sales is due to an adjustment in reserves and internal consumption

HYDROCARBONS

Less sales from joint ventures (~1.3 mn TOE)

TOTAL YIELD OF PETROLEUM PRODUCTS

LUBRICANTS

38.8mn t

REFINING IN RUSSIA

PRODUCT BUSINESS UNITS

2.4mn t

AVIATION FUEL

0.7mn t

PETROCHEMICAL PRODUCTS

1.8mn t

BITUMEN MATERIALS

11.8mn t

RUSSIAN FEDERATION

12.5mn t

EXPORT

3.2mn t

BUNKER FUEL

3.5mn t

OTHER CONSUMERS AND PUBLIC

PROCUREMENT

18.2mn t

PETROLEUM PRODUCTS SUPPLIERS (FILLING STATIONS AND TANK FARMS)

15.3mn t

EXPORT

4.8mn t

PURCHASE OF PETROLEUM PRODUCTS

60.6mn t

PRODUCTION IN RUSSIA

7.0mn t

PURCHASE

1.7mn t

INTERNATIONAL PRODUCTION

3.8mn t

INTERNATIONAL REFINING

Excluding a 0.4 mn t adjustment in reserves (total petroleum product output is always less

than total refining output)

INTERACTIVE BUSINESS MODEL



http://ar2013.gazprom-neft.com/company-profile/business-model/overview/#scheme


CONTENTS

MATERIAL FLOWS OF CRUDE OIL AND PETROLEUM PRODUCTS*

OJSC GAZPROM NEFT PRODUCTION ENTITIES

(100.%.subsidiaries)

THIRD PARTY ENTITIES(Substitution.scheme.)

ENTITIES PARTIALLY OWNED BY

OJSC GAZPROM NEFT(Joint.ventures)

GAZPROM NEFT OIL REFINERIES,

INCLUDING JV

GAZPROM NEFT TANK FARMS

AND LEASED TANK FARMS

FUELLING COMPLEXES AT AIRPORTS

AND BUNKER TERMINALS IN PORTS

PURCHASERS IN NON-CIS COUNTRIES

THIRD PARTY ENTITIES

GAZPROM NEFT TRADING GMBH, 100 %

SUBSIDIARY

GAZPROM NEFT TRADING GMBH, 100 %

SUBSIDIARY

PURCHASERS IN NON-CIS COUNTRIES

PURCHASERS IN RUSSIA

PURCHASERS IN CIS COUNTRIES

Wholesale.of.petroleum.products




Wholesale,.small-scale.wholesale..and.retail.sale.of.petroleum.products

Small-scale.wholesale.of.petroleum.products

Small-scale.wholesale.of.petroleum.products

Retail.sale..of.petroleum..products

Wholesale..of.petroleum..

products

Sales..of.crude.oil

Sales..of.crude.oil

Sales..of.crude.oil

Sales..of.crude.oil

Sales..of.crude.oil

Sales..of.crude.oil

Sales..of.crude.oil

Joint.shipments.of.crude.oil

Supply.of.crude.oil

Supply..of.petroleum.

products

GAZPROM NEFT FILLING STATION CHAIN

PURCHASERS IN RUSSIA (INCLUDING COMMODITY

EXCHANGE TRADES) AND CIS COUNTRIES

*..From.Gazprom.Neft.resources,.excluding.refining.at.the.Mozyrskiy.Refinery.and.NIS.a.d.

COMPANY PROFILE BUSINESS MODEL

INTERACTIVE BUSINESS MODEL



http://ar2013.gazprom-neft.com/company-profile/business-model/material-flows-of-crude-oil-and-petroleum-products/

25www.gazprom-neft.com24 GAZPROM NEFT 2013.ANNUAL.REPORT

CONTENTS

COMPANY PROFILE

34

24

38

753

28 27

65

25

79

89

23

26915

1618

7 6

5

77

47

76

35

43

59

44

5360

67

39

69

3733

52

211213

5873

4032

57 7146

48 62

68

6364

31

36

61

8329

51

10

11

14

70

42

19

72

66

457456

2

4

54

86

55

78

50

GAZPROM NEFT IN THE WORLD

30

Angola.

Bulgaria

Bosnia.and.Herzegovina.

Hungary

Venezuela

Iraq.

Italy

Kazakhstan

Kyrgyzstan.

Republic.of.Belarus

Romania

Serbia

Tajikistan

Ukraine

Code Region Prod

uctio

n

Sub-

soil

use

Gazp

rom

neft

Mar

ine

Bunk

er

Gazp

rom

neft-

Aero

Refin

ing

Lubr

ican

ts

mat

eria

ls

Bitu

men

mat

eria

ls

Reta

il w

hole

sale

Larg

e-sc

ale

who

lesa

le

4 Altai.territory. ● ●

28 Amur.region. ● ●

29 Arkhangelsk.region. ● ●

30 Astrakhan.region ● ●

31 Belgorod.region. ●

32 Bryansk.region. ● ●

33 Vladimir.region. ●

34 Volgograd.region. ● ●

35 Vologda.region. ● ●

36 Voronezh.region. ● ●

79 Jewish.Autonomous.region. ●

75 Zabaykalsky.territory ●

37 Ivanovo.region. ● ●

6 Republic.of.Ingushetia. ●

38 Irkutsk.region. ● ● ●

7 Kabardino-Balkar.Republic. ●

39 Kaliningrad.region ● ● ●

40 Kaluga.region. ● ●

42 Kemerovo.region. ● ● ●

43 Kirov.region ●

44 Kostroma.region ●

23 Krasnodar.territory. ● ● ● ● ●

24 Krasnoyarsk.territory. ● ● ● ● ●

45 Kurgan.region ● ●

46 Kursk.region ● ●

47 Leningrad.region ● ● ● ●

48 Lipetsk.region ● ●

13 Republic.of.Mordovia. ●

77 Moscow. ● ● ●

50 Moscow.region. ● ● ● ● ● ●

51 Murmansk.region. ● ● ●

83 Nenets.Autonomous.District. ●

52 Nizhniy.Novgorod.region ● ● ●

53 Novgorod.region ● ●

54 Novosibirsk.region ● ● ●

55 Omsk.region ● ● ● ● ● ● ● ●

56 Orenburg.region. ● ● ● ●

57 Oryol.region ●

58 Penza.region ●

59 Perm.territory. ●

25 Primorsk.territory. ● ●

60 Pskov.region. ● ● ●

2 Republic.of.Bashkortostan ●

3 Republic.of.Buryatia. ●

5 Republic.of.Dagestan ●

Code Region Prod

uctio

n

Sub-

soil

use

Gazp

rom

neft

Mar

ine

Bunk

er

Gazp

rom

neft-

Aero

Refin

ing

Lubr

ican

ts

mat

eria

ls

Bitu

men

mat

eria

ls

Reta

il w

hole

sale

Larg

e-sc

ale

who

lesa

le

9 Republic.of.Karachayevo-Cherkessia. ●

10 Republic.of.Karelia. ● ●

11 Komi.Republic. ●

12 Republic.of.Mari.El. ●

14 Republic.of.Sakha.(Yakutia). ●

15 Republic.of.North.Ossetia.–.Alania. ●

16 Republic.of.Tatarstan. ● ●

19 Republic.of.Khakassia. ●

61 Rostov.region ● ● ●

62 Ryazan.region. ● ● ●

63 Samara.region. ● ●

78 St..Petersburg. ● ● ●

64 Saratov.region. ● ●

65 Sakhalin.region. ●

66 Sverdlovsk.region. ● ● ●

67 Smolensk.region. ● ●

26 Stavropol.territory. ●

68 Tambov.region. ● ●

69 Tver.region. ● ● ●

70 Tomsk.region. ● ● ● ● ●

71 Tula.region. ●

72 Tyumen.region. ● ● ● ●

18 Udmurt.Republic ●

73 Ulyanovsk.region. ● ●

27 Khabarovsk.territory. ● ● ●

86 Khanty-Mansiysk.AD.–.Yugra. ● ● ● ●

74 Chelyabinsk.region. ● ● ●

21 Republic.of.Chuvashia. ●

89 Yamalo-Nenets.Autonomous.District. ● ● ● ●

76 Yaroslavl.region.. ● ● ● ● ● ●

INTERNATIONAL

Angola. ●

Bulgaria ●

Bosnia.and.Herzegovina* ●

Hungary* ●

Venezuela ●

Iraq. ●

Italy ● ●

Kazakhstan ●

Kyrgyzstan ● ●

Republic.of.Belarus ●

Romania* ●

Serbia ● ● ● ● ●

Tajikistan ●

Ukraine ●

*. Member.countries.of.NIS.a.d..Novi.Sad.Concession.

OPERATING GEOGRAPHY




CONTENTS

COMPANY PROFILE

COMPETITIVE POSITION

OJSC Gazprom Neft is one of Russia’s leading oil companies in terms of hydrocarbon production and refining.

№ 1In production growth

№ 3In refining output volumes

№ 4In hydrocarbon production volumes

№ 5In crude oil export volumes

OIL REFINING

CRUDE OIL EXPORT

CRUDE OIL AND GAS PRODUCTION

According.to.InfoTEK,.in.2013.crude.oil.and.gas.production.in.Russia.was.647.million.TOE,.demonstrating.a.2.47%.year-on-year.increase..Gazprom.Neft’s.production.increased.by.3.14%,.while.the.TP.reserve.replacement.ratio.amounted.to.333%.–.the.best.performance.among.the.largest.vertically.integrated.oil.companies.After.the.consolidation.of.Rosneft.and.TNK.BP.production.assets,.Gazprom.Neft.ranked.fourth.in.terms.of.hydrocarbon.production,.with.an.increase.in.production.to.62.million.tonnes.

In.2013.the.volume.of.oil.refining.in.Russia.was.275.million.tonnes,.demonstrating.a.2.62%.year-on-year.increase..For.several.years.the.Company.has.ranked.third.among.the.Russian.oil.companies.in.terms.of.oil.refining.and.petroleum.product.output..Gazprom.Neft.accounts.for.14.2%.of.Russia’s.total.refining.output..In.2013,.Gazprom.Neft.Group.saw.a.0.58%.decline.in.refining.due.to.period.of.scheduled.maintenance.at.the.Company’s.refineries..The.refining.output.grew.2.22%.compared.to.2011.

Gazprom.Neft.is.also.among.the.largest.crude.oil.exporters,.accounting.for.3.8%.of.total.Russian.crude.oil.exports.via.Transneft.



CONTENTS

Total crude oil & gas output in Russia by oil & gas producers*, ‘000 TOE

Crude oil refining in Russia, ‘000 t

Crude oil exports by Russian oil companies via Transneft, ‘000 t

*. Crude.oil,.gas.condensate,.petroleum.(associated).and.natural.gas.production.in.the.Russian.Federation.according.to.monthly.statistics.by.InfoTEK..For.the.purpose.of.data.comparability,.gas.production.is.defined.as.the.total.volume.of.gas.extracted.from.the.Company’s.fields.(gas.resource),.which.may.differ.from.the.Company’s.official.gas.output.as.the.latter.may.reflect.the.volume.of.gas.production.less.flare.gas.(gas.utilization).or.the.volume.of.gas.sales.(marketable.gas).

**. Including.share.in.production.of.Tomskneft.and.Slavneft..The.results.for.2012.and.2011.include.TNK.BP.figures.

***. Including.share.in.production.of.Slavneft,.Tomskneft,.SPD,.SeverEnergia,.excluding.production.outside.Russia.(NIS).

*. Including.share.in.refining.by.Slavneft..2012.data.includes.TNK.BP.figures..Including.share.in.production.of.Tomskneft.and.Slavneft..The.results.for.2012.and.2011.include.TNK.BP.figures.

*. 2012.data.include.TNK.BP.figures.

Source:.InfoTEK

Company

2013 2012 2011 2010 Share in 2013, %

Share in 2012, %

Change 2013/2012, %‘000 t ‘000 t ‘000 t ‘000 t

Rosneft* 86,160 84,038 82,673 81,922 31.3 31.3 2.5

LUKOIL. 45,470 44,710 45,491 45,214 16.5 16.7 1.7

Gazprom Neft* 38,978 39,204 38,132 35,048 14.2 14.6 –0.6

Surgutneftegaz. 19,847 20,629 21,161 21,237 7.2 7.7 –3.8

Bashneft 21,399 20,774 21,062 21,193 7.8 7.7 3

TAIF.Oil.Company. 8,264 8,383 8,318 8,100 3 3.1 –1.4

Tatneft. 7,815 7,231 2,213 230 2.8 2.7 8.1

Others. 47,296 43,246 38,846 37,009 17.2 16.1 9.4

TOTAL 275,229 268,214 257,895 249,953 100 100 2.6

Company

2013 2012 2011 2010 Share in 2013, %

Share in 2012, %

Change 2013/2012, %‘000 TOE ‘000 TOE ‘000 TOE ‘000 TOE

Rosneft** 239,916 234,041 135,321 137,855 37 37 2.5

LUKOIL. 101,657 99,157 99,717 104,041 16 16 2.52

Surgutneftegaz. 71,209 71,353 71,411 70,756 11 11 –0.2

Gazprom Neft*** 61,934 60,048 57,233 53,527 10 10 3.14

Tatneft. 27,178 27,042 26,886 26,783 4 4 0.5

Others. 145,526 140,193 220,426 207,457 22 22 3.8

RUSSIA (EXCLUDING GAS PRODUCTION BY GAZPROM AND NOVATEK)

647,419 631,834 610,994 600,419 100 100 2.5

Company

2013 2012 2011 2010Share in 2013, %

Share in 2012, %

Change2013/2012, % ‘000 t ‘000 t ‘000 t ‘000 t

Rosneft** 94,256.5 91,049.3 88,737.6 85,499.5 45.8 42.9 41.8

Surgutneftegaz. 28,820.7 26,718.2 27,010.1 25,554.7 14.0 12.6 12.7

LUKOIL. 20,321.5 24,642.7 23,823.2 27,886.6 9.9 11.6 11.2

Tatneft. 11,397.5 11,881.0 15,565.6 16,345.5 5.5 5.6 7.3

Gazprom Neft 7,765.2 11,945.2 12,718.9 14,594.1 3.8 5.6 6.0

Others. 43,244 46,235 44,355 43,932 21 22 21

TOTAL 205,805 212,471 212,210 220,822 100 100 100




CONTENTSCONTENTS


READ MORE

28

COMPANY STRATEGY:.

NEW OPPORTUNITIES FOR INCREASING SHAREHOLDER VALUE

The 2025 Development Strategy for OJSC Gazprom Neft was adopted in May 2013. The document reaffirms the 2020 goals, develops ways to achieve them in the key business segments – hydrocarbon production, oil refining and sales of petroleum products – subject to the changing industry environment and global economy, and also states a key objective for the period from 2020 to 2025 – to maintain the business level achieved by 2020. Today the Company is building its exploration and production project portfolio and expects a plateau in hydrocarbon production to start in 2020. Its goal, therefore, to offset any further decline in production from its aging fields and to maintain the production level at 100 million tonnes of oil equivalent is just as ambitious as the 2020 plans. In the refining and sales segment, the Company remains focused on modernizing its refining facilities and maximizing sales of its petroleum product output through its own premium-class distribution channels.

BUSINESS TARGETS FOR THE COMPANYThe implementation of the plans outlined in the 2025 Strategy is designed to create the maximum shareholder value within the Russian oil & gas industry.





CONTENTS

COMPANY STRATEGY

COMPANY’S BUSINESS TARGETS

EXPLORATION AND PRODUCTION

Gazprom.Neft.intends.to.increase.its.annual.hydrocarbon.production.volumes.to.100.million.TOE.by.2020.and.maintain.this.level.until.2025,.with.international.projects.accounting.for.at.least.10%.of.total.production..The.reserves-to-production.ratio.is.expected.to.be.maintained.at.the.current.level.for.at.least.20.years..To.achieve.these.goals,.Gazprom.Neft.will.look.to.maximize.oil.recovery.from.its.current.resource.base.by.adopting.current.development.optimization.best.practices,.reducing.costs.through.proven.technologies,.as.well.as.applying.and.implementing.new.technology.on.a.large-scale..The.Company.is.envisaging.the.creation.of.a.new.production.center.in.the.North.of.YaNAD.and.the.development.of.its.operations.on.the.Arctic.shelf..Gazprom.Neft.considers.non-conventional.reserves.as.a.growth.opportunity.and.will.develop.this.asset.category.as.an.important.element.of.its.portfolio..In.addition,.the.Company.plans.to.develop.new.production.centers.in.the.Russian.Federation.beyond.the.2020.horizon.and.consolidate.its.efforts.and.competencies.to.develop.actively.outside.Russia.

OIL REFINING

Gazprom.Neft’s.strategic.priorities.in.refining.development.in.Russia.remain.the.same:.to.improve.operational.efficiency.and.implement.refining.asset.modernization.programs..Currently,.the.first.stage.of.modernization.to.improve.motor.oil.quality.is.close.to.completion,.and.the.Company.is.launching.the.second.stage.to.increase.refining.depth.at.its.Russian.facilities..At.its.chosen.sites,.Gazprom.Neft.is.planning.to.put.into.operation.hydrocracker.complexes.in.the.Omsk.Refinery.(2018).and.the.Moscow.Refinery.(2019),.with.an.annual.capacity.of.2.million.tonnes.in.each.plant..In.addition,.the.Company.plans.to.construct.the.following.large-scale.facilities:.a.flexicoking.unit.in.the.Moscow.Refinery.by.2019.(2.million.tonnes.capacity).and.a.coking.unit.in.the.Omsk.Refinery.by.2018.(2.million.tonnes.capacity)..Currently,.a.YaNAD.modernization.program.is.being.extended.to.include.a.deep.refining.complex.as.well..The.implementation.of.the.planned.modernization.projects.will.enable.Gazprom.Neft.to.achieve.the.following.targets.in.2025.in.the.Russian.Federation:.oil.refining.–.40.million.tonnes.per.year;.refining.depth.–.95%.and.light.petroleum.products.output.–.77%..Gazprom.Neft.considers.international.expansion.as.a.way.to.create.more.value.for.shareholders,.and.global.diversification.and.infrastructure.development.to.ensure.long-term.business.growth..In.order.to.develop.oil.refining.outside.Russia.the.Company.is.researching.suitable.assets.in.the.two.key.regional.markets:.Europe.and.South-Eastern.Asia.

Gazprom Neft’s main strategic targets and business objectives until 2025, by operating segment:

100 mn TOE

Hydrocarbon production volume

40 mn t

Refining volume in Russia

>10%Share of international projects

95%Refining depth in Russia

20 years

Reserves-to-production ratio(TP/production)

77%Light products output in Russia



CONTENTS

SALES SALES OF MOTOR OILS

SALES OF PETROLEUM PRODUCTS TO INDUSTRIAL USERS

Gazprom.Neft.has.two.key.sales.segments:.sales.of.motor.oils.via.the.corporate.retail.chain.and.small-scale.distribution.channels,.as.well.as.sales.of.petroleum.products.to.industrial.users..Each.segment.has.its.own.goal..However,.the.main.objective.of.Gazprom.Neft’s.sales.segments.is.for.its.sales.to.be.covered.100%.by.the.Company’s.own.production.

By.2025,.Gazprom.Neft.is.planning.to.increase.the.total.sales.of.motor.oils.in.Russia.and.CIS.to.24.7.million.tonnes..The.main.growth.is.planned.for.the.retail.distribution.channel,.with.a.sales.target.of.15.million.tonnes..Small-scale.wholesales.are.expected.to.reach.9.7.million.tonnes.in.2025..In.order.to.achieve.its.objectives,.the.Company.plans.to.increase.the.number.of.filling.stations.in.its.retail.chain.in.Russia.and.CIS.to.1,880.by.2025.and.filling.station.personnel.expenses.are.expected.to.be.fully.covered.by.the.gross.revenue.of.the.respective.business.

In.order.to.increase.petroleum.product.sales,.Gazprom.Neft.has.identified.separate.premium.business.segments,.including.sales.of.jet.fuel,.lubricants,.bitumen.materials,.petrochemicals.and.ship.bunkering..Individual.strategic.plans.have.been.developed.for.each.segment.in.the.Company..The.CJSC.Gazpromneft-Aero.sales.chain.is.focused.on.increasing.jet.fuel.sales.to.5.3.million.tonnes.and.further.expanding.the.sales.network.to.220.airports.by.2025.(58.own.fuelling.complexes,.162.airport.locations)..The.OJSC.Gazpromneft.Marine.Bunker.strategy.envisions.active.growth.in.international.markets:.in.Europe,.the.Middle.East.and.Asia,.as.well.as.an.increase.in.market.share.in.Russia..Bunker.fuel.sales.are.planned.to.grow.to.8.2.million.tonnes,.and.the.Company’s.own.fleet.is.expected.to.expand.to.20.vessels.by.2025..As.part.of.the.bitumen.business.development.programme,.the.Company.plans.to.achieve.a.sales.increase.of.2.5.million.tonnes.per.year.by.2025..Gazprom.Neft-Lubricants.plans.to.create.a.national.lubricant.company,.which.is.recognized.as.the.leader.in.the.production.of.high-specification,.premium-grade.oils,.lubricants.and.service.fluids.under.a.global.brand,.bringing.the.annual.sales.of.packaged.products.to.330,000.tonnes.by.2025.

5.3 mn t

Sales of jet fuel

8.2 mn t

Sales of bunker fuel

24.7 mn t

Sales of motor fuels in Russia

2.5 mn t

Sales of bitumen

2.25 mn t

Sales of petrochemicals

1,880 FFS

Number of retail chain stations in Russia and CIS

100%of own products sold on the market




CONTENTS

COMPANY STRATEGY

UPDATE ON PROGRESS OF COMPANY STRATEGY IN THE REPORTING YEAR

This reporting year was a successful one for Gazprom Neft. The Company improved its performance against almost all operating and financial indicators; production, operating and net profits increased, despite negative market conditions including a fall in oil and petroleum product prices, the increase in MET and natural monopoly rates, and an increase in excise duties on different fuel types.

The.Gazprom.Neft.Group’s.proven.hydrocarbon.reserves.as.of.December.31,.2013.totalled.1.34.billion.TOE,.a.year-on-year.growth.of.11.9%..The.current.indicator.for.the.Company’s.reserves-to-production.ratio,.for.its.proven.hydrocarbon.reserves.as.per.the.PRMS-SPE.standards,.is.in.excess.of.20.years.

The.resource.base.was.expanded.in.2013.mainly.due.to.an.increase.in.Gazprom.Neft’s.share.of.SeverEnergia.and.its.exploration.results..The.Company’s.subsidiaries.achieved.a.high.level.of.exploration.drilling,.with.a.success.rate.of.75%.at.the.end.of.last.year..In.2013,.the.East.Myginskoe.field.was.discovered.in.the.Tomsk.region,.along.with.another.31.oil.deposits.and.one.gas.deposit..Through.a.targeted.program.to.develop.hard-to-recover.reserves.the.Company.has.successfully.increased.its.oil.recovery.rate.at.nine.fields.

The.Company’s.production.reached.62.26.million.TOE.in.2013,.a.year-on-year.increase.of.4.3%.These.results.are.mainly.due.to.growing.production.in.the.Orenburg.Region.and.at.the.Priobskoye.field.(KhMAD-Yugra),.the.production.and.sale.of.Muravlenkovskoye.field.gas,.the.start.of.oil.production.in.SeverEnergia’s.Samburgskoye.field,.growth.of.APG.utilization,.as.well.as.the.successful.application.of.high.technology.operations.at.the.Company’s.mature.assets..

Among.its.strategic.achievements,.a.notable.highlight.is.the.start.of.oil.production.at.the.Prirazlomnoye.field.(in.2014,.at.least.300,000.tonnes.of.oil.production.and.the.first.tanker.shipment.are.planned,.with.a.potential.production.level.of.about.6.million.tonnes).and.the.organization.of.winter.transportation.of.oil.from.the.Novoportovskoye.and.East-Messoyakhskoye.fields,.as.well.as.an.increase.in.the.share.of.the.SeverEnergia.project..As.part.of.the.strategic.goal.to.create.growth.centers.at.non-conventional.reserves,.a.JV.was.established.with.Shell.and.the.first.commercial.volumes.were.obtained.from.the.Bazhenovskaya.block.in.the.Palianovskaya.well.area.in.2013.

+11.9%Increase in proven hydrocarbon reserves

62.26 mn TOE

Hydrocarbon production volume

19.0 t per day

Average volume handled per filling station (highest volume in the industry)

23.9 mn t

Sales from premium business segments

KEY FIGURES 2013



CONTENTS

The.volume.of.refining.in.2013,.including.foreign.refineries,.totalled.42.63.million.tonnes;.the.slight.difference.(–0.71).against.2012.was.due.to.the.scheduled.maintenance.at.the.Company’s.refineries..In.2013,.all.Company.refineries.switched.over,.ahead.of.the.deadline.set.by.the.Technical.Regulations,.to.the.production.of.fuels.of.the.highest.environmental.standards.–.Euro.5..The.Omsk.Refinery.is.still.Russia’s.largest.refinery.in.terms.of.refining.volumes.and.output.of.light.petroleum.products.(67.5%)..The.Moscow.Refinery.moved.up.two.rankings.among.Russian.factories.in.terms.of.refining.depth.(up.almost.5%.in.2013,.to.72.3%).

Sales.in.the.premium.segments.increased.by.almost.5%.to.reach.23.9.million.tonnes.in.2013..The.main.growth.segments.are:.bunkering,.sale.of.jet.fuel,.motor.fuels.and.lubricant.materials,.including.growth.through.acquisitions..Another.important.trend.in.the.premium.segments.is.the.change.in.the.weighting.of.sales.channels.with.a.reallocation.of.volumes.from.small-scale.wholesale.to.retail.

The.growth.of.hydrocarbon.production.and.the.significant.increase.in.sales.through.premium.distribution.channels.led.to.a.higher.adjusted.EBITDA.(earnings.before.interest,.taxes,.depreciation.and.amortization),.up.4.2%.(RUB.336.8.billion)..Net.profit.amounted.to.RUB.177.9.billion,.a.year-on-year.increase.of.0.9%..At.the.end.of.2013,.the.Company.became.one.of.the.industry.leaders.in.terms.of.operating.profit.per.BOE.produced.and.adjusted.operating.profit.(subject.to.performance.of.joint.ventures)..At.year-end.2013,.the.dividend.yield.of.OJSC.Gazprom.Neft.shareholders.also.remained.the.highest.among.its.industry.peers..The.results.achieved.confirm.the.status.of.the.Company.as.one.of.the.industry.leaders.in.terms.of.efficiency.

GAZPROM NEFT HOLDS LEADING POSITIONS:

.� Net.cash.flow.per.BOE

.� Operating.income.per.BOE

.� Return.on.investment



CONTENTS

ENHANCING REFINING

EFFICIENCY MODERNIZE REFINERIES

IMPROVING PRODUCT QUALITY

IMPROVE PREMIUM-GRADE MOTOR FUEL

EXPANDING THE RANGE OF PREMIUM

PRODUCTS DEVELOP OILS

AND LUBRICANTS BUSINESS

PROVIDING GREATER SALES TRANSPARENCY

REORGANIZE SALES MODEL


READ MORE

COMPANY STRATEGY NEW HORIZONS

CURRENT SHAREHOLDER

VALUE

DEVELOPING THE RUSSIAN ARCTIC

SHELFPRIRAZLOMNAYA

PLATFORM

SETTING NEW GOALS 2025 DEVELOPMENT

STRATEGY

IMPLEMENTING INNOVATIVE

TECHNOLOGIES INCREASE OIL YIELD

AND DEVELOP HARD-TO-RECOVER RESERVES

34

GENERATING NEW SOURCES OF BUSINESS GROWTH

As part of its post-2020 Development Strategy, Gazprom Neft will focus on generating new sources of business growth, developing its legacy fields efficiently, maintaining its leadership in operational efficiency and achieving maximum returns on investment in order to ensure significant shareholder value growth and to secure the Company’s sustainable development through to 2025.


NEW SOURCESOF BUSINESS GROWTH


http://ar2013.gazprom-neft.com/company-strategy/new-growth-opportunities/


CONTENTS

The.Prirazlomnoye.oil.field.is.located.in.the.Pechora.Sea,.60.kilometres.from.the.shore..The.recoverable.oil.reserves.amount.to.74.4.million.tonnes,.and.the.estimated.annual.oil.production.is.around.6.million.tonnes.(from.2020)..The.first.oil.shipment.from.Prirazlomnoye.is.expected.to.take.place.in.the.first.quarter.of.2014,.and.it.is.planned.to.produce.at.least.300.thousand.tonnes.of.oil.during.the.year.

The.Prirazlomnaya.offshore.ice-resistant.stationary.platform.is.key.to.enabling.every.process.operation.at.the.field:.from.drilling.for.oil,.oil.production.and.storage,.to.the.processing.of.the.end.product,.and.offloading..This.is.the.first.time.in.the.world.that.hydrocarbons.in.the.Arctic.shelf.will.be.produced.from.a.stationary.platform.

The.Prirazlomnaya.platform.has.no.parallel.and.has.been.designed.and.constructed.in.Russia.to.Gazprom’s.specifications..It.is.intended.for.operation.under.extreme.environmental.and.climatic.conditions,.meets.the.most.stringent.safety.requirements.and.can.resist.high.ice.loads..Special.alloys,.which.are.resistant.to.corrosion,.low.temperatures,.high.humidity.and.an.aggressive.marine.environment,.were.used.during.the.platform.construction..The.platform.is.held.in.place.on.the.seabed.by.its.own.weight.(506.thousand.tonnes,.including.the.artificially.made,.anti-abrasive.stone.beam).

Gazprom.holds.30.field.licenses.in.the.Russian.Arctic.shelf..All.operations.in.the.region.are.conducted.in.line.with.the.Programme.for.hydrocarbon.resources.exploitation.in.the.Russian.Federation.shelf.until.2030.

74.4 mn t 6 mn t per day

Total recoverable reserves at the field

Planned annual production level after 2020

WHY IS IT IMPORTANT?

In.decades.to.come,.the.success.of.the.Arctic.fields.development.will.play.a.major.part.in.defining.the.future.development.of.the.entire.Russian.oil.and.gas.sector.

PRIRAZLOMNAYA PLATFORM:.

DEVELOPING THE RUSSIAN ARCTIC SHELF

Gazprom Neft started producing oil from the Prirazlomnoye field. This is Russia’s first ever Arctic shelf development project and represents the start of Gazprom Neft’s large-scale activities aimed at creating a large hydrocarbon production center in the region. The project operator is Gazprom Neft and the license holder is Gazprom Neft Shelf.


3D DIAGRAM OF THE PRIRAZLOMNAYA

PLATFORM

D3





CONTENTS

“Gazprom Neft remains one of the most efficient players in Russia’s oil industry and aims to maintain this position in the future. The 2025 Strategy outlines Gazprom Neft’s business goals and challenges, and establishes a firm foundation for future growth and geographical expansion. It envisions the Company becoming the industry leader in refining yield, significantly increasing shareholder value and securing the sustainable development of Gazprom Neft through to 2025” said Alexey Miller, Chairman of the Board of Directors of Gazprom Neft.

Hydrocarbon production, million TOE per year

Refining yield

Fuel retail sales through filling station chain in Russia and the CIS, Mtpa

2013

59.71

2012

57.25

2025

100.00

2020

100.00

2011

52.81

2010

50.20

2013

76.8%

2012

75.2%

2025

95.0%

2020

90.0%

2011

73.0%

2010

71.9%

2013

6.60

20124.90

2025

15.00

2020

22.00

20114.10

20103.80

20 years

+1.2–1.7 bn TOE

1,880 FFS

27–30%

Reserves-to-production ratio

Increase in reserves

Number of stations in the retail chain in Russia and CIS

Company share of the aviation fuel, bunkering and bitumen materials market


The.new.strategy.outlines.the.processes.required.to.create.a.firm.foundation,.allowing.the.Company.to.become.the.industry.leader.in.refining.yield,.to.significantly.increase.shareholder.value.and.to.secure.the.sustainable.development.of.Gazprom.Neft.through.to.2025.

2025 DEVELOPMENT STRATEGY:.

SETTING NEW GOALS

The Gazprom Neft Board of Directors has approved the Company’s 2025 Development Strategy. The 2025 strategy uses the 2020 strategy as its foundation taking into account both the changing industry environment and the state of the global economy. The document outlines the Company’s goals in key business areas, such as hydrocarbon production, refining, and sales. The 2025 Development Strategy reinforces the Company’s commitment to continue focusing on increasing shareholder value.





CONTENTS

“One of the challenges any company is facing today is choosing and implementing new technologies effectively. Handling hard-to-recover reserves is a serious technological challenge. We are creating special competency centers that are accumulating, adapting, and helping to share successful technological solutions. All of this will allow us to bring new reserves into development, boost production, and increase efficiency” said Gazprom Neft First Deputy CEO Vadim Yakovlev.

In.2013,.Gazprom.Neft.will.substantially.increase.the.scope.of.its.horizontal.well.drilling.operations.with.multiple.hydro-fracturing,.as.part.of.its.efforts.to.develop.hard-to-recover.reserves.

This.hard-to-recover.reserves.program.was.approved.by.Gazprom.Neft.in.2012.and.seeks.to.add.60.million.tonnes.of.reserves.to.the.development.portfolio.before.2015..By.2020.that.figure.should.rise.to.300.million.tonnes.

Horizontal.well.drilling.with.multi-stage.hydrofracturing.is.the.main.technology.for.recovering.depleted.reserves.approved.by.the.Company.in.its.2013.projects..This.technology.uses.multiple.hydraulic.fracturing.in.a.single.well.to.enhance.oil.production.and.raise.the.oil.recovery.factor.by.stimulating.separate.formations.(for.example,.low-productivity.ones).at.the.same.time..

Horizontal drilling, number of wells

Multi-stage hydro-fracturing in Gazprom Neft, number of hydrofracs

2013

233

2012

87

2014 (forecast)

282

2011

27

2013

139

201229

2014 (forecast)

167

2011

1

300 mn t

Additional oil reserves to be brought into development by 2020

60 mn t

Additional oil reserves to be brought into development by 2015

>22 mn t

Additional oil reserves brought into development in 2013


The.development.of.hard-to-recover.reserves.is.a.new.opportunity.to.expand.the.resource.base,.which.will.increase.the.oil.recovery.factor.and.the.operational.efficiency.of.the.reserves.

INCREASE OIL YIELD AND DEVELOP HARD-TO-RECOVER RESERVES:.

IMPLEMENTING INNOVATIVE TECHNOLOGIES

In recognition of the growing importance of the use of innovative technologies in its operations, in 2013 the Company developed and approved the Innovation Policy. This sets out the key principles and approaches to managing innovative development in the analysis of technological challenges, researching and selecting possible solutions, and implementing innovative projects.





CONTENTS

In.2012,.the.Omsk.Oil.Refinery.completed.the.first.stage.of.its.development.program.with.the.goal.of.improving.product.quality..In.2013,.this.allowed.the.Omsk.Oil.Refinery.to.switch.completely.to.the.production.of.Euro.4.and.Euro.5.high-octane.gasoline,.and.also.to.start.production.of.Euro.5.diesel.fuel.

The.Omsk.Oil.Refinery.has.started.to.develop.design.specifications.and.cost.estimates.for.the.production.facilities.that.are.planned.to.be.constructed.and.modernized.as.part.of.the.second.stage.of.the.refinery’s.2020.development.program..The.program’s.second.stage.is.focused.on.increasing.the.refining.yield..According.to.the.medium-term.investment.program,.Gazprom.Neft.will.allocate.more.than.RUB.50.billion.for.the.modernization.of.the.Omsk.Oil.Refinery.in.2013–2015.

As.a.part.of.the.medium-term.investment.programme,.in.2013.the.Moscow.Oil.Refinery.will.switch.completely.to.the.production.of.Euro.5.gasoline,.compliant.with.Russian.technical.regulations..The.share.of.Euro.5.diesel.fuel.will.account.for.over.75%.of.the.total.volume.of.diesel.fuel.produced.at.the.Moscow.Oil.Refinery.

Gazprom.Neft.adopted.a.medium-term.investment.program.for.its.Moscow.Oil.Refinery..The.Company.will.invest.over.RUB.50.billion.in.the.modernization.of.the.enterprise.between.2013.and.2015,.thus.making.it.possible.to.implement.large-scale.projects.to.improve.the.refinery’s.quality.of.petroleum.products,.increase.its.refining.yield,.reduce.the.refinery’s.environmental.impact.and.raise.its.energy.efficiency.

>50 RUB bn

>50 RUB bn

Investment in the Moscow Oil Refinery modernization program from 2013 to 2015

Investment in the Omsk Oil Refinery modernization program from 2013 to 2015

OMSK OIL REFINERY

MOSCOW OIL REFINERY


The.program.implementation.will.enable.Gazprom.Neft’s.refineries.to.produce.more.high.value-added.light.oil.products.and.to.improve.the.quality.of.their.output.

MODERNIZE REFINERIES:.

ENHANCING REFINING EFFICIENCY

In the last six years, the large-scale refinery modernization and upgrade programs, together with the consolidation of assets, have dramatically increased the output of Gazprom Neft’s refineries by over 60%. The Company started producing Euro 4 and Euro 5 fuels two years ahead of the deadline stipulated in the Technical Regulations. Further modernization efforts will focus on increasing the oil refining yield.





CONTENTS


In.addition.to.improved.vehicle.performance,.G-Drive.fuel.also.reduces,.by.several.factors,.the.environmental.impact.of.exhaust.emissions,.thereby.contributing.to.a.healthier.environment.

IMPROVE PREMIUM-GRADE MOTOR FUEL:.

IMPROVING PRODUCT QUALITY

The G-Drive 98 hi-tech fuel with enhanced properties contains components developed by leading international experts in the area of engine operational efficiency improvement. An active compound of additives increases the engine’s power, improves the automobile’s acceleration, removes deposits from the fuel system, and prevents them from reappearing, and also reduces fuel consumption.


All.Gazprom.Neft.filling.stations.sell.petroleum.products,.produced.by.the.Moscow,.Yaroslavl,.and.Omsk.Oil.Refineries,.that.are.among.the.best.and.most.advanced.automotive.gasoline,.diesel.fuels.and.oils.in.Russia..The.use.of.high-quality.petroleum.products.extends.the.operational.life.and.reliability.of.automotive.equipment.

In.2013,.Gazprom.Neft.launched.a.new.premium-grade.98.octane.fuel.under.the.G-Drive.brand.in.Moscow,.Saint.Petersburg,.and.the.Krasnodar.Territory..By.the.end.of.the.year,.this.premium-grade.gasoline.will.be.available.at.Gazprom.Neft.filling.stations.in.the.Novosibirsk,.Omsk,.Chelyabinsk,.Kemerovo,.and.Tyumen.Regions,.as.well.as.the.Krasnoyarsk.Territory.and.the.Khanty-Mansiysk.and.Yamalo-Nenets.Autonomous.Districts.

Due.to.an.active.additives.compound,.the.new.generation.G-Drive.fuel.offers.professional.protection.of.the.engine.fuel.system,.increases.the.engine’s.power.and.improves.the.vehicle’s.acceleration.

BENEFITS OF G-DRIVE FUEL*

Up 12% Down by 1.8 sec

Increase in engine’s power

Professional engine protection

Improvement of vehicle’s acceleration

*..Results.of.tests.held.at.an.independent.European.test.center.using.fuel.with.the.active.additives.compound.in.a.Volkswagen.Golf,.with.an.engine.capacity.of.1.6.L.and.fuel.stratified.injection.(VW.Gold.1.6.FSI),.demonstrate:.

. . 1..Over.a.12%.increase.in.the.engine’s.power.at.2,000.RPM..Average.increase.in.the.engine’s.power.at..2,000–4,000.RPM.was.7.4%;.2..A.reduction.in.the.vehicle’s.acceleration.from.50km/h.to.100.km/h.of.1.8.sec.in.fifth.gear..The.average.improvement.of.the.vehicle’s.acceleration.performance.across.a.broad.range.of.speeds.from.20.km/h.to.120.km/h.in.third,.fourth.and.fifth.gear.was.8.2%.




CONTENTS

Gazprom.Neft-Lubricants.the.operator.of.Gazprom.Neft’s.motor.oil.production.and.sales.business,.began.selling.motor.oils.under.the.Gazprom.Neft.brand..The.brand,.under.which.only.oils.for.industrial.equipment.were.previously.sold,.has.expanded.its.product.line.to.include.synthetic,.synthetic.blends,.and.conventional.oils.for.gasoline.and.diesel.engines.in.cars.and.trucks,.as.well.as.transmission.oils,.lubricants,.and.technical.fluids.

At.present,.Gazprom.Neft’s.lubricants.production.and.sales.business.is.actively.growing.both.in.Russia.and.abroad..In.2013,.Gazprom.Neft-Lubricants.achieved.a.historic.sales.record.of.492,000.tonnes.of.products.(an.increase.of.12%.versus.2012).due,.partially,.to.the.commercialization.of.returned.products..Gazprom.Neft-Lubricants.increased.premium.sales.by.13.3%.compared.to.2012,.while.G-Energy.sales.showed.a.26%.increase.in.a.stagnating.market.with.intense.competition.

Company share of the Russian lubricants market

2013 20252010

10% 13% 18%

633 thousand t 330 thousand t

Total oils output in 2025 High-grade packaged oils output in 2025


Expanding.the.motor.oil.business,.taking.into.account.long-term.industry.forecasts,.will.allow.us.to.maintain.current.growth.rates.until.2025.and.strengthen.the.Company’s.market.positions.

OILS BUSINESS DEVELOPMENT:.

EXPANDING THE RANGE OF PREMIUM PRODUCTS

Gazprom Neft-Lubricants intends to build on its competitive advantages by expanding its range of products and developing new products, which are compliant with the latest specifications, in collaboration with leading international auto manufacturers. It is also planning to develop specialized technical services for its clients. The company will continue to build its distribution network and actively promote its products through premium sales channels, primarily at service stations.





CONTENTS

The.organizational.separation.of.wholesale.and.retail.sales.is.in.line.with.the..the.“OJSC.Gazprom.Neft.commercial.practice.rules.relating.to.the.sale.of.gasoline.and.diesel.fuel.in.the.Russian.Federation”,.signed.by.Gazprom.Neft.and.Russia’s.Antimonopoly.Service.in.February.2013..The.document,.developed.by.Gazprom.Neft,.defines.the.basic.principles.of.wholesale.petroleum.product.sales,.including.priority.ranking.of.supplies.to.the.domestic.market.and.a.unified.pricing.procedure.

In.order.to.manage.its.wholesale.business.more.efficiently,.Gazprom.Neft.set.up.a.new.company,.LLC.Gazpromneft-Regional.Sales,.in.Saint.Petersburg.with.four.cluster.branches:.a.central.branch.in.Moscow,.a.Ural.branch.in.Tyumen,.a.West.Siberian.branch.in.Omsk,.and.an.East.Siberian.branch.in.Kemerovo..Gazpromneft-Regional.Sales.sells.petroleum.products.to.small.wholesalers.and.provides.regional.logistics.services..The.central.wholesale.cluster.began.operating.as.a.pilot.project.in.April.2013..The.cluster.encompasses.Moscow.and.the.Moscow.Region,.Saint.Petersburg.and.the.Leningrad.Region,.and.the.Ivanovo,.Kaluga,.Nizhny.Novgorod,.Novgorod,.Pskov,.Tver,.and.Yaroslavl.Regions..Other.branches.have.been.operating.since.June.01,.2013.

The.retail.sales.restructuring.started.in.June.2013.when.the.petroleum.product.supply.enterprises.were.combined.into.three.clusters:.a.central.cluster.in.Saint.Petersburg,.a.Ural.cluster.in.Yekaterinburg,.and.a.Siberian.cluster.in.Novosibirsk.


One.of.the.key.benefits.of.the.reorganization.to.wholesale.customers.will.be.the.greater.transparency.of.the.Company’s.sales.activities.

REORGANIZE SALES MODEL:.

PROVIDING GREATER SALES TRANSPARENCY

In 2013, Gazprom Neft was the first oil company to reorganize its sales to achieve even higher results, both within the Gazpromneft filling station chain and in the wholesale business. The main purpose of the project is to strengthen the sales and corporate governance, in particular, by simplifying and integrating the sales structure and separating the financial results of the wholesale and retail businesses.


Regional cluster branches

SAINT-PETERSBURG

MOSCOW

OMSKKEMEROVO

YEKATERINBURGTYUMEN

NOVOSIBIRSK




CONTENTS

COMPANY STRATEGY

MEDIUM-TERM PLANSThe Company’s plans for the next three years are to achieve a strong performance against key financial indicator targets (revenues, EBITDA) across all operating segments.

PRODUCTION

.� Launch.major.projects.in.the.northern.part.of.the.Yamal-Nenets.region

.� Develop.the.northern.continental.shelf..Start.production.at.the.Prirazlomnoye.field

.� Create.additional.reserves.in.conventional.production.areas,.for.example.by.using.hard-to-recover.reserves.and.using.proven.new.technologies.

.� Test.new.technologies.for.developing.non-conventional.reserves.and.increasing.the.oil.recovery.rate

.� Further.international.development

SALES TO END USERS

FOCUS ON INCREASING SALES THROUGH OWN, HIGH-MARGIN DISTRIBUTION CHANNELS

FOCUS ON NEW PROJECTS AND TECHNOLOGIES

FOCUS ON INCREASING EFFICIENCY

REFINING

.� Increase.the.production.of.Euro.5.motor.and.diesel.fuels

.� Complete.refinery.reconstruction.projects.to.increase.oil.refining.depth

.� Increase.operational.efficiency

.� Further.increase.sales.volumes.through.premium.channels.(aviation.fuel,.ship.fuel.and.lubricants)

.� Develop.the.G-Drive.fuel.brand;.increase.G-Drive.share.of.total.sales

.� Increase.volumes.handled.at.existing.filling.stations

.� Expand.the.filling.station.chain

.� Launch.new.products..onto.the.market.for.end.consumers

.� Expand.the.refuelling.facility.chain.at.airports

.� Expand.the.bunkering.infrastructure



CONTENTS


READ MORE

PERFORMANCE BY SEGMENT:.

EFFICIENT GROWTH ACROSS THE ENTIRE VALUE CHAIN




CONTENTS

PERFORMANCE BY SEGMENT

EXPLORATION & PRODUCTION OF CRUDE OIL & GAS

In line with the Company’s 2025 Development Strategy covering exploration and production, Gazprom Neft intends to increase hydrocarbon production to 100 million tonnes per year. The reserves-to-production ratio should remain at this level for at least 20 years and international projects should account for over 10% of total production. This target will be achieved by utilizing existing assets, projects in which Gazprom Neft has a share, and oil fields transferred to Gazprom Neft by Gazprom. The Company also plans to expand its asset portfolio by acquiring as yet unallocated rights to sub-soil areas, acquiring assets in the Russian market, and developing projects outside Russia. The implementation of the Company’s long-term plan is based, inter alia, on achieving medium-term goals and focusing on current priorities.

NOTE

The.in-house.production.of.crude.oil.and.liquid.hydrocarbons.can.be.converted.to.barrels.by.using.factors.which.characterize.the.density.of.hydrocarbons,.depending.on.the.field.where.they.were.produced,.as.well.as.the.actual.density.of.products.developed.by.the.Group’s.gas.processing.plants.

The.volumes.of.purchased.crude.oil,.as.well.as.other.indicators.expressed.in.tonnes,.can.be.converted.to.barrels.using.an.average.rate.of.7.33.barrels.per.tonne.

The.conversion.of.cubic.feet.to.cubic.meters.is.calculated.using.a.ratio.of.35.31.cubic.feet.per.cubic.meter.

One.barrel.of.crude.oil.is.equivalent.to.1.BOE,.and.the.conversion.of.a.BOE.to.cubic.feet.is.calculated.using.a.ratio.of.6,000.cubic.feet.per.BOE.. Arcticgaz 9.6

Messoyakha 5.6

SPD 0,7Slavneft 4.1

Tomskneft –2.4Novy Port 65.4

Traditional fields 29.0

333% – Reserve replacement ratio2

2012

1,200

1,343

112

Production Review of reserves

Changes within the Group

2013

91

Source: Company data

-60

mn.TOE

1. Excluding.NIS.a.d..Novi.Sad.reserves.and.production..2. Proven.reserves.

RESERVES1



CONTENTS

For over 15 years, the Company’s reserves have been audited in accordance with PRMS-SPE standards and the even more conservative standards of the US SEC (the US Securities and Exchange Commission). The audits, which were carried out at all Gazprom Neft fields, covered 99% of reserves at the Company’s fields in the Russian ABC1 category.

As.reported.by.the.independent.petroleum.appraisers,.DeGolyer.&.MacNaughton.(in.2006.and.2007.the.Company’s.reserves.were.appraised.by.Miller.and.Lents,.Ltd),.Gazprom.Neft’s.total.reserves.in.proven.and.probable.hydrocarbons.categories.as.per.the.PRMS.international.standards.(including.the.Company’s.share.in.reserves.of.its.subsidiaries,.calculated.as.a.proportion.of.its.equity.share.holding).were.2,291.million.tonnes.of.oil.equivalent.as.of.December.31,.2013,.(1,708.million.tonnes.of.oil,.726.billion.cubic.meters.of.gas),.excluding.NIS.

The.current.reserves-to-production.ratio,.for.proven.hydrocarbon.reserves.as.per.the.PRMS.standards,.is.in.excess.of.20.years.

Gazprom.Neft’s.increase.in.proven.and.probable.hydrocarbon.reserves.as.per.the.PRMS.standards,.based.on.reviewing.existing.reserves,.initial.evaluations.and.new.acquisitions.(Yuzhno-Kinyaminskoye,.Vakunaiskoye,.Ignyalinskoye.and.Tympuchikanskoye.fields),.and.including.Gazprom.Neft’s.increase.in.its.shareholding.of.SeverEnergia,.was.163.million.tonnes.of.oil.equivalent.in.2013..

Given.the.2013.production.volumes,.the.Reserves.Replacement.Ratio.for.Gazprom.Neft’s.reserves.in.proven.and.probable.hydrocarbons,.including.the.acquired.share.of.SeverEnergia,.amounted.to.367%..

>20 years

Current reserves-to-production ratio (for proven hydrocarbon reserves as per PRMS standards)

EXPLORATION & PRODUCTION OF CRUDE OIL & GAS ON OPERATIONS MAP



http://ar2013.gazprom-neft.com/company-profile/operating-geography/


CONTENTS

PERFORMANCE BY SEGMENT EXPLORATION & PRODUCTION OF CRUDE OIL & GAS

GEOLOGICAL SURVEYING FOR EXPLORATION PURPOSES

During the reporting period, 18 prospecting and exploration wells were completed in license areas owned by OJSC Gazprom Neft and its wholly-owned subsidiaries, of which 12 yielded commercial hydrocarbon flows. Total exploration drilling was 83,009 meters in 2013. The success rate of exploration drilling was 75% with a hydrocarbon output of 381 tonnes per meter drilled, and an increase in the specific cost ratio for Category C reserves of RUB 351 per TOE.

Exploration.drilling.and.follow-up.exploration.during.2013.led.to.the.discovery.of.the.Vostochno-Myginskoe.field.with.2.8.million.tonnes.of.C1+C2.oil.reserves..There.were.20.discoveries.of.new.oil.deposits.and.one.gas.deposit.discovery,.mostly.at.the.Yety-Purovskoye.(7).and.Vyngapurskoye.(2).fields,.with.recoverable.C1.oil.reserves.of.4.0.million.tonnes,.and.2.6.million.tonnes.of.C2.reserves..Gazprom.Neft.increased.C1.recoverable.oil.reserves.by.4.6.million.tonnes.in.the.Tsarichansky.license.area,.Orenburg.Region.

83,009 meters

Total exploration drilling

75%Success rate of exploration drilling



CONTENTS

In.2013,.19.out.of.the.66.geological.targets.tested.yielded.commercial.flows.of.oil,.condensate.and.gas;.22.yielded.non-commercial.flows.of.oil.and.gas;.25.targets.yielded.no.flows..

3D.seismic.survey.work.during.the.reporting.period.in.Gazprom.Neft’s.license.areas,.and.those.of.its.subsidiaries,.totalled.4,650.km2.

The.investment.made.in.geological.surveying.by.Gazprom.Neft.and.its.subsidiaries.amounted.to.RUB.7.43.billion.in.2013,.which.is.in.increase.of.132%.versus.total.investments.in.2012.

Companies.and.projects.in.which.Gazprom.Neft.has.an.interest.(OJSC.NGK.Slavneft,.OJSC.Tomskneft.VNK,.Salym.Petroleum.Development,.LLC.Arcticgaz,.CJSC.Messoyakhaneftegaz,.Badra,.Junin,.and.Kurdistan).finished.the.construction.of.29.exploration.wells.and.total.drilling.amounted.to.75,500.running.meters.in.2013..Category.C1.raw.hydrocarbon.reserves.increased.by.38.5.million.tonnes..11.new.oil.deposits,.mainly.at.the.Taylakovskoye.field.(seven.deposits),.and.one.gas.deposit.were.discovered.

During.the.reporting.period,.seismic.surveys.were.completed.in.the.license.areas.of.the.above.companies.as.follows:.3D.–.3,496.km2.and.2D.–.345.running.km.

In.2013,.the.Company.acquired.two.new.licenses.in.Russia:.for.the.Yuzhno-Pudinskiy.license.area.and.the.Dolginskoye.field..In.Iraqi.Kurdistan,.Gazprom.Neft.expanded.its.presence.by.taking.part.in.a.new.geological.survey.project,.Halabja..This.is.now.the.third.license.area.in.this.country.where.a.geological.survey.has.been.carried.out.

In.2013,.Gazprom.Neft.Group’s.resource.potential.increased.by.7.1%,.that.is,.192.5.million.tonnes.of.oil.equivalent,.including.137.9.million.tonnes.of.oil.equivalent.due.to.the.increase.in.the.Group’s.share.of.SeverEnergia..These.increases.fully.offset.annual.production..Following.the.results.of.geological.survey.work,.the.increase.in.reserves.totalled.89.3.million.tonnes.of.oil.equivalent.and.23.9.million.tonnes.of.oil.equivalent.was.due.to.reserve.recalculation;.the.Yuzhno-Pudinskiy.license.area.was.acquired.with.C1.reserves.amounting.to.2.6.million.tonnes.of.oil.equivalent..The.0.9.million.tonnes.of.oil.equivalent.increase.in.the.Group’s.resource.base.was.due.to.the.acquisition.of.a.Dolginskoye.field.license..The.absolute.increase,.net.of.the.share.increase.in.SeverEnergia,.totalled.54.6.million.tonnes.of.oil.equivalent..Gazprom.Neft.Group.resource.base.recovery.amounted.to.188%.

An.integrated.geological.survey.program.for.the.Gazprom.Neft.Group.in.2014.was.scoped.and.is.now.being.implemented..The.total.planned.investment.is.RUB.35.billion,.which.is.one.third.higher.than.in.the.previous.year.

EXPLORATION DRILLING AND DISCOVERIES

Exploration drilling ('000 meters)

2012 129

2013 14883 12

64 14 51

53

Joint ventures Proportionally consolidated entitiesSubsidiaries

Exploration wells drilled

2012 45

2013 5128 5

22 5 18

18

Разведочное бурение, тыс. м

2012 129

2013 14883 12

64 14 51

53

Совместные предприятия Пропорционально консолидированные предприятияДочерние компании

Количество пробуренных разведочных скважин

2012 45

2013 5128 5

22 5 18

18

Source:.Company.data




CONTENTS

LICENSING

As of December 31, 2013, OJSC Gazprom Neft and its subsidiaries owned the sub-soil usage rights for 70 license areas across eight regions of the Russian Federation and on the shelf of the Pechora Sea. Internationally, the Company’s subsidiary, NIS, holds 69 permits (analogous to licenses) across Serbia, Romania, and Republic of Serbia (Bosnia and Herzegovina).

These.licenses.give.various.rights:.eight.licenses.are.for.the.geological.survey.of.mineral.areas.over.a.five-year.period,.while.62.licenses.are.for.the.exploration.and.hydrocarbon.production.for.periods.between.20.and.50.years.

The.sub-soil.usage.rights.are.held.by.15.subsidiaries,.but.the.management.of.licenses.is.carried.out.by.the.following.operating.companies:.OJSC.Gazprom.Neft-Noyabrskneftegaz,.LLC.Gazprom.Neft-Khantos,.LLC.Gazprom.Neft-East,.LLC.Gazprom.Neft-Angara,.CJSC.Gazprom.Neft.Orenburg,.LLC.Gazprom.Neft-Development,.and.LLC.Gazprom.Neft-Sakhalin.

OJSC.Gazprom.Neft-Noyabrskneftegaz.operates.full-cycle.hydrocarbon.production.at.42.license.areas.owned.by.four.license.holders.

In.2013,.the.Licensing.Panel.of.the.Federal.Sub-Soil.Agency.(Rosnedra).considered.and.approved.amendments.to.13.sub-soil.licenses.held.by.the.Company:.the.terms.of.the.licenses.and.geological.survey.phases.were.extended.in.nine.areas,.updated.in.three.areas,.and.license.area.borders.were.expanded.in.one.area.

OJSC.NGK.Slavneft.and.its.subsidiaries.hold.licenses.for.oil.and.gas.prospecting,.and.exploration.and.extraction.at.31.license.areas.within.Western.Siberia.and.the.Krasnoyarsk.Territory.


NIS – 69 PERMITS (LICENSES)

LICENSES ARE MANAGED BY OPERATING COMPANIES

CJSC Gazprom Neft Orenburg LLC Gazprom Neft-Angara

LLC Gazprom Neft-Khantos LLC Gazprom Neft-East

LLC Gazprom Neft-Sakhalin LLC Gazprom Neft-Development

OJSC Gazprom Neft-Noyabrskneftegaz

SUBSIDIARIES AND ASSOCIATES – LICENSE OWNERS (73 LICENSES)

OJSC Tomskneft VNK 33.licenses

ОJSC Slavneft 31.licenses

LLC SeverEnergia 4.licenses

Salym Petroleum Development 3.licenses

CJSC Messoyakha Neftegaz 2.licenses

GAZPROM NEFT – 70 LICENSES

8 LICENSESGeological.Survey

62 LICENSESExploration.&.Production



CONTENTS

OJSC.Tomskneft.VNK.holds.33.licenses.for.developing.over.40.oil.and.gas.fields.within.the.Tomsk.Region.and.the.Khanty-Mansiysk.Autonomous.District.(KhMAD).–.Yugra..The.licenses.were.reassigned.to.OJSC.Tomskneft.VNK.in.2009.

CJSC.Messoyakhaneftegaz.holds.two.licenses.for.geological.survey,.exploration.and.production.within.the.Yamal-Nenets.Autonomous.District.(YaNAD).

In.addition,.Gazprom.Neft.Group.holds.a.50%.share.of.the.Salym.Petroleum.Development.joint.venture,.which.holds.three.licenses.for.additional.exploration.and.development.of.the.Salym.oil.field.cluster,.also.located.in.KhMAD.

OJSC.Arcticgaz,.part.of.LLC.SeverEnergia,.holds.two.licenses.for.geological.survey,.exploration.and.hydrocarbon.production.and.two.licenses.for.exploration.and.hydrocarbon.production..All.the.license.areas.are.located.in.the.YaNAD.(Samburgsky,.Evo-Yakhinsky,.Yaro-Yakhinsky.and.Severo-Chaselsky.areas).

CJSC.Gazprom.Neft.Orenburg.holds.a.license.for.development.and.hydrocarbon.production.within.the.eastern.section.of.the.Orenburg.oil.and.gas.condensate.field,.in.the.Orenburg.Region..

LLC.Oil.Company.Magma.holds.two.licenses.for.exploration.and.development.in.the.Khanty-Mansiysk.Autonomous.District.(at.the.Yuzhnoye.and.Orekhovskoye.fields)..OJSC.Yuzhuralneftegaz.holds.a.license.at.the.Kapitonovskoye.field.

CJSC.Technology.Research.Center.holds.a.license.for.exploration.and.hydrocarbon.production.at.the.Tsarichanskoye.and.Filatovskoye.fields,.and.a.geological.survey.license.within.the.Tsarichanskoye.prospecting.area..

LLC.Zhivoy.Istok.holds.a.license.for.exploration.and.hydrocarbon.production.at.the.Baleykinskoye.field.and.a.geological.survey.license.within.the.Uranskaya.area..

LLC.Gazprom.Neft.Novy.Port.holds.a.license.for.the.production.of.oil,.gas.and.condensate.within.the.Novy.Port.field..

LLC.Gazprom.Neft-Sakhalin.holds.a.license.for.sub-soil.use.at.the.Dolginskoye.field.on.the.Pechora.Sea.shelf..

9 licenses

License terms and geological survey stage extended

3 licenses

License conditions updated

1 license

License area borders expanded

In 2013, the Licensing Panel of the Federal Sub-Soil Agency considered and approved amendments to 13 sub-soil licenses




CONTENTS


HYDROCARBON PRODUCTION

FIELD DEVELOPMENT AND CRUDE OIL PRODUCTION

Most.of.the.Company’s.crude.oil.in.Russia.is.produced.by.its.subsidiaries:.OJSC.Gazprom.Neft-Noyabrskneftegaz,.LLC.Gazprom.Neft-Khantos,.LLC.Gazprom.Neft-East,.and.CJSC.Gazprom.Neft.Orenburg.(since.October.2011)..The.companies.are.developing.fields.within.the.Yamal-Nenets.Autonomous.District.(YaNAD).and.the.Khanty-Mansiysk.Autonomous.District.(KhMAD),.and.within.the.Omsk,.Tomsk,.Tyumen,.Orenburg,.and.Irkutsk.regions.

The.Company’s.foreign.subsidiary,.NIS,.explores.and.produces.oil.and.gas.in.Serbia,.Angola,.Bosnia.and.Herzegovina,.and.Hungary.

Gazprom.Neft.is.also.party.to.a.number.of.production.sharing.agreements.and.hydrocarbon.exploration.and.production.projects.in.Iraq.and.Venezuela.

In.addition.to.its.own.production,.OJSC.Gazprom.Neft.has.production.rights.for.three.affiliates.(in.which.the.Company.has.50%.interest).proportionate.to.its.equity.shareholding:.OJSC.Slavneft.(50%),.OJSC.Tomskneft.VNK.(50%),.Salym.Petroleum.Development.(SPD).(50%).and.LLC.SeverEnergia.(25.5%..In.December.2013,.the.share.increased.to.40.2%).

The.Company’s.fields.with.the.largest.hydrocarbon.reserves.in.the.Yamal-Nenets.Autonomous.District.are:.Sugmutskoye,.Sutorminskoye,.Vyngapurovskoye,.Sporyshevskoye,.Vyngayakhinskoye.and.Muravlenkovskoye..The.Company’s.share.of.production.at.these.fields.represented.29.7%.of.its.total.crude.oil.production.(net.of.output.from.the.consolidated.entities).in.2013..These.fields.are.operated.by.the.following.oil.and.gas.production.companies:.OJSC.Gazprom.Neft-Noyabrskneftegaz,.its.subsidiary.LLC.Zapoliar-Neft.(holder.of.a.development.license.at.the.Vyngapurskoye,.Yaraynerskoye,.and.Novogodneye.fields),.and.the.Gazprom.Neft.Muravlenko.branch,.OJSC.Gazprom.Neft-Noyabrskneftegaz.

In.the.Khanty-Mansiysk.Autonomous.District,.the.Company’s.largest.and.most.promising.oil.field.is.Priobskoye,.with.a.development.license.held.by.LLC.Gazprom.Neft-Khantos..

LLC.Gazprom.Neft-Khantos’.total.output,.including.that.of.LLC.Oil.Company.Magma,.was.13.73.million.tonnes.in.2013,.which.is.12%.higher.than.in.2012.

HYDROCARBON PRODUCTION ON OPERATIONS MAP




CONTENTS

LLC.Gazprom.Neft-Khantos.has.the.highest.production.growth.rates..Intensive.development.began.at.Priobskoye.in.2004,.and.the.field.produced.more.than.23%.of.Gazprom.Neft’s.total.output.in.2008,.and.increased.to.37%.in.2013..Priobskoye.is.a.key.asset.that.will.play.a.strategic.role.in.the.Company’s.future.growth..

A.total.of.534.interventions.were.conducted.by.LLC.Gazprom.Neft-Khantos,.resulting.in.2,161.6.thousand.tonnes.of.additional.crude.oil.production.

The.Company.achieved.this.high.level.of.performance.by.exceeding.its.new.well.commissioning.target.by.12.6%.(with.366.new.wells.brought.into.operation),.and.as.a.result.of.efficiently.organizing.the.formation.pressure.system.

The.north-eastern.section.of.the.Palyanovskaya.area.of.the.Krasnoleninskoye.field.is.also.located.within.the.KhMAD,.as.is.a.cluster.of.license.areas.which.the.Company.bought.in.early.2005.(Salym-2,.Salym-3,.and.Salym-5),.and.the.Zimneye.field.in.the.Tyumen.Region..In.2008,.LLC.Gazprom.Neft-Khantos.won.an.auction.for.the.rights.to.the.section.of.the.Zimneye.field.located.within.the.KhMAD.

A.cluster.of.regional.fields.in.the.Omsk.and.Tomsk.Regions.represents.another.new.production.center..Crude.oil.production.operations.at.the.Krapivinskoye.field.in.the.Omsk.Region,.and.at.the.Archinskoye,.Shinginskoye.and.Urmanskoye.fields.in.the.Tomsk.Region,.are.conducted.by.LLC.Gazprom.Neft-East..

The.Luginetskiye.field.cluster,.purchased.in.2010,.has.created.a.new.production.node.which.has.yielded.incremental.crude.oil.production.every.year..Most.of.these.reserves.are.at.an.early.stage.of.development.and.offer.great.potential.for.future.production.growth.

In.2011,.the.Company.acquired.CJSC.Gazprom.Neft.Orenburg.in.the.Orenburg.Region,.which.is.developing.the.eastern.section.of.the.Orenburg.oil.and.gas.condensate.field;.CJSC.Technology.Research.Center.the.license.holder.for.the.Tsarichanskoye.field;.OJSC.Yuzhuralneftegaz,.developer.of.the.Kapitonovskoye.field.and,.in.late.2012,.LLC.Zhivoy.Istok,.which.produces.oil.at.the.Baleykinskoye.field...These.assets.accounted.for.3.3%.of.OJSC.Gazprom.Neft’s.total.output.in.2013,.or.1.6.million.tonnes..Production.is.estimated.to.reach.5.million.tonnes.by.2018.

CRUDE OIL PRODUCTION IN 2013

Oil production, mn t


mn t50.6

Daily crude oil production by the Gazprom Neft Group, thousands of tonnes per day

Venezuela and Kurdistan share of crude oil production

SeverEnergia share of crude oil production

Tomskneft VNK share of crude oil production

SPD share of crude oil production

Slavneft share of crude oil production

Crude oil production Gazprom Neft

0.01

2010 49.60

2011 50.00

2012 50.80

2013 50.600.20

33.40 8.40 5.10 3.50

0.10

32.90 8.90 5.10 3.80

31.50 9.00 5.20 4.20

31.10 9.20 5.20 4.10 135.90

136.90

138.80

138.60

33.4 mn t

Gazprom Neft’s crude oil production

8.4 mn t

Slavneft’s share of crude oil production

5.1 mn t

Tomskneft VNK’s share of crude oil production

3.5 mn t

SPD’s share of crude oil production




CONTENTS


FIELD DEVELOPMENT AND CRUDE OIL PRODUCTION (continued)

Since.late.2007,.OJSC.Gazprom.Neft.and.OJSC.Oil.Company.Rosneft.have.been.equal.joint.venture.partners,.with.alternating.management,.of.OJSC.Tomskneft.VNK.(in.accordance.with.their.shareholder.agreement)..Starting.in.January.2011,.the.operating.control.of.OJSC.Tomskneft.VNK.was.transferred.to.Gazprom.Neft.for.a.three-year.period.

OJSC.Tomskneft.VNK.produced.10.152.million.tonnes.of.oil,.which.is.0.6%.lower.than.the.Business.Plan.targets.and.0.7%.more.than.in.the.previous.year;.Gazprom.Neft’s.share.was.5.075.million.tonnes.of.oil.

OJSC.NGK.Slavneft.is.a.joint.venture.between.Gazprom.Neft.and.OJSC.RN.Holding.(formerly.TNK-BP)..The.company.is.developing.reserves.in.the.Khanty-Mansiysk.Autonomous.District.and.carrying.out.exploration.and.production.in.the.Krasnoyarsk.Territory..

The.company.produced.16.802.million.tonnes.of.oil.in.2013,.which.is.5.9%.less.than.in.2012;.Gazprom.Neft’s.share.was.8.401.million.tonnes.of.oil.and.0.41.billion.cubic.meters.of.gas..

Since.June.2009,.OJSC.Gazprom.Neft.has.held.a.50%.interest.in.Salym.Petroleum.Development,.a.joint.venture.with.Royal.Dutch.Shell..In.2013,.Salym.Petroleum.Development.produced.6.987.million.tonnes,.of.which.a.share.of.3.494.million.tonnes.was.attributed.to.Gazprom.Neft,.an.8.1%.reduction.versus.2012.

Gazprom.Neft’s.overseas.business,.through.Serbia-based.NIS,.succeeded.in.considerably.increasing.its.oil.output..In.2013,.NIS.produced.1.255.thousand.tonnes,.which.is.2.5%.more.than.in.2012.(1.223.thousand.tonnes).

Gazprom.Neft.maintained.its.leading.position.among.Russian.producers.by.oil.and.gas.volume.output.in.2013.

Gazprom.Neft’s.consolidated.crude.oil.production.was.50.575.million.tonnes.of.oil.in.2013,.a.0.4%.decrease.compared.to.2012,.and.also.0.65%.lower.than.its.2013.Business.Plan.targets.

GAS FIELD DEVELOPMENT & PRODUCTION

The.Company.is.rapidly.developing.its.gas.business,.which.is.focused.on.commercializing.associated.and.natural.gas.reserves.at.oil.fields.and.realizing.the.maximum.value.of.gas.

The.Gazprom.Neft.Group’s.gas.production.program.envisions.rapid.growth.of.gas.production.in.Russia..The.target.is.to.increase.gas.production.and.utilization.from.14.5.billion.cubic.meters.in.2013,.to.22.0.billion.cubic.meters.in.2016.

In.2013,.the.total.production.and.utilization.of.gas.by.Gazprom.Neft.Group.(including.its.share.of.production.from.joint.ventures).was.14.55.billion.cubic.meters..

Total.natural.gas.produced.by.subsidiaries.and.affiliates.was.5.96.billion.cubic.meters,.including.5.91.billion.cubic.meters.of.marketable.gas..The.supply.of.natural.gas.increased.due.to.the.expansion.of.the.Muravlenkovskoye.gas.field.in.Q4.2012.

Peak.annual.natural.gas.production.at.Muravlenkovskoye.rose.from.3.2.billion.cubic.meters.to.4.6.billion.cubic.meters.per.year..In.2013,.an.additional.1.3.billion.cubic.meters.of.gas.was.placed.on.the.market,.which.resulted.in.a.production.increase.of.1.0.million.tonnes.of.oil.equivalent.

Compared.to.2011,.the.average.daily.supply.of.marketable.gas.increased.by.30%..

This.increase.was.due.both.to.the.successful.implementation.of.the.above.production.project.(at.the.Muravlenkovskoye.field).and.projects.for.utilizing.associated.gas,.including.the.main.project,.Noyabrsky.Integrated.Project,.which.completed.its.initial.phase.in.October.2012..In.addition,.a.compressor.station.went.into.operation.in.the.southern.license.area.of.the.Priobskoye.field.in.the.middle.of.2013,.bringing.additional.APG.utilization.up.to.over.100.million.cubic.meters.in.2013.

As.part.of.the.APG.utilization.improvement.project.at.the.Yuzhno-Priobskaya.area,.the.optimal.options.and.configuration.were.approved.for.the.construction.of.a.new.gas.processing.plant.(GPP).with.an.annual.processing.capacity.of.900.million.cubic.meters.based.at.the.existing.Yuzhno-Priobskaya.compressor.station..In.December.2013,.Gazprom.Neft.and.SIBUR.signed.an.agreement.for.the.construction.of.this.GPP.in.the.Khanty-Mansi.Autonomous.District.

SeverEnergia’s share of gas production

SPD’s share of gas production

Tomskneft VNK’s share of gas production

Slavneft’s share of gas production

Gazprom Neft’s gas production

0.14

0.13

0.06

2010 3.99

2011 9.07

2012 11.12

2013 14.550.41

11.91 0.85 1.24

0.42

0.42

0.34

0.45

9.28 0.84

7.86 0.73

3.06 0.59

Gas production, billion cubic meters




CONTENTS

As.part.of.the.Noyabrsk.Integrated.Project,.vacuum.gas.compressor.stations.(VCS).were.put.into.operation.at.BS-2.of.the.Yety-Purovskoye.field..A.VCS.at.BS.of.the.Romanovskoye.field.and.a.pipeline.at.the.Umseyskoye.field.also.went.into.operation.

As.part.of.the.flare.unit.reconstruction.project.at.the.Chatylkinskoye.field,.a.smokeless.flare.tip.was.installed.and.put.into.operation.to.reduce.pollutant.emissions..The.gas.infrastructure.was.expanded.in.Orenburg;.and.at.the.Western.field.cluster,.the.decision.was.taken.and.agreement.reached.in.relation.to.the.terms.of.supply.of.APG.to.the.Orenburg.GPP..

Compared.to.2012,.average.utilization.increased.14.p.p..(from.65.7%.to.79.5%).

OJSC.Tomskneft.VNK.produced.1.7.billion.cubic.meters.of.gas,.and.Gazprom.Neft’s.share.was.0.85.billion.cubic.meters..

OJSC.Slavneft.produced.0.82.billion.cubic.meters.of.gas,.and.Gazprom.Neft’s.share.was.0.41.billion.cubic.meters.

The.total.APG.utilization.rate.(including.joint.venture.operations).was.79.9%.in.2013,.compared.with.69.3%.in.2012..(If.the.full.year.effect.with.respect.to.the.projects.implemented.in.2013.is.included,.the.utilization.rate.is.projected.to.reach.about.81%.in.2014)..This.improvement.reflects.the.full.year.effect.of.the.compressor.station.that.was.put.into.operation.at.the.Priobskoye.field.

The.development.of.small.gas.deposits.in.fields.where.Gazprom.Neft.has.production.operations.will.contribute.to.a.more.efficient.utilization.of.the.Company’s.reserves,.helping.to.raise.annual.hydrocarbon.output.to.100.million.tonnes.of.oil.equivalent,.in.line.with.the.Company’s.2025.Development.Strategy.

The.Company.has.developed.a.2014-2016.program.for.associated.petroleum.gas.utilization.by.subsidiaries.and.affiliates,.which.it.approved.in.2013..The.program.includes.a.project.portfolio.that.will.ensure.the.achievement.of.a.95%.target.utilization.rate.across.all.of.the.Company’s.key.assets,.with.the.exception.of.remote.fields.with.inherently.negative.economic.conditions,.where.the.level.of.associated.gas.utilization.will.be.set.by.Government.regulation.




CONTENTS


TOTAL HYDROCARBON OUTPUT

Total.production.by.OJSC.Gazprom.Neft.rose.by.4.3%.in.2013,.to.62.26.million.tonnes.of.oil.equivalent..Oil-equivalent.production.growth.has.been.achieved.owing.to.the.production.assets,.purchased.recently.in.2011-2012.(CJSC.Gazprom.Neft.Orenburg,.LLC.Technology.Research.Centre,.OJSC.Yuzhuralneftegaz,.and.LLC.Zhivoy.Istok).and.highly.efficient.interventions.at.the.Western.Siberian.fields.

The.Company’s.subsidiaries.outperformed.targets.by.drilling.new.horizontal.wells,.including.multi-stage.fracturing,.and.utilizing.effective.techniques.to.improve.production.

In.2013,.the.Company’s.subsidiaries.carried.out.a.total.of.2,567.interventions,.of.which.1,486.were.intended.to.increase.crude.oil.production.and.1,081.were.intended.to.maintain.base.production..This.resulted.in.producing.718.5.thousand.tonnes.more.than.in.the.Business.Plan..Additional.crude.oil.production.due.to.the.above.actions.totalled.5,045.9.million.tonnes..

The.subsidiary.resource.base.is.characterized.by.a.deteriorating.structure.of.remaining.reserves.as.the.majority.of.high-yielding.fields.are.now.in.a.mature.development.phase,.with.some.less.efficient.reserves.now.being.developed..There.is.the.potential.to.improve..the.efficiency.of.these.reserves.through.horizontal.drilling.

2,567 interventions

Carried out in total in 2013

1,486 interventions

Led to a production increase



CONTENTS

HYDROCARBON PRODUCTION IN 2013

62.26mn TOE

4.3%

Hydrocarbon production, million TOE

Daily crude oil production by the Gazprom Neft Group, thousands of tonnes per day

Venezuela and Kurdistan’s share of hydrocarbon production

SeverEnergia’s share of hydrocarbon production

Tomskneft VNK’s share of hydrocarbon production

SPD’s share of hydrocarbon production

Slavneft’s share of hydrocarbon production

Gazprom Neft's production of hydrocarbons

0.01

2010 52.81

2011 57.25

2012 59.71

2013 62.261.16

42.98 8.73 5.77 3.61

0.42

40.32 9.27 5.78 3.92

37.84 9.38 5.76 4.27

33.60 9.45 5.62 4.14 144.70

156.80

163.10

170.60


In.2013,.horizontal.drilling.technologies.and.multilateral.wells.were.utilized.in.more.geologically.complex.deposits.

Gazprom.Neft.subsidiaries.commissioned.767.wells.in.2013,.of.which.233.were.horizontal.wells.(compared.with.144.in.the.Business.Plan,.that.is,.62%.above.plan)..Multi-stage.fracturing.was.utilized.for.148.horizontal.wells.located.in.drilling.areas.with.low.porosity.and.permeability,.which.resulted.in.an.average.of.46.4.tonnes.per.day..In.addition,.24.multilateral.wells.were.completed.in.2013.

This.increase.in.the.number.of.new.wells.reflects.the.expansion.of.the.production.drilling.program.to.2,963.951.thousand.meters,.977.thousand.meters.above.the.Business.Plan,.including.a.2.8.times.increase.in.the.drilling.of.horizontal.wells.(of.750.3.thousand.meters).

By.the.end.of.2013,.the.Company.subsidiaries’.high.performing.oil.production.wells.had.risen.by.476.to.a.total.of.8,335.wells.

1.16 mn TOE

SeverEnergia’s share of hydrocarbon production

8.73 mn TOE

Slavneft’s share of hydrocarbon production

5.77 mn TOE

Tomskneft VNK’s share of hydrocarbon production

3.61 mn TOE

SPD’s share of hydrocarbon production




CONTENTS


PRODUCTION DRILLING

Gazprom.Neft’s.approved.Business.Plan.for.2014.has.set.a.3.6%.increase.in.hydrocarbon.production.to.64.5.tonnes.of.oil.equivalent.

The.planned.steps.to.slow.down.the.decline.in.production.and.achieve.targets.are.as.follows:.drilling.new.wells,.using.new.technology.to.maximize.yield.from.strata,.reopening.idle.wells,.improving.the.water.injection.system.at.mature.fields,.and.implementing.measures.to.maintain.formation.pressure.in.new.production.areas.

The.plan.for.2014.is.to.drill.754.new.wells.with.a.target.yield.of.28.1.tonnes.per.day..This.will.include.282.horizontal.wells,.with.the.multi-stage.fracturing.technique.used.at.167.wells,.which.is.21%.higher.than.the.reported.horizontal.drilling.in.2013..

Most.of.the.drilling.will.be.performed.at.the.Priobskoye,.Novoportovskoye,.Vyngapurskoye,.Vyngayakhinskoye,.Sugmutskoye,.Kraineye,.Zimneye,.Shinginskoye,.Archinskoye,.Zapadno-Luginetskoye,.Umseyskoye,.and.Yety-Purovskoye.fields..CJSC.Messoyakhaneftegaz.will.continue.the.pilot.commercial.drilling.at.fields.under.development.

The.rates.of.hydrocarbon.output.growth.in.the.coming.years.will.remain.at.4%.to.5%.

This.performance.is.to.be.achieved.by.the.phased.commissioning.of.explored.oil.fields.belonging.to.OJSC.Gazprom.Neft,.following.the.commissioning.of.the.Yamal.fields,.and.the.expansion.of.the.resource.base.by.commissioning.oil.field.assets.of.other.companies.within.the.Group.

The.main.challenge.over.the.next.two.to.three.years.will.be.the.updating.of.the.Group’s.hydrocarbon.production.strategy.to.improve.operations.from.a.depleted.resource.base.

CRUDE OIL PURCHASES

The.36.8%.decline.in.crude.oil.purchases.in.Russia.is.due.to.the.termination.of.the.oil.supply.contract.with.TNK.BP.

Year-on-year.changes.in.the.volume.of.international.crude.oil.purchases.can.be.explained.by.changes.in.the.volume.of.trading.operations.

Million tonnes 2013 2012Change

2013/2012, %

Crude.oil.purchases,.Russia* 4.94 7.82 (36.8)

Crude.oil.purchases,.international 1.87 3.24 (42.3)

Total.crude.oil.purchases 6.81 11.06 (38.4)

*. Crude.oil.purchases.in.Russia.exclude.purchases.from.the.Group’s.joint.ventures.(Slavneft.and.SeverEnergia).

TARGET PRODUCTION SCOPE FOR 2014 INCLUDES:.� development.of.existing.Gazprom.Neft.assets:.OJSC.Gazprom.Neft-Khantos.(including.LLC.Oil.Company.Magma);.OJSC.Gazprom.Neft-Noyabrskneftegaz,.OJSC.Gazprom.Neft-East;.with.the.acquisition.of.open.acreage.licenses;

.� shares.of.production.in.joint.ventures.with.OJSC.NGK.Slavneft.(50%.JV.with.OJSC.Oil.Company.Rosneft),.OJSC.Tomskneft.VNK.(50%.JV.with.OJSC.Oil.Company.Rosneft),.and.SPD.(50%.JV.with.Shell.Salym.Development.B.V.);

.� further.development.of.OJSC.Gazprom.Neft’s.fields:.Orenburgskoye,.Prirazlomnoye;.

.� production.of.Cenomanian.natural.gas.at.OJSC.Gazprom.Neft-Noyabrskneftegaz.fields:.Novogodneye.and.Muravlenkovskoye;.development.of.NGK.Slavneft’s.Kuyumbinskoye.field.jointly.with.OJSC.Oil.Company.Rosneft.(50%);.

.� participating.in.foreign.projects.and.acquiring.land.and.assets.of.open.acreage.of.the.Russian.Federation.


CONTENTS

CONTENTS


READ MORE

PROJECTS IN RUSSIA.

RESOURCE BASE INCREASE DUE TO NEW PROJECTS


CONTENTS


CONTENTS

NOVY PORT PROJECT

PROJECT HISTORYThe.Novoportovskoye.oil-gas.condensate.field.was.discovered.in.1964.

In.2011,.in.order.to.consolidate.this.field.within.OJSC.Gazprom.Neft,.the.license.and.assets.of.the.Novoportovskoye.field.were.moved.to.LLC.Gazprom.Neft-Novy.Port,.which.had.been.established.as.a.result.of.the.reorganization.and.split-off.from.LLC.Gazprom.Dobycha.Nadym.

In.December.2012,.Gazprom.Neft.paid..RUB.6.3.billion.to.acquire.the.share.capital.of.Gazprom.Neft-Novy.Port,.taking.a.90%.control.of.the.company..OJSC.Gazprom.remains.the.second.owner.of.LLC.Gazprom.Neft-Novy.Port..The.difference.between.the.money.paid.(RUB.6.3.billion).and.the.historical.cost.(RUB.4.9.billion).is.reflected.in.the.additional.paid-up.capital.for.the.year.ended.December.31,.2012..In.spring.2011,.Gazprom.Neft.confirmed.the.potential.for.year-round.offshore.oil.export.from.the.field.–.the.atomic.icebreaker.Vaigach.made.a.test.voyage.from.the.port.of.Sabetta.(north-east.of.the.Yamal.peninsula).to.the.theoretical.location.of.the.Novoportovskoye.oil.field,.located.400.km.south.of.Cape.Kamenny..The.ice-free.period.in.this.part.of.the.Gulf.of.Ob.lasts.three.months,.from.July.to.September.

In.2012,.exploration.wells.were.tested.and.the.results.significantly.exceeded.expectations..The.first.construction.stage.of.a.central.oil.processing.facility.(CPF).was.completed;.an.oil.loading.terminal.was.built.to.facilitate.winter.oil.shipments;.well.pad.No..2.was.equipped;.the.pipeline.from.well.No..146.to.the.CPF.was.constructed.and.tested..At.present,.a.gas.engine.power.plant.and.well.cluster.No..1.dumping.are.being.installed,.an.in-field.flow.line.and.a.high.voltage.power.line.are.under.construction,.and.a.site.for.the.construction.of.an.oil.depot.in.the.area.of.Cape.Kamenny.is.being.developed.

In.December.2012,.the.pilot.development.of.the.field.started.

Depending.on.the.geological.structure.of.the.formation,.Jurassic.deposits.(41%.of.reserves).are.planned.to.be.developed.by.using.two.types.of.operating.wells:.controlled.directional.wells.with.fracturing,.as.well.as.horizontal.wells.and.horizontal.wells.with.fracturing...Neocomian.deposits.(formation.of.the.NP.group.representing.36%.of.reserves).will.be.developed.by.using.horizontal.wells,.with.a.horizontal.area.between.1,000.to.1,500.meters.

COMMISSIONINGStart.of.pilot.production.–.2012;.start.of.commercial.production.–.2015.

PERFORMANCE BY SEGMENT PROJECTS IN RUSSIA

PROJECTS IN RUSSIA


http://ar2013.gazprom-neft.com/overview/exploration-production-of-crude-oil-gas/projects-in-russia/


CONTENTS

OJSC GAZPROM NEFT SHARE

100%

С1 + С2 reserves as of Jan 01, 2014

454 mn TOE

C2C1

Oil + condensate, mn t

Gas, bn m3 288 36

32220

Reserves data

PROJECT GEOGRAPHY

NADYM

NOVOPORTOVSKOYE

The.Novoportovskoye.oil-gas.condensate.field.is.the.northernmost.field.of.the.Yamal.oil-gas.condensate.fields.and.is.located.to.the.southeast.of.the.Peninsula.in.the.YaNAD.(250.km.north.of.Nadym.and.30.km.from.the.Gulf.of.Ob.coast)..Payuta.is.the.nearest.railway.station.around.200.km.away.(by.winter.road.only).

CURRENT PROJECT STATUS (2013)

.� Positive.results.of.pilot.commercial.drilling.at.well.pads.No..1.and.No..2.–.potential.of.wells.was.228%.against.target.

.� 2013.drilling.operation.program.completed.at.well.pad.No.1;.the.Company.successfully.tested.and.carried.out.fracturing.at.four.vertical.and.horizontal.wells.(299%.of.plan.achieved).

.� Winter.oil.shipment.made.(10,000.tonnes).

.� Gas.engine.power.plant.went.into.operation.

.� Interconnection,.gas.injection,.power.supply.and.oil,.gas.and.condensate.transportation.developed.

.� Feasibility.study.of.the.Arctic.terminal.carried.out.

There.has.been.a.lot.of.talk.recently.about.the.economic.future.of.Russia.lying.in.the.Far.North..Huge.mineral.reserves,.including.hydrocarbon,.the.shortest.and.the.most.efficient.transport.route.from.Europe.to.Asia.–.all.that.is.Arctic.However,.for.Gazprom.Neft.the.areas.beyond.the.Arctic.Circle.do.not.relate.just.to.the.future.as.there.are.already.many.high-latitude.projects.we.are.able.to.talk.about.today.Commercial.production.is.expected.to.start.at.the.Novoportovskoye.field.and.Messoyakha.cluster.where.wells.are.being.actively.drilled.and.necessary.infrastructure.is.under.construction..We.have.developed.a.unique.concept.of.using.the.Northern.Sea.Route.for.year-round.oil.export;.no.one.has.done.this.before..The.exploration.and.development.of.Arctic.areas.is.a.key.goal.of.Gazprom.Neft’s.2025.Development.Strategy..However,.being.by.the.first.to.enter.the.region,.we.are.laying.the.foundations.operations.at.the.Arctic.shelf.for.the.entire.industry.

Vadim.Yakovlev.First.Deputy.CEO,.Gazprom.Neft




CONTENTS


MESSOYAKHA PROJECT

PROJECT HISTORYThe.Messoyakha.project’s.main.logistical.difficulty.is.the.absence.of.any.oil/gas.transmission.network..In.order.to.resolve.this,.the.construction.of.a.main.Zapolyarye-Purpe.pipeline.500.kilometers.long.is.required..The.design.and.construction.of.this.pipeline.is.being.carried.out.by.OJSC.AK.Transneft..Currently,.the.linear.pipeline.portion.is.being.constructed.(first.stage).and.the.design.and.evaluation.documentation.is.being.developed.for.the.second.and.third.stages.of.construction..The.first.stage.commissioning.is.planned.for.Q4.of.2014,.the.second.stage.in.Q4.of.2015,.and.the.third.stage.in.Q4.of.2016..Along.with.the.construction.of.the.main.Zapolyarye-Purpe.pipeline,.LLC.Gazpromneft-Development.will.start.the.design.of.a.pumping.pipeline.from.the.Vostochno-Messoyakhskoye.gas-oil.condensate.field.to.the.initial.pump.station-1.of.the.main.Zapolyarye-Purpe.pipeline..The.first.oil.from.Messoyakha.is.planned.to.be.connected.to.the.main.trunk.pipeline.system.in.Q4.of.2016.

In.addition,.OJSC.Gazprom.Neft.is.negotiating.a.favourable.beneficial.tax.treatment.for.the.new.fields,.taking.into.account.the.Program.for.the.complex.development.of.oil.and.gas.deposits.in.the.YNAD.and.the.northern.part.of.the.Krasnoyarsk.Territory.until.2020,.which.is.currently.under.consideration.by.the.Russian.Government.

Gazprom.Neft.and.TNK-BP.agreed.to.establish.a.joint.venture.to.develop.the.Zapadno-Messoyakhskoye.and.Vostochno-Messoyakhskoye.fields.in.the.Yamalo-Nenets.AD..Gazprom.Neft.is.acting.as.the.project.operator..The.decision.to.establish.the.JV.is.based.on.the.immense.scale.of.the.project.and.the.complexity.of.its.implementation..By.managing.the.assets.directly,.the.shareholders.will.be.able.to.make.swift.key.decisions.based.on.the.experience.and.technology.of.the.two.largest.VIOCs.

At.present,.owing.to.the.acquisition.of.TNK-BP.by.Rosneft,.Rosneft.has.become.the.new.partner.under.the.project.

In.October.2012,.the.first.oil.was.obtained.from.the.Vostochno-Messoyakhskoye.field.as.a.result.of.pilot.operations..During.the.preparation.for.pilot.development.of.Messoyakha.in.2012,.Gazprom.Neft.drilled.six.production.wells.and.two.water.wells.at.well.pads.No..1.and.No..2..Among.the.six.production.wells,.five.wells.were.completed.with.a.horizontal.drilling.length.of.over.600.meters..In.addition,.the.drilling.of.four.geological.survey.wells.was.completed.as.part.of.the.2012.geological.survey.well.program,.and.42.facilities.were.tested.against.a.target.of.34.



CONTENTS


.� Geological.survey.wells.drilled.and.tested.in.2013..According.to.the.geological.survey.program,.the.expected.increase.in.C1.category.oil.reserves.amounted.to.31.7.million.tonnes.

.� Winter.oil.shipment.made.(421.tonnes).

.� Wells.completed.under.Pilot.Work-1,.Pilot.Work-2,.and.Pilot.Formation.Pressure.System.Support.programs.

.� Geological.structure.and.field.development.plans,.and.ground.infrastructure.and.logistics.plans.developed.

.� Design.of.key.infrastructure.facilities.is.underway.

KEY PROJECT CHARACTERISTICS Recoverable.C1.and.C2.oil.reserves.at.the.Messoyakhskiye.fields.are.estimated.at.465.million.tonnes.of.oil.and.175.billion.cubic.meters.of.gas,.making.them.the.largest.fields.in.the.district..Commercial.production.at.the.Messoyakhskiye.fields.is.planned.to.start.in.2016,.with.peak.oil.production.in.2023-2024.and.peak.gas.production.in.2022..Maximum.production.is.estimated.to.be.12.million.tonnes.of.oil.equivalent.per.year..Most.of.the.reserves.are.heavy,.highly.viscous.oil.

PROJECT GEOGRAPHY

NOVY URENGOY

ZAPADNO-MESSOYAKHSKOYEVOSTOCHNO-MESSOYAKHSKOYE

The.fields.were.discovered.in.the.1980s.and.are.the.northernmost.identified.onshore.fields.in.Russia..The.Messoyakha.group.is.located.on.the.Gydan.Peninsula.in.the.Taz.region.of.the.Yamalo-Nenets.Autonomous.District,.340.km.north.of.the.city.of.Novy.Urengoy.in.the.Arctic.climate.zone,.in.a.region.with.undeveloped.infrastructure.

1. Data.for.100%.of.field.reserves.(GPN.share.–.50%)


50%


606 mn TOE

C2C1


Gas, bn m3 103 73

234231

Reserves data1




CONTENTS


PRIRAZLOMNOYE PROJECT

PROJECT HISTORYThe.project.includes.licenses.for.the.development.of.the.Prirazlomnoye.field.(owned.by.LLC.Gazprom.Neft.Shelf,.license.series.ШПЧ.№.14758,.expiring.in.March.2043),.the.most.prepared.for.commercial.development.on.the.shelf.field.of.the.Timano-Pechorskaya.petroleum.province.and.a.part.of.Gazprom.Neft’s.development.strategy.

The.project.implementation.will.serve.as.the.basis.for.further.development.of.hydrocarbon.deposits.in.the.Arctic.zone.of.the.Russian.continental.shelf.

The.Prirazlomnoye.field.was.discovered.in.1989..It.is.located.at.the.south-eastern.shallow.marine.shelf.of.the.Barents.Sea.(in.the.Pechora.Sea).is.18.0-20.5.meters.deep,.and.next.to.the.undeveloped.coast.of.the.Bolshezemelskaya.Tundra.in.the.exclusive.economic.area.of.the.Russian.Federation.

The.field.is.situated.55.kilometers.from.the.coast,.north.of.the.Varandey.village,.240.kilometers.northwest.of.the.Naryan-Mar.port.on.the.Pechora.River.and.980.kilometers.east.of.Murmansk.

The.project.includes.the.construction.of.an.offshore.ice-resistant.fixed.platform,.onshore.infrastructure,.oil.spill.response.(OSR).system,.creation.of.a.maritime.transportation.and.processing.system,.drilling.of.20.production.wells,.13.injection.wells.and.a.well.for.slurry.utilization.

PROJECT OBJECTIVES.� Creation.of.an.economically.efficient.asset.� Development.of.competencies.for.field.development.on.the.Arctic.continental.shelf

PRIRAZLOMNAYA PRESENTATION


http://www.youtube.com/watch?v=xdmpiLjg9f8


CONTENTS

OJSC GAZPROM NEFT SHAREOJSC GAZPROM NEFT ACTS AS THE OPERATOR IN THE PRIRAZLOMNOYE PROJECT

PROJECT GEOGRAPHY

The.Prirazlomnoye.field.is.located.at.the.south-eastern.shallow.marine.shelf.of.the.Barents.Sea.(in.the.Pechora.Sea).at.a.depth.of.18.0-20.5.meters,.adjacent.to.the.undeveloped.coast.of.the.Bolshezemelskaya.Tundra.in.the.exclusive.economic.area.of.the.Russian.Federation.


74.4 mn t

C2C1

Oil, mn t 25,0049,40

Reserves data

NARYAN-MAR

PRIRAZLOMNOYE


.� Oil.spill.response.plan.approved,.command-staff.exercise.carried.out.

.� Management.of.the.offshore.ice-resistant.fixed.platform.transferred.to.LLC.Gazprom.Neft.Shelf.

.� Offshore.ice-resistant.fixed.platform.staffed,.training.carried.out.

.� Drilling.facilities,.gas.turbine.generator,.SPGF.and.HVAC.completed.according.to.drilling.facilities.and.offshore.ice-resistant.fixed.platform.evacuation.zones.

.� First.stage.of.HAZOP.(hazard.and.operability.system).completed.

.� First.well.drilled,.production.commenced.

There.is.no.doubt.that.2013.will.become.a.landmark.year,.not.just.for.the.Company.but.also.for.the.entire.Russian.oil.industry,.due.to.the.start.of.oil.production.on.the.Arctic.shelf.from.the.Prirazlomnaya.platform..We.have.pioneered.the.Russian.Arctic.shelf.development,.and.it.is.hard.to.overstate.the.importance.of.this.milestone..

Alexander.DyukovChief.Executive.Officer

OJSC.Gazprom.Neft



CONTENTS


PROJECT HISTORYThe.total.reserves.of.the.Chona.project.are.estimated.at.125.million.tonnes.of.oil.and.225.billion.cubic.meters.of.gas..The.Company.is.working.with.the.Japanese.company,.JOGMEC,.at.the.Ignyalinskoye.field,.but.is.working.independently.at.the.other.two.fields..The.Company.is.complying.fully.with.the.terms.of.the.license.agreements..In.the.Chona.project,.LLC.Gazprom.Neft.Angara.was.the.first.Russian.company.to.use.the.innovative.UniQ.exploration.technology.developed.by.Schlumberger..UniQ.is.a.unique.system.of.geophysical.equipment.and.computer.software.designed.for.high-resolution.seismic.data.collection..In.2013,.the.UniQ.seismic.system.was.used.in.over.350.square.kilometers.in.the.Tympuchikansky.and.Vakunaisky.areas..As.a.result,.16.times.more.data.was.collected.than.would.have.been.possible.using.traditional.3D.seismic.survey.methods.

In.2013,.the.total.amount.of.survey.work.carried.out.on.the.three.fields.of.the.Chona.project.comprised.500.square.kilometers.of.3D.seismic.survey,.2,500.linear.kilometers.of.electrical.exploration,.the.drilling.of.four.exploration.and.appraisal.wells,.and.repeat.testing.of.four.previously.drilled.wells..Pilot.development.work.commenced.at.the.Tympuchikanskoye.field.and.trial.production.is.underway..The.design.for.the.Chona.project’s.surface.infrastructure.was.developed.

The.main.focus.for.2014.is.to.carry.out.research.and.prepare.for.the.pilot.development.work..In.2014,.3D.seismic.surveys.will.be.carried.out.on.900.square.kilometers.(including.600.square.kilometers.using.UniQ.technology),.and.up.to.4,500.linear.kilometers.of.electrical.exploration..Plans.include.drilling.of.five.exploration.and.appraisal.wells,.repeat.testing.of.one.previously.drilled.well,.and.the.start.of.commercial.test.production.at.two.wells..Work.will.also.start.this.year.to.locate.sand.quarries.and.rocky.soil.to.provide.materials.for.site.access.roads..Sites.will.be.prepared.for.the.construction.of.the.main.production.facilities.during.2016–2018,.including.oil.treatment.facilities,.a.commercial.oil.pipeline,.an.acceptance.station,.energy.supply.facilities,.etc.

PERFORMANCE BY SEGMENT PROJECTS.IN.RUSSIA

YAKUTSK

TYMPUCHIKANSKOYE IGNYALINSKOYE

VAKUNAISKOYE

At.present,.the.Company.is.carrying.out.exploration.work.as.part.of.the.Chona.Project.in.three.fields.–.Ignyalinskoye,.Tympuchikanskoye.and.Vakunaiskoye,.all.of.them.located.on.the.border.between.the.Irkutsk.Region.and.the.Republic.of.Sakha.(Yakutia).

PROJECT GEOGRAPHY

CHONA PROJECT

Standard 3D seismic survey

UniQ seismic survey


CONTENTS


NARYAN-MAR

DOLGINSKOYE

“Developing shelf projects is a strategic goal for Gazprom Neft. Continuing geological exploration at the Dolginskoye oil field will enable Gazprom Neft to expand its competencies in implementing shelf projects,” said Gazprom Neft First Deputy CEO Vadim Yakovlev

PROJECT HISTORYIn.2006,.OJSC.Gazprom’s.oil.business.strategy.was.approved..The.strategy.planned.to.consolidate.all.of.OJSC.Gazprom’s.oil.assets,.including.those.on.the.Russian.shelf,.within.the.Gazprom.Neft.Group.

As.part.of.the.decision.taken.to.consolidate.the.Dolginskoye.oil.field,.in.2011.OJSC.Gazprom.Neft,.together.with.leading.Russian.and.international.companies,.carried.out.a.Feasibility.Study.and.Proposals.for.the.Commercial.Development.of.Dolginskoye.Oil.Field.to.evaluate.the.asset’s.geological.and.economic.potential.

In.June.2012,.the.Dolginskoye.Oil.Field.Commercial.Development.Program.was.approved.as.OJSC.Gazprom.Central.Commission’s.development.concept.for.Subsurface.Resources.Use.and.Licensing.Management.

In.September.2012,.OJSC.Gazprom.and.LLC.Gazprom.Neft.Sakhalin.finalised.a.contract.for.geological.exploration.work,.commercial.development,.and.the.field’s.operation.

Pursuant.to.the.decision.of.the.Federal.Agency.for.Sub-surface.Use.dated.September.05,.2013,.the.license.for.sub-soil.use.at.the.Dolginskoye.Oil.Field.was.consolidated.into.Gazprom.Neft’s.subsidiary,.LLC.Gazprom.Neft-Sakhalin,.which.meets.all.statutory.requirements.to.carry.out.shelf.operations.

As.part.of.its.license.obligations,.the.preparation.for.the.construction.of.exploration.wells.during.the.2014.and.2015.navigation.periods.is.underway.

The.field.is.planned.to.be.put.into.operation.with.the.first.oil.to.be.obtained.in.2021.

DOLGINSKOYE FIELD

PROJECT GEOGRAPHY

The.Dolginskoye.oil.field.is.located.on.the.shelf.of.the.Pechora.Sea,.80-110.kilometers.from.the.shore,.and.was.discovered.in.1999..The.depth.of.the.sea.in.the.area.of.the.field.ranges.from.40-55.meters..A.total.of.over.11,000.linear.kilometers.of.2D.seismic.surveys.has.been.conducted.at.the.field,.as.well.as.1,600.square.kilometers.of.3D.seismic.surveys..The.drilling.of.three.exploratory.wells.was.completed,.including.two.Severo-Dolginskaya.wells.and.one.Yuzhno-Dolginskaya.well..At.present,.the.field’s.recoverable.reserves.are.estimated.at.over.140.million.tonnes.of.oil.equivalent.

CURRENT STATUS

.� Operator.of.the.Dolginskoye.field.exploration.and.development.project.–.LLC.Gazprom.Neft-Sakhalin.–.is.currently.preparing.for.the.drilling.of.an.exploratory.well.in.the.Severo-Dolginskaya.area.of.the.field.

.� There.are.plans.to.drill.a.3-CD.well,.test.promising.horizons,.and.collect.over.200.meters.of.core.samples.from.the.Dolginskoye.field.during.the.ice-free.months.of.2014.for.laboratory.evaluation..The.sea.depth.is.approximately.40.meters.at.the.point.of.drilling,.while.the.design.depth.of.the.well.is.3,500.meters,.and.the.minimum.distance.from.the.drilling.operations.site.to.the.shore.is.75.kilometers.

.� On.December.24,.2013,.public.consultations.were.held.in.Naryan-Mar.concerning.the.project.plans.for.the.drilling.exploration.of.well.№.3-CD.at.the.Dolginskoye.field,.including.a.Prevention.and.Response.Plan.for.Oil.Spills,.as.well.as.an.Environmental.Impact.Assessment..The.project.plans.were.unanimously.approved.

.� The.contracting.of.supply.vessels.and.a.service.company.is.underway.

.� The.start.of.the.well.construction.is.planned.for.June.2014.



CONTENTS


SEVERENERGIA PROJECT

KEY CHARACTERISTICS OF THE PROJECTIn.2017,.the.gas.production.capacity.at.the.SeverEnergia.field.will.exceed.31.billion.cubic.meters.per.annum..Natural.gas.from.the.company’s.fields.will.be.delivered.to.the.Unified.Gas.Supply.System,.and.the.gas.condensate.will.be.transported.via.the.condensate.pipeline.to.the.Yurkharovo-Purovsky.Gas.Condensate.Stabilization.Plant..Further.plans.at.the.Samburgskoye.field.include.the.development.of.oil.rims.and.a.link.to.the.Zapolyarye-Purpe.oil.pipeline.which.is.currently.under.construction..The.successful.launch.of.the.Samburgskoye.field.is.the.result.of.international.cooperation.in.the.oil.and.gas.industry.

PROJECT HISTORYIn.July.2010,.OJSC.Gazprom.Neft.and.NOVATEK.announced.the.establishment.of.a.new.joint.venture,.LLC.Yamal.Development,.to.implement.joint.projects.to.develop.oil.and.gas.condensate.fields.in.the.Yamalo-Nenets.Autonomous.District.

By.the.end.of.2013,.LLC.SeverEnergia.was.a.Russian-Italian.entity.with.51%.of.its.shares.owned.by.LLC.Yamal.Development.–.a.joint.venture.established.by.OJSC.NOVATEK.and.OJSC.Gazprom.Neft.under.equal.control..The.49%.share.of.the.authorized.capital.of.LLC.SeverEnergia.was.held.by.a.joint.venture.between.the.Italian.energy.providers.Eni.(60%).and.Enel.(40%),.Arctic.Russia.B.V.

In.November.2013,.LLC.Yamal.Development.entered.into.a.binding.agreement.with.Eni.to.acquire.a.60%.share.in.Arctic.Russia.B.V.,.which.held.49%.of.the.authorized.capital.of.LLC.SeverEnergia..The.deal.amounted.to.USD.2,940.million..After.the.transaction.was.completed,.LLC.Yamal.Development’s.share.in.LLC.SeverEnergia.increased.to.80.4%.

In.December.2013,.OJSC.NOVATEK.reported.that.it.was.also.entering.into.an.asset.exchange.contract.with.OJSC.Oil.Company.Rosneft..The.51%.share.in.OJSC.Sibneftegas,.owned.by.NOVATEK,.will.be.exchanged.for.a.40%.share.of.Rosneft.in.Arctic.Russia.B.V..The.non-cash.transaction.will.be.completed.once.the.required.approvals.have.been.obtained.

The.outcome.of.the.above.transactions.resulted.in.an.increase.in.NOVATEK’s.effective.share.of.the.authorized.capital.of.LLC.SeverEnergia.to.59.8%.as.of.January.15,.2014..OJSC.Gazprom.Neft’s.share.amounted.to.40.2%.



CONTENTS


.� 64.production.wells.drilled.

.� 3D.field.work.at.the.Yevo-Yakhinskoye.and.Samburgskoye.fields.completed..Data.is.being.processed.and.interpreted.

.� The.second.stage.of.Samburgskaya.GTP.launched.(aggregate.capacity.of.the.first.and.second.stages.is.4.3.bcm.per.annum).

.� The.first.stage.of.OTU.launched.at.the.Samburgskoye.field.

PROJECT GEOGRAPHY

1. Data.for.100%.of.field.reserves.(GPN.share.–.40.2%)


40.2%


993 mn TOE

C2C1


Gas, bn m3 877 630

204 490

Reserves data1

In.April,.2012,.the.first.stage.of.the.Samburgskoye.oil.and.gas.condensate.field.owned.by.SeverEnergia.was.officially.put.into.commercial.operation..The.Samburgskoye.field.is.the.first.of.SeverEnergia’s.fields.to.produce.hydrocarbons..The.gas.production.capacity.of.the.first.stage.is.2.3.bcm.per.annum..The.company.plans.to.launch.the.second.stage.by.the.end.of.2012.

INFRASTRUCTURE AND TRANSPORTATION.� At.the.beginning.of.2014,.the.gas.and.condensate.treatment.and.transportation.facilities.were.put.into.operation.only.at.the.Samburgsky.license.area.(Valanzhinskaya.deposit).

.� The.areas.are.located.60-100.kilometers.from.Novy.Urengoy.

4.5 mn TOE

SE production (100%) in 2013

1.7 mn TOE

SE production (100%) in 2012

NOVY URENGOY

SAMBURGSKOYE

The.Samburgskoye.field.is.located.in.the.Yamalo-Nenets.Autonomous.District.within.the.Samburgsky.license.area,.the.reserves.of.АВС1+С2.natural.gas.being.1,263.7.mn.BOE.and.those.of.liquid.hydrocarbons.(oil.and.gas.condensate).918.4.mn.BOE..The.Samburgsky.license.area.also.comprises.the.Urengoyskoye,.Severo-Yesetinskoye.and.Vostochno-Urengoyskoye.oil/gas/condensate.fields..As.of.January.01,.2014,.the.total.АВС1+С2.reserves.of.the.Samburgsky.license.area.are.estimated.at.8,969.9.million.BOE..In.addition,.LLC.SeverEnergia.holds.licenses.in.the.Yaro-Yakhinsky,.Yevo-Yakhinsky.and.Severo-Chaselsky.license.areas..As.of.January.01,.2014,.LLC.SeverEnergia’s.natural.gas.and.liquid.hydrocarbon.reserves.amounted.to.7,865.8.million.BOE.and.5,070.2.million.BOE,.respectively,.according.to.the.Russian.АВС1+С2.categories.




CONTENTS

INTERNATIONAL PROJECTS

In.December.2009,.in.the.second.licensing.round,.Gazprom.(as.part.of.a.consortium).obtained.the.rights.to.develop.the.Badra.field..As.an.operator.the.Company.holds.a.30%.share..The.consortium.comprises:.Gazprom.Neft,.Kogas.(Korea),.Petronas.(Malaysia),.and.TPAO.(Turkey).

Gazprom.Neft’s.share.of.the.project.is.30%,.while.Kogas.has.22.5%,.Petronas.15%,.and.TPAO.7.5%..The.Iraqi.government.is.represented.by.Oil.Exploration.Company.(OEC).with.a.25%.interest.

The.service.contract.was.signed.on.January.28,.2010.and.became.effective.on.February.18,.2010.

30%

OJSC Gazprom Neft share

CURRENT STATUS (2013)

.� Well.BD4.drilling.completed..

.� Well.BD5.drilling.completed.and.under.development.

.� Drilling.of.six.more.production.wells.contracted.to.Zhongman.Petroleum.and.Natural.Gas.Group.Co.,.Ltd..(ZPEC).

.� EPC-contract.entered.into.with.Samsung.for.the.construction.of.gas.infrastructure.

.� EPC-contract.entered.into.with.CPP.for.strategic.pipeline.junction.

.� EPC.tender.issued.for.gas.export.pipeline.

.� Field.service.contract.signed.with.Petrofac.International.(UAE).Ltd.

FORECAST UNTIL THE END OF 2014

.� Complete.final.preparation.plans.for.field.development.

.� Put.into.operation.the.“A”.oil.treatment.process.line.(CPF),.infield.pipelines,.export.pipeline,.wells.BD4.and.BD.

.� Commence.commercial.production.(next.year’s.target.production.is.15,000.barrels.per.day).

.� Commence.production.drilling.

IRAQ (BADRA)

BAGHDADBADRA

PROJECT GEOGRAPHY


The.Badra.oil.field.lies.in.the.province.of.Wasit.in.eastern.Iraq.



CONTENTS

LIBYA (ELEPHANT)

Libya.(Northern.Africa).ranks.among.Gazprom.Neft’s.priority.regions.owing.to.its.predominantly.onshore.production,.significant.potential.to.increase.the.resource.base,.established.logistics,.and.developed.infrastructure.

The.Elephant.field.lies.in.western.Libya..Its.recoverable.oil.reserves.are.estimated.at.100.million.tonnes..The.field.is.fully.equipped.and.has.power.supply.utilities.and.facilities.for.oil.treatment.and.transportation.to.its.own.onshore.terminal.

In.June.2011,.Gazprom.Neft.signed.an.Option.Agreement.and.obtained.the.right.(but.not.the.obligation).to.acquire.under.certain.conditions.by.December.22,.2012.Eni’s.33%.share.in.the.consortium.of.foreign.companies.developing.the.field.under.equal.control.with.the.Libyan.national.oil.company,.NOC..On.December.21,.2012,.Gazprom.Neft.notified.Eni.duly.and.in.good.time.of.its.intent.to.exercise.this.option.to.purchase.a.stake.in.the.project.

In.January.and.September.2013,.OJSC.Gazprom.Neft.delegations,.supported.by.the.Russian.Government,.consulted.with.NOC.management.and.the.Oil.Ministry.in.Libya.to.obtain.approval.to.join.the.project..These.consultations.and.negotiations.between.Eni’s.management.and.the.Prime.Minister.of.Libya.confirmed.that,.in.principle,.the.Libyan.party.had.no.objections.to.Gazprom.Neft.joining.the.project;.however,.the.final.position.was.still.to.be.determined.

Due.to.the.difficult.political.and.military.situation.and.unstable.new.government.in.Libya.in.2013,.the.Libyan.party.was.unable.to.come.to.a.conclusion.concerning.Gazprom.Neft’s.acquisition.of.a.share.in.the.Elephant.project..Given.these.circumstances,.Gazprom.Neft.and.Eni.decided.in.2013.to.extend.the.option.until.December.31,.2014.

TRIPOLI

ELEPHANT

The.Elephant.field.lies.in.western.Libya.

PROJECT GEOGRAPHY




CONTENTS

PERFORMANCE BY SEGMENT INTERNATIONAL PROJECTS

VENEZUELA (JUNIN-6)

In.accordance.with.the.Memorandum.of.Understanding.between.OJSC.Gazprom.Neft,.OJSC.Oil.Company.Rosneft,.OJSC.LUKOIL.OJSC.Surgutneftegaz,.and.OJSC.TNK-BP.Holding,.the.parties.acquired.share.capital.of.the.National.Oil.Consortium.(NOC).on.June.23,.2009..Since.the.project.of.Junin-6.consortium,.implemented.as.part.of.an.intergovernmental.treaty.in.Venezuela,.is.an.oil.production.project,.Gazprom.Neft.acquired.the.share.capital.of.NOC.to.implement.this.project.following.a.decision.made.by.Gazprom.management.

On.March.30,.2010,.LLC.National.Oil.Consortium.and.Corporation.Venezolana.del.Petroleo.(CVP),.a.subsidiary.of.the.Venezuelan.government-owned.oil.company.(PDVSA),.established.Petro.Miranda.–.a.joint.venture.to.develop.the.Junin-6.heavy-oil.field.in.the.Orinoco.River.basin..NOC.has.paid.the.first.part.of.a.USD.600.million.bonus.to.the.Bolivarian.Republic.of.Venezuela.for.the.right.to.become.a.member.of.the.joint.venture.

On.April.27,.2010,.the.NOC.Board.of.Directors.designated.OJSC.Gazprom.Neft.as.the.Junin-6.leader,.with.responsibility.for.its.technical.implementation,.while.OJSC.TNK-BP.Holding.was.designated.as.its.partner.for.the.organization.and.implementation.of.the.project.

On.February.27,.2012,.drilling.of.the.first.stratigraphic.well.J6-D12.commenced.as.part.of.additional.exploration.work.of.the.Junin-6.block..Oil-wet.core.samples.were.obtained.and.the.analysis.showed.a.highly.accurate.producing.depth.forecast.and.a.45%.increase.in.the.well’s.capacity.

On.May.16,.2012,.the.NOC.Board.of.Directors.approved.the.Early.Production.project,.subject.to.the.Venezuelan.party’s.acceptance.of.the.key.terms.of.the.project.implementation.

On.September.27,.2012,.an.official.event.was.held.in.the.Junin-6.block.to.launch.the.first.horizontal.well.DB1-01.and.discovery.of.the.first.oil.at.the.Junin-6.field.(as.part.of.the.Early.Production.project)..Chief.executives.of.the.Russian.companies.participating.in.NOC.headed.by.I.I..Sechin,.Chairman.of.the.NOC.Board.of.Directors,.and.chief.executives.of.Venezuelan.PDVSA,.headed.by.R..Ramirez,.Minister.of.the.People’s.Power.for.Oil.of.the.Bolivarian.Republic.of.Venezuela,.took.part.in.the.event.

PROJECT CHARACTERISTICS

Pilot.operation.(2012).and.commercial.operation.of.the.field.(in.2015,.once.the.final.investment.decision.has.been.made,.following.the.results.of.the.additional.block.exploration).


.� Ground.and.access.for.the.construction.of.the.stratigraphic.well.completed.

.� 3.stratigraphic.wells.constructed;.core.samples.taken.from.one.of.them..

.� One.multilateral.well.for.horizontal.production.well.borehole.navigation.constructed.

.� 4.horizontal.wells.put.into.operation.(with.an.average.daily.oil.influx.of.about.370.tonnes,.including.one.well.commissioned.in.2012).

.� Transfer.of.project.management.to.OJSC.Oil.Company.Rosneft.still.in.progress..

.� Upgrading.of.infrastructure.and.basic.engineering.upgrading.is.underway.


.� Implement.the.contractual.plan.for.additional.exploration.on.a.step-by-step.basis.(completion.of.the.first.stage.of.exploration).

.� Continue.implementation.of.the.Early.Production.project.

.� Construct.pipelines.as.part.of.the.Early.Production.project.

.� Continue.motor.road.and.bridge.construction.work.

.� Upgrade.block.and.ground.infrastructure.through.basic.engineering.

8%

OJSC Gazprom Neft share

CARACAS

JUNIN-6

The.Junin-6.block.lies.in.the.Bolivarian.Republic.of.Venezuela.in.the.heavy-oil.belt.of.the.Orinoco.River.basin.

PROJECT GEOGRAPHY



CONTENTS

IRAQ (KURDISTAN)

In.August.2012,.Gazprom.Neft.took.part.in.some.new.hydrocarbon.reserve.exploration.and.development.projects.in.Iraq..The.Company.signed.two.production.sharing.agreements.(PSA).with.the.Kurdistan.Government,.covering.the.Garmian.and.Shakal.blocks,.with.a.total.area.of.2,054.km2,.located.in.south-west.Kurdistan..In.February.2013,.a.PSA.for.1,519.km2.of.the.Halabja.block.was.signed.

Gazprom.Neft’s.share.of.the.Garmian.block.is.40%..The.Company.is.expected.to.become.the.block.operator.in.January.01,.2015..In.the.Shakal.and.Halabja.blocks,.with.a.share.of.80%,.the.Company.acts.as.the.project.operator..The.share.of.the.Kurdistan.Regional.Government.in.all.agreements.is.20%.

The.total.payment.to.be.made.by.Gazprom.Neft.to.join.the.projects,.including.compensation.for.historical.costs.incurred,.will.amount.to.some.USD.390.million..The.investments.in.geological.surveys.in.the.three.projects.prior.to.2015,.made.by.Gazprom.Neft,.are.estimated.to.amount.to.at.least.USD.1.billion..The.PSA.model.allows.for.the.compensation.of.costs.incurred.by.the.investor.once.field.production.has.started..

According.to.Gazprom.Neft.estimates,.the.geologic.reserves.at.the.three.blocks.(recalculated.from.resources).amount.to.over.1,300.million.tonnes.(about.9.7.billion.barrels.of.oil)..The.peak.yield.of.at.least.30,000.tonnes.(230,000.barrels).per.day.is.planned.at.the.blocks.for.the.next.eight.years.

At.present,.a.geological.survey.is.still.in.progress..This.is.to.be.completed.no.later.than.2015,.followed.by.the.start.of.production.in.Kurdistan.

40%

OJSC Gazprom Neft ’s share of the Garmian block

80%

OJSC Gazprom Neft ’s share of the Shakal block

80%

OJSC Gazprom Neft ’s share of the Halabja block


.� 277.km2.of.3D-seismic.surveying.at.the.central.part.and.219.km.of.2D-seismic.surveying.at.the.south-east.of.the.Shakal.block.completed;.350.km2.of.geoelectrochemical.and.magnetic.prospecting.surveys.completed..

.� Two.exploration.wells.up.to.600.meters.deep.bored.and.static.hydrocarbon.reserves.discovered.jointly.with.WesternZagros.in.the.Upper.Bakhtiari.deposits.at.the.Garmian.block;.drilling.of.two.more.exploration.wells.–.Hasira-1.and.Baram-1.commenced..In.addition,.100.km.of.2D.and.572.km2.of.3D.seismic.surveying.completed.in.the.northern.and.southern.parts.of.the.block,.as.part.of.the.extensive.exploration.program.


.� According.to.the.2014.exploration.program,.100.km2.of.3D-seismic.surveying.will.be.completed.in.the.north-western.part.of.the.Shakal.block.and.two.exploration.wells.will.be.constructed..

.� Drilling.and.testing.of.two.converted.wells.–.Hasira-1.and.Baram-1,.and.the.construction.of.the.exploration.well,.Qulijan-1,.at.the.Garmian.block.to.be.completed.jointly.with.WesternZagros..Additional.exploration.wells.–.Qula-1.and.Chwar-1.to.be.bored.

.� 1,000.km.of.2D-seismic.survey,.a.geoelectrochemical.prospecting.survey.along.the.seismic.profiles.and.the.start.of.the.preparation.for.drilling.the.first.exploration.well.are.planned.at.the.Halabja.block.

.� Further.development.Gazprom.Neft.in.the.most.promising.oil.and.gas.regions.of.Kurdistan.is.planned.

BAGHDAD

GARMIANHALABJA

SHAKAL

The.south-western.part.of.Kurdistan.in.east.Iraq.

PROJECT GEOGRAPHY




CONTENTS

OIL REFININGAs a vertically integrated company, Gazprom Neft is, inter alia, focused on refining crude oil and producing petroleum products. Gazprom Neft produces a wide range of oil-refining products and petrochemicals. The Company’s main product lines include automotive gasoline, diesel fuel, lube products, construction and road bitumen, marine fuels, boiler fuel (fuel oil), aviation jet fuel, paraffin wax products, and also a whole range of aromatic hydrocarbons, liquefied petroleum gases, and catalysts.

The.Company’s.main.hydrocarbon.production.priority.to.increase.production.efficiency,.improve.the.environmental.performance.of.fuels,.increase.its.refining.depth,.and.expand.its.volumes.and.product.range.(high-octane.gasoline,.diesel.fuels,.aromatic.hydrocarbons,.coke,.modern.bituminous.materials,.and.petrochemicals)..In.addition,.Gazprom.Neft.places.great.emphasis.on.ensuring.the.safety.of.its.production.operations.and.the.protection.of.the.environment.through.its.integrated.industrial,.occupational.and.environmental.safety.management.system.at.the.Company’s.production.facilities.

Since.2009,.OJSC.Gazprom.Neft.has.been.implementing.a.large-scale.refinery.modernization.program,.not.only.to.improve.the.quality.of.its.products,.but.also.to.make.motor.fuels.more.environmentally-friendly.and.minimize.their.environmental.impact..In.2013,.Gazprom.Neft.refineries.switched.over,.ahead.of.the.deadline.set.by.the.Technical.Regulations,.to.the.production.of.Euro.4.and.Euro.5.motor.fuels.

According.to.2013.figures,.the.modernization.and.product.line.optimization.programs.at.the.Company’s.refineries.in.Russia.increased.the.output.of.Euro.4.and.Euro.5.automotive.gasoline.by.52%.and.Euro.4.and.Euro.5.diesel.fuel.by.129%.compared.to.2012.

In.2013,.Gazprom.Neft.maintained.its.leading.position.among.Russian.oil.companies.in.terms.of.refining.output..During.the.reporting.year,.42.63.million.tonnes.of.crude.oil.were.refined.and.40.5.million.tonnes.of.commercial.petroleum.products.were.produced.at.the.Company’s.facilities..

In.2013,.there.was.a.slight.reduction.compared.to.2012.(-1.6%).in.the.total.refining.volume.at.the.Company’s.refineries.due.to.planned.maintenance.at.the.crude.oil.distillation.plants.of.the.Omsk.Refinery.(September-October.2013).and.the.Yaroslavl.Refinery.(March-April.2013),.as.well.as.the.decline.in.refining.volumes.at.the.Mozyr.Refinery.

Gazprom.Neft.currently.owns.five.refining.assets..The.main.assets.are.the.Omsk.and.Moscow.refineries.(where.the.Company.has.a.100%.share.of.refining),.and.YaNOS.(where.the.Company.has.a.50%.share.of.refining)..

Breakdown of Gazprom Neft’s petroleum products output in Russia, million tonnes Crude oil refining by the Company’s refineries, million tonnes

201035.0033.20

6.70 10.60 7.30 1.30 3.502.401.50

201138.1036.10

7.60 10.80 4.607.90 1.602.50

201239.3037.20

8.10 10.30 5.907.70 1.402.60

201338.8036.70

8.30 2.60 6.70 1.70 5.7010.70

Jet fuelFuel oilBitumen

Gasoline, serviceDiesel fuel

Gasoline, automotive

Oil refiningOther

refiningproducts

1.10

1.20

1.00

NIS

YANOS

Moscow Refinery

Belarusian refineriesOmsk Refinery

1.10

2013 42.6320.23 11.08 7.52 2.75

2010 37.9018.98 8.91 7.15 2.85

2011 40.4919.95 10.80 7.39 2.36

2012 43.3420.95 10.67 7.64 2.14 1.94





CONTENTS

38.8 mn t

OJSC Gazprom Neft’s petroleum products output in Russia in 2013

+52%Growth of Euro 4 and Euro 5 automotive gasoline output in 2013

+129%Growth of diesel fuel output in 2013

42.63 mn t

Crude oil refining by the Company’s refineries in 2013

OIL REFINING ASSETS MAP





CONTENTS

PERFORMANCE BY SEGMENT OIL REFINING

OMSK REFINERY

The Omsk refinery is among Russia’s most advanced and the world’s largest refineries. The Omsk refinery’s installed annual capacity is 21.4 million tonnes of crude oil. The Omsk refinery retained its leadership in Russia in 2013 in terms of light petroleum and aromatic hydrocarbon output.

In.2013,.the.Omsk.refinery’s.crude.oil.refining.output.was.20.2.million.tonnes,.including.0.4.million.tonnes.of.gas.condensate.–.the.highest.volume.among.all.Russian.refineries..In.2013,.the.Omsk.refinery’s.primary.crude.oil.refining.capacity.utilization.was.94.51%,.and.refining.depth.was.91.03%..Light.petroleum.products.accounted.for.67.53%.of.output.in.2013.

The.commissioning.of.a.motor.fuel.hydro-skimming.facility.in.2012.enabled.the.refinery.to.increase.significantly.the.output.of.Euro.5.high-octane.gasoline.and.diesel.fuels..Euro.4.gasoline.production.is.being.maintained.at.the.minimum.level.

In.the.reporting.year,.the.output.of.Euro.5.gasoline.increased.to.3.65.million.tonnes,.which.is.2.6.times.higher.than.in.2012,.and.the.output.of.Euro.5.diesel.fuel.was.4.0.million.tonnes...The.Omsk.Refinery.did.not.produce.Euro.5.diesel.fuel.in.2012.

In.2013,.products.from.the.Omsk.refinery.were,.once.again,.named.among.Russia’s.100.Best.Products..Laureate.diplomas.were.awarded.to.the.Premium.Euro-95.Unleaded.Gasoline.(Euro.5).and.Euro.3.Diesel.Fuel..Awards.were.given.to.fuel.for.ship.units.(RMG.380),.polymer-viscosity.graded.bitumen.PBV-90,.aviation.jet.fuel.TC.1.(premium.grade),.and.oil.paraxylene.of.the.maximum.purity.

91.03%Refining depth at the Omsk Refinery in 2013



CONTENTS

MAIN PRODUCTS:

.� Automotive.gasoline

.� Diesel.fuel

.� Construction.and.road.bitumen

.� Marine.fuel

.� Boiler.fuel.(fuel.oil)

.� Aviation.jet.fuel

.� Aromatic.hydrocarbons

.� Liquefied.hydrocarbon.gases

.� Various.lube.oils

.� Catalysts

2010 2011 2012 2013


Oil refiningGasoline, serviceDiesel fuel

Gasoline, automotive Lube oilsCokeOther

20.2019.10

20.9019.7019.90

18.8019.0017.90

– refining– products

4.604.70

0.60

5.70

1.50

2.00

0.60

6.30

1.50

1.50

3.200.20

0.30

0.40

0.20

0.30

0.40

0.20

0.30

0.50

0.40

0.20

0.30

0.40

4.30

4.10

6.10

1.40

2.80

3.10

3.60

1.00

6.00

1.40

2.80

2.20

Oil refining and petroleum products output at the Omsk Refinery, million tonnes


21.4 mn t per annum

Installed capacity of the Omsk Refinery

19.1 mn t

Petroleum products output at the Omsk Refinery in 2013

20.2 mn t

Oil refining at the Omsk Refinery in 2013

In.just.a.few.years,.a.new.plant.has.been.constructed.in.Omsk.Today,.Omsk.Refinery.is.one.of.the.most.advanced.oil.refineries.in.Russia..The.development.and.construction.of.such.high-tech.facilities.help.Gazprom.Neft.meet.its.strategic.goal.of.providing.high.quality.fuel.to.Russian.consumers.in.a.more.efficient.way..Today,.all.Gazprom.Neft.refineries.have.moved.towards.producing.world.class,.greener.fuels.ahead.of.the.Technical.Regulations.requirements.

Anatoly.Cherner.Deputy.CEO.for.Logistics,.Refining.and.Sales,.

OJSC.Gazprom.Neft




CONTENTS


MOSCOW REFINERY

The Moscow refinery is a leader in the production of high-octane gasoline and diesel fuels, and supplies about 40% of the demand for petroleum products in the city of Moscow and the surrounding region. The Moscow refinery’s installed annual capacity is 12.15 million tonnes of crude oil.

In.2013,.refining.output.was.11.08.million.tonnes.of.oil,.a.year-on-year.increase.of.3.8%.and.a.record.result..The.primary.refining.capacity.utilization.at.the.Moscow.refinery.in.the.reporting.year.was.91.18%..Crude.oil.refining.depth.was.72.26%.

During.the.reporting.year,.light.petroleum.products.accounted.for.55.71%.of.the.total.output.at.the.Moscow.refinery,.or.6.2.million.tonnes,.of.which.high-octane.gasoline.amounted.to.2.3.million.tonnes,.a.year-on-year.increase.of.9.6%..Aviation.fuel.output.increased.by.6.5%.to.657.9.thousand.tonnes..Bitumen.production.reached.a.record.level.of.1.07.million.tonnes,.a.year-on-year.increase.of.48.3%.

In.2013,.the.Moscow.refinery.completed.the.first.stage.of.its.upgrade.program,.which.enabled.the.factory.to.switch.over.fully.to.the.production.of.Euro.5.high-octane.automotive.gasoline.and.to.start.the.production.of.Euro.5.diesel.fuel..In.the.reporting.year,.the.output.of.Euro.5.gasoline.at.the.Moscow.Refinery.amounted.to.1.4.million.tonnes.and.the.output.of.Euro.5.diesel.fuel.was.1.2.million.tonnes..The.Moscow.Refinery.did.not.produce.Euro.5.gasoline.or.diesel.fuels.in.2012.

Based.on.2013.figures,.the.World.Refining.Association.named.the.Moscow.Refinery.the.best.refining.facility.in.the.CIS..The.Moscow.Refinery.also.received.an.environmental.award.from.the.Moscow.Government.in.the.category.“Best.project.implemented.with.the.use.of.green.and.energy.efficient.technologies.”

72.26%Refining depth at the Moscow Refinery in 2013

MOSCOW REFINERY SWITCHES TO EURO-5 FUEL PRODUCTION


http://www.gazprom-neft.com/press-center/media/?watch=1095231


CONTENTS

12.15 mn t per annum

Installed capacity of the Moscow Refinery

10.54 mn t

Petroleum products output at the Moscow Refinery in 2013

11.08 mn t

Oil refining at the Moscow Refinery in 2013

MAIN PRODUCTS:

.� Automotive.gasoline

.� Diesel.fuel

.� Jet.fuel

.� Marine.fuel

.� Liquefied.petroleum.gases

.� Road.bitumen

2010 2011 2012 2013

Jet fuelFuel oilFuel oil

Oil refiningOther



11.0810.5410.70

10.30

10.8010.30

8.908.50


2.50

2.10

0.70

2.90

1.10

1.10

0.20

2.20

0.60

3.30

0.70

0.50

0.30

2.50

0.60

2.80

1.00

0.60

0.30

2.70

2.40

2.20

0.50

0.70

0.50

0.20

2.00

2.40

Oil refining and petroleum products output at the Moscow Refinery, million tonnes


Completing.the.first.stage.of.the.Moscow.Refinery’s.modernization.plan.is.a.real.milestone.for.Gazprom.Neft..Now.all.of.the.Company’s.refining.assets.have.switched.to.Euro.5.standard.fuel.production,.2.5.years.ahead.of.statutory.requirements..The.refinery.will.supply.Moscow.and.Central.Russia.with.better.quality.gasoline.and.diesel.which.meet.European.standards..This.will.significantly.contribute.to.the.reduction.of.harmful.emissions.and.have.a.positive.effect.on.the.environment..The.next.stage.in.the.modernization.of.the.Moscow.Refinery.is.aimed.at.increasing.both.its.throughput.and.supply.of.high-quality.fuels.to.the.Moscow.market.

Alexander.Dyukov.CEO,.OJSC.Gazprom.Neft




CONTENTS


NIS REFINING FACILITY

The NIS refining facility consists of two refineries located in Panchevo and Novi Sad. The maximum capacity of the refineries is 7.3 million tonnes of crude oil per year.

The.NIS.refineries.refined.a.total.of.2.747.million.tonnes.of.crude.oil.in.2013;.in.addition,.137,400.tonnes.of.other.hydrocarbons.were.refined.

An.upgrade.program,.implemented.at.the.NIS.refinery.in.Panchevo,.included.the.commissioning.of.a.mild.hydrocracking/diesel.hydrotreatment.(MHC/DHT).facility,.a.hydrogen.generation.unit,.and.a.black.sulphuric.acid.regeneration.unit.in.November.2012..The.construction.of.this.facility.made.it.possible.to.switch.production.over.to.high-octane.gasoline.and.diesel.fuels.that.meet.Euro.5.standards.and.to.increase.the.share.of.medium.distillates.in.the.product.portfolio.

Despite.the.fact.that.the.Novi-Sad.refinery.is.currently.under.reconstruction,.the.Panchevo.plant’s.capacity.has.enabled.NIS.not.only.to.cover.all.local.demand.within.the.Serbian.market,.but.also.to.export.fuels.to.Balkan.countries..NIS.exports.motor.fuels,.benzene,.toluene,.and.road.and.polymer-modified.bitumen.to.Germany,.Belgium,.Italy,.Croatia,.Bulgaria,.Romania,.Macedonia,.Bosnia-Herzegovina.and.Ukraine.

2.75 mn t

Oil refining at NIS in 2013



CONTENTS

7.31 mn t per annum

Installed capacity of NIS

2.84 mn t

Petroleum products output at NIS in 2013

MAIN PRODUCTS:

.� Euro.Premium.motor.gasoline

.� B-7.biodiesel;.Euro.diesel.that.meets.Euro.5.standards

.� Aviation.jet.fuel

.� Automotive.liquefied.gas

.� Diesel.fuel.with.0.1%.sulphur.content.(government.standard.for.military..and.agricultural.equipment)

.� Furnace.fuel

.� Lubricants

.� Road.bitumen

.� Polymer-modified.bitumen

2010 2011 2012 20131


Oil refiningOther



2.702.80

2.102.00

2.402.40

2.902.50 – refining

– products

0.400.400.50

0.60

0.90

0.50

0.20

0.20

0.70

0.40

0.20

0.30

0.60

0.40

0.20

0.20

0.40

1.10

0.40

0.20

0.20

0.10

0.10

0.10

0.10

0.10

0.10

0.10

Oil refining and petroleum products output at NIS, million tonnes


We.have.completed.the.business.stabilization.process.and.now.we.are.confident.in.our.readiness.to.commence.implementing.the.Company’s.development.strategy..In.many.respects,.NIS.is.already.the.No..1.company.in.the.region,.but.we.do.still.need.to.scale.up..The.shareholders.have.set.us.the.task.of.transforming.NIS,.a.national.oil.and.gas.company,.into.a.full-fledged.international.vertically.integrated.energy.holding,.active.across.all.business.sectors..The.NIS’.2020.development.strategy.envisages.increasing.the.company’s.annual.production.to.at.least.five.million.tonnes.of.oil.and.gas.per.year.(in.oil.equivalent),.refining.–.to.five.million.tonnes.of.oil,.and.sales.–.to.five.million.tonnes.of.petroleum.products..In.other.words,.we.need.to.ensure.we.have.the.greatest.resource.base.possible.

Kirill.Kravchenko.CEO,.NIS.a.d..Novy.Sad

1. In.addition.to.oil,.the.production.of.petroleum.products.uses.natural.gas,.VGO,.and.semi-finished.products.




CONTENTS


OIL REFINING AT THIRD-PARTY REFINERIES

In addition to its own petroleum refining capacity, Gazprom Neft has access to refining capacity at the Yaroslavl refinery (YaNOS) and the Mozyr refinery in the Republic of Belarus.

OJSC SLAVNEFT-YAROSLAVNEFTEORGSINTEZ

As.a.shareholder.of.OJSC.Slavneft.Oil.and.Gas.Company,.Gazprom.Neft.has.a.proportional.share.of.the.refining.capacity.of.OJSC.Slavneft-Yaroslavnefteorgsintez..OJSC.Slavneft-Yaroslavnefteorgsintez.(YaNOS).produces.fuel.and.lubricants.using.a.deep.crude.oil.refining.system,.which.ranks.fifth.among.Russian.refineries.in.terms.of.primary.processing.volumes..The.refinery’s.installed.annual.capacity.is.15.0.million.tonnes.of.crude.oil.

YaNOS’.main.products.are.Euro.5.high-octane.automotive.gasoline.and.diesel.fuels,.aviation.jet.fuels,.aromatic.hydrocarbons,.bitumen,.oils,.and.paraffin.wax.products..

After.a.diesel.hydrotreatment.unit.was.put.into.operation.in.the.beginning.of.2013,.the.plant.switched.over.to.the.production.of.Euro.5.diesel.fuels.and.discontinued.its.production.of.domestic.furnace.fuel.

In.2013,.primary.refining.by.YaNOS.was.15.0.million.tonnes.and.Gazprom.Neft’s.share.was.7.5.million.tonnes.(50%)..Refining.depth.was.65.86%.in.2013,.and.light.petroleum.products.made.up.55.77%.of.total.output.

MOZYR REFINERY

The.Mozyr.Refinery.is.located.in.the.south.of.the.Republic.of.Belarus.near.the.Ukrainian.border..The.refinery’s.installed.annual.primary.refining.capacity.is.12.031.million.tonnes.of.crude.oil.

The.main.product.lines.of.the.plant.are.automotive.gasoline,.including.high-octane.A-92,.A-95.(Euro.4,.Euro.5),.lighting.kerosene,.diesel.fuel.(Euro.5),.etc..The.Mozyr.Refinery.refined.a.total.of.11.054.million.tonnes.of.oil.stock.in.2013.(11.0.million.tonnes.of.oil.and.53,400.tonnes.of.raw.hydrocarbons)..Refining.depth.was.71.31%.

The.Company.refines.oil.at.the.Mozyr.Refinery.through.its.subsidiary,.FLLC.Gazpromneft-Belnefteprodukt..The.light.oil.products.output.is.marketed.through.its.own.sales.network.and.exported.to.Ukraine.and.Poland;.fuel.oil.is.delivered.to.Baltic.ports.for.transhipment..In.2013,.Belnefteprodukt.refined.1.05.million.tonnes.of.oil.at.the.Mozyr.Refinery.



CONTENTS

2012 2013

Fuel oilBitumen Crude oil refining at primary capacitiesDiesel fuel


1.101.00

1.701.50

Other


0.200.40

0.50

0.60

0.40

0.40

0.005

0.30

0.016

2010 2011 2012 2013

Jet fuelFurnace fuelFuel oil

Oil refiningGasoline, serviceDiesel fuel


7.507.10

7.607.20

7.407.00

7.206.80

Other

BitumenOils


1.20

2.20

0.40

2.40

0.20

1.20

2.00

0.40

2.40

0.20

0.30

1.201.20

2.002.10

0.400.40

2.302.30

0.300.30

0.20

0.20

0.10

0.20

0.20

0.10

0.20

0.20

0.10

0.20

0.20

0.10

0.20

Oil refining and petroleum products output at Belarusian refineries, million tonnes

Gazprom Neft’s oil refining and petroleum products output at Yaroslavnefteorgsintez, million tonnes



1.0 mn t

Petroleum products output at Belarusian refineries in 2013

7.07 mn t

Petroleum products output at Yaroslavnefteorgsintez in 2013

71.31%Refining depth at Belarusian refineries in 2013

65.85%Refining depth at Yaroslavnefteorgsintez in 2013

1.1 mn t

Oil refining at Belarusian refineries in 2013

7.52 mn t

Oil refining at Yaroslavnefteorgsintez in 2013




CONTENTS



In 2013, in its petroleum product sales segment, the Company completed a phase of activity to expand the scale of its business and build a strong brand name. Another priority will be to achieve organic growth through improved operational efficiency. The Company plans to be among the leaders in Russia and CIS in terms of retail sales and filling station chain efficiency by 2025.

2012

High-octane

gasoline

Low-octane

gasoline

Naphtha Dieselfuel

Fuel oil Aviationjet fuel

Marine fuel

Other

7.71

7.38

1.91

2.65

2.12

0.37 0

3.01

25.15

2013

High-octane

gasoline

Low-octane

gasoline

Naphtha Dieselfuel


Marinefuel

Other

8.06

7.16

1.66

2.83

2.45

0.20 0.02

3.46

25.84

91


Low-octane gasoline

Naphtha

High-octane gasoline

5,526

305

241,733

9,147

–

214,569

2013 2012

Diesel fuel

Fuel oil

Aviation jet fuel

19,168

68,808

200,883

21,000

62,019

183,501

2013 2012

49,958

630,359

43,978

42,880

572,082

38,966

2013 2012

Marine fuel

RUB mn

Other

TOTAL

DOMESTIC SALES OF PETROLEUM PRODUCTS mn.t

Gazprom.Neft.owns.one.of.the.most.developed.sales.networks.in.Russia..In.2013,.the.Company.further.reinforced.its.position.in.the.retail.petroleum.market.when.it.became.the.largest.supplier.of.light.petroleum.products.in.the.regions.where.it.operates,.with.a.21%.share..The.Company.sells.petroleum.products.in.Russia.and.CIS.countries.mainly.through.its.15.subsidiaries.(15.petroleum.product.suppliers)..These.subsidiaries.and.affiliates.specialize.in.large-.and.small-scale.wholesale.through.tank.farms,.and.retail.marketing.through.a.chain.of.filling.stations.

At.the.end.of.2013,.the.Company’s.petroleum.product.supply.entities.operated.60.owned.and.leased.tank.farms..7.6.million.tonnes.of.petroleum.products.were.sold.through.tank.farms.in.2013.and.tank.farm.turnover.amounted.to.14.1.units..Petroleum.products.sales.volumes.through.large-scale.wholesale.was.0.9.million.tonnes.in.2013..

Petroleum.product.sales.on.the.Russian.domestic.market.through.filling.stations.and.tank.farms.in.2013.increased.by.2%.year-on-year.to.14.5.million.tonnes..



CONTENTS

25.84 mn t

Gazprom Neft Group’s domestic sales of petroleum products in 2013

630.4 RUB bn

Cost of petroleum products sold on the domestic market in 2013

21%Gazprom Neft’s share of light petroleum products on the Russian market in 2013

7.6 mn t

Petroleum products sold through tank farms




CONTENTS

PERFORMANCE BY SEGMENT SALES OF PETROLEUM PRODUCTS

RETAIL SALES

The Gazprom Neft filling station chain operates in 26 Russian regions, as well as in CIS and Eastern Europe countries. By the end of 2013, 1,339 of the Company’s filling stations were operating in Russia and CIS, 74 units more than at the end of the previous year.

In.2013,.8.4.million.tonnes.of.petroleum.products.were.sold.through.the.Company’s.filling.stations.(+13%.compared.to.2012)..Average.petroleum.product.sales.per.filling.station.in.Russia.increased.by.7.8%.to.19.0.tonnes.per.day.in.2013.

In.2013,.sales.of.petroleum.products.through.Russian.filling.stations.grew.by.11%.to.7.3.million.tonnes..Sales.of.gasoline.rose.by.9%.to.4.4.million.tonnes.and.diesel.fuel..by.14%.to.2.8.million.tonnes.

Revenues.from.sales.of.associated.goods.and.services.at.the.filling.stations.were.RUB.10.6.bn.in.2013,.a.year-on-year.increase.of.44%.

The.Company.was.the.first.in.the.Russian.oil.and.gas.industry.to.initiate.and.start.remodelling.its.regional.sales.network.in.order.to.improve.business.efficiency.and.implement.legislative.changes..This.project.will.involve.the.reorganization.of.the.nine.existing.regional.petroleum.product.suppliers.into.eight.specialized.entities.covering.a.specific.business.line..As.a.result,.each.business.will.have.separate.financial.results,.performance.indicators.and.will.be.an.independent.profit.center..The.project’s.main.development.in.2013.was.the.start.of.operations.by.LLC.Gazprom.Neft.–.Regional.Sales.and.OJSC.GPN.–Transport;.LLC.Gazprom.Neft.–.Corporate.Sales.also.started.operating.

RETAIL SALES ON OPERATIONS MAP




CONTENTS

One.of.the.most.effective.tools.used.to.increase.sales.volumes.and.brand.confidence.is.a.federal-wide.loyalty.program.for.individuals.called.Going.the.Same.Way,.which.was.launched.by.the.Company.in.2010.

The.program.is.currently.run.in.all.regions.of.Russia.and.CIS.(Republic.of.Belarus).where.Gazprom.Neft.filling.stations.operate..Since.the.loyalty.program.was.launched,.over.4.3.million.customers.have.joined.it..The.share.of.Going.the.Same.Way.sales.account.for.over.70%.(almost.90%.in.a.number.of.regions)..In.CIS,.the.Going.the.Same.Way.loyalty.program.is.the.largest.fuel.loyalty.program.among.VIOCs.by.membership.level.in.the.regions.where.Gazprom.Neft.filling.stations.are.located.

1,339 filling stations

Number of the Company’s filling stations in Russia and CIS at year-end 2013

1,111 filling stations

Number of the Company’s filling stations in Russia

228 filling stations

Number of the Company’s filling stations in CIS


Number of the Company’s filling stations in Eastern Europe

8.4 mn t

Petroleum products sold through filling stations in Russia and CIS in 2013

19 t per day

Average daily sales per filling station in Russia and CIS in 20131

Gazprom Neft’s filling station chain expansion in 2013

Filling station chain key indicators

Average daily sales per filling station in Russia, tonnes per dayEastern Europe

CIS

Russia

2013 1,7471,111 228 408

2012 1,6091,060 205 344

2011 1,6701,043 202 425

2010 1,596947 121 468 10.3

14.2

17.6

19.0


1..Best.performance.among.all.Russian.oil.companies.




CONTENTS


At.the.end.of.2013,.a.joint.project.between.Gazprom.Neft.and.Gazprombank.(OJSC).was.launched.for.customers.holding.Gazprombank-Gazprom.Neft.cards,.which.provides.additional.rewards.under.the.Going.the.Same.Way.loyalty.program,.when.customers.use.the.card.to.make.other.purchases.(e.g..services,.repairs)..The.project.is.not.only.raising.the.profile.of.the.loyalty.program.among.existing.and.new.customers.but.also.increasing.sales.

PREMIUM-CLASS GASOLINES

In.the.reporting.year,.Gazprom.Neft.continued.to.implement.its.premium.branded.fuel.sales.programs.at.its.own.filling.stations..380,000.tonnes.of.G-Drive.95.premium.fuel.was.sold.in.2013..At.year-end.2013,.808.Gazprom.Neft.filling.stations.were.selling.this.type.of.fuel..G-Drive.95’s.share.of.Ai-95.sales.to.individuals.in.filling.stations.selling.branded.fuel.was.30%.as.of.December.2013..G-Drive.95’s.share.of.total.Аi-95.fuel.sales.to.individuals.was.25%..The.Company.also.started.selling.G-Drive.95.motor.fuel.in.Kazakhstan,.Tajikistan.and.Belarus.in.2013.

In.February.2013,.the.Company’s.filling.stations.started.selling.G-Drive.98.premium.motor.fuel..12,000.tonnes.of.this.fuel.type.were.sold.in.2013.and.by.the.year.end,.320.of.the.Company’s.filling.stations.were.promoting.G-Drive.98.fuel.

REBRANDING OF FILLING STATION CHAIN

Developing.retail.petroleum.products.is.a.key.business.line.for.the.Company..Having.its.own.highly.recognizable.and.trusted.nationwide.brand.is.instrumental.in.achieving.one.of.the.Company’s.strategic.goals.–.to.become.the.market.leader.in.petroleum.products.in.Russia.and.CIS.in.terms.of.retail.sales.and.filling.station.network.efficiency.by.2025.


Constructed


Reconstructed and rebranded


Rebranded

Within five years (from 2009 to 2013)

2010 2011 2012 2013

Unbranded filling stations

Temporary brand

Construction

Reconstruction and rebranding

Rebranding

1,3541,304

1,250

1,024

428507 562 568

99

341

119

163

255365

57

345

178

95

367

121

292

37

258




CONTENTS

GAS MOTOR FUELS (LPG, CNG)

Increasing.attention.has.recently.been.placed.on.environmentally-friendly.and.cost.efficient.transportation..These.are.key.criteria.for.urban.public.and.commercial.transport,.making.these.segments.of.the.transportation.market.a.natural.starting.point.to.showcase.the.large-scale.use.of.natural.gas.fuel..In.line.with.this.approach,.Gazprom.Neft.is.placing.particular.emphasis.on.increasing.its.sales.of.the.two.main.gas.motor.fuels,.liquefied.petroleum.gas.(LPG).and.compressed.natural.gas.(CNG).

LPG.and.CNG.represent.less.than.3%.of.total.motor.fuel.sales.in.Russia..LPG.has.proved.more.popular.as.a.motor.fuel,.accounting.for.2.4%.of.total.fuel.consumption..The.share.of.CNG.is.only.0.4%.

In.2013,.out.of.all.multi-fuel.filling.facilities.176.gas.filling.stations.were.branded.Gazpromneft..Respective.sales.of.LPG.and.CNG.in.2013.were.94,000.tonnes.(a.year-on-year.increase.of.1.0%).and.9,000.tonnes.(a.year-on-year.increase.of.10.7%)..


LPG sales, 2012–2013

2012 101

2013 103 176

121

Number of filling stations (LPG and CNG sales), unitsSales, 000’t




CONTENTS


COMMODITY EXCHANGE SALES

In 2013, Gazprom Neft continued to take part in the trading of petroleum products on the Russian commodity markets as a mechanism to ensure fair and transparent pricing, as well as to improve sales of petroleum products.

Gazprom.Neft.is.a.co-founder.of.CJSC.St..Petersburg.International.Mercantile.Exchange.(SPIMEX).and.has.traded.petroleum.products.regularly.on.this.platform.since.November.2009.

In.2013,.the.Company.sold.over.2.29.million.tonnes.of.exchange-traded.petroleum.products.,.a.year-on-year.increase.of.10%..The.total.exchange-traded.sales.of.the.Company.in.2013.were.10.2%.of.the.petroleum.product.output.(in.2012.–.7.5%).

The.change.in.the.share.of.exchange-traded.sales.in.2013.was.due.to.the.specification.and.formalization.of.regulators’.requirements.for.exchange.trading,.as.a.result.of.the.Joint.Decree.of.the.Russian.FAS.and.Ministry.of.Energy,.which.came.into.effect.on.June.16,.2013..

At.year-end.2013,.the.Company.was.ranked.second.among.Russian.VIOCs.in.terms.of.volume.of.exchange-traded.sales.of.petroleum.products.(in.2012.it.was.ranked.first).due.to.market.changes.in.2013.connected.with.the.acquisition.of.TNK-BP.by.Oil.Company.Rosneft.

In.the.reporting.year,.the.Company.also.started.trading.oil.on.the.exchange;.100,000.tonnes.of.crude.oil.were.purchased.in.the.Oil.Section.of.the.SPIMEX.

In.2013,.the.Company.adopted.the.new.terms.of.the.SPIMEX.General.Exchange,.which.includes.the.requirement.to.exchange.commodities.with.exchange.trading.organizations.at.balance.sites.and.the.specification.of.exchange.commodities.produced.outside.Russia,.in.Customs.Union.states.

In.2013,.according.to.the.regulators’.requirements,.the.Company.registered.over.16,600.off-exchange.transactions,.the.equivalent.of.12%.of.the.total.number.of.off-exchange.transactions.registered.by.the.SPIMEX..Following.the.amendments.to.the.law,.the.Company.upgraded.its.automated.off-exchange.transaction.registration.system.and.started.registering.petroleum.product.export.transactions..Gazprom.Neft.was.the.first.company.in.the.Russian.market.to.register.crude.oil.transactions.on.the.SPIMEX.in.June.2013..

The.Company.carries.out.its.exchange.activities.in.accordance.with.the.requirements.of.the.Joint.Decree.of.the.Russian.FAS.and.Ministry.of.Energy.that.took.effect.in.June.2013,.and.the.applicable.instructions.and.explications.of.the.FAS.of.Russia.and.provisions.of.the.Company’s.Trading.Practices.approved.by.the.FAS.



CONTENTS

2.3 mn tCompany’s exchange-traded sales in 2013

10.2%Share of exchange-traded sales versus total output of petroleum products in 2013

Breakdown of petroleum product exchange-traded sales in 2012-2013, thousand tonnes

20122013

Aviationkerosene

295

164

Furnacefuel oils

466

605

Dieselfuel

680

879

Automotivegasoline

850

441


Company’s petroleum product exchange-traded sales, 2013

jan feb mar apr may jun jul aug sep oct dec

As required by Joint Order FAS/ME, 000’tActual sales,000’t Compliance %

AVIATION KEROSENE

nov

14 18 23 1439 38

31 28 19 18 22 22

7.75%9.62%

12.69% 11.60%

13.94% 14.37%

10.69%10.04% 10.14% 10.55% 10.52% 11.39%

FURNACE FUEL OIL

38 4832

4827 17

34 31 2858 45

61

6.72% 7.59%5.32%

9.42%

4.12%3.15%

6.39% 5.98%6.63%

12.36%

6.99% 9.20%

DIESEL FUEL

49 51 5942 43 36

71 70 64 65 68 63

5.19% 5.57%6.94% 6.56%

4.37% 3.76%

7.30% 7.10%

8.82%7.93%

7.22% 6.96%

AUTOMOTIVE GASOLINE

39 5286 67 51 64 73 82

5482 98 102

5.49%

7.98%

11.89% 10.81%

7.20%9.25% 9.98% 10.98% 9.74%

12.49% 12.90%

14.92%

6.4%Share of average annual exchange-traded sales of total output, the requirement being 5%







CONTENTS

EXPORTS OF CRUDE OIL & PETROLEUM PRODUCTS


Low-octane gasoline

Naphtha


6,060

34,166

7,855

5,585

33,809

9,827

2013 2012

Diesel fuel

Fuel oil

Aviation jet fuel

125,195

10,003

142,134

129,435

7,545

117,812

2013 2012

13,319

352,990

14,258

17,994

349,049

27,042

2013 2012

Marine fuel

RUB mn

Other

TOTAL

2013

High-octane

gasoline

Low-octane

gasoline

Naphtha Dieselfuel


Marinefuel

Other

0.27

4.80

0.320.57

0.22

0.5214.61

1.20

2012

High-octane

gasoline

Low-octane

gasoline

Naphtha Dieselfuel


Marinefuel

Other

0.32

3.93

0.22 1.00

0.20 1.19

0.6114.13

6.66 6.71

EXPORT SALES OF PETROLEUM PRODUCTS mn.t

In.2013,.Gazprom.Neft.Group.exported.16.82.million.tonnes.of.petroleum.products,.including.14.61.million.tonnes.to.non-CIS.countries.and.2.21.million.tonnes.to.CIS.countries..Exports.to.non-CIS.countries.grew.by.3.40%.compared.with.2012..The.increase.in.export.sales.of.petroleum.product.was.due.to.the.expansion.into.new.markets.and.an.increased.volume.of.trade..

Exports.to.CIS.countries.fell.by.5.96%.compared.to.2012..Overall.growth.in.petroleum.product.exports.during.the.reporting.year.was.2.06%.

+3.4%Growth in petroleum product exports to non-CIS countries in 2013




CONTENTS


Low-octane gasoline

Naphtha


4,314

–

20,863

4 785

1,012

18,928

2013 2012

Diesel fuel

Fuel oil 2,541

17,267

2,842

14,346

2013 2012

5,419

58,309

8,190

59,177

2013 2012

RUB mn

Other

TOTAL

Aviation jet fuel 7,905 9,074

2013

High-octane

gasoline

Low-octane

gasoline

Naphtha Dieselfuel


Other

0.72

0.63

0.22

0.20

0.18

0.26

2.21

0

2012

High-octane

gasoline

Low-octane

gasoline

Naphtha Dieselfuel


Other

0.65

0.54

0.23

0.23

0.19

0.06

0.45

2.35

SALES OF PETROLEUM PRODUCTS TO CIS mn.t

In.the.reporting.year,.crude.oil.exports.by.Gazprom.Neft.Group.reached.12.34.million.tonnes.in.absolute.terms,.which.was.4.3.million.tonnes.lower.than.in.2012..Crude.oil.exports.to.non-CIS.countries.dropped.by.41.29%.in.the.reporting.year.compared.with.2012,.due.to.the.redistribution.of.oil.exports.in.favour.of.CIS.countries.

Crude.oil.exports.to.CIS.countries.were.4.05.million.tonnes,.62%.more.than.in.2012.62%

Growth in oil exports to CIS in 2013




CONTENTS

Crude oil exports to non-CIS and CIS countries, 2010-2013, million tonnes

CISNon-CIS countries

2013 12.348.29 4.05

2012 16.6914.19 2.5

2011 16.0713.08 2.99

2010 18.88*15.94 3.02


*.Including.SE.

Petroleum product exports to non-CIS and CIS countries, 2010-2013, million tonnes

CISNon-CIS countries

2013 16.8214.61 2.21

2012 16.4413.54 2.90

2011 14.5911.83 2.76

2010 14.2312.07 2.16


Breakdown of crude oil exports from Russia by types of transportation, million tonnes

2013 12.34

2012 11.9513.54

2011 12.7511.83 2.76

2010 15.4312.07 2.16

PrimorskNovorossiyskTuapse

East Siberia-PacificBaltic Pipeline System-2

Druzhba

SE Morskoy NovorossiyskUst-Luga





CONTENTS

GAZPROM NEFT TRADING GMBH

Oil and petroleum products are exported to non-CIS countries through Gazprom Neft Trading GmbH, Austria, a trading subsidiary of the Group that supplies oil and petroleum products manufactured by the Company to end consumers outside Russia. The establishment of a trading subdivision for the centralized export of products is in line with common practice, used by the majority of the largest international vertically integrated companies (BP, SHELL, ExxonMobil, TOTAL, ENI, etc.) and national oil companies (Petro China, Aramco, Kuwait Petroleum, etc.)

The.Company.has.identified.the.following.advantages.of.channelling.crude.oil.and.petroleum.product.exports.through.Gazprom.Neft.Trading.GmbH:1. .Geographical.proximity.to.the.main.international.oil.trading.centers,.lower.

administrative.costs.in.customer.negotiations,.less.paperwork.and.faster.decision.making.

2. The.successful.operational.track.record.of.Gazprom.Neft.Trading.GmbH.in.the.global.oil.and.petroleum.products.markets.enables.Gazprom.Neft.to.make.the.most.of.opportunities.when.implementing.large.Russian.and.international.production.projects.(Arctic,.Middle.East).and.refining.projects.(Vietnam.and.Germany.refineries).

3. The.employment.of.both.Russian.and.foreign.experts.with.experience.in.international.companies.and.a.deep.knowledge.of.global.energy.markets.is.a.competitive.advantage.for.Gazprom.Neft.Trading,.enabling.it.to.export.the.Company’s.oil.and.petroleum.products.to.international.markets.efficiently.

4. Located.in.the.European.Union,.Gazprom.Neft.Trading.can.develop.relations.with.end.consumers.in.the.main.target.market.more.efficiently.

5. Ability.to.make.faster.agreements.with.contractors.without.the.need.for.currency.regulation.and.control.procedures.as.required.in.Russia.

6. More.flexible.access.to.hedging.operations.through.leading.international.commodity.exchanges.(ICE,.NYMEX).and.off-exchange.contractors.

7. Quicker.chartering.of.oil.and.petroleum.product.tanker.tonnage.8. Favourable.terms.of.cooperation.with.leading.international.banks:.ING,.BNP.

Paribas,.RBI,.and.Credit.Agricole,.owing.to.the.trading.subsidiary’s.long-term.record.in.the.EU.zone.

9. Minimized.risks.for.the.non-submission.of.documentation.required.by.Russian.law.to.confirm.VAT.zero.rate.for.petroleum.product.exports,.and.lower.administration.costs.

In.2013,.Gazprom.Neft.Trading.GmbH.sold.9.62.million.tonnes.of.oil.and.13.17.million.tonnes.of.petroleum.products.abroad,.including.12.87.million.tonnes.to.non-CIS.countries.and.0.30.million.tonnes.to.CIS.countries..Exports.to.non-CIS.countries.grew.by.3.5%.versus.2012..Petroleum.product.exports.to.CIS.countries.decreased.by.16.9%.compared.with.2012.

KEY STRATEGIC TARGETS OF GAZPROM NEFT TRADING GMBH:.� Efficient.growth.in.foreign.markets.through.the.creation.and.promotion.of.oil.and.petroleum.products.across.the.whole.value.chain..The.main.target.area.is.the.promotion.of.wholesales.of.low.sulphur.diesel.fuel.in.Germany,.France.and.Austria.(in.2013.they.amounted.to.1.3.million.tonnes),.as.well.as.direct.oil.supplies.to.European.and.Asia-Pacific.refineries.

.� Generation.of.profit.from.foreign.activities,.subject.to.acceptable.risk.levels.and.taking.into.account.the.Company’s.long-term.interests.

.� Company.integration.through.efficient.supplies.to.the.Group’s.subsidiaries.abroad.

Crude oil exports by Gazprom Neft Trading GmbH to non-CIS countries, million tonnes

2013

2012

2011

2010

9.62

15.14

14.21

17.06


Petroleum product sales by Gazprom Neft Trading GmbH, million tonnes

2013 13.17

2012 12.80

2011 11.5410.87 0.67

2010 9.629.26

12.87

12.44

0.36

0.30

0.36

CIS countriesNon-CIS countries Source:.Company.data




CONTENTSCONTENTS

102 GAZPROM NEFT 2013.ANNUAL.REPORT 103www.gazprom-neft.com

READMORE

PREMIUM BUSINESS SEGMENTS:.

STRENGTHENING SALES OF HIGH-MARGIN PRODUCTS





CONTENTS

PREMIUM BUSINESS SEGMENTS

In order to sell petroleum products more efficiently, Gazprom Neft identified separate business segments, including the sales of jet fuel, lubricants, bitumen materials, petrochemicals and ship bunkering. Individual strategic development plans were developed by the Company for each segment. The main objectives for each business segment is to increase sales efficiency, widen the geographical area of business, and increase market share in the premium segments.

2012

Jet fuel Marine fuel Oils and lubricants Bitumen Petrochemicals

2.07

1.45

0.62

2.89

0.15

3.017.18

2013

Jet fuel Marine fuel Oils and lubricants Bitumen Petrochemicals

2.39

1.80

0.66

3.22

0.17

8.24

Источник: данные Компании

Судовое топливо

Авиационное топливо

?? ???

??? ???

?? ???

??? ???

2013 2012

Масла и смазки

Битум ?? ???

??? ???

?? ???

??? ???

2013 2012

? ??? ???

? ???

? ??? ???

? ???

2013 2012

Нефтехимия

млн руб.

ИТОГО:

SALES VOLUMES THROUGH PREMIUM CHANNELS mn.t





CONTENTS

+11.4%Growth in sales of marine fuel in 2013

+15.5%Growth in sales of jet fuel in 2013

+13.3%Growth in sales of premium lubricants in 2013

+24.1%Growth in sales of premium bitumen products in 2013




CONTENTS

SHIP BUNKERING

Sales.of.light.and.heavy.fuels.and.oils.for.marine.and.inland.water.transport.are.handled.by.LLC.Gazpromneft.Marine.Bunker,.a.subsidiary.of.the.Company.established.in.2007..Petroleum.products.are.sold.24/7.all.year.round.in.all.key.marine.and.river.ports.in.Russia.

The.Company.currently.holds.a.leading.position.in.the.Russian.bunkering.market.with.an.18.6%.market.share..In.2013,.‘direct-to-ship’.sales.of.fuel.rose.by.28%.compared.to.2012,.and.reached.2.3.million.tonnes.

The.Company’s.total.annual.sales.of.petroleum.products.grew.by.11.4%.to.3.2.million.tonnes.compared.to.2012.

Petroleum.products.are.shipped.by.Gazpromneft.Marine.Bunker.from.the.Omsk.refinery.and.the.Moscow.refinery.that.produce.a.range.of.high-quality.DMA.marine.fuels.(environmental.and.class.2).and.TSU,.including.a.range.with.less.than.1%.sulphur.content..Some.products.are.purchased.from.third.parties.

In.2013,.the.bunkering.business.was.expanded.considerably.following.the.acquisition.of.two.European.companies.–.Gazpromneft.Marine.Bunker.Balkan.S.A..(Romania).and.AS.Baltic.Marine.Bunker.(Estonia);.the.Company.also.started.ship.bunkering.in.the.ports.of.Sochi.and.Nizhnekamsk..Two.new.refuelling.ships.

were.commissioned.to.operate.in.the.ports.of.the.Far.East.and.Black.Sea..A.bunker.terminal.was.acquired.in.the.port.of.Novorossiysk,.which.includes.a.tank.farm.and.berthing.facilities.

The.customers.of.LLC.Gazpromneft.Marine.Bunker.include.major.Russian.and.international.shipping.companies..Gazpromneft.Marine.Bunker.has.the.strongest.presence.of.all.domestic.bunkering.companies.in.Russia,.operating.in.19.sea.ports.and.10.river.ports..In.addition,.the.Company.continued.its.operations.in.international.ports.

Gazpromneft.Marine.Bunker.currently.holds.a.leading.position.in.the.Russian.bunkering.market..It.is.comprised.of.nine.regional.offices.and.six.subsidiaries:.� Gazpromneft.Shipping.operates.the.company’s.own.fleet.of.eight.refuelling.vessels.(four.vessels.in.Saint-Petersburg,.three.in.the.Black.Sea.and.another.one.in.the.Russian.Far.East).

.� Gazpromneft.Terminal.SPb.operates.on.a.long-lease.basis.a.bunker.terminal.near.the.Kirovskiy.Plant.in.Saint-Petersburg.

.� Gazpromneft.Marine.Bunker.Balkan.S.A..sells.marine.fuels.in.Romania.(Constanta.port).

.� AS.Baltic.Marine.Bunker.sells.marine.fuels.in.Estonia.(Tallinn.port).

.� Novorosnefteservis.and.the.Novorossiysk.Transhipment.Complex.tranship.petroleum.products.at.their.own.bunker.terminal.(tank.farm.and.berth).in.Novorossiysk.


The dynamic development of Gazprom Neft’s bunkering business has become the basis for setting even more ambitious goals to achieve before 2025. The main trend in the international bunkering market is the increasingly demanding environmental standards for marine fuels. Therefore, besides actively expanding its international presence, Gazpromneft Marine Bunker is planning to expand its range of fuels and implement a liquefied natural gas bunkerage project in the near future, which will facilitate the formation of a new market segment.


OJSC.Gazprom.Neft



CONTENTS

In.line.with.Gazpromneft.Marine.Bunker’s.ongoing.growth,.the.Company.updated.its.long-term.development.strategy.and.set.targets.to.2025.

The.implementation.of.Gazpromneft.Marine.Bunker’s.large-scale.strategic.plans.requires.it.to.continue.to.strengthen.its.competitive.advantages,.which.include.its.own.large.fleet.of.vessels..In.2013,.the.company’s.fleet.was.complemented.by.two.new.bunkering.tankers.–.Gazprom.Neft.Zuid.East.for.bunkering.ultra-large.container.ships.in.the.Far.East,.and.Gazprom.Neft.Nord.East.for.bunkering.ships.in.the.Black.Sea.ports..

The.Company’s.plans.include.further.additions.to.its.own.fleet,.which.should.expand.to.20.vessels.by.2025.

Bunker.fuel.sales.should.grow.to.8.2.million.tonnes.by.2025,.which.is.16.7%.above.the.2020.target..Another.competitive.advantage,.instrumental.in.enabling.Gazpromneft.Marine.Bunker.to.achieve.its.ambitious.plans,.is.a.network.developed.from.both.its.owned.and.leased.terminals..Gazpromneft.Marine.Bunker.plans.to.build.a.complete.bunker.infrastructure.cycle.in.all.key.ports.where.it.operates.

In.2013,.the.company.took.over.a.terminal.in.Novorossiysk,.and.renewed.long-lease.terminal.contracts.in.Saint-Petersburg.and.Kaliningrad..The.company’s.development.strategy.envisions.active.growth.in.international.markets.over.the.next.three.years:.in.Europe,.the.Middle.East.and.Asia..It.plans.to.increase.its.market.share.in.Russia.to.27%.by.2025.

18.6%LLC Gazpromneft Marine Bunker’s share of the Russian bunker market in 2013

2.3 mn t

Volume of ‘direct-to-ship’ sales in 2013

3.2 mn t

Total annual sales of marine fuel in 2013

Sales of marine fuel, million tonnes

Market share of LLC Gazpromneft Marine Bunker, %

2013 3.20

2012 2.90

2011 2.20

2010 1.50

2010

16.0%

2011

18.2%

2012

18.6%

2013

18.6%



GAZPROMNEFT MARINE BUNKER

PORTS IN RUSSIA INTERNATIONAL PORTS PLANS FOR EXPANDING GEOGRAPHICAL

PRESENCE IN 2012-2015

Ports.in.RussiaEast.European.sea.ports

INLAND WATERWAYSAstrakhan.Volgograd.Kazan.Kama.UstyeSamaraRostov-on-DonUst.KutCherepovets.SheksnaYaroslavl

RUSSIAN FAR EASTVaninoVladivostok.VostochnyZarubino,.Posyet,.Slavyanka.KozminoNakhodkaSakhalin

RUSSIAN NORTHWESTArkhangelsk.BaltiyskKaliningradMurmanskPrimorskSaint-Petersburg.Ust-Luga

RUSSIAN SOUTHNovorossiysk.TamanTuapse

Port.KavkazSochi.

Goteborg.(Sweden)Kalundborg.(Denmark)Constanta.(Romania)Tallinn.(Estonia)




CONTENTS

AIRCRAFT REFUELLING

The.main.business.of.CJSC.Gazpromneft-Aero,.a.subsidiary.of.the.Company.established.in.2008,.is.small.wholesale.and.retail.of.jet.fuel,.as.well.as.integrated.services.for.aircraft.fuel.and.lubricant.supply.

CJSC.Gazpromneft-Aero’s.sales.network.is.the.largest.among.Russian-based.vertically.integrated.oil.companies.and.consists.of.38.integrated.fuelling.facilities.located.in.Russia.and.CIS.countries..Gazpromneft-Aero’s.subsidiaries.provide.aircraft.fuelling.services.in.the.airports.of.Moscow,.Saint-Petersburg,.Novosibirsk,.Murmansk,.Tomsk,.Bryansk,.Ulyanovsk,.Kemerovo,.Krasnoyarsk,.and.Bishkek.(Kyrgyzstan)..Gazpromneft-Aero.is.the.sole.supplier.of.jet.fuel.at.27.aerodromes.owned.by.the.Russian.Defence.Ministry.

Gazpromneft-Aero’s.strategic.goal.is.to.be.among.the.world’s.top.ten.jet.fuel.suppliers.

Gazpromneft-Aero’s.own.infrastructure.enables.it.to.ensure.uninterrupted.jet.fuel.supplies.to.airports,.high-quality.fuel,.the.latest.aircraft.fuelling.technologies,.as.well.as.flight.safety.

Summarizing.the.results.of.the.year,.Gazpromneft-Aero.is.the.uncontested.leader.in.aircraft.fuel.retailing.in.Russia..Retail.jet.fuel.sales.grew.by.15.5%.versus.2012..The.Company’s.share.of.Russia’s.retail.market.grew.from.21.3%.in.2012.to.22.9%.in.2013..Total.sales.of.jet.fuel.for.the.Russian.Defence.Ministry’s.aircrafts.reached.560,000.tonnes.in.2013.

The.company.has.ongoing.partnership.programs.for.aircraft.refuelling.with.125.airports.in.South-East.Asia,.Europe,.Africa,.Australia,.and.North.and.Latin.Americas..Since.2008,.Gazpromneft-Aero.has.been.designated.a.strategic.partner.of.the.International.Aviation.Transportation.Association.(IOTA).for.supplying.aircraft.fuel.

In.the.past.year,.the.company.significantly.expanded.its.geographic.scope.for.sales.in.both.domestic.and.international.markets..It.started.to.provide.refuelling.services.at.its.own.integrated.fuelling.facilities.at.the.airports.in.Kemerovo.and.Orsk..Aircraft.refuelling.services.are.offered.by.Gazpromneft-Aero.in.49.countries.(170.cities).compared.with.38.countries.(127.cities).in.2012.

In.order.to.strengthen.its.position.in.both.domestic.and.international.markets,.Gazpromneft-Aero.intends.to.continue.the.intensive.development.of.its.own.chain.of.modern.integrated.fuelling.facilities..By.2025,.the.company.plans.to.create.a.network.of.58.integrated.fuelling.facilities.(five.more.than.the.2020.target).located.at.domestic.and.international.airports.and.to.increase.jet.fuel.sales.to.5.3.million.tonnes,.or.6%.above.the.2020.target..The.company’s.plans.include.expanding.its.international.sales.network.to.220.airports,.and.to.increase.its.share.of.the.domestic.market.to.over.31%.by.2025.

2.7 RUB bn

invested by Gazpromneft-Aero in upgrading the aviation fuel infrastructure of domestic airports in 2013


Gazprom Neft’s updated aviation fuel business strategy 2025 establishes new, higher target parameters. This testifies both the successful development its sales strategy and long-term market prospects. By benefiting from its competitive advantages such as its broad sales network and high service standards, Gazprom Aero will be able to become one of the leaders in the international aviation fuel market.


OJSC.Gazprom.Neft



CONTENTS

22.9%Gazpromneft-Aero’s share of the Russian retail market in 2013*

2.4 mn t

Sales of jet fuel in 2013

38 own refueling

Gazpromneft-Aero’s sales network in Russia and CIS countries

Sales of jet fuel, million tonnes

Gazpromneft-Aero’s share of the Russian retail market, %

2013 2.39

2012 2.07

2011 1.60

2010 1.0

2010

17.0%

2011

19.0%

2012

21.3%

2013

22.9%



GAZPROMNEFT-AERO

PROJECTS IN RUSSIA INTERNATIONAL PROJECTSDEVELOPMENT

PLANS FOR INTEGRATED

AIRCRAFT REFUELLING FACILITIES

OF GAZPROM NEFT GROUP IN REGIONS UNTIL

2025

Middle.EastWestern.EuropeCentral.Asia

PROJECTS IN CENTRAL

ASIA

Kyrgyzstan CIVIL AIRCRAFT

Barnaul.Bryansk.VladivostokKazanKemerovoKrasnoyarsk.Moscow.(Scheremetyevo).Moscow.(Vnukovo)Moscow.(Domodedovo).Moscow.(Ostafyevo)MurmanskNovosibirskOmskOrskSaint-PetersburgTomskUlyanovsk

AIRCRAFT FOR THE DEFENCE MINISTRY (I STAGE)

Baltimore(Voronezh).Domna.(Chita)Krymsk.(Krasnodar)Levashovo..(Saint-Petersburg)Migalovo.(Tver)Tolmachevo.(Novosibirsk)Ukrainka.(Seryshevo)Khurba.(Khabarovsk).Chkalovsky.(Moscow.Region)Shagol.(Chelyabinsk).Engels.(Saratov)

AIRCRAFT FOR THE DEFENCE MINISTRY (II STAGE)

AkhtubinskBorisoglebskDyagilevo.(Ryazan)KoltsovoKurskLipetskOrenburgPskovTaganrogTambovChkalovsk

AustriaAlgeriaBulgariaBrazilUKVietnam.Guinea.Hong.Kong.GermanyGreeceDominican.Republic.EgyptSpainIraqIndia.JordanItalyCanadaCameroon.CongoChina.CyprusLatviaMaldivesMalaysia.

NorwayNicaragua.NigeriaUAEPortugalUSASerbiaSlovakiaSingaporeSeychelles.Thailand.TurkeyTunisUganda.FranceFinlandCroatiaCzech.RepublicMontenegro.SwedenSri-LankaEthiopia.Equatorial.Jamaica.Japan.

AIRCRAFT FOR THE DEFENCE MINISTRY (III STAGE)

KantPushkinUlyanovskCheryomushkiChernyakhovsk

*. The.market.share.includes.aircraft.fuelling.for.the.Russian.Ministry.of.Defence.




CONTENTS

PRODUCTION AND SALE OF OILS AND LUBRICANTS

The Company places great importance on the production and sales of motor oils as is demonstrated by its dedicated vertically integrated oil company, LLC Gazprom Neft-Lubricants.

Gazprom.Neft-Lubricants.owns.production.assets.in.Western.Siberia.(Omsk),.European.Russia.(Yaroslavl),.Moscow.Region.(Fryazino),.Western.Europe.(Bari,.Italy).and.Serbia.(Novi.Sad)..The.company.has.received.ISO.international.quality.certificates.that.confirm.its.compliance.with.international.standards.(ISO.9001:2008,.14001:2004,.OHSAS.18001:2007)..At.present,.the.company.is.preparing.for.the.ISO/TS.16949.certification.(requirements.for.suppliers.to.automotive.manufacturer.assembly.lines).

LC.Gazprom.Neft-Lubricants.sells.its.products.through.the.extensive.Gazprom.Neft.filling.station.chain,.and.also.supplies.retailers.and.online.stores,.service.stations,.and.assembly.lines.for.automotive.manufacturers..Gazprom.Neft-Lubricants.sells.its.products.both.inside.and.outside.Russia.

In.2013,.automotive.engine.oils.under.the.Gazpromneft.brand.were.launched.in.Russia.and.CIS.countries..The.corporate.brand.was.used.for.these.new.segments.as.part.of.a.complex.marketing.program.for.a.retail.chain.that.now.comprises.over.6,000.retail.outlets.

In.the.reporting.year,.the.company.continued.to.expand.its.motor.oil.sales.channels..The.company.began.delivering.new.G-Energy.FE.DX1.5W30.oil.approved.by.General.Motors.to.the.Opel/Chevrolet.assembly.line.of.Avtotor..A.strategic.agreement.with.the.Chinese.car.manufacturer.LIFAN.was.signed.to.supply.G-Family.to.assembly.lines.(Cherkessk).in.Russia.and.to.the.Russian.dealer.network.(150.service.stations)..The.company.began.delivering.Baumaster/Sturm.premium-grade.products.under.a.co-branding.program.to.retail.and.service.networks.in.Russia.and.Ukraine.(300.tonnes)..

Expanding Gazprom Neft’s motor oil business in combination with long-term industry forecasts will allow us to maintain current growth rates until 2025 and strengthen the Company’s market positions. One of the competitive advantages of Gazprom Neft-Lubricants is its strong R&D and engineering resources and its willingness to implement the latest world-class technologies at Russian production sites in order to provide quality products to Russian consumers.


OJSC.Gazprom.Neft




CONTENTS

In.2013,.Gazprom.Neft-Lubricants.supplied.100%.of.the.Gazprom.Group’s.demand.for.turbine.oils;.in.addition,.1,200.tonnes.of.a.wide.range.of.premium-grade.oils.and.7,000.tonnes.of.turbine.oils.were.supplied..1,350.tonnes.of.high-quality.products.were.also.delivered.to.Russian.Ministry.of.Defence.enterprises..The.company.started.to.supply.premium-graded.products.to.key.Russian.industrial.enterprises:.SDS,.SUEK,.UGMK,.Apatit,.Russian.Coal,.Polyus.Gold,.as.well.as.to.Belarusian.enterprises.BelAZ,.MAZ,.MTZ,.and.Belarusian.Metallurgic.Plant.

In.2013,.Gazprom.Neft-Lubricants.continued.to.expand.into.international.markets.by.broadening.lubricant.sales.outside.Russia..The.company.began.supplying.oils.to.Turkmenistan,.Uzbekistan,.Lebanon,.Nigeria,.Afghanistan,.Dominican.Republic,.and.Hungary..The.company.now.sells.products.in.42.different.countries.

A.significant.milestone.in.the.reporting.year.was.the.completion.of.the.construction.and.commissioning.of.an.automatic.oil-mixing.station.at.the.Omsk.Lubricant.Plant.with.an.annual.capacity.of.110,000.tonnes.

In.2013,.Gazprom.Neft-Lubricants.achieved.a.historic.sales.record.of.492,000.tonnes.of.products.(an.increase.of.12%.versus.2012).due,.partially,.to.the.commercialization.of.returned.products..Gazprom.Neft-Lubricants.increased.premium.sales.by.13.3%.compared.to.2012,.while.G-Energy.sales.showed.a.26%.increase.in.a.stagnating.market.with.intense.competition,.confirming.the.success.of.its.strategic.direction..

Gazprom.Neft-Lubricants.has.set.itself.a.goal.–.to.create.a.national.lubricant.company.recognized.as.a.leader.in.technology,.marketing.and.services.related.to.high-specification.premium-grade.oils,.lubricants.and.service.fluids.under.a.global.brand..In.pursuit.of.these.objectives,.LLC.Gazprom.Neft-Lubricants.is.planning.to.add.new,.premium-grade.lubricants.to.its.product.portfolio,.increase.its.market.share.in.Russia.and.expand.further.into.foreign.markets.

492,000 t

Gazprom Neft-Lubricants’ sales in 2013

+12%Growth in sales in 2013

+26%Growth in G-Energy sales in 2013

Packaged oils sales, thousand tonnes

2013 0.17

2012 0.15

2011 0.12

2010 0.08 Source:.Company.data

In 2013, Gazprom Neft-Lubricants supplied:

7,000 t

Turbine oils

1,200 t

Wide range of premium-grade oils

1,350 t

Products for enterprises under the Russian Ministry of Defence




CONTENTS

BITUMEN MATERIALS

All.Gazprom.Neft.refineries.are.involved.in.the.production.and.sale.of.bitumen.materials..At.the.end.of.the.reporting.year,.Gazprom.Neft.maintained.its.leadership.in.the.Russian.bitumen.market,.with.a.30%.share.

In.2013,.overall.sales.of.bituminous.materials.totalled.1.8.million.tonnes...Of.particular.note.is.the.record.volume.in.Russia.of.1.1.million.tonnes.of.bitumen.produced.at.the.Moscow.Refinery.in.2013..LLP.Gazprom.Neft.Bitumen.Kazakhstan,.acquired.in.2012,.produced.over.50,000.tonnes.of.bitumen.in.2013.

In.order.to.build.brand.awareness,.Gazprom.Neft.continued.to.increase.its.supply.of.bitumen.using.branded.bitumen.carriers..In.2013,.over.70,000.tonnes.of.bitumen.materials.were.delivered,.a.threefold.increase.compared.to.2012..Since.last.year,.branded.road.tankers.have.been.used.for.the.transportation.of.bitumen.from.NIS;.in.addition,.a.long-term.agreement.was.signed.to.use.rail.cars.and.the.company.began.delivering.bitumen.in.branded.rail.tankers.

Gazprom.Neft.is.always.in.search.for.new.markets.and.state-of-the-art.technology..In.2013,.Gazprom.Neft.and.Total,.one.of.the.leading.petroleum.product.manufacturers.in.Europe,.established.LLC.Gazprom.Neft-Total.PMB,.a.joint.venture.engaged.in.the.production.of.modern.polymer.bitumen.materials..In.2013,.the.company.acquired.Russia’s.largest.Ryazan.polymer.modified.bitumen.plant.–.ROZNKhP..At.the.current.time,.these.are.the.most.promising.bitumen.products.with.high.added.value.and.in.great.demand.in.road.construction..As.a.result,.Gazprom.Neft.increased.the.sales.of.polymer-asphalt.binders.and.bitumen.emulsions.by.24.1%.

Sales of bitumen materials, thousand tonnes

2013 1.80

2012 1.50

2011 1.60

2010 1.0 Source:.Company.data

Demand for innovative road construction materials is growing rapidly in Russia. The production and sales of high-quality bitumen materials using the latest technology is one of Gazprom Neft’s priorities in maintaining its leading position in the Russian bitumen market.


OJSC.Gazprom.Neft




CONTENTS

Sales.of.the.Company’s.aromatics.were.304.thousand.tonnes.in.2013,.of.which.295.thousand.tonnes.were.sold.in.Russia..The.output.of.propane-propylene.fraction.by.the.Company’s.refineries.was.317.thousand.tonnes.in.2013.

In.2013,.Gazprom.Neft.analyzed.the.possibility.to.create.a.stable.gas.condensate.processing.complex.and.Benzol+.monetization..The.outcome.of.this.was.the.agreement.of.three-.to.five-year.contracts.which.will.increase.future.product.sales.margins.

LLC.NPP.Neftekhimia,.a.joint.venture.with.OJSC.SIBUR.Holding,.expanded.its.range.of.titan-magnesium.catalysts.as.part.of.a.program.to.improve.product.quality.and.unify.its.branded.range.of.polypropylene..The.packaging.of.finished.products.has.been.outsourced.since.2013.in.order.to.improve.operational.efficiency.

Gazprom.Neft.is.planning.a.significant.expansion.of.its.petrochemical.production.and.a.deeper.processing.of.basic.petrochemical.products.by.upgrading.existing.refinery.facilities.and.by.implementing.major.capital.projects.for.the.construction.of.large-scale.production.facilities.

PETROCHEMICAL INDUSTRY

Gazprom Neft is Russia’s largest producer of a range of basic petrochemical products: aromatic hydrocarbons (benzene, paraxylene, orthoxylene, and toluene) and propane-propylene fraction (propylene liquefied petroleum gas). Gazprom Neft’s petrochemical production units are located at the refineries in Russia (Omsk, Yaroslavl, and Moscow) and Serbia. The Company’s share of the overall Russian consumption of aromatic hydrocarbons in 2013 was 17%, while its share of exports was 32%.

Petrochemical production units of Gazpromneft Group

Business unit Location Production profile

OJSC.Gazprom.Neft.–.Omsk.Refinery

Omsk,.Russia Benzene,.paraxylene,.orthoxylene,.toluene,.propane-propylene.fraction.and.methyl.tertiary.butyl.ether

OJSC.Slavneft-YaNOS Yaroslavl,.Russia Benzene,.toluene,.aromatic.hydrocarbons.and.propane-propylene.fraction

OJSC.Gazprom.Neft.–.Moscow.Refinery

Moscow,.Russia Methyl.tertiary.butyl.ether.and.propane-propylene.fraction

LLC.NPP.Neftekhimia.(JV.with.OJSC.SIBUR.Holding)

Moscow,.Russia Polypropylene

Petrochemicals production, thousand tonnes

Petrochemicals 2013 2012

Aromatic.hydrocarbons 304 306

Propane-propylene.fraction. 351 317




CONTENTS

INNOVATION:.

IMPLEMENTING NEW TECHNOLOGY TO ACHIEVE STRATEGIC GOALS




CONTENTS

Gazprom Neft’s long-term development strategy is based on maximum business efficiency and feasibility as a key competitive factor. In 2013, the Gazprom Neft Board of Directors approved the Company’s 2020 Innovation Development Program that includes information on the main areas of Gazprom Neft’s innovation development, cooperation plans with external organization, as well as key performance indicators corresponding to the indicators of the Innovative Development Program of OJSC Gazprom, the major shareholder. The key objectives include field exploration and development under adverse geological and climatic conditions, economic and energy efficient production at depleted fields, as well as the development of oil refining and petrochemistry.

“Today, for any modern company, utilizing innovations is essential for raising competitiveness, increasing production and financial performance, reducing environmental impact, and improving the quality of human life. Putting together a program and actively utilizing technological innovations will create a solid foundation for Gazprom Neft to achieve the goals set out in the Company’s Development Strategy,” said Alexander Dyukov, Chairman of the Management Board of Gazprom Neft.

Gazprom.Neft’s.strategy.envisages.a.considerable.production.growth.over.the.next.years..At.the.same.time,.the.share.of.new.field.types.requiring.meeting.a.variety.of.technological.challenges.for.their.efficient.development.will.increase.in.the.Company’s.production.profile..Therefore,.in.order.to.achieve.its.strategic.production.objectives,.the.Company.is.taking.steps.to.develop.and.implement.advanced.technologies,.such.as.high-resolution.seismic.surveying,.alkali-surfactant-polymer.water.flooding,.horizontal.well.drilling.operations.with.multi-stage.hydro-fracturing,.sidetracking,.rotary.steerable.systems,.digital.field.technologies,.etc.

A.large.portion.of.the.refining.innovation.projects.is.implemented.as.part.of.the.refinery.modernisation.program..The.existing.plants.reconstruction.and.launch.of.new.ones.will.enable.the.Company.to.considerably.reduce.fuel.oil.production,.increase.the.output.of.light.petroleum.products.to.77%.and.the.refining.depth.to.95%.by.2025,.in.line.with.the.Company’s.strategy.

In.recognition.of.the.growing.importance.of.the.use.of.innovative.technology.in.its.operations,.in.2013.the.Company.developed.and.approved.an.Innovation.Policy.setting.out.the.key.principles.and.approaches.to.managing.innovation.development,.relating.to.the.analysis.of.technological.challenges,.the.research.and.selection.of.possible.solutions,.as.well.as.the.implementation.of.innovation.projects.

In.the.second.half.of.2013,.the.Company.established.a.Strategy.and.Innovation.Department.with.a.mandate.to.implement.the.Innovation.Policy,.ensure.the.development.of.Gazprom.Neft’s.technology.strategies.and.monitor.the.implementation.of.the.Innovative.Development.Program.

In.the.reporting.year.a.large-scale.commercialization.of.advanced.production.technologies.was.witnessed.at.enterprises.of.the.Exploration.&.Production.Block,.the.main.technological.development.areas.of.which.include:...� improvement.of.resource.base.forecasting.quality;..� economic.increase.in.production.and.ORF.at.current.fields;.� development.of.oil.and.gas.condensate.deposits;..� development.of.fractured.reservoirs;.� development.of.shelf.fields;.� development.at.the.Bazhenov.suite;.and.� improvement.of.industrial.and.environmental.safety.

1.8 RUB bn

R&D expenditure in 2013

>95%Share of exploration & production projects

PRIRAZLOMNAYA

In.2013,.the.Prirazlomnoye.field,.the.first.Russian.Arctic.shelf.project.operated.by.Gazprom.Neft,.was.developed..A.production.well.with.a.horizontal.well.bore.of.780.meters.in.length.was.drilled.in.the.field..The.starting.production.rate.was.1,600.tonnes.per.day.and.the.watering.rate.0%.




CONTENTS

Horizontal drilling

201320122010

Horizontal wells (HW)

87

27

233

2014 (forecast)

282

INNOVATION

A.new.world.seismic.surveying.record.was.set.at.the.Shakal.block.in.Iraq,.which.is.operated.by.Gazprom.Neft..During.the.seismic.study,.data.was.transmitted.from.more.than.6,200.sensors.using.the.RT.System.2.wireless.recording..According.to.Wireless.Seismic,.Inc.,.which.manufactured.the.equipment,.this.is.the.highest.number.of.sensors.ever.used.in.simultaneous.wireless.real-time.data.transmission..

The.application.of.this.innovative.technology.will.enable.the.Company.to.improve.the.quality.of.geological.surveys,.by.reducing.time.and.improving.efficiency..Real-time.operations.allow.the.recording.of.background.noises.caused.by,.for.example,.construction.in.the.study.area,.and.take.these.into.account.when.collating.information.

In.2013,.projects.to.introduce.multi-stage.fracturing.assemblies.at.horizontal.wells.were.initiated.at.10.of.the.Company’s.major.fields.in.order.to.develop.reserves.with.low.filtration.properties..Applying.five.to.seven.fracturing.phases.on.average.at.the.horizontal.well.section.at.a.length.of.500.to.1,000.meters.(from.400.to.700.meters.in.2012).allowed.the.formation.coverage.area.to.increase.without.increasing.the.costs.associated.with.drilling.additional.wells..By.applying.this.technology,.139.wells.with.multi-stage.fracturing.assemblies.were.launched.(versus.29.wells.in.2012),.with.a.success.rate.of.93.1%.and.an.average.increase.in.the.daily.oil.yield.of.46.4.tonnes..Additional.oil.production.totalled.1,598.4.thousand.tonnes.as.of.January.01,.2014.



CONTENTS

For.the.first.time.in.Russia,.a.horizontal.well.was.brought.on-stream.following.a.ten-stage.hydraulic.fracturing.at.Gazprom.Neft’s.Vyngapurovskoye.field,.operated.by.OJSC.Gazpromneft.Noyabrskneftegaz..The.depth.of.the.new.well.is.nearly.4,500.meters,.and.the.length.of.the.horizontal.section.is.over.1,000.meters..There.was.an.additional.operational.difficulty.–.the.formation.through.which.the.horizontal.section.of.the.well.was.drilled.was.only.four.meters.thick..Moreover,.the.effective.horizontal.well.length.(i.e..the.section.of.the.well.that.penetrates.the.oil-containing.formation.without.coming.into.contact.with.the.surrounding.rock).reached.90%,.which.is.above.average.even.for.wells.with.shorter.horizontal.wellbores.

The.flow.rate.obtained.at.the.well.was.over.135.tonnes.per.day,.which.exceeded.the.results.obtained.at.horizontal.wells.with.a.lower.number.of.hydraulic.fracturing.stages.by.approximately.one.third.

An.acid.multiple.hydraulic.fracturing.operation.was.carried.out.for.the.first.time.in.the.East.area.of.the.Orenburg.oil.and.gas.condensate.field.as.part.of.Gazprom.Neft’s.depleted.reserves.program..Acid.multiple.hydraulic.fracturing.involves.metered.injections.of.a.special.gelatinous.compound.and.inhibited.hydrochloric.acid.into.the.stratum..During.the.first.stage,.a.viscous.layer.fills.the.cracks.in.the.reservoir..Subsequent.acid.processing.makes.it.possible.to.achieve.a.deeper.penetration.of.the.compound.into.the.stratum..The.treated.channels.remain.open,.which.allows.the.cracks.to.have.a.high.throughput.and.increases.the.influx.of.oil.into.the.well.

The.hydraulic.fracturing.consisted.of.five.stages..The.length.of.the.horizontal.section.was.600.meters..A.total.of.two.hydraulic.fracturing.operations.were.performed.on.two.separate.production.wells..Once.the.operations.have.been.completed,.the.combined.average.flow.rate.of.both.wells.will.add.up.to.approximately.80.tonnes.of.oil.per.day..The.wells.function.via.natural.flow.

In.the.past.year,.Salym.Petroleum.Development,.a.joint.venture.between.Gazprom.Neft.and.Shell,.continued.the.implementation.of.its.pilot.project.(covering.the.period.2013-2016).to.introduce.a.technology.for.alkali-surfactant-polymer.(ASP).water.flooding.to.increase.oil.yield.from.formations.at.the.Zapadno-Salymskoye.field..� Adjusting.experiments.were.performed.to.establish.the.phase.behaviour.and.formula.specification.and.concentration.of.the.main.chemical.agents.(surfactant,.polymer,.soda).found.in.the.ASP.solution.

.� Core.experiments.were.performed.in.order.to.determine.the.amount.of.surfactant.absorption.in.rock.

.� Main.pilot.project.facilities.were.designed.

.� Research.into.Russian-produced.surfactant.analogues.commenced.

.� Laboratory.experiments.were.carried.out.to.determine.the.efficiency.of.a.chemical.‘cocktail’.of.ASP.and.oil.from.the.Pogranichnoye.field.

.� A.technical.and.economic.assessment.was.performed.into.the.application.of.ASP.water.flooding.in.the.Pogranichnoye.field.in.order.to.determine.project.optimization.methods.

Another.milestone.in.2013.was.the.drilling.of.multilateral.wells..Gazprom.Neft.drilled.the.very.first.Russian.four-borehole.horizontal.well.at.the.Umseyskoye.field..

At.present,.most.of.Gazprom.Neft.fields.are.at.stages.3.and.4.of.development..It.needs.to.be.taken.into.consideration.that.some.fields.have.adverse.geological.conditions.which,.given.the.late.stages.of.development,.create.an.imbalance.in.the.proportion.of.reserves.recovered.from.watering..Sidetracking.solves.the.problem.of.recovering.geologically-complex.reserves.and.immovable.oil.recovery.in.the.development.process,.and.helps.to.avoid.high.watercuts.

In.2013,.the.rotary.steerable.systems.–.a.new.generation.of.downhole.equipment.for.drilling.wells.–.reduced.capital.costs.by.0.6%,.whilst.increasing.hydrocarbon.production.by.0.6.million.tonnes..The.total.incremental.increase.between.2013.and.2016.is.expected.to.reach.2.1.million.tonnes..

A.development.project.at.Bazhena.is.being.implemented.within.the.Palianovskaya.area.of.the.Krasnoleninskoye.field..Based.on.paleotectonic.reconstruction.and.geomechanical.modelling,.a.model.of.a.fracture-block.stratum.structure.was.built..The.model.allows.the.identification.of.potentially.productive.zones.for.the.drilling.of.new.wells..The.results.from.the.pilot.well.drilling.support.the.development.methods.recognized.for.the.Bazhenovskaya.suite.of.deposits..The.well.revealed.that.the.fracture.zone.was.an.oil.filtration.channel..Where.it.was.impossible.to.find.potentially.productive.fracture.zones.for.any.reason.by.drilling.a.well,.recommendations.were.made.to.carry.out.acid.multiple.hydraulic.fracturing.operations.in.order.to.actively.develop.filtration.channels.

.NEW BITUMEN PRODUCTION TECHNOLOGIES

In.2013,.a.“peroxidation.–.dilution”.bitumen.production.technology.was.implemented.at.the.Moscow.Refinery.to.improve.bitumen.material.quality.control.accuracy.and.to.obtain.higher.quality.bitumen..The.plant.started.production.of.БН.90/10.construction.bitumen.–.one.of.the.most.popular.brands.

At.the.same.time,.the.plant.started.to.build.a.polymer.modified.bitumen.unit.based.on.a.technology.developed.by.Total..Polymer.modified.bitumen.(PMB).is.an.innovative.and.modern.alternative.to.road.bitumen.used.in.road.concrete.mix.production.for.road.construction..Using.PMB.ensures.a.compound.improvement.in.the.operational.characteristics.of.road.concrete.mixes,.such.as.durability.and.resistance.against.potholes.and.cracks.

Multi-stage hydro-fracturing in Gazprom Neft

201320122011

Multi-stage hydro-fracturing

29

139

2014 (forecast)

167

1




CONTENTS

.CATALYST DEVELOPMENT AND CATALYTIC CRACKING GASOLINE HYDROTREATMENT

The.2013.projects.include.catalyst.development.and.the.catalytic.cracking.gasoline.hydrotreatment.process.with.a.minimum.decrease.in.octane.levels..Catalytic.cracking.gasoline.hydrotreatment.with.the.use.of.catalysts.currently.available.on.the.market.leads.to.a.considerable.decrease.in.the.product’s.octane.level..Using.the.new.catalyst.will.result.in.an.output.of.catalytic.cracking.gasoline.with.a.total,.maximum.residual.sulphur.of.10.ppm..In.addition,.the.hydrotreatment.will.lead.to.a.decrease.in.gasoline.octane.levels.of.no.more.than.1.5.points.and.in.motor.octane.levels.of.no.more.than.1.point,.which.allows.them.to.be.used.in.compound.high-octane.Euro.5.gasoline..The.developed.catalyst.can.be.used.at.the.Company’s.factories.to.increase.the.octane.level.and.in.turn.reduce.the.final.cost.of.the.gasoline.produced..In.addition,.in.order.to.increase.the.return.on.investment.in.the.development.of.innovative.products,.catalyst.production.licenses.may.be.sold.to.other.market.players.

INNOVATION

Approximately.4.5%.of.the.Company’s.own.production.in.2013.was.generated.owing.to.the.application.of.technologies.such.as.horizontal.wells,.multi-stage.hydraulic.fracture.technology,.sidetracking,.rotary.steerable.systems.and.oil-based.muds.

In.2013.Gazprom.Neft.refineries.completed.their.main.production.modernization.programs.aimed.at.improving.the.quality.of.product.output..All.Gazprom.Neft.refineries.switched.over.to.the.production.of.motor.fuels.to.the.Euro.5.standard.

One.of.Gazprom.Neft’s.key.technology.development.areas.is.the.refining.of.catalysts..The.catalyst.line.under.development.includes.both.catalytic.cracking.catalysts.produced.at.the.catalyst.plant.of.the.Omsk.refinery,.and.catalysts.of.other.refining.processes..

Gazprom.Neft.is.also.focusing.on.the.improvement.of.oil.refining.processes..For.example,.in.2013,.the.process.of.viscosity.breaking.and.coking.gasoline.refining,.without.the.use.of.molecular.hydrogen,.was.developed..The.method.under.development.will.increase.significantly.the.refining.depth.of.thermal.process.gasoline,.and.the.quality.of.the.product.output..In.particular,.the.application.of.the.new.technology.may.help.to.reduce.the.olefin.content.in.the.gasoline.output.by.over.95%,.and.sulphur.content.by.over.98%.with.approximately.a.90%.output.of.gasoline.fraction.mass..Moreover,.the.octane.level.of.the.refined.gasoline.will.increase.by.4–5.points.

The.Panchevo.Refinery,.Serbia,.started.the.production.and.export.of.Euro.diesel.with.biocomponents,.as.well.as.BMB-98.Euro.gasoline.

The.Company.invests.significantly.in.the.acquisition.of.high.efficiency.production.and.refining.technologies.and.pilot.testing.in.order.to.provide.assurance.of.the.new.technologies..In.addition,.Gazprom.Neft.develops.valuable.technologies.with.the.active.involvement.of.external.partners:.national.research.organizations.and.universities,.and.foreign.oil.and.gas.companies..The.Company’s.key.cooperation.areas.with.research.organizations.and.universities.in.2013.include.research.into.the.area.of.surfactants,.development.of.catalysts.and.the.improvement.of.oil.refining.processes.

R&D.investment.in.2013.amounted.to.around.RUB.1.8.billion,.of.which.over.95%.was.for.exploration.and.production.projects.

Strengthening.its.innovation.is.the.Company’s.only.possibility.to.implement.its.long-term.strategy.which.is.based.on.developing.large.Arctic.fields,.redeveloping.hard-to-recover.reserves.of.existing.operating.assets.and.practically.rebuilding.a.new.oil.refining.system.



CONTENTS

INVESTMENT ACTIVITIES:.

MODERNIZING ASSETS TO ENHANCE OPERATING EFFICIENCY


READ MORE




CONTENTS

Gazprom Neft’s investments aim to maximize value, increase efficiency, and help the Company achieve its strategic goals.

Investments by business segment, RUB billion


2012

2013 217.45

188.12

Marketing and salesOtherRefining

Exploration and production M&AUnconsolidatedexploration andproduction projects

144.04 27.26 17.52 14.58

101.92 41.84 16.22

6.15

9.80

9.26

9.07

7.90

The.alignment.of.investment.plans.with.the.approved.Strategy.is.ensured.through.a.three-year.medium-term.investment.program..The.program.aims.to.achieve.clear,.detailed.medium-term.targets.as.it.moves.towards.the.implementation.of.the.Company’s.long-term.strategic.goals..The.program.consists.of.investment.projects,.whose.financing.needs.and.economic.and.operating.indicators.have.been.broadly.defined,.and.whose.scope.is.proportional.to.the.Company’s.investment.capacities.

Large-scale.development.plans.in.all.business.segments.will.require.considerable.investments..Total.investments.were.RUB.217.5..billion.in.2013,.a.16%.increase.over.2012..� Capital.investment.totalled.RUB.195.0.billion.in.2013.(excluding.changes.in.advances.issued.and.materials.used.in.capital.expenditures)..Compared.with.2012,.investments.in.the.exploration.and.production.segment.grew.by.14.8%.due.to.an.increased.number.of.drilling.programs.at.the.Company’s.traditional.fields.and.the.East.area.of.Orenburg.oil.and.gas.condensate.field,.including.a.higher.number.of.more.technology-intensive.horizontal.wells.to.develop.complex.fields.more.efficiently,.as.well.as.due.to.the.financing.of.large.infrastructure.facilities.at.the.Novoportovskoye.field.in.order.to.prepare.for.its.full-scale.development.

.� In.2013,.RUB.27.3.billion.were.invested.in.oil.refining.operations,.which.is.35%.lower.than.in.2012..This.reduction.was.due.to.the.completion.of.the.construction.of.the.catalyst.cracking.gasoline.hydrotreatment.and.diesel.hydrotreatment.facilities.at.the.Omsk.Refinery.in.2012.

.� Capital.investment.in.petroleum.products.sales.totalled.RUB.17.5.billion.in.2013,.which.is.an.increase.of.8%.compared.to.2012..This.growth.is.due.to.the.implementation.in.2013.of.a.large-scale.program.to.bring.the.filling.station.chain.in.line.with.the.Company’s.formats.and.standards.in.Moscow.and.the.Moscow.Region.

.� Other.investments.totalled.RUB.6.2.billion.

.� Exploration.and.production.projects.accounted.for.RUB.14.6.billion,.the.majority.of.which.were.major.development.projects.at.the.Prirazlomnoye.and.Messoyakhskoye.fields.in.the.Russian.Federation.

.� Projects.to.acquire.assets.(M&A).accounted.for.RUB.7.9.billion,.including.acquisitions.in.the.Marketing.and.Sales.segment.and.increased.participation.in.subsidiaries.

Longer-term.investment.projects.totalled.RUB.22.5.billion.in.2013.

In.2014.the.Company.plans.to.increase.its.investments.to.RUB.304.7.billion.

GAZPROM NEFT’S FUNDAMENTAL INVESTMENT PRINCIPLES ARE AS FOLLOWS:.� comply.with.the.investment.plans.as.set.out.in.the.Company’s.approved.Strategy;

.� implement.the.most.efficient.projects,.and.create.an.optimized.investment.portfolio;

.� implement.collaborative.decision-making.and.delegate.investment.decision-making.through.a.hierarchy.of.responsibility;

.� minimize.the.risks.associated.with.project.implementation;

.� adopt.a.differentiated.decision-making.approach.to.projects.and.control.over.their.progress,.depending.on.the.type.and.complexity.of.each.project;.and

.� undertake.mandatory.periodical.monitoring.of.project.implementation.

INVESTMENT ACTIVITIES

MODERNIZING ASSETS TO ENHANCE OPERATING EFFICIENCY



CONTENTS

REVIEW OF FINANCIAL RESULTS OF OPERATIONS

The.following.review.of.the.Group’s.financial.position.as.of.December.31,.2013.and.for.the.years.ended.December.31,.2013.and.2012.should.be.read.in.conjunction.with.the.Consolidated.Financial.Statements.and.notes,.which.were.prepared.in.accordance.with.International.Financial.Reporting.Standards.(“IFRS”).

This.report.represents.Gazprom.Neft’s.financial.position.and.results.of.its.operations.on.a.consolidated.basis..In.this.report,.the.terms.“Gazprom.Neft”.and.“Company”.mean.OJSC.Gazprom.Neft,.its.subsidiaries.and.proportionally.consolidated.entities.(joint.arrangements.under.IFRS.11).(Tomskneft.and.Salym.Petroleum.Development.(SPD)).

The.term.“Joint.Ventures”.means.companies.accounted.for.under.the.equity.method.

CHANGES IN THE MAIN PROVISIONS OF THE ACCOUNTING POLICY

Starting.from.January.01,.2013,.Gazprom.Neft.applied.a.number.of.new.IFRS.standards,.such.as.IFRS.10.Consolidated.Financial.Statements,.IFRS.11.Joint.Arrangements,.and.IFRS.12.Disclosure.of.Interests.in.Other.Entities..Due.to.the.adoption.of.these.new.standards,.particularly.IFRS.11.Joint.Arrangements,.the.Company.switched.over.from.the.method.of.equity.participation.in.Tomskneft.and.Salym.Petroleum.Development.to.proportional.consolidation.of.assets.and.liabilities.with.respect.to.these.companies.

The.above.operational.information.was.restated.(including.past.periods).to.make.it.comparable.with.the.financial.information.

The.detailed.information.on.the.adoption.of.IFRS.11.is.disclosed.in.Note.2.to.the.consolidated.financial.statements.for.the.year.ended.on.December.31,.2013.

KEY FINANCIAL DATA FOR 2012–2013

Key Financial and Operating Data

2013 2012 Change, %

FINANCIAL RESULTS (RUB MILLION) . . .

Sales 1,504,037 1,519,450 (1.0)

Adjusted EBITDA* 336,752 323,106 4.2

RUB.per.TOE.of.production 5,408.8 5,411.3 (0.1)

USD**.per.BOE.of.production 23.1 23.7 (2.3)

Profit.attributable.to.OJSC.Gazprom.Neft 177,917 176,296 0.9

Net.debt 185,922 156,922 18.5

** EBITDA.is.a.non-IFRS.measure..A.reconciliation.of.adjusted.EBITDA.to.profit.before.income.taxes.is.provided.in.the.Appendix.** Translated.to.USD.at.the.average.exchange.rate.for.the.period.




CONTENTS

RESULTS OF OPERATIONS

RUB million 2013 2012 Change, %

REVENUES

Sales 1,504,037 1,519,450 (1.0)

Less.export.duties.and.excise.tax* (236,434) (286,801) (17.6)

TOTAL REVENUE 1,267,603 1,232,649 2.8

COSTS AND OTHER DEDUCTIONS

Purchases.of.oil,.gas.and.petroleum.products (319,051) (340,453) (6.3)

Production.and.manufacturing.expenses (144,552) (126,639) 14.1

Sales,.general.and.administrative.expenses (72,005) (68,389) 5.3

Transportation.expenses (107,837) (103,556) 4.1

Depreciation,.depletion.and.amortization (76,785) (69,163) 11.0

Taxes.other.than.income.tax (316,070) (297,824) 6.1

Exploration.expenses (2,876) (3,431) (16.2)

TOTAL OPERATING EXPENSES (1,039,176) (1,009,455) 2.9

Other.loss (6,310) (5,268) 19.8

OPERATING PROFIT 222,117 217,926 1.9

Share.of.profit.of.equity.accounted.investments 11,251 12,767 (11.9)

Net.foreign.exchange.gain/(loss) (2,166) 1,042 –

Finance.income 6,011 3,275 83.5

Finance.expense (11,233) (11,089) 1.3

TOTAL OTHER INCOME 3,863 5,995 (35.60)

PROFIT BEFORE INCOME TAX 225,980 223,921 0.9

Current.income.tax.expense (34,823) (34,108) 2.1

Deferred.income.tax.expense (4,437) (5,661) (21.6)

TOTAL INCOME TAX EXPENSE (39,260) (39,769) (1.3)

PROFIT FOR THE PERIOD 186,720 184,152 1.4

Less:.Profit.attributable.to.non-controlling.interest. (8,803) (7,856) 12.1

PROFIT ATTRIBUTABLE TO GAZPROM NEFT 177,917 176,296 0.9

*.Includes.excise.tax.calculated.based.on.the.volume.of.petroleum.products.sold.by.the.Company’s.subsidiary.in.Serbia.

Operating profit, RUB million


2012

2013

217,926

222,117222.117 RUB mn

Operating profit in 2013

186.720 RUB mn

Profit in 2013




CONTENTS

Revenues

RUB million 2013 2012 Change,%

CRUDE OIL

Export 106,665 195,567 (45.5)

Export.sales 208,125 346,213 (39.9)

Less.related.export.duties (101,460) (150,646) (32.7)

International.markets 1,323 1,740 (24.0)

Export.to.CIS 48,619 29,783 63.2

Domestic 19,258 13,241 45.4

TOTAL CRUDE OIL REVENUE 175,865 240,331 (26.8)

GAS

International.markets 1,461 6,281 (76.7)

Domestic 23,926 17,729 35.0

TOTAL GAS REVENUE 25,387 24,010 5.7

PETROLEUM PRODUCTS

Export 253,429 240,381 5.4

Export.sales 352,990 349,049 1.1

Less related export duties (99,561) (108,668) (8.4)

International.markets 92,316 69,876 32.1

Sales.on.international.markets 124,376 92,725 34.1

Excise* (32,060) (22,849) 40.3

CIS 54,956 54,539 0.8

Export.sales.and.sales.in.CIS 58,309 59,177 (1.5)

Less related export duties (3,353) (4,638) (27.7)

Domestic 630,359 572,082 10.2

TOTAL PETROLEUM PRODUCT REVENUE 1,031,060 936,878 10.1

OTHER REVENUE 35,291 31,430 12.3

TOTAL REVENUE 1,267,603 1,232,649 2.8

*..Includes.excise.tax.calculated.based.on.the.volume.of.petroleum.products.sold.by.the.Company’s.subsidiary.in.Serbia.

Average Realized Sales Prices

2013 2012 Change,%

CRUDE OIL RUB PER TONNE

Export.sales 25,106 24,519 2.4

Export.to.CIS 12,005 11,913 0.8

Domestic.sales 10,410 10,509 (0.9)

PETROLEUM PRODUCTS RUB PER TONNE

Export.sales 24,161 24,703 (2.2)

Sales.on.international.markets 40,382 38,635 4.5

Export.sales.and.sales.in.CIS 26,384 25,182 4.8

Domestic.sales 24,395 22,747 7.2

2013 RESULTS VS. 2012 RESULTS

Total.hydrocarbon.production,.including.the.Group’s.share.in.joint.ventures,.increased.4.3%.to.62.26.million.TOE.due.to.continued.production.growth.at.the.Priobskoye.field.and.Orenburg.assets,.higher.associated.gas.utilization,.higher.natural.gas.output.at.the.Muravlenkovskoye.field,.and.the.commissioning.of.the.Samburgskoye.field.by.SeverEnergia.

Refining.throughput.decreased.1.6%.due.to.planned.maintenance.at.the.crude.oil.distillation.plants.of.the.Omsk.Refinery.(September-October.2013).and.the.Yaroslavl.Refinery.(March-April.2013),.as.the.well.as.decline.in.refining.volumes.at.the.Mozyrskiy.Refinery.

Increased.hydrocarbon.production.and.growth.in.premium.segment.sales.contributed.to.the.growth.in.adjusted.EBITDA.(up.4.2%),.while.foreign.exchange.loss.and.amortization.growth.reduced.the.profit.attributable.to.Gazprom.Neft.shareholders.by.just.0.9%.

The.1.0%.drop.in.sales.was.due.to.a.decrease.in.oil.trading.on.international.markets;.however,.it.was.partially.compensated.by.the.growth.in.petroleum.product.sales.

INTERACTIVE PERFORMANCE

ANALYSIS



http://ar2013.gazprom-neft.com/overview/key-financial-indicators/#analysis


CONTENTS

Petroleum Products Exports

2013 2012 Change, %

RUB million RUB million RUB million

High.octane.gasoline 7,855 9,827 (20.1)

Low.octane.gasoline 6,060 5,585 8.5

Naphtha 34,166 33,809 1.1

Diesel 142,134 117,812 20.6

Fuel.oil 125,195 129,435 (3.3)

Jet.fuel 10,003 7,545 32.6

Marine.fuel 14,258 27,042 (47.3)

Other 13,319 17,994 (26.0)

TOTAL 352,990 349,049 1.1

Petroleum Products Sales on International Markets

Petroleum Products Sales in CIS

2013 2012 Change, %

RUB million RUB million RUB million

High.octane.gasoline 20,863 18,928 10.2

Low.octane.gasoline 4,314 4,785 (9.8)

Naphtha – 1,012 –

Diesel 17,267 14,346 20.4

Fuel.oil 2,541 2,842 (10.6)

Jet.fuel 7,905 9,074 (12.9)

Other 5,419 8,190 (33.8)

TOTAL 58,309 59,177 (1.5)

Domestic Sales of Petroleum Products

2013 2012 Change, %

RUB million

MM tonnes

RUB million

MM tonnes

RUB million

MM tonnes

High.octane.gasoline 241,733 8.06 214,569 7.71 12.7 4.5

Low.octane.gasoline 5,526 0.20 9,147 0.37 (39.6) (46.0)

Naphtha 305 0.02 – – – –

Diesel 200,883 7.16 183,501 7.38 9.5 (3.0)

Fuel.oil 19,168 1.66 21,000 1.91 (8.7) (13.1)

Jet.fuel 68,808 2.83 62,019 2.65 11.0 6.8

Marine.fuel 43,978 2.45 38,966 2.12 12.9 15.6

Other 49,958 3.46 42,880 3.01 16.5 15.0

TOTAL 630,359 25.84 572,082 25.15 10.2 2.7

Other RevenueOther.revenue.includes,.primarily,.revenue.from.transport,.construction.and.other.services..� The.increase.in.other.revenue.of.12.3%.year-on-year.was.primarily.driven.by.changes.in.volumes.sold.

Purchases of Oil, Gas and Petroleum Products .� Purchases.of.oil,.gas.and.petroleum.products.decreased.6.3%.primarily.due.to.a.decrease.in.the.volume.of.crude.oil.purchased.on.international.and.domestic.markets.

REVIEW OF FINANCIAL RESULTS OF OPERATIONS RESULTS OF OPERATIONS



CONTENTS

Production and Manufacturing Expenses


UPSTREAM EXPENSES 72,491 63,926 13.4

Subsidiaries 58,034 50,911 14.0

RUB.per.TOE.of.production 1,350 1,263 6.9

USD*.per.BOE.of.production 5.78 5.54 4.4

Proportionally.consolidated.companies 14,457 13,015 11.1

RUB.per.TOE.of.production 1,543 1,342 15.0

USD*.per.BOE.of.production 6.61 5.89 12.3

DOWNSTREAM EXPENSES 37,293 32,737 13.9

Refining.expenses.at.subsidiaries’.refineries 21,558 17,602 22.5

RUB.per.tonne 633 521 21.4

USD*.per.barrel 2.71 2.29 18.5

Refining.expenses.at.joint.ventures’.refineries 11,139 10,530 5.8

RUB.per.tonne 1,300 1,099 18.3

USD*.per.barrel 5.57 4.82 15.5

Lubricants.manufacturing.expenses 4,596 4,605 (0.2)

TRANSPORTATION EXPENSES TO REFINERIES 23,747 21,946 8.2

OTHER OPERATING EXPENSES 11,021 8,030 37.3

TOTAL 144,552 126,639 14.1

*.Translated.to.USD.at.the.average.exchange.rate.for.the.period.

.� Upstream.expenses.include.expenditure.on.raw.materials.and.supplies,.maintenance.and.repairs.of.extraction.equipment,.labour.costs,.fuel.and.electricity.costs,.oil.recovery.improvement.activities,.and.other.similar.costs.at.the.Group’s.upstream.entities..

.� Upstream.expenses.in.the.subsidiaries.increased.14.0%.year-on-year.due.to.increased.hydrocarbon.production,.including.the.acquisition.of.new.assets.(Novoportovskoye,.Yuzhno-Kinyamskoye,.Baleykinskoye.fields).and.expansion.of.the.Muravlenkovskoye.gas.field.

.� Specific.upstream.expenses.in.the.subsidiaries.increased.by.6.9%.year-on-year.due.to:

.– Acquisition.of.the.Novoportovskoye.field.with.high.operating.expenses.at.the.pilot.development.stage;.– Increased.GEO.activities.to.maintain.the.production.level;.and.electricity.price.increases.(+13.2%);.– Increased.water.cut.at.mature.fields.

.� Refining.expenses.at.the.subsidiaries’.refineries.include.expenditure.on.raw.materials.and.supplies,.maintenance.and.repairs.of.production.equipment,.labor.and.electricity.costs,.and.other.similar.costs.at.Gazprom.Neft’s.upstream.entities.

.� Refining.expenses.at.the.subsidiaries’.refineries.increased.22.5%.year-on-year.primarily.due.to.natural.monopolies.charging.higher.tariffs,.increased.material.costs.incurred.in.connection.with.product.quality.improvement,.the.launch.of.new.processing.units.at.the.Omsk.and.Moscow.refineries,.and.maintenance.at.the.Company’s.refineries.

.� Refining.expenses.at.the.joint.ventures’.refineries.increased.5.8%.year-on-year.due.to.the.launch.of.new.processing.units.

.� Despite.the.increase.in.tariffs.of.natural.monopolies,.lubricant.manufacturing.expenses.reduced.by.0.2%.year-on-year,.owing.to.the.implementation.of.a.cost.saving.policy.

Sales, General and Administrative ExpensesSales,.general.and.administrative.expenses.include.general.business.expenses,.wages,.salaries.(except.wages.and.salaries.at.our.production.and.refining.subsidiaries),.insurance,.banking.commissions,.legal.fees,.consulting.and.audit.services,.allowances.for.doubtful.accounts.and.other.expenses..� Sales,.general.and.administrative.expenses.increased.by.5.3%.year-on-year.due.to.business.expansion.and.higher.premium.sales.




CONTENTS

Transportation Expenses Transportation.expenses.include.the.cost.of.transporting.crude.oil.and.petroleum.products.to.end.customers..These.costs.include.pipeline.transportation,.sea.freight,.railroad,.shipping,.handling,.and.other.transportation.costs..� The.increase.in.transportation.expenses.year-on-year.was.driven.by.higher.tariffs.and.increased.sales.volumes..

Depreciation, Depletion and AmortizationDepreciation,.depletion.and.amortization.expenses.include.the.depreciation.of.oil.and.gas.properties,.refining.and.other.assets..� Depreciation,.depletion.and.amortization.expenses.increased.11.0%.year-on-year.in.line.with.the.increase.in.depreciable.assets.driven.by.capital.expenditure.

Taxes Other than Income Tax


Mineral.extraction.taxes 214,023 201,305 6.3

Excise 77,701 76,408 1.7

Property.tax 7,938 7,814 1.6

Other.taxes 16,408 12,297 33.4

TOTAL TAXES OTHER THAN INCOME TAX 316,070 297,824 6.1

.� Mineral.extraction.tax.(MET).expenses.increased.6.3%.year-on-year.due.to.increased.oil.production.by.the.subsidiaries.and.proportionally.consolidated.entities.and.a.higher.tax.rate..Despite.a.2.3%.year-on-year.fall.in.the.oil.price.in.the.Urals,.the.average.MET.rate.for.oil.increased.by.5.2%.as.the.fall.in.oil.price.was.offset.by.the.increase.in.the.base.rate.from.RUB.446.per.tonne.to.RUB.470.per.tonne.

.� Excise.tax.expenses.increased.1.7%.year-on-year.due.to.the.introduction.of.higher.rates.on.January.01,.2013.and.on.July.01,.2013..The.increase.in.rates.was.offset.by.the.growth.in.production.of.high-grade.motor.fuels.that.are.subject.to.lower.excise.rates.

Share of Profit of Equity Accounted Investments


Slavneft 9,538 12,229 (22.0)

SeverEnergia (131) (170) (22.9)

Other.companies 1,844 708 160.5

SHARE OF PROFIT OF EQUITY ACCOUNTED INVESTMENTS 11,251 12,767 (11.9)

.� The.Group’s.share.of.profit.of.Slavneft.decreased.mainly.due.to.a.decline.in.production,.and.increase.in.the.MET.rate.and.foreign.exchange.losses.in.2013.(profit.in.2012).driven.by.a.revaluation.of.the.Group’s.debt.portfolio.that.is.denominated.mostly.in.United.States.dollars.

Other Financial Items.� Foreign.exchange.gains/losses.were.mainly.driven.by.a.revaluation.of.the.portion.of.the.Group’s.debt.portfolio.that.is.denominated.in.foreign.currencies.

.� Finance.income.increased.year-on-year.due.to.increased.cash.and.cash.equivalents.and.funds.in.bank.deposits.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows


Net.cash.provided.by.operating.activities 276,968 247,695 11.8

Net.cash.used.in.investing.activities (255,940) (180,456) 41.8

Net.cash.used.in.financing.activities (13,010) (16,032) (18.8)

NET INCREASE OF CASH AND CASH EQUIVALENTS 8,018 51,207 (84.3)

Net Cash from Operating Activities


Net.cash.from.operating.activities.before.changes.in.working.capital,.income.tax,.interest.and.dividends 307,548 289,069 6.4

Net.changes.in.working.capital 7,942 (8,349) –

Income.tax.paid (33,514) (28,932) 15.8

Interest.paid (9,981) (11,302) (11.7)

Dividends.received 4,973 7,209 (31.0)

NET CASH PROVIDED BY OPERATING ACTIVITIES 276,968 247,695 11.8

.� Net.cash.from.operating.activities.increased.11.8%.year-on-year.mainly.due.to.an.increase.in.EBITDA.and.a.reduction.in.working.capital.




CONTENTS

Net Cash Used in Investing Activities


Capital.expenditure (208,611) (169,213) 23.3

Acquisition.of.subsidiaries.and.shares.in.equity.affiliates (5,857) (2,261) 159.1

Net.changes.in.deposits (29,425) (4,239) 594.1

Other.transactions (12,047) (4,743) 154.0

NET CASH USED IN INVESTING ACTIVITIES (255,940) (180,456) 41.8

.� Net.cash.used.in.investing.activities.increased.41.8%.year-on-year.mainly.due.to.an.increase.in.capital.expenditure.and.cash.deposited.in.banks..

Net Cash Used in Financing Activities


Net.changes.in.debt 56,395 25,418 121.9

Payment.of.dividends.to.shareholders. (63,328) (34,433) 83.9,

Acquisition.of.non-controlling.interest..in..subsidiaries (1,755) (5,572) (68.5)

Other.transactions (4,322) (1,445) 199.1

NET CASH USED IN FINANCING ACTIVITIES (13,010) (16,032) (18.8)

.� Net.cash.used.in.financing.activities.decreased.year-on-year.to.RUB.13,010.million..This.change.was.due.to:

.– the.Group’s.higher.loan.portfolio..In.2013,.net.increase.in.debt.was.RUB.56,395.million.(versus.RUB.25,418.million.in.2012);.– an.increase.in.total.dividends.paid.to.RUB.63,328.million.(versus.RUB.34,433.million.in.2012),.due.to.an.increase.in.dividend.payment.to.RUB.9.3.per.share.in.2012.(versus.RUB.7.3.per.share.in.2011),.as.well.as.the.payment.of.interim.dividends.at.RUB.4.09.per.share.for.the.1H2013.

Capital Expenditure


Exploration.and.production 144,035 101,923 41.3

Subsidiaries 132,178 90,812 45.6

Proportionally.consolidated.companies 11,857 11,111 6.7

Refining 27,264 41,844 (34.8)

Marketing.and.distribution 17,523 16,224 8.0

Other 6,151 9,802 (37.2)

SUBTOTAL CAPITAL EXPENDITURE 194,973 169,793 14.8

Change.in.advances.issued.and.material.used.in.capital.expenditures 13,638 (580) –

TOTAL CAPITAL EXPENDITURE 208,611 169,213 23.3

.� Capital.expenditure.for.Exploration.and.Production.increased.41.3%.year-on-year.mostly.due.to.more.drilling.programs.at.the.Company’s.old.fields.and.in.the.East.area.of.the.Orenburg.oil.and.gas.condensate.field,.including.a.higher.number.of.more.technology-intensive.horizontal.wells.allowing.the.more.efficient.development.of.complex.fields,.as.well.as.due.to.financing.large.infrastructure.facilities.at.the.Novoportovskoye.field.in.order.to.prepare.for.its.full-scale.development.

.� Capital.expenditure.for.Refining.decreased.34.8%.year-on-year.mostly.due.to.the.completion.of.the.construction.of.catalyst.cracking.gasoline.hydrotreatment.and.diesel.hydrotreatment.facilities.at.the.Omsk.Refinery.in.2012.

Debt and Liquidity

RUB million 2013 2012

Short-term.loans.and.borrowings 52,413 77,193

Long-term.loans.and.borrowings 261,455 166,447

Cash.and.cash.equivalents (91,077) (79,199)

Short-term.deposits (36,869) (7,519)

NET DEBT 185,922 156,922

Short-term.debt./.total.debt,.% 16.7 31.7

Net.debt./.EBITDA 0.59 0.51

.� The.Group.has.a.diversified.debt.structure.that.includes.pre-export.financing,.syndicated.and.bilateral.loans,.bonds,.and.other.instruments..

.� The.average.maturity.of.the.Group’s.debt.increased.from.3.81.years.as.at.December.31,.2012.to.5.15.years.as.at.December.31,.2013.

.� The.average.interest.rate.increased.from.3.48%.as.at.December.31,.2012.to.3.68%.as.at.December.31,.2013..




CONTENTS

FINANCIAL APPENDIX

EBITDA Reconciliation


PROFIT FOR THE PERIOD 186,720 184,152 1.4

Total.income.tax.expense 39,260 39,769 (1.3)

Finance.expense 11,233 11,089 1.3

Finance.income (6,011) (3,275) 83.5

Depreciation,.depletion.and.amortization 76,785 69,163 11.0

Net.foreign.exchange.gain/(loss) 2,166 (1,042) –

Other.loss 6,310 5,268 19.8

EBITDA 316,463 305,124 3.7

Less.share.of.profit.of.equity.accounted.investments (11,251) (12,767) (11.9)

Share.of.EBITDA.of.equity.accounted.investments 31,540 30,749 2.6

ADJUSTED EBITDA 336,752 323,106 4.2

FINANCIAL DATA

Profitability

RUB million 2013 2012 Change, pp

Adjusted.EBITDA.margin,.% 26.57 26.21 0.4

Net.profit.margin,.% 14.73 14.94 (0.2)

Return.on.assets.(ROA),.% 12.91 14.88 (2.0)

Return.on.equity.(ROE),.% 19.99 23.03 (3.0)

Return.on.average.capital.employed.(ROACE),.% 17.44 19.38 (1.9)

Liquidity


Current.ratio 2.08 1.75 19.1

Quick.ratio 1.13 0.76 47.6

Cash.ratio 0.71 0.45 57.4

Leverage

2013 2012

Change, pp

Net.debt/.Total.assets,.% 11.89 11.81 0.1

Net.debt/.Equity,.% 18.63 18.04 0.6

Gearing,.% 18.25 15.90 2.4

. Change, %

Net.debt/.Market.capitalization 0.27 0.23 15.0

Net.debt/.EBITDA 0.59 0.51 14.2

Total.debt/.EBITDA 0.99 0.80 24.2




CONTENTS

SUSTAINABLE DEVELOPMENT:.

FOSTERING A SUPPORTIVE BUSINESS ENVIRONMENT


READ MORE




CONTENTS

SUSTAINABLE DEVELOPMENT ACTIVITIES

Gazprom Neft consistently integrates sustainable development and social responsibility principles into its business strategy. The achievement of the Company’s objectives and its sustainable growth is based on the systematic and balanced management of its business, social, and environmental activities.

The.Company’s.sustainable.growth.and.social.responsibility.priorities.are:..� industrial.and.environmental.safety,..� energy.saving.and.energy.efficiency,..� developing.employee.potential.and.providing.social.support.to.employees;.and.� contributing.to.the.development.of.the.regions.where.it.operates...

The.introduction.of.modern.environmental.and.social.management.systems.that.meet.international.standards.plays.a.key.role.in.implementing.the.Company’s.strategy.in.these.areas.

The.Company.aims.for.continuous.improvement.in.its.industrial.and.environmental.safety,.by.constantly.reducing.incident.rates,.industrial.accidents.and.work-related.illnesses...It.also.aims.to.minimize.the.environmental.impact.from.its.operations.

By.increasing.the.competences.of.its.human.resources,.Gazprom.is.creating.an.environment.where.its.employees.can.successfully.develop.their.innovative.potential..In.order.to.achieve.this,.the.Company.is.creating.and.improving.a.system.for.employee.motivation,.professional.development,.and.social.support.

Gazprom.Neft.contributes.significantly.to.the.social.and.economic.development.of.Russian.regions.as.a.major.taxpayer,.employer,.and.a.partner.of.governmental.authorities.and.local.communities.in.resolving.social.and.economic.development.issues.in.the.regions.where.it.operates..The.Company’s.social.investments.aim.to.improve.quality.of.life.and.build.a.positive.social.environment.for.local.people.

This.section.presents.the.main.results.and.programs.in..the.area.of.sustainable.development..For.more.detailed.information,.please.refer.to.Gazprom.Neft’s.Sustainable.Development.Report.for.2013.


SAVE A PDF VERSION OF THE SUSTAINABLE DEVELOPMENT REPORT


http://ar2013.gazprom-neft.com/upload/Gazprom_Neft_SR_2013_rus.pdf


CONTENTS

6,505.9 RUB mn

Expenditure on environmental safety in 2013

–33%Decrease in number of industrial accidents in 2013

–28%Decrease in air pollutant emissions in 2013

3.7 RUB billion

Total spend on “Home Towns” program in 2013

55,975 employees

Average headcount at Gazprom Neft in 2013




CONTENTS


INDUSTRIAL, ENVIRONMENTAL, AND OCCUPATIONAL HEALTH AND SAFETY (HSE)

The Company’s key priorities in the area of corporate social responsibility include the improvement of occupational health and safety and the reduction of its environmental impact. The Company aims to continuously improve its HSE activities in accordance with global best practices and through its own, innovative developments.

Gazprom.Neft.complies.with.the.national.policy.requirements.in.the.area.of.health,.safety,.environment,.and.social.protection,.as.well.as.corporate.and.international.standards.

The.Company.has.a.corporate.Health,.Safety,.Environment,.and.Social.Protection.Policy.(The.HSE.and.Social.Protection.Policy)..The.Policy.is.pivotal.to.the.performance.and.improvement.of.the.HSE.and.social.protection.management.system.that.complies.with.OHSAS.18001:2007.and.ISO.14001:2004.international.standards.and.covers.all.Gazprom.Neft.production.facilities.

The.Company.has.developed.and.is.successfully.applying.an.integrated.indicator.based.on.key.HSE.and.social.protection.measures:.accident.and.injury.rates,.as.well.as.its.progress.in.implementing.injury.prevention.programs,.fire.safety,.transportation,.environmental.and.social.protection.programs.at.subsidiaries.and.affiliates..These.measures.are.taken.into.account.when.reviewing.the.annual.performance.of.the.Company’s.subsidiaries.

Cooperation.with.contractors.in.this.area.is.considered.to.be.an.important.part.of.the.Company’s.HSE.and.social.protection.management.system..According.to.the.‘Procedure.for.managing.contractors.and.cooperative.arrangements.in.the.field.of.industrial,.environmental.and.occupational.safety,.and.social.protection’,.contractor.compliance.with.the.HSE.and.social.protection.requirements.is.an.important.pre-qualification.criterion..All.contractors.who.provide.services.to.the.Company.sign.an.HSE.and.social.Agreement.that.stipulates.mandatory.compliance.with.Company.HSE.standards.



CONTENTS

–7.5%Reduction of hazardous incidents at facilities in 2013

–32%Decrease in the injury rate (LTIFR) in 2013

Hazardous incidents at facilities

2013 3,299

2012 3,566

2011 3,413

2013 0

2012 2

2011 1



Hazardous accidents at facilities

In.2013,.scheduled.work.continued.to.establish.an.integrated.HSE.and.social.protection.system.and.to.improve.its.efficiency..In.pursuit.of.this.goal,.the.main.objectives.were.to.improve.this.system.and.to.develop.programs.and.projects,.based.on.an.analysis.of.the.status.quo.and.subject.to.an.efficiency.assessment...In.the.reporting.year,.the.auditing.of.HSE.and.social.protection.management.systems.at.subsidiaries.continued..Two.audits.of.the.HSE.and.social.protection.system.(at.the.Omsk.Lubricants.Plant.branch.of.LLC.Gazprom.Neft.–.Lubricants.and.LLC.Gazprom.Neft.Asia).and.two.full.technical.audits.(at.OJSC.Gazprom.Neft-NNG,.CJSC.Gazprom.Neft-Terminal).were.carried.out.

OCCUPATIONAL HEALTH & SAFETY

The Company’s key OHS priorities include a continuous improvement in health and safety by reducing accident, occupational injury, and work-related illness rates.

Injury.prevention.programs,.as.well.as.transport.and.fire.safety.programs,.are.developed.at.the.Company’s.subsidiaries.in.accordance.with.the.corporate.integrated.HSE.and.social.protection.risk.management.system..In.the.event.of.an.incident,.the.Company.carries.out.an.investigation.and.develops.and.implements.corrective.actions..Information.about.incidents.is.communicated.to.all.subsidiaries.and.contractors.engaged.by.the.Company.and.its.subsidiaries.so.that.preventive.actions.can.be.taken.

The.Company.spent.RUB.12,357,031.thousand.on.HSE.and.social.protection.in.2013.(excluding.jointly-owned.and.foreign.assets)..As.a.result.of.consistent.focus.on.performance.in.this.area,.accident.and.injury.rates.decreased.in.2013.

The.Company.focuses.in.particular.on.its.employees’.health.and.safety..Gazprom.Neft.offers.regular.medical.examinations.for.its.staff..The.Company.spent.RUB.3,401,715.thousand.on.occupational.health.and.safety.in.2013.(excluding.jointly-owned.and.foreign.assets).

In.2013,.the.Company.continued.implementing.a.set.of.measures.to.improve.road.transportation.safety,.including.the.development.of.regulatory.instruments,.conducting.monthly.safety.campaigns,.and.training.staff..In.the.area.of.social.protection,.the.Company’s.actions.were.focused.on.the.implementation.of.national.policy,.the.improvement.of.employees’.emergency.skills,.as.well.as.improving.the.continuity.of.production.facilities.in.the.event.of.an.emergency.




CONTENTS

SUSTAINABLE DEVELOPMENT ACTIVITIES INDUSTRIAL, ENVIRONMENTAL, AND OCCUPATIONAL HEALTH AND SAFETY (HSE)

RECERTIFICATION

In.2013,.OHSAS.18001:2007.certificates,.valid.until.2016,.were.reissued.to.CJSC.Gazprom.Neft-Moscow.Lubricants.Plant,.OJSC.Gazprom.Neft.Moscow.Refinery,.and.Omsk.Lubricants.Plant.branch.of.LLC.Gazprom.Neft-Lubricants..The.successful.recertification.confirms.that.the.subsidiaries’.management.systems.comply.with.the.international.OHS.management.system.requirements.

Number of industrial accidents

Number of fatalities

Injury rate (LTIFR)

2013 33

2012 47

2011 57

2013 1

2012 3

2011 2

2013 0.44

2012 0.65

2011 0.64




REDUCTION OF ADVERSE INDUSTRIAL IMPACTS ON THE ENVIRONMENT, EFFICIENT USE OF RESOURCES

One of the main business principles of Gazprom Neft and its subsidiaries is the protection of the natural environment and resources. The Company aims to minimize the negative impact of its operations on the environment.

Gazprom.Neft.thoroughly.assesses.the.environmental.and.biodiversity.impact.of.its.planned.and.current.operations,.including.growing.periods,.breeding.seasons,.and.animal.migration.

Gazprom.Neft.has.an.integrated.environmental.management.system..In.2013,.a.certification.audit.was.carried.out,.and.the.system.was.confirmed.to.comply.with.the.ISO.14001:2004.international.standard..The.certification.of.subsidiaries.will.be.the.Company’s.next.environmental.management.development.focus..In.the.reporting.year,.Gazprom.Neft-Omsk.Refinery.and.Gazprom.Neft-Moscow.Refinery.underwent.a.compliance.audit.of.the.Integrated.Management.System.in.accordance.with.ISO.9001,.14001,.and.OHSAS.18001,.and.obtained..international.compliance.certificates..Gazprom.Neft-Sakhalin.also.obtained.ISO.9001.and.14001.compliance.certificates.

According.to.the.Decree.of.the.President.of.the.Russian.Federation.“On.Holding.a.Year.of.Environmental.Protection.in.Russia”,.2013.was.declared.the.Year.of.Ecology.at.Gazprom.Neft..The.Company.developed.measures.to.reduce.its.adverse.environmental.impact,.including.over.300.different.campaigns.to.improve.waste.management.and.wastewater.treatment.systems,.reduce.air.pollutant.emissions,.decrease.APG.flaring,.etc.



CONTENTS

Current environmental expenditure, RUB million

2013 6,505.90

2012 3,380.60

2011 3,656.70

2010 2,617.60


Breakdown of environmental expenditure*

Air protectionOther environmental activities

Waste managementSurface/ground water and land conservationand rehabilitation

Wastewater collection and treatment

33.3%2.6%

10.0%28.0%

26.1%


*.Net.of.costs.associated.with.capital.construction,.retrofitting.and.maintenance.of.fixed.assets,.which.have.a.positive.environmental.impact.

IMPROVING AIR QUALITY

Gazprom Neft is implementing measures to improve air quality, by making an inventory of emission sources, developing design and consent documentation, monitoring air components at controlled facilities, and upgrading equipment in order to reduce emissions.

In.2013,.an.APG.flaring.system.update,.under.a.soot-free.regime,.resulted.in.the.reduction.of.air.pollutant.emissions.from.APG.flaring..The.implementation.of.APG.utilization.programs.enabled.the.Company.to.reduce.greenhouse.gas.emissions.and.to.close.eight.flare.stacks,.which.were.sources.of.air.pollutant.emissions..Due.to.the.implementation.of.these.measures.in.2013,.the.Company’s.overall.pollutant.emissions.decreased.by.305,900.tonnes.(down.28%.year-on-year)..The.APG.utilization.level.in.the.Company.reached.80%.by.year-end.2013.(up.14%.year-on-year)..The.Company.is.an.industry.leader.in.terms.of.APG.utilization.rates.

.AS PART OF ITS ENVIRONMENTAL PROGRAM, COMPANY SUBSIDIARIES CARRIED OUT THE FOLLOWING IN 2013:

.� Flaring.system.update.and.APG.redirection.(Gazprom.Neft-East,.Gazprom.Neft-Khantos);

.� Installation.of.aluminium.pontoons.on.reservoirs.(Slavneft-YaNOS,.Gazprom.Neft-Omsk.Refinery);

.� The.construction.and.commissioning.of.Vacuum-compressor.stations.(Vyngapurovskoye.and.Vyngayakhinskoye.fields.–.Gazprom.Neft-Noyabrskneftegaz.and.its.branch.Gazprom.Neft-Muravlenko);

.� Introduction.of.gas.contamination.control.stations.(sanitary.protection.zone.of.Gazprom.Neft.Moscow.Refinery).in.the.Moscow.Unified.Monitoring.System;

.� Reconstruction.of.a.bitumen.plant.(Gazprom.Neft-Moscow.Refinery);

.� Implementation.of.an.automated.truck.and.rail.bitumen.loading.project.(Gazprom-Neft-Omsk.Refinery);

.� Rebuilding.of.the.Company’s.filling.stations,.resulting.in.a.modern,.high-tech.chain;

.� Installation.of.automated.emission.monitoring.systems.and.sampling.stations.(Gazprom.Neft-Moscow.Refinery).




CONTENTS


ENERGY CONSUMPTION AND EFFICIENCY

The implementation of its energy efficiency policy is one of Gazprom Neft’s strategic priorities. The Company strives to improve its energy efficiency and to optimize the use of energy resources, by implementing respective solutions at all its enterprises.

In.2013,.Gazprom.Neft.completed.the.first.stage.and.launched.the.second.stage.of.its.energy.management.system.(EMS).project.according.to.the.ISO.50001:2011.standard..During.the.first.stage,.which.started.in.September.2012,.the.Company.adopted.an.Energy.Policy.and.developed.and.implemented.a.unified.regulatory.and.methodological.framework.for.integrating.energy.management.business.processes.into.existing.business.processes.at.the.Corporate.Center.and.Gazprom.Neft.enterprises..During.the.second.stage,.the.EMS.will.be.implemented.as.a.pilot.at.the.following.enterprises:.Gazprom.Neft-Omsk.Refinery.and.Gazprom.Neft-NNG..During.the.third.stage,.the.EMS.will.be.cascaded.across.all.enterprises.of.the.Company,.taking.into.account.the.lessons.learned.

Improving.the.reliability.of.electric.power.facilities.is.an.important.strategic.development.both.for.the.energy.sector’s.utility.companies.and.for.Gazprom.Neft...A.large.portion.of.these.facilities.are.located.in.areas.characterized.by.insufficient.flow.rates.and.a.lack.of.transformer.capacity.from.external.grids..

Vadim.Yakovlev.First.Deputy.CEO



CONTENTS

EXPLORATION & PRODUCTION SECTION

Energy.efficiency.is.a.priority.for.oil.companies.that.spend.a.significant.amount.of.opex.money.on.electricity..The.Exploration.&.Production.Segment.(EPS).energy-saving.measures.are.mainly.intended.to.reduce.the.energy-related.component.of.the.overall.unit.production.costs.incurred.by.EPS.facilities.

The.main.indicator.of.energy.efficiency.at.EPS.facilities.is.the.specific.energy.consumption.(SEC).for.the.mechanical.extraction.of.liquid.

The.main.areas.of.EPS.reliability.and.its.energy.efficiency.improvement.program.in.2013.include:.commissioning.and.reconstruction.of.the.Kirillovskaya-Trachukovskaya.and.Tarko-Sale-Urengoy.overhead.power.transmission.lines;.replacement.of.diesel.power.plants.with.six.gas-powered.electrical.generators.at.the.power.complex.in.the.south-west.of.the.Krapivinskoye.field;.access.to.electricity.and.capacity.wholesale.markets.(Gazprom.Neft-NNG.and.Gazprom.Neft-Khantos);.preparation.and.approval.of.a.2014–2016.technical.metering.program.in.four.of.the.Company’s.subsidiaries;.and.carrying.out.five.field.training.courses.for.employees.

The.economic.benefit.from.the.energy-saving.measures.taken.by.the.oil.production.facilities.in.2013.amounted.to.RUB.585.million.

LOGISTICS, REFINEMENT AND SALES SEGMENT

The.main.energy-saving.measures.in.the.Logistics,.Refinement.and.Sales.Segment.subsidiaries.in.2013.included:.replacement.of.furnaces.(with.an.energy-saving.impact.of.644.1.TJ),.updating.furnaces.to.increase.efficiency.(571.5.TJ),.optimization.of.condensate.collection.and.return.(139.4.TJ),.reconstruction.of.economizers.and.superheaters.for.recovery-boilers.(185.2.TJ),.process.heat.recovery.(184.4.TJ),.and.compressor.optimization.(206.6.TJ).

In.2013,.as.a.result.of.energy.efficiency.measures.in.the.Logistics,.Refinement.and.Sales.Segment,.the.Company.saved.3,403.1.TJ.of.heat,.electricity.and.fuel,.reducing.energy.costs.by.more.than.RUB.615.9.million.

Gazprom.Neft.is.exploring.new.possibilities.for.using.alternative.energy.sources..In.2013,.NIS,.a.Serbian.company,.in.which.Gazprom.Neft.has.a.56.5%.interest,.continued.work.to.construct.a.wind.farm.at.Plandiste..In.September.2013,.work.commenced.to.construct.a.substation.that.will.connect.the.wind.farm.to.EMC.grids.(a.grid.company)..In.addition,.in.2013,.four.small.cogeneration.plants.were.constructed.(Sirakovo,.Velebit-1,.Velebit-2,.and.Kikinda),.and.the.geothermal.energy.project.was.further.developed.

Specific energy consumption for the mechanical extraction of liquid

Mechanical extraction SEC by EPS facilities, kWh/t

Energy saved under Energy Conservation

Program, million kWh2013 2012

Gazprom.Neft-Noyabrskneftegaz 15.44 15.63 57

Gazprom.Neft-Muravlenko,.branch 19.95 20.04 72

Gazprom.Neft-Khantos 24.05 24.25 8

Gazprom.Neft. 18.63 18.69 143


Consumption of purchased energy: Exploration and Production Segment

Energy resources provided under supply contracts (purchase and sale contracts) Measuring units 2013 2012 2010

Purchased.electric.power.(net.of.power.transferred.to.third.parties)

RUB.thousand 11,203,759 12,139,252 13,927,202

thousand.kWh 4,577,957 4,902,184 5,154,370

Purchased.thermal.power.(net.of.power.transferred.to.third.parties)

RUB.thousand 22,725 40,163 45,757

GJ 85,913 122,059 132,406

Gcal 20,519 29,152 31,623


Consumption of purchased energy: Logistics, Refining and Sales Segment

Energy resources provided under supply contracts (purchase and sale contracts) Measuring units 2013 2012 2010

Purchased.electric.power.(net.of.power.transferred.to.third.parties)

RUB.thousand 3,338,369 3,121,124 2,998,110

thousand.kWh 17,313,245 16,854,981 16,308,921

Purchased.thermal.power.(net.of.power.transferred.to.third.parties)

RUB.thousand 22,725 40,163 45,757

GJ 85,913 122,059 132,406

Gcal 20,519 29,152 31,623


Energy Conservation Program targets and achievements in 2013

Subsidiary Cost savings, RUB million Energy resource saving, TJ

Planned Actual Planned Actual

Omsk.Refinery 267.3 307.3 1,696.9 1,635.5

Moscow.Refinery 119.0 79.5 876.8 550.5

YaNOS 100.0 229.1 577.4 1,217.0

TOTAL 486.6 615.9 3,151.1 3,403.1





CONTENTS

HUMAN RESOURCE DEVELOPMENT

The development of human resources is one of the key actions underpinning the Company’s ability to achieve its strategic goals. Gazprom Neft employees are offered competitive wages and social packages, and benefit from career and professional development opportunities. The Company takes consistent steps to enhance the efficiency of its HR development and social support programs.

STAFF APPRAISAL

At.year-end.2013,.Gazprom.Neft.employed.approximately.57,400.people.across.its.corporate.divisions.and.facilities..Our.employees.work.across.24.regions.of.Russia,.as.well.as.in.the.CIS.and.non-CIS.countries..60%.of.the.staff.are.blue-collar.workers,.and.40%.are.managers,.experts.and.office.staff.

The.majority.of.employees.are.concentrated.in.the.Yamal-Nenets.Autonomous.District.(~18%).where.the.main.production.facilities.and.oilfield.services.are.located,.as.well.as.in.Saint.Petersburg.and.the.Leningrad.Region.(~15.6%),.and.in.the.Omsk.Region.(~13.5%).

The.average.headcount.increased.by.2%.in.2013.year-on-year.due.to.the.staffing.of.both.new.and.developing.enterprises.of.the.petroleum.product.supply.and.aviation.fuel.supply.chains.

In.2013,.the.corporate.HR.Strategy.was.updated.to.set.strategic.HR.management.objectives.and.key.initiatives.for.their.achievement.

HR.strategic.objectives.for.the.period.up.to.2020:.� Systematic.selection.and.reorganization.of.personnel;

.� Talent.management,.competency.development,.and.training;

.� Motivation.system.development.and.creation.of.engagement.culture;

.� Improvement.of.performance.and.organizational.efficiency;

.� Enhancement.of.HR.function.




CONTENTS

48.2 RUB bn Personnel costs in 2013

35.5 RUB thousand Average spend on social payments per employee in 2013

X 2.5 higher

Average Company wage level compared to average wages across Russia

Average headcount, employees

Employee structure by main areas of activity, as of December 31, 2013, employees

2013 55,975

2012 54,829

2011 58,905

2010 64,895

2013 67,054

2012 59,828

2011 59,988

2010 50,095



Breakdown of average monthly salary, RUB

COMPENSATION AND SOCIAL SUPPORT

The.Company.has.a.comprehensive.incentive.system.which.includes.both.material.and.non-material.employee.incentives..The.incentive.system.is.closely.linked.to.the.Company’s.strategic.goals.and.is.continually.improved.in.accordance.with.business.responsibilities..Gazprom.Neft.is.continuing.its.process.to.introduce.an.annual.employee.performance.appraisal.system.using.broad-based.criteria,.including:.professional.skills,.managerial.skills,.and.ethics..The.appraisal.results.are.taken.into.account.when.planning.careers.and.selecting.employees.for.the.candidate.pool...They.also.influence.salary.increases.and.annual.bonuses.

The.Company.continues.to.stay.in.line.with.average.market.wages.in.the.sector’s.labor.market..Wages.and.salaries.are.revised.annually.subject.to.individual.performance..The.performance.of.each.employee.is.assessed.based.on.the.Company’s.goal.management.system.

The.average.annual.increase.in.monthly.salaries.from.2009.to.2013.was.about.11%.

22,77341%

7,61514%

6,78412%

4,7338%

4,7418%

1,4943%1,906

3%

5,92911%

Oilfield services and geological exploration

Logistics, procurement

Product-oriented business units

Other (management, business and administration service, non-core activities)

Production

Diversified enterprise NIS

Refining

Sales of petroleum products and aviation fuel procurement

TOTAL

4,741

1,906

1,494

5,929

7,615

6,784

4,733

22,773

57,398

8%

3%

3%

11%

14%

12%

8%

41%

100%

57,398employees




CONTENTS

The.average.salary.of.the.Company’s.employees.in.2013.was.RUB.67,054.which.is.12%.more.than.in.2012.and.2.5.times.higher.than.the.average.salary.in.Russia.for.nine.months.of.20131.

Personnel.expenses.in.2013.amounted.to.RUB.48.2.billion,.which.is.a.14.1%.increase.compared.to.the.previous.year.

Gazprom.Neft.also.places.special.emphasis.on.improving.its.non-financial.incentive.system.and.this.is.a.key.priority.for.HR.management..It.includes.professional.competitions,.sports.and.recreational.activities,.as.well.as.corporate.communications.sessions..The.Company.annually.awards.two.kinds.of.honorary.titles.(corporate.merit.badges).for.its.workers:.‘Honoured.Worker.of.Gazprom.Neft’.and.‘Veteran.of.Gazprom.Neft.’

The.Company’s.enterprises.have.adopted.collective.agreements.and.follow.corporate.regulations.and.rules.which.set.out.various.social.benefits.for.employees.above.and.beyond.those.required.by.law.

The.social.packages.at.most.enterprises.include.voluntary.health.insurance,.accident.insurance,.subsidized.meals,.financial.aid,.holiday.vouchers,.and.other.benefits..Company.employees.receive.medical.advice.and,.if.necessary,.treatment.in.the.best.Russian.hospitals.under.a.corporate.voluntary.health.insurance.contract..The.Company.also.arranges.medical.examinations.for.its.employees.from.time.to.time.

In.a.number.of.regions,.a.corporate.mortgage.program.is.in.place.to.help.employees.buy.an.apartment.or.a.house..Under.the.program,.the.enterprise.partially.compensates.the.loan.interest.payable.by.an.employee.to.the.bank.or.advances.money.to.make.the.initial.deposit.

The.Company.develops.and.implements.social.programs.in.active.cooperation.with.trade.unions..Over.two.thirds.of.the.Company’s.employees.are.represented.by.trade.union.organizations.who.are.involved.in.resolving.professional.and.social.issues,.as.well.as.matters.relating.to.labor.rights.and.employees’.interests.

Average.expenditure.on.social.benefits.in.2013.amounted.to.RUB.35,465.per.employee,.up.4%.year-on-year.

SUSTAINABLE DEVELOPMENT ACTIVITIES HUMAN RESOURCE DEVELOPMENT

1 .According.to.Rosstat.(Federal.State.Statistics.Service).data.

Personnel costs, RUB thousand

2013 2012 2010

TOTAL 48,225,670 42,259,549 45,277,846

Payroll.fund 45,039,918 39,363,693 42,403,326

Social.benefits.paid 3,185,752 2,895,856 2,874,520


Benefits package, RUB thousand

2013 2012 2010

Free.and.subsidized.meals 522,774 493,052 509,864

Voluntary.health.insurance 650,709 529,623 438,862

Paid-for.holiday.packages 115,705 109,761 101,722

Payments.to.retiring.employees 257,019 321,874 623,067

Housing.program 121,329 124,132 118,413

Sports.and.cultural.events 317,599 290,222 314,003


COMPENSATION AND SOCIAL SUPPORT (CONTINUED)



CONTENTS

TRAINING AND DEVELOPMENT

In 2013, the main employee training and development priorities were:.� Creating.an.efficient.candidate.pool.planning.system;.� Developing.professional.competencies;.� Developing.leadership.and.management.competencies;.� Improving.management.of.graduates.and.young.specialists;.� Developing.and.implementing.a.system.for.key.employee.appraisal.and.accelerated.development.

In.2013,.the.Company.conducted.an.audit.of.the.candidate.pool.management.system.in.order.to.determine.whether.it.complies.with.the.Company’s.strategic.goals.and.to.analyze.its.performance..Based.on.the.results,.the.candidate.pool.management.methodology.was.adjusted.and.the.decision.was.taken.to.implement.new.initiatives,.including.the.establishment.of.a.Talent.Committee.

In.the.reporting.year,.the.Company.took.further.measures.to.build.professional.competency.models..Models.for.five.subdivisions.of.the.Moscow.Refinery.were.developed,.eight.EPS.functional.areas.were.classified,.and.“career.ladders”.were.developed.for.the.Exploration.function..Special.emphasis.in.the.reporting.year.was.placed.on.the.development.of.e-learning.that.was.made.available.to.more.than.20,000.employees.

In.2013,.a.corporate.Academy.of.Talent.Pool.and.Prospective.Manager.Training.was.set.up..Academy.modules.are.aimed.at.developing.managerial.competencies,.enhancing.the.leadership.potential.of.existing.managers,.teambuilding,.and.creating.a.common.management.culture.based.on.corporate.values.

The.Stockholm.School.of.Economics.developed.and.implemented.a.TOP.Drive.module.program.to.support.one.of.the.Company’s.2013.key.organizational.projects.–.the.reorganization.of.the.regional.sales.model..The.program.is.intended.for.managers.of.the.regional.sales.directorate.and.chief.executives.of.petroleum.product.suppliers.and.encompasses.different.management.aspects.–.strategic.planning,.HR.management,.etc.

In.2013,.Project.Management.School,.an.educational.program.for.EPS.employees.aimed.at.building.basic.knowledge.in.project.management,.was.launched..Lecturers.from.European.business.schools.were.invited.as.the.course.moderators.

In.the.reporting.year,.Gazprom.Neft.continued.its.cooperation.with.higher.educational.institutions.and.specialized.secondary.schools.for.the.purposes.of.personnel.training.and.recruitment,.employee.professional.development,.and.R&D..More.than.20.universities.became.partners.of.the.Company,.including.the.National.Mineral.Resources.University.(University.of.Mines),.Gubkin.Russian.State.University.of.Oil.and.Gas,.Lomonosov.Moscow.State.University,.Moscow.Institute.of.Physics.and.Technology,.and.others.

Students.of.the.universities.and.specialized.secondary.schools.partnering.with.the.Company.have.the.opportunity.to.undertake.an.internship.at.Gazprom.Neft.enterprises..Over.500.students.undertake.such.internships.annually..Based.on.his/her.results,.the.student.may.be.invited.to.work.for.the.Company..In.2013,.more.than.160.university.graduates.were.employed.by.the.Company.subsidiaries.

42,094 employees

Received training in 2013

535 RUB mn

Training expenditure in 2013




CONTENTS

INTERNAL COMMUNICATIONS

The development of an internal communications system is critical for promoting the corporate culture, ensuring transparency and openness of the Company’s activities and maintaining a dialogue between management and employees.

Annual.surveys,.which.monitor.the.corporate.social.and.psychological.climate,.are.used.to.shape.the.information.content.distributed.via.internal.communication.channels..The.survey.includes.interviews.with.top.managers,.focus.groups,.and.a.wide.survey.of.employees.in.the.Corporate.Center.and.subsidiaries..In.2013,.the.survey.covered.32.enterprises.and.approximately.9,000.employees..The.research.findings.helped.develop.corrective.action.plans.for.each.subsidiary.

The.Company’s.internal.communication.channels.include:.a.range.of.corporate.media,.staff.meetings.with.Gazprom.Neft.management,.feedback.tools,.corporate.activities.and.sports.events,.corporate.parties,.competitions,.and.other.similar.events.

Corporate.media.channels.include.the.Company’s.official.website.and.websites.of.its.subsidiaries,.intranet-portals.of.Gazprom.Neft.enterprises,.Siberian.Oil.corporate.magazine.and.the.Neftegazeta.periodical.newspaper..This.newspaper.publishes.both.corporate-wide.materials.and.information.concerning.particular.enterprises.and.businesses..In.2013,.Gazprom.Neft-Aero.launched.a.24h.corporate.radio.station.which.is.broadcast.in.all.branches.and.subsidiaries.

The.Company.actively.uses.a.range.of.feedback.tools.to.maintain.a.dialogue.between.management.and.employees..The.Company.has.a.corporate.hotline,.an.‘Ask.Your.Manager’.section.on.the.intranet.portals.of.the.Corporate.Center.and.subsidiaries,.and.information.kiosks.are.installed.to.collect.questions.for.management.from.employees.who.have.no.access.to.the.corporate.network.


.UNIFORM COMMUNICATION PLATFORM

The.Uniform.Communication.Platform.project,.which.envisages.the.development.of.a.multi-service.management.model.for.Gazprom.Neft.corporate.portals,.won.a.Best.Intranet.Russia.2013.intranet-solution.award.–.it.was.the.winner.in.the.Corporate.Management.category..The.implementation.of.the.project.will.result.in.the.creation.of.a.user-friendly.intranet.environment.enabling.the.Company.to.focus.on.the.general.business.priorities.of.Gazprom.Neft.and.its.subsidiaries.and.to.strengthen.avenues.of.dialogue.with.employees.



CONTENTS

HOME TOWNS:.

IMPROVING QUALITY OF LIFE AND BUILDING A COMFORTABLE ENVIRONMENT


READMORE




CONTENTS

REGIONAL POLICY AND LOCAL COMMUNITY DEVELOPMENT

The Company’s social activities in the regions aim to improve quality of life and create a comfortable social environment for local residents, including the Company’s employees and their families. Gazprom strives to be a partner and an initiator of social and economic change by encouraging active stakeholder engagement in the social development of the regions.

The.Company.chooses.social.investment.projects.based.on.engagement.with.stakeholders.(residents.and.representatives.of.regional.government.authorities).and.monitoring.social.well-being..The.results.obtained.enable.Gazprom.Neft.to.identify.the.regions’.social.challenges.and.then.develop.and.implement.respective.social.and.charity.projects..Taking.advice.from.representatives.of.non-profit.social.organizations.plays.a.key.role.when.creating.this.project.portfolio.

As.part.of.the.Home.Towns.program,.the.Company.implemented.348.projects.in.2013,.59.projects.more.than.in.2012..The.Home.Towns.geographical.scope.was.also.extended:.in.the.reporting.year,.the.first.projects.in.the.Orenburg.and.Kemerovo.Regions.were.implemented.

Total.costs.associated.with.the.Home.Towns.program.were.RUB.3.7.billion.in.2013,.up.RUB.1.3.billion.compared.to.2012,.of.which.RUB.2.5.billion.were.spent.on.infrastructure.investment.as.part.of.social.and.economic.agreements.with.the.Russian.regions.and.municipalities.and.more.than.RUB.1.2.billion.on.supporting.corporate.charitable.initiatives.

The.Home.Towns.program.is.mainly.implemented.through.social.and.economic.agreements.with.regional.and.municipal.authorities,.and.also.charitable.donations,.volunteering.campaigns.and.a.social.initiative.grants.competition.


HOME TOWNS INTERACTIVE MAP IN A TABLET PC APPLICATION




CONTENTS

In.2013,.the.Company.made.38.social.and.economic.agreements.in.cooperation.with.the.regional.and.municipal.authorities.of.the.Yamal-Nenets.Autonomous.District,.Khanty-Mansiysk.Autonomous.District.–.Yugra,.Nenets.Autonomous.Districts,.Kemerovo,.Leningrad,.Omsk,.Orenburg,.Tomsk,.and.Tyumen.Regions.

In.the.reporting.year,.the.decision.was.made.to.introduce.a.grants.competition.as.a.new.social.investment.tool.within.the.framework.of.the.Home.Towns.program..The.pilot.project.of.the.grants.competition.was.implemented.in.2013.in.the.Orenburg.Region..The.Grants.Panel.selected.12.projects.out.of.38.applications.received,.and.provided.grants.amounting.to.RUB.1.6.billion..Starting.in.2014,.similar.competitions.will.be.held.in.the.key.regions.of.the.Company’s.operations.

UNDER THE HOME TOWNS PROGRAM

implemented

348 projects spent on infrastructure projects

2.5 RUB bncharitable donations

1.2 RUB bn

The Company implements all social and charity projects as part of the Home Towns social investment program, which determines the main investment areas.

A TOWN FOR PEOPLE

Urban development (housing, urban land development)

Creating and developing infrastructure for children

and grassroots sports, supporting sports

institutions and holding sport events

Educational support and development

Conservation and development of the cultural potential of local

communities

Cooperation with the native minorities of Northern

Russia.

BIRTHPLACE OF VICTORY NEW HORIZONS CULTURAL CODE PRESERVING TRADITIONS




CONTENTS


A BIRTHPLACE OF VICTORY

By.taking.part.in.the.construction.of.sports.facilities,.the.Company,.together.with.the.regional.and.local.authorities,.provides.people.with.much-needed.sports.facilities.and.also.promotes.healthy.lifestyles.

In.2013,.a.1,000-seater.Ice.Stadium.was.built.with.the.Company’s.support.in.the.town.of.Leninsk-Kuznetsky.in.the.Kemerovo.Region..In.the.reporting.year,.Gazprom.Neft.commissioned.Zenith.multi-purpose.sports.complexes.in.the.town.of.Noyabrsk.and.in.the.village.of.Khanymey.in.the.Purovsky.district.(YaNAD).

The.Company’s.project.to.construct.all-season.outdoor.playgrounds.is.one.of.the.ways.of.promoting.healthy.lifestyles.and.active.family.outdoor.activities..In.2013,.as.part.of.this.project,.four.multi-purpose.hockey.rinks.were.built.in.the.Novosergievsky,.Orenburgsky.and.Perevolotsky.districts.of.the.Orenburg.Region,.and.a.sports.ground.was.built.in.the.village.of.Ratta.(in.the.Krasnoselkupsky.district,.YaNAD)..In.Omsk,.three.sports.grounds.and.a.sports.mini-park.were.opened.with.the.support.of.the.Company..In.2014,.more.outdoor.sports.grounds.are.expected.to.be.opened.in.the.town.of.Noyabrsk.(YaNAD).and.covered.sports.grounds.are.also.scheduled.to.be.constructed.in.YaNAD.(in.the.towns.of.Noyabrsk.and.Muravlenko,.and.in.the.village.of.Khanymey.in.the.Purovsky.district).

In.2013,.the.Company.continued.to.implement.an.inter-regional.sports.project.in.the.Yamal-Nenets.Autonomous.District.—.the.Avangard.Ice.Hockey.Academy..The.project’s.goal.is.to.establish.a.uniform.hockey.training.system.for.children.and.teenagers.in.the.Urals.and.Siberian.territories,.which.will.become.part.of.a.branch.network.extending.to.different.regions..The.center.of.the.Academy.will.operate.under.the.aegis.of.Russia’s.leading.hockey.club,.Avangard.Omsk,.whose.main.founders.are.the.companies.of.the.Gazprom.Group..The.best.students.in.the.regional.branches.will.have.an.opportunity.to.continue.training.at.the.Academy’s.Center.in.Omsk.and,.later,.in.Avangard’s.club.system..For.the.initial.stage.of.the.project,.the.Yamal-Nenets.Autonomous.

District.has.been.chosen.as.a.priority.region.for.the.Academy’s.branch.development...In.the.reporting.year,.the.first.branch.of.the.Avangard.Hockey.Academy.was.opened.in.the.town.of.Tarko-Sale..In.2015,.a.branch.is.planned.to.be.opened.in.the.town.of.Noyabrsk.

In.2013,.the.Company,.together.with.Nissan,.arranged.the.auto-tour.Nismo.G-Drive.Show..The.event.was.held.in.Omsk,.Novosibirsk,.Tyumen,.and.Yekaterinburg.attracting.more.than.160,000.people.in.total..As.part.of.the.event,.Safe.Driving.School.Express.Courses.and.a.children’s.driving.school.were.organized.in.each.city.

The.International.Gazprom.Neft.Cup.Kids.Ice.Hockey.Tournament.is.the.Company’s.flagship.social.project.in.the.field.of.children’s.sports..In.2013,.the.seventh.tournament.was.held.in.Omsk.and.was.attended.by.16.teams,.comprising.over.400.young.players..Over.the.past.seven.years,.the.level.of.organization.of.the.tournament.is.such.that.it.is.now.recognized.internationally,.and.the.number.of.applications.received.to.take.part.in.the.tournament.is.growing.year.by.year..Based.on.the.success.of.the.2013.tournament,.the.decision.was.made.to.increase.the.number.of.participating.teams.from.16.to.24.in.2014.and.to.break.down.the.competition.into.two.groups,.the.‘West’.(Minsk).and.‘East’.(Omsk).groups.

The.Company.continues.to.help.organize.regional.sports.events.that.are.important.for.the.local.communities..In.particular,.a.speed.chess.tournament,.the.International.Chess.Day.and.the.‘Mom,.Dad.&.Me.–.a.Chess.Family’.events.were.supported.by.the.Company.in.the.town.of.Khanty-Mansiysk.

A TOWN FOR PEOPLE

In.this.area,.Gazprom.Neft’s.aim.is.to.give.the.residents.of.the.regions.where.it.operates.access.to.a.quality.urban.environment.and.to.opportunities.similar.to.those.found.in.large.and.megacities..The.urban.development.projects.in.this.area.include.housing.construction.and.renovation,.as.well.as.urban.land.development.

In.the.reporting.year,.the.Company.made.significant.efforts.to.resolve.the.issue.of.housing.shortages.and.rundown.conditions.in.the.regions.of.the.Company’s.operation..The.Company.also.contributed.to.the.completion.of.a.residential.complex.of.120.apartments.in.the.town.of.Muravlenko.(YaNAD).

In.the.reporting.year,.construction.of.a.second.residential.complex.of.120.apartments.in.the.town.of.Khanty-Mansiysk.(KhMAD-Yugra).commenced..The.Company.also.supported.a.housing.repair.project.for.large.families.in.the.Orenburg.Region..The.Company.continued.to.provide.support.to.municipalities.in.the.Tomsk.and.Tyumen.Regions.in.connection.with.the.construction.and.purchase.of.apartments.for.social.workers.(teachers.and.health.care.workers).with.the.aim.of.attracting.young.professionals.

The.lack.of.children’s.playgrounds.in.the.areas.of.the.Company’s.operations.is.an.equally.important.issue..In.the.reporting.year,.the.Company.contributed.to.the.construction.of.children’s.playgrounds.in.the.villages.of.Verkhnyaya.Platovka,.Mamalaevka.and.Chkalov.in.the.Orenburg.Region.and.funded.the.construction.of.eight.children’s.playgrounds.in.Omsk.

As.part.of.A.Town.for.People.scheme,.several.urban.land.development.projects.were.implemented.in.2013,.for.example,.the.improvement.of.the.central.square.of.the.village.of.Karavanny.in.the.Orenburg.Region..Land.improvement.and.landscaping.projects.were.implemented.in.the.village.of.Zerkaltsevo.in.the.Tomsk.Region.where.Company.volunteers.planted.cedars.

Poor.quality.healthcare.is.another.issue.in.the.regions.where.Gazprom.Neft.is.active.and.has.influenced.Gazprom.Neft’s.social.investment.projects.in.2013.to.include.health.care.facilities..In.the.reporting.year,.the.Company.contributed.to.the.repair.of.the.Kargasok.Central.Regional.Hospital.(Tomsk.Region).and.the.procurement.of.equipment.for.the.Children’s.Clinical.Hospital.No..3.in.Omsk.

HOME TOWNS PROGRAM



CONTENTS

NEW HORIZONS

The.Company’s.support.of.educational.activities.in.the.regions.aims.to.solve.the.most.pressing.problems.–.the.lack.of.capacity.in.child.day-care.facilities.and.the.poor.quality.of.their.equipment.

In.2013,.the.“Childhood.Planet”.day-care.facility.was.commissioned.in.the.town.of.Khanty-Mansiysk,.with.20%.of.the.places.allocated.to.the.children.of.employees.at.Gazprom.Neft-Khantos.

In.the.reporting.year,.the.Company.actively.developed.the.New.Horizons.initiatives.in.the.Orenburg.and.Omsk.regions..The.Company.has.focused.on.the.maintenance.of.schools,.child.day-care.facilities.and.recreation.centers..In.2013,.Gazprom.Neft.contributed.to.the.repair.of.schools.in.the.villages.of.Mryasovo,.Platovka,.and.Berdyanka...School.grounds.in.the.villages.of.Verkhnyaya.Platovka,.Karavanny,.Mamalaevka,.and.Perevolotsky.were.also.improved..The.Company.gave.further.financial.support.to.classroom.chemistry.laboratories.that.had.been.established.earlier.in.municipal.schools.in.Omsk.

CULTURAL CODE

In.2013,.as.part.of.this.aspect.of.the.Home.Towns.program,.the.Company.supported.cultural.events.and.initiatives.that.are.particularly.important.for.residents.of.the.regions.where.the.Company.operates.

The.Company’s.continued.its.tradition.of.sponsoring.City.Day.events.in.the.towns.of.Muravlenko.and.Noyabrsk.(YaNAD)..In.addition,.the.Company.supported.the.11th.International.Film.Festival.“Fire.Spirit”.that.takes.place.annually.in.the.town.of.Khanty-Mansiysk.and.is.one.of.the.key.cultural.events.in.Yugra..Gazprom.Neft.has.been.a.general.partner.of.the.film.debut.festival.since.2007..The.Company.established.a.special.Preservation.of.Cultural.Traditions.award.within.the.framework.of.the.festival.

In.2013,.Gazprom.Neft.supported.a.number.of.air.shows.as.an.official.fuel.supplier.of.air.display.teams,.some.of.which.participated.in.MAKS.2013.International.Aviation.and.Space.Show.(Moscow.Region),.Air.Show.2013.(Ulyanovsk).and.an.air.show.in.Kyrgyzstan.(Bishkek).

As.part.of.its.support.of.cultural.initiatives,.Gazprom.Neft.funded.archaeological.excavations.organized.by.the.Institute.for.the.History.of.Material.Culture.under.the.Russian.Academy.of.Sciences.

PRESERVING TRADITIONS

Supporting.the.traditional.lifestyles.of.native.minorities.of.Northern.Russia,.whilst.ensuring.their.integration.into.the.modern.economic.and.social.landscape,.is.an.important.social.investment.initiative.of.the.Company.

In.2013,.as.part.of.its.activity.in.this.field,.the.Company.helped.construct.trading.posts.for.native.minorities.of.the.North.and.sponsored.the.communities.in.order.to.support.their.traditional.activities..In.particular,.Gazprom.Neft.provided.families.with.power.plants,.chain.saws,.and.snowmobiles,.and.helped.them.buy.construction.materials.and.work.clothes.

In.2013,.the.Company.also.helped.organize.a.Reindeer.Herder.Day.event,.a.traditional.national.holiday.in.the.town.of.Muravlenko,.the.Tolka.and.Khalyasovey.villages.(YaNAD).and.in.the.Russinskaya.village.(Surgutsky.district.of.the.KhMAD-Yugra).

HOME TOWNS PROGRAM

FOR DETAILED INFORMATION ON THE HOME TOWNS PROGRAM, PLEASE REFER TO THE SUSTAINABLE DEVELOPMENT REPORT FOR 2013 OR THE COMPANY’S WEBSITE



http://rodnyegoroda.ru/


CONTENTS


CHARITABLE ACTIVITIES AND VOLUNTEER PROGRAMS

Gazprom Neft has adopted a common approach to organizing charitable activities that is determined by the Policy of Charitable Activities and the corporate standard “Charity Support Procedures”.

In.2013,.the.Company.adopted.a.Charity.Concept.aimed.at.improving.the.effectiveness.of.charity.programs.in.the.regions.of.its.operations..The.Concept.divides.the.charity.activities.into.four.groups:.targeted.corporate.charity,.give-and-take.fund,.corporate.volunteering,.and.social.initiative.grant.competitions.

The.Company.implements.a.corporate.volunteering.program..Encouraging.Company.volunteers.to.donate.blood.and.supporting.orphanages.and.boarding.schools.are.the.program’s.key.priorities..The.events.held.in.2013.included.Blood.Donor’s.Day,.“Letter.to.Santa”,.“Prepare.Your.Child.for.School”,.Children’s.Day.and.“Sports.Spring”.

In.the.reporting.year,.the.Company’s.employees.played.an.active.part.in.Gazprom.Neft’s.Year.of.Ecology.volunteer.programs..The.volunteers.helped.clear.rubbish.from.coastal.and.urban.regions,.planted.trees.and.improved.urban.areas..Over.7,500.Company.employees.took.part.in.corporate.volunteer.events.in.2013..



CONTENTS

PUBLIC AND GOVERNMENT RELATIONS (PR AND GR)

GAZPROM NEFT’S INFORMATION POLICY AND INTERACTION WITH GOVERNMENT

“The ‘Strive for Better’ slogan describes the key development principle that Gazprom Neft has been following in recent years. This new promotional concept made it possible to convey the Company’s values and achievements to the audience and demonstrate the effectiveness of its social projects,” said Alexander Dybal, member of the Management Board of Gazprom Neft.

In.2013,.the.Company.continued.to.collaborate.actively.with.public.and.governmental.stakeholders.based.on.the.principles.of.dialogue.and.partnership.

At.part.of.its.commitment.to.transparency,.the.Company.informs.stakeholders.about.all.aspects.of.its.operations..For.example,.in.2013,.141.official.statements.and.20.interviews.given.by.Company.management.to.the.largest.Russian.and.foreign.business,.social.&.political.media.were.published.on.Gazprom.Neft’s.website..In.order.to.raise.greater.awareness.of.Gazprom.Neft’s.projects,.press.tours.were.organized.to.give.journalists.from.various.federal.and.regional.mass.media.an.opportunity.to.visit.the.Company’s.production.facilities.–.the.Omsk.and.Moscow.Refineries,.facilities.of.Naftna.Industrija.Srbije.(NIS).(Gazprom.Neft’s.subsidiary.in.Serbia),.and.Gazprom.Neft-Khantos’.fields.in.the.KhMAD-Yugra..In.addition,.Gazprom.Neft’s.top.managers.held.regularly.press.conferences.and.briefings,.answering.questions.concerning.the.Company’s.operations.and.plans.

The.main.topics.of.interest.during.the.year.included.the.ongoing.modernization.of.the.Company’s.refineries.and.their.switch.to.Euro.5.standard.fuel.production,.the.implementation.of.hard-to-recover.and.non-conventional.reserve.projects,.and.the.development.of.large.projects.in.new.regions,.including.in.the.north.of.YaNAD.and.outside.Russia.

The.Gazprom.Neft.Group.websites,.combined.in.a.single.integrated.system.that.gives.increased.access.to.information.about.the.Group’s.activities.to.all.stakeholders,.are.the.most.important.communications.tool.

In.2013,.Gazprom.Neft’s.website.won.the.Business.Website.Design.Award.at.the.13th.All-Russian.Internet.Contest.“Golden.Website”.

INCREASE IN CORPORATE WEBSITE TRAFFIC, %

2011/2010 2012 2013

Increase.in.traffic,.% +.53 +.30 +.37

In.2013,.a.strategy.was.developed.to.promote.corporate.communications.for.business.audiences..In.spring.2013,.the.Company’s.first.ever.visual.advertising.campaign.was.launched.under.the.slogan:.‘Strive.for.Better’..Conceptual.solutions.reflecting.the.trends.of.the.Company’s.key.business.lines.and.highlighting.the.aspiration.for.excellence.have.been.published.in.various.business.and.sector.mass.media.

The Company continues to strengthen its dialogue with federal government agencies and organizations to improve legislation in the oil and gas sector and to establish a favorable investment climate in Russia. The Company’s Corporate Regional Policy Concept adopted in 2010 continues to implement the set of principles and mechanisms aimed to standardize the Company’s work in the regions.




CONTENTS

KEY ACTIVITIES IN THE AREA OF PUBLIC AND GOVERNMENT RELATIONS

The Company is actively involved in dialogue to improve legislation in the oil and gas sector and to establish a favorable investment climate in Russia.

Gazprom Neft managers and employees work continuously on building and maintaining an active dialogue with public authorities to improve regulatory activities and stimulate the development of the oil & gas industry.

When.interacting.with.federal.executive.and.legislative.authorities,.special.emphasis.was.placed.on.the.tax.and.customs.tariff.regulation.in.the.oil.&.gas.industry,.particularly.with.regard.to.the.creation.of.additional.stimuli.to.develop.new.fields,.extract.hard-to-recover.oil,.implement.cutting-edge.technologies.to.enhance.oil.recovery.and.increase.Russia’s.refining.depth,.reduce.administrative.barriers.connected.with.the.regulation.of.sub-soil.asset.exploration.and.mineral.resource.replacement,.as.well.to.improve.Russia’s.antidumping,.and.HSE.laws.and.regulations.

A.positive.outcome.of.our.work.was.the.passing.of.Federal.Law.No..263-FZ.of.September.30,.2013.adopted.to.amend.Chapter.26.of.the.Tax.Code.of.the.Russian.Federation.and.to.establish.a.formula-based.procedure.for.the.calculation.of.the.mineral.extraction.tax.(MET).levied.on.extracted.flammable.natural.gas.and.gas.condensate...This.law.took.into.account.the.Company’s.suggestions.as.to.how.to.balance.its.own.competitive.conditions.and.those.of.other.Russian.independent.natural.gas.producers..From.July.01,.2014.the.decreasing.coefficient.will.no.longer.apply..The.difference.in.the.MET.rate.for.Gazprom.and.independent.producers.will.be.based.on.a.special.calculation.procedure.

Gazprom.Neft.has.also.been.actively.involved.in.the.processes.of.improving.applicable.environmental.legislation.and.developing.draft.laws.by.engaging.with.executive.and.legislative.authorities.and.taking.part.in.the.Russian.Union.of.Industrialists.and.Entrepreneurs’.activities..In.2013,.the.Company.was.involved.in.the.modification.of.a.number.of.draft.laws:.suggestions.were.made.to.amend.Federal.Laws.On.Production.and.Consumption.Waste,.On.Environmental.Expert.Examination,.etc.

In.addition,.the.Company.took.an.active.part.in.preparing.comments.and.suggestions.for.the.discussion.of.the.following.key.legal.amendments.adopted.in.2013:.amendments.to.Federal.Law.No..213-FZ.of.July.23,.2013.aimed.to.stimulate.the.implementation.of.new.investment.projects.for.the.development.of.hard-to-recover.reserve.fields,.and.Federal.Law.No..268-FZ.of.September.30,.2013,.which.establishes.new.tax.and.customs.incentives.for.hydrocarbon.extraction.on.the.Russian.continental.shelf.

In.2014,.the.Company.will.focus.on.the.discussion.of.steps.to.improve.the.tax.and.customs.tariff.system.within.the.oil.sector,.including.the.adoption.of.an.approach.to.resource.production.taxation.based.on.the.entity’s.financial.performance.(marginal.income.tax/profit-based.tax),.the.extension.of.MET.‘holidays’.with.respect.to.oil.extracted.in.the.Yamal.Peninsula.(YaNAD).and.in.Eastern.Siberia.(Krasnoyarsk.Territory,.Irkutsk.Region.and.the.Republic.of.Sakha),.the.decrease.in.oils.export.customs.duties.and.other.topical.issues.to.increase.the.attractiveness.of.making.investments.in.the.oil.industry.

Working.meetings.with.representatives.of.regional.executive.and.legislative.authorities.and.participation.in.Russian.regional.authority-level.consultative.bodies.(working.groups).remain.the.key.tools.to.build.and.develop.relations.with.the.regional.authorities.and.promote.the.Company’s.business.processes*..The.Company’s.participation.in.law.making.regarding.improvements.in.regional.legislation.and.creating.favorable.conditions.for.business.development.is.also.an.effective.tool.to.establish.a.favorable.investment.climate.

In.2013,.the.Company.managed.to.secure.existing.State.support.measures.(tax.breaks).for.its.YaNAD.and.KhMAD.subsidiaries..The.Gazprom.Neft.Orenburg.investment.project.was.approved.by.the.Government.of.the.Orenburg.Region.as.a.priority,.and.in.2014.the.enterprise.will.be.entitled.to.State.support..The.Company.also.initiated.changes.to.regional.laws.in.the.Tomsk.Region.to.extend.investment.project.tax.benefits.to.oil.and.gas.companies.

The.Company.is.developing.its.level.of.cooperation.in.its.sales.segment.areas,.such.as.aviation.fuel.supplies,.bitumen.material.supplies.and.the.expansion.of.the.filling.station.chain..For.example,.Fuelling.Company.Omsk.(Central),.a.joint.venture.with.OJSC.Omsk.Airport,.was.set.up..A.joint.working.group.comprising.Company’s.specialists,.YaNAD.Government.and.YaNAD.airports.was.established.to.develop.cooperation.in.the.area.of.aviation.fuel.supply.in.Yamal.airports..In.a.number.of.regions,.an.agreement.was.made.to.utilize.innovative.bitumen.brands.in.road.construction..As.a.result,.a.joint.road.repair.pilot.project.with.the.Government.of.the.Omsk.Region.using.polymer-bitumen.binding.materials.was.implemented.to.assess.the.performance.of.these.materials.under.higher.load.levels..Similar.pilot.projects.will.be.implemented.in.the.Tomsk.and.Leningrad.Regions..If.the.outcome.of.the.projects.is.successful.this.will.help.increase.the.volumes.of.Gazprom.Neft’s.innovative.bitumen.used.in.road.construction.

*.1..Working.group.on.the.coordination.of.activities.of.Fuel.and.Energy.Sector.entities.operating.in.the.KhMAD-Yugra,.and.KhMAD-Yugra.Government.2..Working.group.on.the.discussion.of.issues.and.elaboration.of.suggestions.concerning.the.development.and.regional.legislation.related.to.the.creation.of.favorable.conditions.for.the.implementation.of.investment.projects.by.

oil.and.gas.companies.in.the.region.3..Temporary.working.groups.comprising.specialists.from.the.Company.and.regional.administrations.are.established.in.order.to.solve.local.issues.of.cooperation.in.various.areas.of.Gazprom.Neft’s.activity.and.business.

SUSTAINABLE DEVELOPMENT ACTIVITIES PUBLIC AND GOVERNMENT RELATIONS (PR AND GR)



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READ MORE

CORPORATE GOVERNANCE:.

COMMITMENT TO GOOD GOVERNANCE PRINCIPLES




CONTENTS


The corporate governance system of OJSC Gazprom Neft is based on the principles of maintaining and augmenting its assets, increasing market value, sustaining the financial stability and profitability of the Company, and respecting the rights and interests of shareholders and other stakeholders.

Managing.a.complex,.multi-faceted,.vertically.integrated.oil.company.engaged.in.geologic.exploration,.production,.refining.and.foreign.and.domestic.marketing.requires.a.professional.team.of.managers.and.a.highly.effective.corporate.governance.and.control.system..To.date,.the.Company.has.developed.a.clear.and.comprehensive.organizational.structure,.which.allows.streamlined.interaction.between.management.bodies.and.clearly.defines.control.and.management.responsibilities..The.ultimate.objective.of.this.approach.is.to.achieve.sustainable,.long-term.growth.in.the.Company’s.shareholder.value.

Alongside.protecting.the.Company’s..interests.in.commercially-sensitive.and.other..confidential.information,.OJSC.Gazprom.Neft’s.corporate.governance.system.plays.an.important.role.in.the.Company’s.commitment.to.open.and.transparent.financial.disclosure.

OJSC.Gazprom.Neft’s.main.information.distribution.channel,.accessible.to.most.stakeholders,.is.the.Company’s.official.website.(http://www.gazprom-neft.ru/),.and.its.specialized.IR.section..(http://ir.gazprom-neft.ru/)..Here.the.Company.publishes.its.latest.news,.financial.and.operational.performance.indicators,.statements.and.other.useful.information.about.the.Company’s.business,.as.well.as.documents.governing.the.activities.of.OJSC.Gazprom.Neft’s.management.and.committees,.such.as:.the.Articles.of.Incorporation,.the.Regulations.of.the.General.Meeting.of.Shareholders,.the.Regulations.of.the.Board.of.Directors,.the.Regulations.of.the.Management.Board,.the.Regulations.of.the.Chief.Executive.Officer.and.the.Regulations.of.the.Audit.Committee.

Adhering.to.the.principle.of.equal.access.to.information.for.all.stakeholders,.OJSC.Gazprom.Neft.publishes.information.on.the.official.website.in.both.Russian.and.English.

Structure of Gazprom Neft’s Management and Control Bodies

GENERAL MEETING OF SHAREHOLDERS

BOARD OF DIRECTORS MANAGEMENT BOARD

AUDIT COMMITTEE

CHIEF EXECUTIVE OFFICER

EXTERNAL AUDITOR

INTERNAL AUDIT DEPARTMENT

HUMAN RESOURCES AND COMPENSATION

COMMITTEEAUDIT COMMISSION

The.Board.of.Directors.appoints.the.Director.of.the.Internal.Audit.

Department

The.Internal.Audit.Department.reports.directly.to.the.Audit.Committee




CONTENTS

.MAIN TERMS AND DEFINITIONS:

GENERAL MEETING OF SHAREHOLDERS .The.highest.management.body.whose.jurisdiction.covers.the.most.essential.issues.related.to.the.Company’s.business.

BOARD OF DIRECTORS .A.management.body.which.exercises.general.management.of.the.Company’s.business.and.is.responsible.for.strategic.management.to.increase.the.Company’s.shareholder.value..The.Board.of.Directors.monitors.and.ensures.the.efficient.working.of.the.Company’s.executive.bodies.

MANAGEMENT BOARD .A.collaborative.executive.body.exercising.management.of.the.Company’s.day-to-day.business.

CHIEF EXECUTIVE OFFICER .The.sole.executive.performing.the.functions.of.the.Company’s.Chairman.of.the.Management.Board.

INTERNAL AUDIT DEPARTMENT .A.corporate.unit.authorized.to.exercise.control.over.the.Company’s.financial.and.business.activities.

AUDIT COMMITTEE .A.supervisory.body.controlling.the.Company’s.financial.and.business.activities,.elected.by.the.general.meeting.of.shareholders..The.Audit.Committee’s.jurisdiction.includes.inspecting.and.analyzing.the.Company’s.financial.position,.maintaining.internal.control.and.risk.management.systems.and.monitoring.the.legality.of.business.operations.

EXTERNAL AUDITOR .A.supervisory.body.conducting.the.annual.audit.of.financial.statements.in.accordance.with.the.Russian.Accounting.Standards.(RAS).and.the.International.Financial.Reporting.Standards.(IFRS),.approved.by.the.general.meeting.of.shareholders.at.the.recommendation.of.the.Company’s.Board.of.Directors.




CONTENTS


GENERAL MEETING OF SHAREHOLDERS

In.2013,.the.Company’s.shareholders.convened.one.annual.General.Meeting.and.held.six.extraordinary.general.meetings..The.general.meeting.of.shareholders.held.on.June.07,.2013.approved.the.Company’s.2012.Annual.Report.and.annual.accounting.statements,.distributed.profits.earned.in.2012,.approved.the.2012.dividend.payment.of.RUB.9.3.per.share,.reelected.the.Board.of.Directors.and.the.Audit.Committee,.selected.the.Company’s.external.auditor.for.2013,.and.approved.the.Board.and.Audit.Committee’s.remuneration.payment.

In.accordance.with.the.Company’s.policy.to.strengthen.its.positions.in.petroleum.production.and.processing.and.in.the.output.and.sale.of.high-quality.petroleum.products,.and,.in.light.of.the.Company’s.recently.approved.and.more.ambitious.strategy,.a.decision.was.taken.to.increase.the.number.of.Board.Directors...This.is.seen.as.a.key.measure.to.improve.operational.efficiency,.particularly.with.respect.to.the.balance.of.skills.and.competencies..In.2013.four.extraordinary.sessions.of.the.general.meeting.of.shareholders.were.held.at.which.the.decision.was.made.to.modify.the.Articles.of.Incorporation,.in.relation.to.the.increase.in.the.number.of.Board.Directors,.and.to.reelect.the.Board.of.Directors.

On.September.30,.2013,.for.the.first.time.in.Gazprom.Neft’s.history,.the.extraordinary.general.meeting.of.shareholders.considered.the.payment.of.dividends.for.H1.2013.and,.subsequently,.decided.to.pay.RUB.4.09.per.share.as.dividends.for.the.first.six.months.of.2013.

In.order.to.create.a.stable.financial.environment.for.the.Company’s.subsidiaries,.within.an.integrated.production.complex.and.conforming.with.Russian.legislation,.the.extraordinary.general.meeting.held.on.October.24,.2013.approved.13.related-party.transactions.which.OJSC.Gazprom.Neft.is.now.authorized.to.enter.into.as.part.of.its.usual.business.practices

The general meeting of shareholders is the Company’s highest management body and its scope of responsibilties includes the most important corporate matters, such as the approval of annual reports and annual accounting (financial) statements, the distribution of profits, election of the Board of Directors, amendments to the Articles of Incorporation, the reorganizing and increasing of authorized capital, etc.



CONTENTS

In.accordance.with.the.OJSC.Gazprom.Neft.Articles.of.Incorporation.adopted.by.the.extraordinary.general.meeting.of.shareholders.on.November.12,.2013,.the.Board.of.Directors.shall.be.composed.of.13.people..According.to.the.structure.of.its.authorized.capital.(95.68%.of.the.total.number.of.ordinary.shares.are.held.by.OJSC.Gazprom),.most.of.the.Directors.elected.to.Gazprom.Neft’s.Board.of.Directors.are.nominated.by.OJSC.Gazprom.as.the.controlling.shareholder..The.Company’s.Board.of.Directors.is.comprised.of.members.of.the.OJSC.Gazprom.Management.Committee,.who.represent.the.interests.of.the.controlling.shareholder.and.are.experts.in.managing.oil.and.gas.Company.assets,.and.two.independent.directors..The.high.level.of.participation.of.the.parent.company’s.key.executives.in.the.OJSC.Gazprom.Neft.Board.of.Directors.reflects.the.high.competency.and.effectiveness.of.this.management.body.

The.OJSC.Gazprom.Neft.Board.of.Directors.is.largely.independent.of.the.Company’s.management:.the.only.executive.director.on.the.Board.of.Directors.is.the.Chairman.of.the.OJSC.Gazprom.Neft.Management.Board,.A..V..Dyukov.

OJSC.Gazprom.Neft.elects.its.members.to.the.Board.of.Directors.in.a.transparent.manner:.� The.Company.allows.its.shareholders.to.nominate.candidates.to.the.Board.of.Directors.during.a.two-month.period.(legislation.provides.for.one.month);

.� The.Company.discloses.information.about.the.current.composition.of.the.Board.of.Directors.and.candidates.for.the.Board.of.Directors.well.in.advance;

.� The.Company.regularly.engages.with.the.depositary.bank.issuing.depositary.receipts;

.� The.Company.uses.and.explains.the.cumulative.voting.procedure.when.electing.members.to.the.Board.of.Directors;

.� The.Company.announces.the.results.of.voting.on.items.by.stating.the.quorum.and.the.members.who.voted.for.each.voting.option;

.� The.Company.publishes.Minutes.of.general.meetings.of.shareholders.on.a.public.resource.–.its.official.website.

As.of.December.31,.2013,.the.Directors.in.office.had.been.elected.by.the.General.Meeting.of.Shareholders.held.on.December.24,.2013.(Minutes.No..0101/07.of.December.24,.2013).

BOARD OF DIRECTORS

The Board of Directors exercises general management of the Company’s business. The jurisdiction of the Board of Directors includes areas related to the strategic management of the Company’s business. Among the obligations of the Board of Directors is the determination of the Company’s development priorities within its main operational guidelines. In view of the strategic importance of the goals set by the Board of Directors, its members must gain the support of the Company’s shareholders and ensure that they fulfill their roles effectively.




CONTENTS

CORPORATE GOVERNANCE BOARD OF DIRECTORS

BOARD OF DIRECTORS (as.of.December.31,.2013)

INFORMATION ABOUT CHANGES IN THE COMPOSITION OF THE COMPANY’S BOARD OF DIRECTORS DURING THE REPORTING YEAR

The following changes have taken place in the composition of the Board of Directors since the beginning of 2013:.� Fursenko.Sergey.Aleksandrovich.joined.the.Board.of.Directors.on.February.22,.2013.(by.resolution.of.the.extraordinary.general.meeting.of.shareholders,.Minutes.No..0101/2.of.February.22,.2013).

.� Sereda.Mikhail.Leonidovich.joined.the.Board.of.Directors.on.December.24,.2013.(by.resolution.of.the.extraordinary.general.meeting.of.shareholders,.Minutes.No..0101/7.of.December.24,.2013).

There.were.no.other.changes.in.the.composition.of.the.Company’s.Board.of.Directors.in.2013...At.the.re-election.of.the.OJSC.Gazprom.Neft.Board.of.Directors,.the.other.members.of.the.Company’s.Board.of.Directors.were.re-elected.

Except.for.A..V..Dyukov,.members.of.the.Board.of.Directors.and.its.Chairman.did.not.hold.shares.in.the.Company.during.the.reporting.year...During.the.reporting.year,.members.of.the.Board.of.Directors.did.not.buy.or.sell.any.Company.shares.

No.lawsuits.were.filed.against.members.of.the.Board.of.Directors.in.2013.

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7

11

6

10

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8

12

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9

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CONTENTS

BOARD OF DIRECTORS

1 ALEXEI BORISOVICH MILLERCHAIRMAN OF THE BOARD OF DIRECTORS

Born.in.1962,.graduated.from.the.N..A..Voznesensky.Institute.of.Finance.and.Economics.in.Leningrad.

2001.–.present,.Chairman.of.the.OJSC.Gazprom.Management.Committee..2002.–.present,.Deputy.Chairman.of.the.OJSC.Gazprom.Board.of.Directors.

Ph.D..in.Economics.

3 ANDREI VYACHESLAVOVICH KRUGLOV

Born.in.1969,.graduated.from.the.Saint-Petersburg.Technological.Institute.of.the.Refrigeration.Industry.

2004.–.present,.Deputy.Chairman.of.the.Management.Committee,.Director.of.the.Finance.and.Economic.Department,.OJSC.Gazprom..

Doctor.of.Economics.

2 VALERY ALEKSANDROVICH GOLUBEV

Born.in.1952,.graduated.from.the.V..I..Ulianov.(Lenin).

Electro-technical.Institute.in.Leningrad,.the.National.Academy.of.Economics.under.the.Russian.Federation.Government.2006.–.present,.Deputy.Chairman.of.the.OJSC.Gazprom.Management.Committee.

Ph.D..in.Economics.

9 VSEVOLOD VLADIMIROVICH CHEREPANOV

Born.in.1944,.graduated.from.the.M.V..Lomonosov.Moscow.State.University.

2008–2010,.Deputy.Chief.Executive.Officer.–.Chief.Geological.Engineer,.LLC.Gazprom.Dobycha.Nadym.2010.–.present,.member.of.the.OJSC.Gazprom.Management.Committee,.Director.of.the.Department.of.Gas,.Gas.Condensate.and.Oil.Production,.OJSC.Gazprom.

Ph.D..in.Geological.and.Mineralogical.Sciences.

8 ALEXANDER LEONIDOVICH MIKHEEV

Born.in.1944,.graduated.from.the.Gas.and.Oil.Field.Department.of.the.I..M..Gubkin.Institute.of.Petrochemical.and.Gas.Industry.in.Moscow..

Since.2003,.First.Deputy.Director.of.the.Department.of.Marketing.and.Gas.and.Liquid.Hydrocarbon.Processing,.OJSC.Gazprom.

7 ALEXANDER VALERIEVICH DYUKOV

Born.in.1967,.graduated.from.the.Order.of.Lenin.Shipbuilding.Institute.in.Leningrad..In.2001.gained.an.IMISP.MBA.degree.

2006.–.present,.Chairman.of.the.OJSC.SIBUR.Holding.Board.of.Directors.2006.–.2007,.President.of.Gazprom.Neft.December.2007.–.present,.Chairman.of.the.Management.Board,.Chief.Executive.Officer.of.OJSC.Gazprom.Neft.

Interest.in.the.authorized.capital.(as.of.December.31,.2013):.0.005357244.%.(254,003.units).

5 NIKOLAY NIKOLAEVICH DUBIK

Born.in.1971,.graduated.from.the.M..V..Lomonsov.Moscow.State.University.

2005.–.2008,.Deputy.Director.of.the.Legal.Department,.OJSC.Gazprom.2008..–.First.Deputy.Director.of.the.Legal.Department,.OJSC.Gazprom.2008.–.present,.Director.of.the.Legal.Department,.OJSC.Gazprom,.member.of.the.OJSC.Gazprom.Management.Committee.

Honored.Lawyer.of.the.Russian.Federation.

4 KIRILL GENNADIEVICH SELEZNEV

Born.in.1974,.graduated.from.the.D..F..Ustinov.Baltic.State.Technical.University,.Saint-Petersburg.State.University.

2002.–.present,.Director.of.the.Department.of.Marketing.and.Gas.and.Liquid.Hydrocarbon.Processing.2003.–.present,.member.of.the.OJSC.Gazprom.Management.Committee.2004.–.present,.Chief.Executive.Officer.of.LLC.Gazprom.Mezhregiongaz.

Ph.D..in.Economics.

6 ELENA VLADIMIROVNA MIKHAILOVA

Born.in.1977,.graduated.from.the.Moscow.State.Industrial.University.with.a.degree.in.jurisprudence,.and.gained.a.Master.of.Business.Administration.degree.at.the.National.Academy.of.Economics.under.the.Russian.Federation.Government.

2003.–.2011,.Deputy.Chief.Executive.Officer.for.Corporate.and.Property.Relations,.LLC.Gazprom.Mezhregiongaz.2011.–.2012,.Director.of.the.Department.of.Property.Management.and.Corporate.Relations,.OJSC.Gazprom.2011.–.present,.Director.of.the.Department.of.Property.Management.and.Corporate.Relations,.OJSC.Gazprom.2012.–.present,.member.of.the.Management.Board,.OJSC.Gazprom.

13 MIKHAIL LEONIDOVICH SEREDA

Born.in.1970,.graduate.of.St..Petersburg.State.University.of.Economics.and.Financing.

Since.2002,.member.of.the.Board.of.Directors,.OJSC.Gazprom..Since.2004.,Deputy.Chairman.of.the.Management.Committee,.Head.of.Administration.of.the.Management.Committee,.OJSC.Gazprom.

12 SERGEY ALEKSANDROVICH FURSENKOINDEPENDENT DIRECTOR

Born.in.1954,.graduate.of.Leningrad.Polytechnic.Institute.

2003.–.2008,.Chief.Executive.Officer,.ООО.Lentransgaz.2010.–.2012,.President,.Football.(Soccer).Union.of.Russia.

Since.December.2012,.Chairman.of.the.Board.of.Directors,.Gazprom.Gas-Engine.Fuel,.LLC.

11 VALERY PAVLOVICH SERDYUKOVINDEPENDENT DIRECTOR

Born.in.1945,.graduated.from.the.G..V..Plekhanov.Mining.Institute.in.Leningrad.

1999–2012,.Leningrad.Oblast.Governor..Honored.with.government.and.industry.awards.

Ph.D..in.Economics.

10 VLADIMIR IVANOVICH ALISOV

Born.in.1960,.graduated.from.the.A..A..Zhdanov.Law.Department.of.the.Leningrad.State.University..

2007–2008,.Deputy.Director.of.the.Legal.Department,.OJSC.Gazprom.2008.–.present,.First.Deputy.Director.of.the.Legal.Department,.OJSC.Gazprom.

Member.of.the.Russian.Bar.Association..Member.of.the.Corporate.Governance.Expert.Council.under.the.Federal.Financial.Markets.Service.of.Russia..Honoured.Lawyer.of.the.Russian.Federation.




CONTENTS


ACTIVITIES OF OJSC GAZPROM NEFT BOARD OF DIRECTORS IN 2013

OJSC Gazprom Neft’s Board of Directors pays great attention to issues related to the Company’s future development prospects. Considering the Company’s accelerated growth performance, with most of the targets set out in the 2010 Development Strategy achieved ahead of their deadlines, in 2013 the Company developed and implemented a new corporate strategy that adopted a longer planning horizon until 2025. The document continues to use the 2020 goals and develops ways to achieve them in the key business segments (hydrocarbon production, oil refining, and sales of petroleum products) taking into account both the changing industry environment and the state of the global economy. Once implemented, the new strategy is expected to improve Gazprom Neft’s shareholder value considerably.

Gazprom.Neft.has.always.paid.great.attention.to.researching.and.implementing.innovative.solutions.in.every.business.segment..To.ensure.an.efficient.application.of.knowledge,.experience.and.resources,.in.2013.the.Board.approved.the.Company’s.2020.Innovation.Development.Program.that.contains.information.on.OJSC.Gazprom.Neft’s.main.focus.areas.of.innovative.development,.its.plans.for.interaction.with.third-party.organizations,.and.the.key.performance.indicators,.which.correspond.to.those.found.in.OJSC.Gazprom’s.Innovation.Development.Program.

The.Board.is.particularly.focused.on.issues.relating.to.budget.planning.and.cost.optimization..This.includes.considering.matters.relevant.to.budget.execution,.the.mobilization.of.funds,.overall.efficiency.and.the.allocation.of.cash.flows.

The.Board.of.Directors.also.views.corporate.governance.matters.as.a.priority..In.2013,.the.Board.of.Directors.took.some.significant.decisions,.approving.the.Regulation.on.Insider.Information.and.the.IT.Policy,.and.considering.the.distribution.of.an.interim.dividend.at.the.general.meeting.of.shareholders,.for.the.first.time.since.the.Company’s.incorporation.

All.Board.Directors.are.actively.involved.in.corporate.governance.matters.and.demonstrate.their.commitment.to.the.efficient.growth.of.Gazprom.Neft,.as.is.evidenced.by.the.number.of.meetings.that.the.Board.of.Directors.attended..Each.member.of.the.Board.of.Directors.participated.in.at.least.90%.of.all.sessions.held,.either.in.person.or.via.conference.calls..In.addition,.the.number.of.matters.considered.by.the.Board.grew.significantly.in.2013.

MAIN TOPICS CONSIDERED AT THE MEETINGS OF THE BOARD OF DIRECTORS IN 2013

IN STRATEGIC AND INVESTMENT PLANNING IN BUDGET PLANNING AND CORPORATE FINANCING IN CORPORATE GOVERNANCE

Debt.structure.and.debt.portfolio.management.of.Gazprom.Neft.Group.in.2012.was.considered

Company’s.strategic.performance.indicators.in.2013.were.considered..

2025.Development.Strategy.and.2025.Oil.Refining.Strategy.were.approved

OJSC.Gazprom.Neft.2020.Innovation.Development.Program.was.approved..

Progress.and.efficiency.of.the.implementation.of.the.Company’s.2013.Investment.Program..in.1H.2013.and.the.introduction.of.changes.to.the.Investment.Program.were.considered.

Preliminary.results.of.the.OJSC.Gazprom.Neft.2013.Investment.Program.were.considered..

OJSC.Gazprom.Neft.Investment.Program.for.2014.was.approved..

A.draft.investment.plan.for.2015–2016.was.considered..

A.report.on.activities.of.the.Internal.Audit.Department.was.considered...

Amendments.proposed.to.be.made.to.OJSC.Gazprom.Neft’s.2013.Budget.were.considered..

OJSC.Gazprom.Neft’s.2014.Budget.was.approved..

OJSC.Gazprom.Neft’s.Cost.Optimization.Program.for.2014.was.approved..

Drafts.of.OJSC.Gazprom.Neft’s.Budget.and.Cost.Optimization.Program.for.2015-2016.were.considered..

Decisions.to.place.documentary.interest-bearing.non-convertible.bonds.were.made..

Several.transactions.to.raise.loan.financing.were.approved..

Transactions.to.secure.liabilities.of.Gazprom.Neft.Group’s.members.were.approved..

Regulations.on.insider.information.and.IT.policy.were.approved..

A.series.of.resolutions.were.made.on.corporate.issues,.including.a.resolution.to.convene.an.extraordinary.general.meeting.of.OJSC.Gazprom.Neft.shareholders.to.amend.and.modify.the.Company’s.Articles.of.Incorporation,.to.pay.an.interim.dividend,.and.to.elect.the.Board.of.Directors.

Recommendations.regarding.the.Board.of.Directors.and.the.Audit.Committee’s.remuneration.payments.based.on.the.results.of.2012.were.made

A.number.of.related-party.transactions.were.approved

The.involvement.of.members.of.the.OJSC.Gazprom.Neft.Management.Board.in.executive.bodies.of.other.corporate.entities.was.considered

Resolutions.on.the.Company’s.participation.or.termination.of.the.Company’s.participation.in.other.organizations,.as.part.of.the.implementation.of.the.corporate.restructuring.program,.were.adopted



CONTENTS

ACTIVITIES OF OJSC GAZPROM NEFT BOARD OF DIRECTORS IN 2013

MAIN TOPICS CONSIDERED AT THE MEETINGS OF THE BOARD OF DIRECTORS IN 2013

IN STRATEGIC AND INVESTMENT PLANNING IN BUDGET PLANNING AND CORPORATE FINANCING IN CORPORATE GOVERNANCE

Debt.structure.and.debt.portfolio.management.of.Gazprom.Neft.Group.in.2012.was.considered

Company’s.strategic.performance.indicators.in.2013.were.considered..

2025.Development.Strategy.and.2025.Oil.Refining.Strategy.were.approved

OJSC.Gazprom.Neft.2020.Innovation.Development.Program.was.approved..

Progress.and.efficiency.of.the.implementation.of.the.Company’s.2013.Investment.Program..in.1H.2013.and.the.introduction.of.changes.to.the.Investment.Program.were.considered.

Preliminary.results.of.the.OJSC.Gazprom.Neft.2013.Investment.Program.were.considered..

OJSC.Gazprom.Neft.Investment.Program.for.2014.was.approved..

A.draft.investment.plan.for.2015–2016.was.considered..

A.report.on.activities.of.the.Internal.Audit.Department.was.considered...

Amendments.proposed.to.be.made.to.OJSC.Gazprom.Neft’s.2013.Budget.were.considered..

OJSC.Gazprom.Neft’s.2014.Budget.was.approved..

OJSC.Gazprom.Neft’s.Cost.Optimization.Program.for.2014.was.approved..

Drafts.of.OJSC.Gazprom.Neft’s.Budget.and.Cost.Optimization.Program.for.2015-2016.were.considered..

Decisions.to.place.documentary.interest-bearing.non-convertible.bonds.were.made..

Several.transactions.to.raise.loan.financing.were.approved..

Transactions.to.secure.liabilities.of.Gazprom.Neft.Group’s.members.were.approved..

Regulations.on.insider.information.and.IT.policy.were.approved..

A.series.of.resolutions.were.made.on.corporate.issues,.including.a.resolution.to.convene.an.extraordinary.general.meeting.of.OJSC.Gazprom.Neft.shareholders.to.amend.and.modify.the.Company’s.Articles.of.Incorporation,.to.pay.an.interim.dividend,.and.to.elect.the.Board.of.Directors.

Recommendations.regarding.the.Board.of.Directors.and.the.Audit.Committee’s.remuneration.payments.based.on.the.results.of.2012.were.made

A.number.of.related-party.transactions.were.approved

The.involvement.of.members.of.the.OJSC.Gazprom.Neft.Management.Board.in.executive.bodies.of.other.corporate.entities.was.considered

Resolutions.on.the.Company’s.participation.or.termination.of.the.Company’s.participation.in.other.organizations,.as.part.of.the.implementation.of.the.corporate.restructuring.program,.were.adopted

Board of Directors’ attendance rate

Member of the Board of Directors Number of meetings attendedTotal number of meetings which could be attended

Alexei.Borisovich.Miller.(Chairman.of.the.Board.of.Directors) 58 59

Vladimir.Ivanovich.Alisov 58 59

Valery.Aleksandrovich.Golubev 56 59

Nikolay.Nikolaevich.Dubik 57 59

Alexander.Valerievich.Dyukov 48 49

Andrei.Vyacheslavovich.Kruglov 53 59

Elena.Vladimirovna.Mikhailova 58 59

Alexander.Leonidovich.Mikheev 59 59

Kirill.Gennadievich.Seleznev 58 59

Valery.Pavlovich.Serdyukov 59 59

Mikhail.Leonidovich.Sereda.(Member.of.the.Board.of.Directors.as.of.December.24,.2013) 2 2

Sergey.Aleksandrovich.Fursenko.(Member.of.the.Board.of.Directors.as.of.February.02,.2013) 54 55

Vsevolod.Vladimirovich.Cherepanov 55 59

Breakdown of matters considered by the Board of Directors

2013 141

2012 1125812353 4

4 4 48 21 64

2011 89142 3 27 43

Corporate governance Budget planning and financing Human resources

Strategy Other

Number of Board of Directors’ meetings held

2013 59

2012 63558

8 51

2011 354 31

By conference callIn person




CONTENTS


COMMITTEES OF THE COMPANY’S BOARD OF DIRECTORS

EVALUATION OF BOARD ACTIVITIES

Two committees have been set up under the OJSC Gazprom Neft Board of Directors to ensure the effectiveness of the Board of Directors’ activities: the Audit Committee and the Human Resources and Compensation Committee. These committees have been set up to carry out preliminary in-depth research into matters within their jurisdiction. The procedures governing committee creation and activities are outlined in the respective regulations.

THE AUDIT COMMITTEE

The.Audit.Committee.assists.the.Board.of.Directors.in.exercising.control.over.the.Company’s.financial.and.business.activities.by.assessing.the.efficiency.of.internal.control.systems,.including.mechanisms.for.controlling.the.preparation.and.submission.of.financial.and.other.statements,.assessing.their.completeness.and.reliability,.and.by.monitoring.the.risk.management.system.

The.Audit.Committee.helps.to.establish.a.constructive.dialogue.with.the.external.auditor,.bodies.in.charge.of.controlling.financial.and.business.activities,.and.the.Company’s.internal.audit.units.

The.Committee’s.work.is.directly.related.to.the.Action.Plan.of.the.Board.of.Directors.and.includes.consideration.of.topics.related.to.financial.activities.and.investment.planning..

In.2013,.the.Audit.Committee.considered.the.following.matters:..� Implementation.of.the.2012.Investment.Program.and.OJSC.Gazprom.Neft’s.Budget.(Financial.Plan).based.on.the.2012.results;

.� OJSC.Gazprom.Neft’s.draft.Annual.Report.for.2012;

.� Assessment.of.the.audit.report.of.OJSC.Gazprom.Neft’s.2012.financial.statements,.prepared.by.CJSC.PricewaterhouseCoopers.Audit;

.� Nomination.of.OJSC.Gazprom.Neft’s.auditor.for.2013;

.� Distribution.of.OJSC.Gazprom.Neft.profits.for.2012;

.� Recommendations.on.the.amount.and.payment.procedure.of.dividends.per.share.of.OJSC.Gazprom.Neft.based.on.2012.results.

In.2013,.the.Audit.Committee.was.comprised.of:.� Andrei.Vyacheslavovich.Kruglov.(Chairman),.� Valery.Aleksandrovich.Golubev,.� Nikolay.Nikolaevich.Dubik.

THE HUMAN RESOURCES AND COMPENSATION COMMITTEEIn.accordance.with.the.Regulations.of.the.Human.Resources.and.Compensation.Committee,.the.Committee’s.main.role.is.to.make.a.comprehensive.preliminary.examination.of.matters.included.within.the.jurisdiction.of.the.Board.of.Directors.and.to.prepare.recommendations.for.the.Board.of.Directors.to.adopt.resolutions.regarding.the.Company’s.human.resource.policies.and.compensation.for.members.of.OJSC.Gazprom.Neft’s.management.bodies.and.the.Audit.Committee.

In.2013,.the.Committee.considered.the.following.matters:.� Results.of.the.evaluation.of.the.activities.of.OJSC.Gazprom.Neft’s.Board.of.Directors

In.2013,.the.Audit.Committee.was.comprised.of:.� Nikolay.Nikolaevich.Dubik.(Chairman),.� Andrei.Vyacheslavovich.Kruglov,.� Vsevolod.Vladimirovich.Cherepanov.

An important project implemented by the Human Resources and Compensation Committee of the OJSC Gazprom Neft Board of Directors was the approval of the methodology used to evaluate the Board of Directors’ effectiveness. The adoption and promotion of the Board of Directors’ performance evaluation helps determine its effectiveness as a collegiate management body and the extent to which its activities meet the Company’s needs for development. It also helps to maximize the Board of Director’s contribution to the successful development of the Company.

The.Company.carries.out.an.evaluation.annually,.and.the.results.show.that.the.Board.of.Directors’.effectiveness.is.positive.in.key.performance.areas:.� quality.of.the.Board.of.Directors’.performance.in.their.assigned.functions;

.� composition.and.structure.of.the.Board.of.Directors;

.� the.role.of.the.Chairman.of.the.Board.of.Directors;

.� the.level.of.preparation.by.the.Board.of.Directors;

.� the.practice.of.conducting.meetings;

.� interaction.with.executive.bodies;

.� level.of.information.provided.to.the.Board.of.Directors.

.� quality.of.the.Secretary.of.the.Board.of.Directors’.execution.of.his/her.duties.

Recommendations.received.during.the.evaluation.help.to.improve.the.performance.of.the.Board.of.Directors.and.its.Committees,.as.well.as.the.overall.level.of.corporate.governance.in.the.Company.



CONTENTS

MANAGEMENT BOARD

The.Company’s.Chief.Executive.Officer,.A..V..Dyukov.(first.elected.in.December.2006,.and.re-elected.for.another.five.years.in.December.2011),.acts.simultaneously.as.Chairman.of.the.Management.Board,.whose.functional.duties.include.organizing.Management.Board.activities..In.the.absence.of.the.Chairman.of.the.Management.Board,.his.functions.are.fulfilled.by.one.of.three.Deputy.Chairmen.of.the.Management.Board.(V..V..Yakovlev.(first.Deputy.Chairman),.V..V..Baranov,.and.A..M..Cherner,.elected.as.advised.by.the.Chairman.of.the.Management.Board.by.a.majority.of.votes.from.the.elected.members.of.the.Management.Board.

In.the.absence.of.the.Chairman.and.Deputy.Chairmen,.the.Chairman.of.the.Management.Board’s.functions.are.fulfilled.by.any.member.of.the.Management.Board,.by.resolution.

As.of.December.31,.2013,.OJSC.Gazprom.Neft.Management.Board.was.composed.of.10.members:.the.Chief.Executive.Officer.and.his.Deputies.acting.within.the.scope.of.their.jurisdiction,.as.defined.by.the.CEO.

The structure of OJSC Gazprom Neft executive bodies is stipulated in the articles of Incorporation: they are the management Board and the Chief executive officer. The OJSC Gazprom Neft Management Board is a collaborative executive body exercising management of the Company’s day-to-day activities. In accordance with the OJSC Gazprom Neft Articles of Incorporation, the Management Board is formed by the Board of Directors as advised by the OJSC Gazprom Neft Chief Executive Officer. The term of powers of the Management Board is also determined by resolution of the Board of Directors. The professional qualifications of members of the OJSC Gazprom Neft Management Board are stipulated in internal documentation by OJSC Gazprom Neft.




CONTENTS

CORPORATE GOVERNANCE MANAGEMENT BOARD

MANAGEMENT BOARD (as.of.December.31,.2013)

1 ALEXANDER VALERIEVICH DYUKOVCHAIRMAN OF THE MANAGEMENT BOARD, CHIEF EXECUTIVE OFFICER

Born.in.1967,.graduated.from.the.Order.of.Lenin.Shipbuilding.Institute.in.Leningrad..In.2001,.received.an.IMISP.MBA.degree.

2005.–.2006,.OJSC.SIBUR.Holding,.President.2006,.LLC.SIBUR,.Chief.Executive.Officer.2006.–.present,.Chairman.of.the.OJSC.SIBUR.Holding.Board.of.Directors.2006.–.2008,.President.of.Gazprom.Neft.January.2008.–.present,.Chairman.of.the.Management.Board,.Chief.Executive.Officer.of.OJSC.Gazprom.Neft.

Interest.in.the.authorized.capital..(as.of.December.31,.2012):.0.005357244%.(254,003.units).

2 VADIM VLADISLAVOVICH YAKOVLEVDEPUTY CHAIRMAN OF THE MANAGEMENT BOARD, FIRST DEPUTY CHIEF EXECUTIVE OFFICER

Born.in.1970,.graduated.from.the.Moscow.Engineering.Physics.Institute,.the.Higher.School.of.Finance.of.the.International.University.in.Moscow..Certified.by.the.Chartered.Association.of.Certified.Accountants.(ACCA).in.1999;.awarded.a.diploma.by.the.British.Institute.of.Directors.(ID).in.2009.

2005.–.2006,.Deputy.Chief.Executive.Officer.for.Economics.and.Finance,.LLC.SIBUR-Russian.Tyres.2006.–.2007,.Director.of.the.Planning.and.Budgeting.Department,.OJSC.Gazprom.Neft..September.to.December.2007,.Vice.President.of..Finance,.OJSC.Gazprom.Neft.October.2007.–.present,.member.of.the.OJSC.Gazprom.Neft.Management.Board;.December.2007.–.present,.Deputy.Chief.Executive.Officer.for.Economics.and.Finance.May.2010.to.August.2011,.First.Deputy.Chief.Executive.Officer.–.Financial.Director,.OJSC.Gazprom.Neft.August.2011.–.present,.First.Deputy.Chief.Executive.Officer,.OJSC.Gazprom.Neft..Supervises.exploration.and.production,.strategic.planning,.mergers.and.acquisitions.

Interest.in.the.authorized.capital.(as.of.December.31,.2013):.0.001051526.%.(49,856.units).

INFORMATION ABOUT CHANGES IN THE COMPOSITION OF THE COMPANY’S MANAGEMENT BOARD DURING THE REPORTING YEAR

There.were.no.changes.in.the.composition.of.the.Management.Board.of.the.Company.in.2013..No.securities.transactions.were.made.by.members.of.the.Board.Directors..No.lawsuits.were.filed.against.the.Chief.Executive.Officer.or.members.of.the.Management.Board.in.2013...

5 6

8

4

7 9

10

1 2 3



CONTENTS

MANAGEMENT BOARD

3 ALEXEI VIKTOROVICH YANKEVICHMEMBER OF THE MANAGEMENT BOARD, DEPUTY CHIEF EXECUTIVE OFFICER FOR ECONOMICS AND FINANCE

Born.in.1973,.graduated.from.the.Saint-Petersburg.State.Electro-technical.University.(LETI),.LETI-Lovanium.International.School.of.Management..Certified.as.a.Certified.Management.Accountant.(CMA).in.2004.

2005.–.2007,.Deputy.Chief.Financial.Officer,.LLK-International.2007.–.2011,.Director.of.the.Planning.and.Budgeting.Department,.Head.of.the.Directorate.for.Economics.and.Corp.orate.Planning,.OJSC.Gazprom.Neft.2011.–.2012,.acting.Deputy.Chief.Executive.Officer.for.Economics.and.Finance,.OJSC.Gazprom.Neft.March.2012.–.present,.member.of.the.OJSC.Gazprom.Neft.Management.Board,.Deputy.Chief.Executive.Officer.for.Economics.and.Finance.

7 ALEXANDER MIKHAILOVICH DYBALMEMBER OF THE MANAGEMENT BOARD, DEPUTY CHIEF EXECUTIVE OFFICER FOR CORPORATE COMMUNICATIONS

Born.in.1996,.graduated.from.the.Leningrad.Electrotechnical.Institute.

2005.–.2007,.Chairman.of.the.OJSC.Gazprom-Media.Board.of.Directors.2007–2007,.Vice.President,.Head.of.the.Department.of.Corporate.Communications,.OJSC.Gazprom.Neft.December.2007.–.present,.member.of.the.OJSC.Gazprom.Neft.Management.Board,.Deputy.Chief.Executive.Officer.for.Corporate.Communications..In.charge.of.the.regional.and.information.policy,.internal.corporate.and.marketing.communications.

5 VITALY VITALIEVICH BARANOVDEPUTY CHAIRMAN OF THE MANAGEMENT BOARD, DEPUTY CHIEF EXECUTIVE OFFICER FOR ADMINISTRATIVE ISSUES

Born.in.1966,.graduated.from.the.Saint-Petersburg.University.of.Economics.and.Finance.with.a.degree.in.economics.and.production.management.in.1993.

2008,.training.at.the.London.Business.School.(London,.UK).MBA,.Senior.Executive.Program.2003.–.present,.successively.held.the.offices.of.Advisor,.President.for.General.Issues,.Head.of.the.President’s.Office,.SIBUR.Group.May.2006.–.present,.Vice.President.for.Administrative.Issues,.SIBUR.March.2009.–.present,.Deputy.Chief.Executive.Officer.for.Administrative.Issues,.OJSC.Gazprom.Neft.June.2009.–.present,.member.of.the.OJSC.Gazprom.Neft.Management.Board..

Interest.in.the.authorized.capital.(as.of.Decem-ber.31,.2013):.0.001621496%.(76,880.units).

9 IGOR KONSTANTINOVICH ANTONOVMEMBER OF THE MANAGEMENT BOARD, DEPUTY CHIEF EXECUTIVE OFFICER FOR SECURITY

Born.in.1951,.graduated.from.the.Leningrad.Institute.of.Aircraft.Equipment.Manufacturing.

2000.–.2005,.Chief.Executive.Officer.of.St..Petersburg.State.Unitary.Enterprise.Informatika.2005.–.2007,.Vice.President.for.Security,.OJSC.Sibneft.December.2007.–.present,.Deputy.Chief.Executive.Officer.for.Security,.OJSC.Gazprom.Neft.

4 ANATOLY MOISEEVICH CHERNERDEPUTY CHAIRMAN OF THE MANAGEMENT BOARD, DEPUTY CHIEF EXECUTIVE OFFICER FOR LOGISTICS, REFINING AND SALES

Born.in.1954,.graduated.from.the.Grozny.Petroleum.Institute.

2006.–.2007,.Vice.President.of.Refining.and.Sales,.OJSC.Gazprom.Neft.December.2007.–.present,.member.of.the.OJSC.Gazprom.Neft.Management.Board,.Deputy.Chief.Executive.Officer.for.Logistics,.Refining.and.Sales..In.charge.of.oil.refining,.logistics.and.sales.for.oil.and.oil.products.

8 ELENA ANATOLIEVNA ILYUKHINAMEMBER OF THE MANAGEMENT BOARD, DEPUTY CHIEF EXECUTIVE OFFICER FOR LEGAL AND CORPORATE ISSUES

Born.in.1969,.graduated.from.the.Saint-Petersburg.State.Electro-technical.University,.named.after.Ulianov.(Lenin),.Saint-Petersburg.State.University..Received.a.Ph.D..in.Economics.in.2001.

2001.–.2007,.Deputy.Chief.Executive.Officer,.FGUP.Rublevo-Uspensky.Health.Center.(Administration.of.the.President.of.Russia).Before.being.appointed.to.OJSC.Gazprom.Neft,.held.the.office.of.Executive.Director,.LLC.NorthWest.Investment.Company.December.2007.–.present,.member.of.the.OJSC.Gazprom.Neft.Management.Board,.Deputy.Chief.Executive.Officer.for.Legal.and.Corporate.Issues.In.charge.of.legal.and.corporate.support.of.the.Company’s.business.

6 VLADISLAV VALERIEVICH BARYSHNIKOVMEMBER OF THE MANAGEMENT BOARD, DEPUTY CHIEF EXECUTIVE OFFICER FOR INTERNATIONAL BUSINESS DEVELOPMENT

Born.in.1965,.graduated.from.the.Red-Banner.Military.Institute.

2002.–.2009,.Director.of.OJSC.Gazprom’s.Representative.Office.in.the.PRC,.Asia-Pacific.Regional.Representative..Class.3.State.Councillor.of.the.Russian.FederationApril.2009.–.present,.Deputy.Chief.Executive.Officer.for.International.Business.Development;.November.2009.–.present,.member.of.the.OJSC.Gazprom.Neft.Management.Board..Supervises.development.of.the.Company’s.international.business.and.interaction.with.foreign.partners.

10 KIRILL ALBERTOVICH KRAVCHENKOMEMBER OF THE MANAGEMENT BOARD DEPUTY CHIEF EXECUTIVE OFFICER FOR MANAGEMENT OF FOREIGN ASSETS

Born.in.1976,.graduated.from.the.M..V..Lomonosov.Moscow.State.University,.UK.Open.University,.IMD.Business.School..Doctor.of.Economics,.Professor.

2004.–.2007,.Administrative.Director,.OJSC.MHK.EuroChem..In.different.years.was.elected.to.the.Boards.of.Directors.of.large.companies..2007.–.2007,.Vice.President,.OJSC.Gazprom.Neft.December.2007.–.present,.member.of.the.OJSC.Gazprom.Neft.Management.Board.2007.–.2009,.Deputy.Chief.Executive.Officer.for.Administrative.Issues.2008.–.2009,.Deputy.Chairman.of.the.OJSC.Gazprom.Neft.Management.Board.February.2009.–.present,.Chief.Executive.Officer,.Serbian.Oil.Company.Naftna.Industrija.Srbije.(NIS).March.2009.–.present,.Deputy.Chief.Executive.Officer.for.Management.of.Foreign.Assets,.OJSC.Gazprom.Neft.

Interest.in.the.authorized.capital.(as.of.December.31,.2013):.0.000068462%.(3,246.units).




CONTENTS

CORPORATE GOVERNANCE MANAGEMENT BOARD

WORK CARRIED OUT BY THE OJSC GAZPROM NEFT MANAGEMENT BOARD IN 2013

The OJSC Gazprom Neft Management Board met as scheduled to discuss topics based on the resolutions of the general meeting of shareholders, the Board of Directors and matters referred by the CEO and members of the Management Board. The work schedule of the Management Board is also based on proposals by the heads of OJSC Gazprom Neft organizational units.

According.to.the.Articles.of.Incorporation.and.the.Regulations.of.the.OJSC.Gazprom.Neft.Management.Board,.the.Board.of.Directors.receives.additional.disclosure.on.the.Company’s.performance.every.quarter.via.management.reports.containing.an.MD&A.(management.discussion.and.analysis.of.financial.position.and.operating.results).

Disposal.of.the.shares.in.CJSC.Sibirskaya.Geologicheskaya.Kompania.

Purchase.by.NIS.a.d..Novi.Sad.of.a.55.%.holding.in.the.authorized.capital.of.a.new.company.incorporated.to.control.the.Free.Zone.in.Pancevo,.Serbia

Election.of.deputies.to.the.Management.Board.Chairman

Consolidated.results.of.Gazprom.Neft.in.2012.

OJSC.Gazprom.Neft’s.Strategy.in.the.bitumen.business.until.2025

OJSC.Gazprom.Neft.Development.Strategy.until.2025

Progress.and.objectives.of.the.“Reorganizing.the.regional.sales.model”.project

Acquiring.100%.holding.in.the.authorized.capital.of.OOO.Airport.Fuel.Supply.

Implementation.of.OJSC.Gazprom.Neft’s.2013.Investment.Program.and.Budget.(Financial.Plan).based.on.the.results.of.H1.2013.

Changes.proposed.to.the.Company’s.2013.Investment.Program.and.Budget.(Financial.Plan)

Incorporation.of.ZAO.Gazprom.Neft.Corporate.Sales

Purchase.of.a.100%.holding.in.the.authorized.capital.of..SYNTAZ.OIL.LLC

Acquisition.of.a.holding.in.the.authorized.capital.of.Omsk.(Central).Refueling.Complex.Limited.Liability.Company

Purchase.by.LLC.Gazpromneft.Marine.Bunker.of.a.100%.holding.in.the.authorized.capital.of.ООО.Novorosnefteservis,.and.of.a.100%.holding.in.the.authorized.capital.of.OOO.Novorossiysk.Oil.Transshipment.Complex

Business.plan.of.the.Exploration.and.Production.Segment.for.2014–2016.

Business.plan.of.the.Logistics,.Processing,.and.Sales.Segment.for.2014–2016

Concept.and.Principles.of.OJSC.Gazprom.Neft’s.Charitable.Activities

Disposal.of.a.100%.holding.in.the.authorized.capital.of.ООО.Transservis

Human.resources.strategy.of.OJSC.Gazprom.Neft.until.2020

HR.succession.pool.management.system.in.2014

IN 2013, 11 OJSC GAZPROM NEFT MANAGEMENT BOARD MEETINGS WERE HELD, AND SEVEN MATTERS WERE VOTED UPON. AT THE MEETINGS THE FOLLOWING KEY MATTERS WERE CONSIDERED:



CONTENTS

The.Company.has.also.adopted.a.program,.which.rewards.employees.based.on.stock.appreciation.rights.(SAR)..This.program.is.another.component.in.the.Company’s.long-term.growth.strategy,.and.rewards.management.based.on.the.growth.of.Gazprom.Neft.Group’s.shareholder.value.over.a.certain.period..The.Group’s.shareholder.value.is.calculated.on.the.basis.of.

market.capitalization..The.specific.market.situation.and.employee.functions.are.considered.in.order.to.calculate.the.amount.payable.to.employees.under.the.program..The.level.of.reward.is.then.appraised.on.a.fair.value.basis.at.the.end.of.each.reporting.period,.and.paid.at.the.end.of.the.program’s.period.

TOTAL COMPENSATION TO MEMBERS OF THE BOARD OF DIRECTORS AND MEMBERS OF THE MANAGEMENT BOARD

The Company has a clearly structured and unbiased remuneration policy for its top and senior executive officers, which ensures there is a correlation between short-term targets and the amounts of respective bonuses paid. In addition to short-term bonuses, the Company also uses a system of incentives based on the Company’s market capitalization performance over a three-year period.

COMPENSATION TO MEMBERS OF THE BOARD OF DIRECTORS

The.level.of.compensation.payable.to.the.members.of.the.Board.of.Directors.depends.on.the.Company’s.financial.performance.and.requires.approval.by.the.shareholders.each.year..This.unbiased.shareholder.approval.mechanism.reduces.the.likelihood.of.the.bonus.program.being.abused.

By.resolution.of.the.general.meeting.of.shareholders,.members.of.the.Board.of.Directors.who.do.not.hold.a.position.in.the.Company’s.executive.bodies.(i.e..who.are.not.executive.directors).were.paid.0.005%.of.the.EBITDA.(calculated.under.IFRS).of.the.consolidated.financial.statements.filed.by.OJSC.Gazprom.Neft.for.2012.

In.addition.to.the.base.compensation,.members.of.the.Board.of.Directors.were.paid.additional.compensation.for.performing.the.functions.of.the.Chairman.of.the.Board.of.Directors.(50%.of.the.compensation.payable.to.a.member.of.the.Board.of.Directors),.a.member.of.a.committee.of.the.Board.of.Directors.(10%.of.the.compensation.payable.to.a.member.of.the.Board.of.Directors).or.Chairman.of.a.committee.of.the.Board.of.Directors.(50%.of.the.compensation.payable.to.a.committee.member).

In.2013,.the.total.compensation.paid.to.members.of.the.Board.of.Directors.was.RUB.165.million.(including.personal.income.tax).based.on.the.results.for.2012.

COMPENSATION TO MEMBERS OF THE MANAGEMENT BOARD

The.income.paid.to.members.of.the.Management.Board.was.RUB.782.million.in.2013..Payments.include.bonuses.for.the.reporting.period,.taxes.and.other.compulsory.payments.to.government.funds,.payments.for.annual.paid.vacation.during.the.reporting.period,.and.payment.for.medical.services.

No.additional.compensation.is.paid.to.members.of.the.Management.Board.for.work.in.the.management.bodies.of.OJSC.Gazprom.Neft.or.its.dependent.and.subsidiary.companies.




CONTENTS


INTERNAL AUDIT DEPARTMENT

Internal control over the Company’s financial and business activities is carried out by the Internal Audit Department.

MAIN FUNCTIONS OF THE INTERNAL AUDIT SERVICE:

Internal audits, including: .� assessments.of.the.effectiveness.of.the.business’.processes.and.internal.control.system;.� audits.of.construction.activities;.� audits.of.corporate.procedures;.� IT.audits;.� efficiency.audits.of.the.system.to.ensure.an.ongoing.supply.of.petroleum.products.to.tank.farms.and.filling.stations;.� confirming.compliance.with.legislative.requirements.and.internal.regulations,.including.an.annual.audit.of.corporate.procedures.for.compliance.with.insider.information.laws;

.� controlling.the.integrity.of.OJSC.Gazprom.Neft.assets;

.� monitoring.the.implementation.of.corrective.measures.

Organizing an integrated risk management system (IRMS), including:

.� identifying,.analyzing,.assessing,.revising.and.updating.the.risks.of.OJSC.Gazprom.Neft

.� developing.and.updating.IRMS.procedures.(analysis.of.individual.and.inherent.system.risks,.development.and.issuing.recommendations);

.� monitoring.and.assessing.the.efficiency.of.implemented.procedures.related.to.managing.key.risks.and.other.risks.of.OJSC.Gazprom.Neft.business.units.(blocks);

.� integrating.IRMS.into.key.managerial.business.processes.(business.planning,.management.of.project.risks,.management.objectives).

Carrying out activities to prevent fraud, including:

.� organizing.and.maintaining.a.fraud.prevention.hot.line;

.� carrying.out.special.inspections.designed.to.identify.any.fraud;

Developing a methodology for internal audit, including:

.� Developing.methodology.documents.to.regulate.the.activities.of.the.Internal.Audit.Department;

.� Automating.internal.auditing.processes.(including.planning.and.time.keeping,.management.of.audit.resources,.auditing.procedure.documentation,.monitoring.of.auditing.teams’.activities);

.� Ensuring.continuous.professional.growth.and.training.for.IAD.employees;

.� Implementing.the.program.to.control.the.internal.auditing.function,.and.carrying.out.related.quality.control.

ACCOUNTABILITY OF THE INTERNAL AUDIT SERVICE, INTERACTION WITH THE ISSUER’S EXECUTIVE MANAGEMENT BODIES AND THE ISSUER’S BOARD OF DIRECTORS (SUPERVISORY COUNCIL)The.Internal.Audit.Department.is.directly.accountable.to.the.Company’s.Chief.Executive.Officer;.the.Board.of.Directors.approves.the.appointment.and.dismissal.of.the.Director.of.the.Internal.Audit.Department.

INTERACTION OF THE INTERNAL AUDIT DEPARTMENT WITH THE ISSUER’S EXTERNAL AUDITORThe.Internal.Audit.Department.regularly.reports.on.the.results.of.its.activities.to.the.Company’s.Board.of.Directors.and.submits.information.to.the.Audit.Committee.about.any.material.violations.revealed.in.the.course.of.the.auditing.of.OJSC.Gazprom.Neft’s.financial.and.business.activities.


CONTENTS

www.gazprom-neft.com 167

Company’s compliance with RF laws on combating abuse of insider information and market manipulation

OJSC.Gazprom.Neft’s.activities.to.ensure.compliance.with.the.requirements,.restrictions,.and.sanctions.that.exist.under.Russian.law.to.prevent.the.abuse.of.insider.information.and.market.manipulation.by.the.Company.or.its.employees.and.structural.subdivisions.are.organized.according.to.the.current.legislation.

In.2013,.Gazprom.Neft’s.Board.of.Directors.approved.a.new.version.of.the.Regulation.on.Insider.Information,.which.took.into.account.main.changes.in.Russian.Federal.law.

The.Company.approved.its.List.of.Insider.Information.based.on.the.official.FSFM.List,.and.set.out.a.procedure.covering.the.access.of.insider.information.and.rules.to.keep.insider.information.confidential.and.ensure.compliance.control.

As.recommended.by.the.FSFM,.in.2013.the.Company.expanded.its.insiders.list,.by.including,.in.addition.to.Level.1.insiders.(members.of.the.Board.of.Directors,.members.of.the.Audit.Committee,.members.of.the.Management.Board,.the.Auditor,.Registry.Keeper,.and.appointed.Communications.Agency),.employees.in.executive.positions.(Level.2.insiders).and.Company.employees.authorized.to.access.insider.information.(Level.3.insiders)..As.of.December.31,.2013,.375.individuals.were.listed.as.insiders.of.OJSC.Gazprom.Neft..

The.Internal.Audit.Department,.whose.department.head.is.appointed.by.the.Board.under.the.Company’s.Articles.of.Incorporation,.has.the.role.of.ensuring.legal.compliance.

As.required.by.law,.the.Company.has.a.named,.designated.authorized.subdivision.–.the.Corporate.Regulation.Department.–.whose.function.it.is.to.keep.the.insiders.list,.communicate.it.to.stock.exchanges,.notify.insiders.who.are.added.to.and.deleted.from.the.list,.and.to.disclose.insider.information.under.respective.Federal.Law.

The.Company’s.corporate.website.has.an.“Insiders”.section.where.the.following.information.is.disclosed:.Regulation.on.Insider.Information,.List.of.Insider.Information,.Updated.List.of.Gazprom.Neft.Stock.and.Securities.Transactions.Required.to.be.Reported.by.Insiders.to.the.Company.and.the.FSFM,.and.Insider.Report.Forms..

Insider.information.is.disclosed.on.the.Company’s.website.http://ir.gazprom-neft.com,.on.the.“Essential.Facts.and.Insider.Information”.pages.

The.insider.list.is.maintained.by.using.a.registration.form.that.enables.rapid.compliance.with.regulatory.instructions.(e.g..if.requests.are.made.for.a.list.of.insiders.on.a.specific.date.or.period),.as.well.as.efficient.internal.control.to.enforce.legal.compliance.by.the.insiders.

Financial.instruments.in.relation.to.which.the.Company.qualifies.as.an.insider,.and.transactions.which.are.reportable.by.individuals.on.the.insider.list.to.OJSC.Gazprom.Neft,.other.corporate.entities,.and.the.FSFM,.include.the.ordinary.shares.and.bonds.issued.by.OJSC.Gazprom.Neft.


http://ir.gazprom-neft.com


CONTENTS


COMPLIANCE WITH THE CORPORATE CODE OF CONDUCTCorporate governance in OJSC Gazprom Neft is based on the principle of sustainable growth and long-term appreciation of the Company’s authorized capital. Observing this principle in the long term is only made possible through responsible interaction and trusted relationships with employees, suppliers, clients, and local communities in the regions of the Company’s presence.

Corporate.governance.at.OJSC.Gazprom.Neft.is.based.on.an.unwavering.respect.for.shareholder.rights,.high.quality.investment.planning,.a.logical.system.of.internal.audits.and.risk.management,.a.high.degree.of.financial.and.informational.transparency,.and.an.efficient,.professional.Board.of.Directors.

The.Company.abides.steadfastly.by.the.rules.of.effective.legislation,.aimed.primarily.at.ensuring.respect.for.and.protection.of.shareholder.rights.

OJSC Gazprom Neft ensures the equal treatment of its shareholders by issuing shares of one type (category), including minority (minor) shareholders and foreign shareholders.

OJSC Gazprom Neft ensures that shareholders can exercise authority over their shares without undue restriction, delay or duress.

.� OJSC.Gazprom.Neft.engages.a.professional.independent,.and.highly.reputable.registrar.with.up-to-date.and.trusted.technology,.that.allows.shareholder.rights.and.titles.to.be.recorded.reliably.and.effectively;

.� The.Company.protects.shareholder.title.and.rights,.jointly.with.the.registrar,.by.continuously.updating.shareholder.information.on.the.shareholder.register

OJSC Gazprom Neft provides for the efficient preparation and conducting of general meetings of shareholders.

.� Shareholders.are.notified.of.a.forthcoming.general.meeting.of.shareholders.no.later.than.30.days.before.the.meeting..Notifications.are.communicated.by.two.methods:.via.hard.copy.mailed.to.each.shareholder,.and.via.a.notice.published.in.the.Rossiyskaya.Gazeta.

.� Shareholders.have.the.opportunity.to.study.all.information.made.available.to.them.in.advance.of.the.general.meeting.of.shareholders.(all.information.is.published.on.the.Company’s.official.website;.Russian.and.English.versions.are.published.simultaneously;.shareholders.may.also.study.relevant.materials.at.the.Company’s.registered.office).

.� The.registration.of.shareholders.attending.the.general.meeting.of.shareholders.is.made.as.easy.and.efficient.as.possible.and.the.high.proportion.of.the.Company’s.minority.shareholders.who.attend.general.meetings.of.shareholders.proves.that.there.are.no.technical.difficulties.which.would.hinder.attendance.

.� Shareholders.are.allowed.to.vote.by.proxy.at.the.general.meeting.

.� Voting.is.conducted.by.using.voting.ballots.

.� The.Board.of.Directors.is.elected.using.cumulative.voting.

.� The.procedure.for.voting.on.each.agenda.item.is.explained.before.voting.begins,.including.a.detailed.explanation.of.the.cumulative.voting.principle;.explanations.of.how.to.vote.are.provided.on.the.back.of.each.ballot.paper.

.� To.prevent.errors.and.abuse.during.the.shareholders’.registration.upon.their.arrival.at.a.meeting,.as.well.as.during.the.counting.of.the.votes,.the.Company.employs.a.registrar.to.undertake.the.role.of.returning.officer.

.� The.procedure.for.conducting.the.general.meeting.of.shareholders.promotes.equal.opportunity.for.all.shareholders,.by.allowing.them.to.express.their.opinions.and.raise.questions.on.the.agenda.with.members.of.the.Company’s.Management.Board.who.participate.in.general.meetings.of.shareholders.every.year.

.� Voting.results.are.announced.at.the.general.meeting.of.shareholders.

.� Minutes.of.the.general.meetings.of.shareholders.are.published.on.the.Company’s.official.website.and.are.available.to.any.stakeholder.to.examine.

.� The.Company.maintains.a.dedicated.email.address.for.shareholder.contacts:[email protected].


mailto:shareholders%40gazprom-neft.ru?subject=


CONTENTS

OJSC Gazprom Neft ensures the right of shareholders to receive profit.

.� OJSC.Gazprom.Neft.has.a.clearly.communicated.dividend.policy:.to.pay,.as.a.minimum,.15%.of.the.Company’s.net.profit.calculated.under.International.Accounting.Standards.(IFRS).

.� The.Company.has.a.‘fast.payment’.policy.for.the.payment.of.dividends.to.minority.shareholders.

OJSC Gazprom Neft provides effective control over its financial and business activities.

.� For.the.annual.audit.of.its.financial.statements,.the.Company.engages.PWC,.the.world’s.largest.auditing.service.provider.

.� The.Company.has.an.elected.Audit.Committee.consisting.of.the.parent.company’s.internal.auditors.

.� The.Company.operates.an.efficient.Internal.Audit.Department.comprised.of.highly.skilled.professionals;.auditors.working.in.the.Company’s.subsidiaries.report.to.OJSC.Gazprom.Neft’s.Internal.Audit.Department.

.� An.Audit.Committee.has.been.set.up.under.the.Board.of.Directors..The.Internal.Audit.Department.is.accountable.to.the.Audit.Committee..The.Audit.Committee.regularly.meets.to.address.issues.related.to.the.Company’s.activities.within.the.scope.of.its.jurisdiction.as.stipulated.in.the.Audit.Committee.Regulations.

.� As.part.of.its.risk.management.and.internal.control.system,.the.Company.has.established.a.safe,.confidential,.and.easy-to-use.communications.method.(a.hot.line).to.report.violations.of.law,.internal.procedures,.or.the.Company’s.Corporate.Conduct.Code.by.any.employee.and/or.member.of.an.executive.or.management.body.in.charge.of.controlling.the.Company’s.financial.and.business.activities.

OJSC Gazprom Neft seeks to disclose information in the most timely and transparent manner.

.� The.Board.of.Directors.has.approved.the.Regulations.of.the.Information.Policy.

.� The.Company.has.an.official.bilingual.website.(www.gazprom-neft.com).

.� The.Company.does.not.attempt.to.conceal.any.material.information.about.its.business.

.� The.Company.ensures.a.high.level.of.disclosure.of.information.about.its.business.(including.information.about.the.structure.of.its.equity.capital,.financial.and.operating.data).by.using.available.media,.including.on-line.publication.of.press.releases.

.� The.Company.provides.prompt.disclosure.of.information.to.prevent.it.from.becoming.out.of.date.

.� When.disclosing.information,.the.Company.uses.disclosure.methods.which.allow.unrestricted,.user-friendly.and.the.lowest-cost.access.to.information.

.� When.disclosing.information,.the.Company.ensures.that.no.audience.has.priority.over.other.audiences.

.� In.accordance.with.the.law,.the.Company.provides.information.(documents).at.the.request.of.shareholders.

OJSC Gazprom Neft adheres to international social responsibility standards; social goals are integrated into the Company’s long-term strategy

.� For.many.years.OJSC.Gazprom.Neft.has.been.preparing.and.publishing.Sustainable.Development.Reports.

.� The.Company.implements.large-scale.programs.aimed.at.improving.industrial,.environmental.and.occupational.safety.

.� OJSC.Gazprom.Neft.is.involved.in.regional.social.and.economic.development.programs.

.� The.Company.implements.an.HR.motivation.and.professional.development.policy.





CONTENTS

INTERACTION WITH INVESTORS AND EQUITY CAPITAL

BASIC INFORMATION ABOUT SHARES AND ADRS OF OJSC GAZPROM NEFT AS OF DECEMBER 31, 2013

Ordinary.registered.shares State Registration Number 1-01-00146-А dated October 17, 1995

Par.value.per.share.of.the.issued 0.0016 RUB

Quantity.of.securities.in.the.issue.(units) 4,741,299,639

Total.par.value.of.issued.shares 7,586,079.4224 RUB

ISIN.CODE SIBN

COMPOSITION OF SHAREHOLDERS AND AUTHORIZED CAPITAL STRUCTURE

According.to.the.OJSC.Gazprom.Neft.articles.of.Incorporation,.the.Company’s.authorized.capital.consists.of.4,741,299,639.common.shares..As.of.the.end.of.2013,.OJSC.Gazprom.Neft.has.no.preferred.shares.

The.major.shareholder.of.OJSC.Gazprom.Neft.stock.is.OJSC.Gazprom..It.holds,.directly.and.indirectly,.95.68%.of.the.Company’s.total.common.shares..

The.remainder.of.common.shares.(4.32%).is.distributed.between.minority.shareholders.–.individuals.and.corporations.

As.of.December.31,.2012,.8,988.business.accounts.were.registered.in.the.shareholder.register,.including:.15.corporations,.8,969.individuals,.one.beneficial.owner.and.four.nominees.

List of registered persons/entities recorded with a shareholding of at least 1% of the authorized capital

Persons/entities listed in the shareholder register

As of December 31, 2013 As of December 31, 2012

Share of authorized capital, %

Number of shares, units

Share of authorized capital, %

Number of shares, units

OJSC.Gazprom. 66.9837%. 3,175,898,234. 66.9837%. 3,175,898,234.

Gazprom.Finance.B.V 5.6791%. 269,261,275. 5.6791%. 269,261,275

LLC.Deutsche.Bank.(Nominee). 20.0002%. 948,271,442. 20.0124%. 948,848,442

CJSC.ING.Bank.(Eurasia).(Nominee). – – 2.8075%. 133,112,553

CJSC.NCO.National.Clearing.Depository.(Nominee) 7.0477%. 334,154,265 4.1538%. 196,942,733


INVESTMENT CALCULATOR ON THE COMPANY’S WEBSITE


http://ir.gazprom-neft.com/share-data/performance-calculator/


CONTENTS

ADRs

2013 2012 2011 2010 2009

Price,.USD.(closing.price) 22.60 27.40 27.40 27.40 27.40

52-week.average.price,.USD 21.32 17.74 17.74 17.74 17.74

52-week.max.price,.USD 24.66 29.69 29.69 29.69 29.69

52-week.min.price,.USD 16.90 9.20 9.20 9.20 9.20

Daily.average.trade.volume,.million.ADRs 1.973 3.294 3.003 2.160 1.585

Market.capitalization,.USD.billion 21.262 22.248 21.821 19.955 24.065

Total.outstanding.ADRs,.units 23,709,554 23,530,268 18,669,113 16,536,755 16,879,785

OTCQx.system.code.–..LSE.IOB./.ISIN.code

GZPFY – GAZ / RU0009062467

CUSIP. 36829G107

Coefficient... 1 ADR: 5 ordinary shares

Effective.since. April 20, 1999

SEDOL. 5109407

ISIN. RU0009062467

Depositary.bank BNY Mellon

Volume.of.ADR.issued.(units)

23,709,554

Percent.of.free-floated.ADR.(free.float),.%

58

MICEX-RTS.system.code/.ISIN.code

SIBN / RU0009062467

Par.value.of.ordinary.shares.(RUB)

0.0016

Authorized.capital.(RUB) 7,586,079.4224

Free-floated.shares.(free.float),.%

4.32

MICEX

2013 2012 2011 2010 2009

Price.per.share,.RUB.(closing.price) 146.77 142.52 148.18 128.27 163.64

52-week.average.price,.RUB 135.39 148.68 132.63 133.64 110.59

52-week.max.price,.RUB 149.22 162.1 155.99 170.97 176.32

52-week.min.price,.RUB 112.20 126.1 106.33 111.11 61.08

Daily.average.trade.volume,.USD.million 1.007 1.492 2.755 3.581 4.273

Market.capitalization,.RUB.billion 695.881 675.7300246 702.5657805 608.167 775.866

Total.outstanding.ordinary.shares,.units 4,741,299,639 4,741,299,639 4,741,299,639 4,741,299,639 4,741,299,639




CONTENTS

TRADING OF SHARES

Shares.of.OJSC.Gazprom.Neft.are.traded.in.Russia.on.the.main.trading.floors.of.the.integrated.OJSC.Moscow.Exchange.(MICEX)..In.foreign.markets,.the.Company’s.shares.are.traded.as.American.Depositary.Receipts.(ADRs),.mainly.on.OTC.markets.through.the.LSE.IOB.system.in.the.UK,.the.OTCQx.system.in.the.USA,.and.also.in.Germany..

In.2013,.the.value.of.OJSC.Gazprom.Neft.shares.traded.across.all.MICEX.trading.floors.amounted.to.RUB.12.billion.(USD.367.million)..As.of.the.end.of.2013,.ADRs.issued.against.OJSC.Gazprom.Neft.shares.accounted.for.0.3%.of.the.total.trade.value.of.ADRs.of.foreign.companies.traded.on.the.London.Stock.Exchange.in.the.IOB.system,.or.USD.752.million.

As.of.the.end.of.2013,.there.was.a.small.increase.in.the.price.of.the.Company’s.shares..According.to.the.final.trading.results.of.the.MICEX.on.December.31,.2013,.the.price.of.OJSC.Gazprom.Neft.shares.stood.at.RUB.146.77.per.ordinary.share.(+3.0%.compared.with.the.beginning.of.the.year)..OJSC.Gazprom.Neft’s.market.capitalization.as.of.December.31,.2013,.was.USD.21.262.billion.

Based.on.generally.recognized.market.value.indicators,.OJSC.Gazprom.Neft.remained.undervalued.by.the.market.in.2013,.in.comparison.with.both.international.oil.companies.and.with.Russian.competitors..In.many.respects,.this.is.due.to.the.limited.liquidity.of.the.Company’s.shares..According.to.investment.analysts,.the.Company’s.considerable.potential.in.hydrocarbon.production.growth,.its.high.proportion.of.refining,.extended.sales.in.premium.segments,.and.aggressive.development.of.new.production.projects,.along.with.a.high.operating.efficiency.are.factors.which.create.considerable.competitive.advantage.and.a.substantial.opportunity.to.grow.shareholder.value.in.the.long.term.

80

60

40

20

0

100

80

60

Volume of trade in OJSC Gazprom Neft shares,USD million (right axis)

JanuaryFebruary

MarchApril May

June JulyAugust

SeptemberOctober

November

December

Price of OJSC Gazprom Neft share,RUB (left axis)

Trading volume and price of OJSC Gazprom Neft shares on the MICEX stock exchange 2013

Source:.Bloomberg

Gazprom Neft MICEXUrals

JanuaryFebruary

MarchApril May

June JulyAugust

SeptemberOctober

November

December

110

100

90

80

70

Source:.Bloomberg

120

110

100

90

80

70

Gazprom Neft Average

JanuaryFebruary

MarchApril May

June JulyAugust

SeptemberOctober

November

December

Source:.Bloomberg

CORPORATE GOVERNANCE INTERACTION WITH INVESTORS AND EQUITY CAPITAL

250,000,000

200,000,000

150,000 000

100,000,000

50,000,000

0

Micex LSE OTCQX

JanuaryFebruary

MarchApril May

June JulyAugust

SeptemberOctober

November

December

OJSC Gazprom Neft share performance on MICEX, RTS, LSE and OTCQx, 2013



CONTENTS

DIVIDEND HISTORY

The dividend policy is a vital element of corporate governance and a key indicator of the Company’s respect for its shareholders’ rights.

The.annual.general.meeting.of.shareholders.held.on.June.07,.2013,.adopted.a.decision.(AGMS.Minutes.No..0101/03.of.June.10,.2013).to.pay.RUB.44.1.billion.as.dividends.for.2012,.or.23.94%.of.the.2012.net.profit.calculated.under.IFRS;.this.was.27.4%.higher.than.the.dividends.paid.for.2011,.making.it.one.of.the.highest.dividend.payments.in.the.sector.

2013.was.the.first.year.when.the.Board.of.Directors.approved.the.payment.of.an.interim.dividend..The.extraordinary.general.meeting.of.shareholders.held.on.September.30,.2013.decided.to.pay.RUB.4.09.per.share.as.interim.dividends.after.the.first.half.of.2013..

The.decision.to.pay.interim.dividends.demonstrates.the.Company’s.readiness.to.adhere.to.high.corporate.governance.standards.

Period 2008 2009 2010 2011 2012 1H2013

Dividends.paid.per.share,.RUB 5.40 3.57 4.44 7.30 9.30 4.09

Total.amount.of.dividends.paid.on.shares.of.this.category,.RUB 25.603.018.051 16.926.439.711 21.051.370.397 34.611.487.365 44.094.086.644 19.391.915.524

Percent.of.US.GAAP.net.profit.and.IFRS.(from.statements.for.2013),.% 21% 20% 22% 22% 24% –

The.issuer’s.management.body.responsible.for.the.payment.of.dividends

Annual.General.Meeting.

of.Shareholders


of.Shareholders


of.Shareholders


of.Shareholders


of.Shareholders

Extraordinary.General.Meeting.of.Shareholders

The.date.of.the.meeting.of.the.issuer’s.management.body,.at.which.it.was.resolved.to.pay.dividends,.the.date.and.number.of.the.Minutes

June.22,.2009.Minutes.No..47.of.

July.03,.2009

June.29,.2010.Minutes.No..

0101/01.of.July.01,.2010


0101/01.of.June.14,.2011


0101/02.of.June.14,.2012


0101/03.of.June.10,.2013

September.30,.2013.Minutes.

No..0101/04.of.October.3,.2013

The.date.by.which.declared.dividends.are.to.be.paid Before.May.31,.2010.

Before.May.31,.2011.

Before.August.09,.2011



Before.November.29,.2013

Method.and.other.terms.of.payment.of.declared.dividends In.cash In.cash In.cash In.cash In.cash In.cash

Unpaid.to.accrued.dividend.ratio,.%* 0.014% 0.02% 0.06% 0.02% 0.05% 0.07%

*. Dividends.are.not.paid.to.shareholders.who.failed.to.provide.details.for.transferring.dividends.according.to.Paragraph.5,.Article.44.of.RF.Federal.Law.No..208.dated.12/26/1995.“On.Joint-Stock.Companies”..The.dividends.accrued.on.the.shares.of.unidentified.persons.are.paid.as.shareholder.rights.until.such.securities.are.established.

THE MAIN PRINCIPLES OF OJSC GAZPROM NEFT’S DIVIDEND POLICY:

Ensuring maximum transparency concerning the amount of dividend to be distributed and its payment

The.Dividend.Policy.Regulations.set.the.minimum.annual.dividend.payable.on.shares.at.15%.of.the.Company’s.net.profit.calculated.under.International.Financial.Reporting.Standards.(IFRS)

Complying with Russian Federation law, the Company’s Articles of Incorporation and internal documents

The.right.to.receive.dividends.is.granted.to.each.shareholder.listed.in.the.shareholder.register.as.of.the.date.of.drawing.up.the.list.of.shareholders.entitled.to.participate.in.the.shareholder.meeting.at.which.it.is.resolved.to.pay.dividends..The.date.of.registration.for.depositary.receipt.holders.is.set.on.an.individual.basis.by.the.depositary.bank.(the.Bank.of.New.York.Mellon)

Commitment to high corporate governance standards.

The.Company.has.formalized.the.principle.of.ensuring.progressive.dividend.payments.linked.to.growth.in.net.profit..The.approved.Regulations.of.the.Dividend.Policy.of.OJSC.Gazprom.Neft.are.published.on.the.Company’s.official.website.together.with.a.history.of.the.Company’s.dividend.payments

9.3 RUB Dividend per share (+ 27.4% against 2011 which had been the highest payment figure in the last 5 years)




CONTENTS

PARTICIPATION IN THE DEPOSITARY RECEIPT PROGRAM

During.2013.there.were.on-going.programs.of.American.and.global.depositary.receipts.against.the.Company’s.shares,.which.were.traded.on.the.OTC.market.in.the.U.S.,.U.K.,.Germany,.etc..One.ADR.is.equivalent.to.five.common.shares.of.OJSC.Gazprom.Neft..The.depositary.bank.under.the.depositary.receipt.programs.for.OJSC.Gazprom.Neft.is.the.Bank.of.New.York.Mellon..

As.of.the.end.of.2013,.the.total.quantity.of.ADRs.issued.against.common.shares.was.equivalent.to.119.million.shares.(2.5%.of.the.Company’s.authorized.capital).

The.volume.of.trade.in.Gazprom.Neft’s.ADRs.was.USD.806.million.in.2013,.of.which.USD.752.million.occurred.on.the.IOB.London.Stock.Exchange,.USD.18.million.on.OTCQx.and.USD.36.million.on.other.European.platforms.(mainly,.in.Germany).

806 USD mn

value of Gazprom Neft’s ADRs traded in 2013

250 meetings with investors

held in 2013

CORPORATE GOVERNANCE INTERACTION WITH INVESTORS AND EQUITY CAPITAL

ENGAGEMENT WITH SHAREHOLDERS AND INVESTORS

The.Company.places.great.emphasis.on.proactive.engagement.with.existing.and.potential.shareholders..The.level.of.information.disclosed.to.Gazprom.Neft’s.shareholders.and.investors.has.significantly.increased.recently,.and.this.has.been.confirmed.by.a.series.of.investor.relations.studies.conducted.by.independent.agencies.as.well.as.the.Company’s.awards.for.achievements.in.this.area.

The.Company.regularly.organizes.investor.conference.calls.in.which.the.management.team.participates..In.addition,.Gazprom.Neft.publishes.the.“Management’s.analysis.of.financial.position.and.operating.results,”.on.a.quarterly.basis.as.an.attachment.to.OJSC.Gazprom.Neft.financial.statements,.prepared.in.accordance.with.US.GAAP.and.IFRS.standards.

For.a.detailed.analysis.of.the.Company’s.performance,.a.Databook.and.Datafeed.are.also.published..

In.order.to.improve.the.level.of.understanding.of.the.Company’s.business,.the.Company.holds.regular.meetings.with.investors.and.shareholders,.and.participates.in.all.large.conferences.for.investment.and.broker.organizations..In.2013,.the.Company.held.about.250.meetings.with.investors;.the.investor.relations.team.took.part.in.21.conferences.for.financial.and.broker.organizations,.and.organized.two.tours.for.investors.(non-deal.Roadshows).

UralsRussia FTSE IOB Index

110

100

90

80

70

Gazprom Neft

January 2013

February 2013

March 2013

April 2013

May 2013

June 2013

July 2013

August 2013

September 2013

October 2013

November 2013

December 2013

Декабрь 2012

OJSC Gazprom Neft ADR performance versus Russian FTSE IOB and Urals oil prices

ADR AND COMPANY SHARES TRADING RESULTS POSTED ON WEBSITE


http://ir.gazprom-neft.com/share-data/shares/


CONTENTS

Each.year.the.Company.organizes.an.Investor.Day.which.is.attended.by.the.top.management.of.OJSC.Gazprom.Neft;.during.this.event.analysts.and.investors.from.investment.companies.may.ask.questions.and.receive.answers.directly.from.the.Company’s.management.

Gazprom.Neft.also.regularly.organizes.roadshows.at.its.industrial.and.production.sites.to.give.investors.and.analysts.an.insight.into.the.Company’s.operations..In.2013,.Gazprom.Neft’s.shareholders.were.given.the.opportunity.to.see.the.oil.production.processes.at.the.Krasnoleninskoye.field.(production.from.the.Bazhenovskaya.suite).in.the.Khanty-Mansi.Autonomous.District,.and.oil.refining.at.the.Moscow.Oil.Refinery.

In.2013,.the.Company.was.honored.with.several.investor.relations.awards..

OJSC.Gazprom.Neft’s.corporate.website.was.shortlisted.in.the.Best.Corporate.Website.categotory,.for.International.Companies.

The.Company.won.several.prizes.at.the.annual.event.held.by.IR.Magazine.Russia.&.CIS.Awards.–.the.only.specialist.international.magazine.to.award.prizes.to.the.best.global.IR.teams.in.the.last.year..In.2013,.Alexei.Yankevich,.OJSC.Gazprom.Neft’s.Deputy.CEO.for.Economics.and.Finance,.came.second.in.the.Best.CFO.category..

The.Company.won.the.4th.Saint.Petersburg.corporate.websites.and.annual.reports.competition,.in.the.“Best.IR.Section.of.Corporate.Site”.category..

IN 2013, GAZPROM NEFT’S ANNUAL REPORT WON SEVERAL AWARDS.

In.the.12th.Annual.International.Investment.Forum.in.Sochi,.OJSC.Gazprom.Neft’s.Annual.Report.was.the.Overall.Winner.in.the.tenth.Competition.of.Joint.Stock.Companies’.Annual.Reports..

According.to.the.results.of.the.Annual.Federal.Contest.for.Annual.Reports.and.Websites,.organized.by.the.Securities.Market.Journal.and.Investor.ru.social.network.(and.assisted.by.the.Russian.Central.Bank’s.Financial.Markets.Service),.Gazprom.Neft’s.Annual.Report.ranked.second.in.the.main.category.“Best.Comprehensive.Corporate.Presentation”.(ranked.4th.in.2012),.and.first.in.the.Fuel.and.Energy.Sector;.the.Company.also.won.awards.for:.“Best.Annual.Report”.in.the.category.“Best.Annual.Report.in.the.Fuel.and.Energy.Sector”,.and.“Best.Annual.Report.of.Securities.Issuers.in.the.North-West.Federal.District”.

In.the.traditional.Annual.Reports.competition.hosted.by.the.Moscow.Exchange,.the.Company.won.“Best.Report.on.Corporate.Social.Responsibility.and.Sustainable.Development”,.and.also.came.second.in.the.“Best.Interactive.Annual.Report”.category.

The.Company.took.part.in.several.prestigious.international.annual.reports.contests.for.the.first.time.

Gazprom.Neft’s.Annual.Report.won.gold.at.the.ARC.Awards.(Academy.Awards.of.Annual.Reports)..The.ARC.Awards.contest.is.the.most.widely.known.international.contest.that.assesses.the.quality.of.annual.reports,.and.is.regarded.as.the.Oscar.for.annual.corporate.reports..The.contest.has.a.number.of.categories,.with.individual.sections.of.the.report.evaluated.as.well.as.the.entire.annual.report..Gazprom.Neft’s.Report.won.the.“Non-English.Reports”.category.for.the.“Oil.and.Gas.Sector”.

Gazprom.Neft’s.Annual.Report.was.also.the.gold.medal.winner.in.an.annual.report.contest.hosted.by.the.LAСP.(League.of.American.Communications.Professionals.LLC).in.the.“Energy-Petroleum/Gas/Fuel”.sector.

The.LACP.Vision.Awards.is.globally.known.as.a.quality.indicator.of.financial.reports..In.2013,.the.contest.received.over.6,000.applications.from.both.large.and.small.capitalization.companies.from.12.countries.worldwide..The.panel,.formed.of.international.communications.experts,.used.several.criteria.to.evaluate.the.reports:.general.impression,.design,.language,.creative.approach.to.presentation,.clarity.of.message,.and.credibility..Gazprom.Neft’s.Annual.Report.scored.98.points.out.of.100.and.the.Company.was.the.contest’s.gold.winner.



http://www.investor.ru


CONTENTS

DEBT PORTFOLIO MANAGEMENT & CREDIT RATINGS

The.Company.follows.a.conservative.debt.financing.policy..One.of.the.main.principles.of.this.policy.is.to.ensure.a.strong.financial.position,.which.is.indicated,.inter.alia,.by.maintaining.the.Net.Debt/EBITDA.ratio.calculated.for.the.entire.Gazprom.Neft.Group..The.Company.makes.every.effort.to.ensure.that.the.ratio.is.maintained.at.a.level.no.higher.than.1.5..During.the.reporting.period,.the.Company’s.Net.Debt./.EBITDA.ratio.remained.much.lower.than.the.threshold...As.of.December.31,.2012.it.was.0.51;.and.as.of.December.31,.2013.it.was.0.59,.according.to.IFRS.consolidated.statements.

An.important.principle.in.attracting.debt.financing.is.to.optimize.the.rates.and.borrowing.periods.by.aligning.them.to.the.Company’s.financing.projects.and.the.situation.on.the.debt.markets..For.example,.the.long-term.nature.of.the.Company’s.investment.projects.caused.the.average.debt.period.to.increase.from.3.81.years.as.of.December.31,.2012,.to.5.15.years.as.of.December.31,.2013...In.the.meantime,.a.careful.selection.of.financing.instruments.(including.rate.type,.investors,.and.debt.currency).and.the.timing.of.market.access,.allowed.the.weighted.average.interest.rate.to.remain.at.almost.the.same.level.–.3.48%.as.of.December.31,.2012.and.3.68%.as.of.December.31,.2013..The.proportion.of.short-term.borrowing.to.total.debt.decreased.considerably.from.31.7%.as.of.December.31,.2012.to.16.7%.as.of.December.31,.20131.

In order to finance its activities, Gazprom Neft relies upon both its own funding sources, such as revenue from its operations, and borrowings. By setting a target debt-to-equity ratio for its capital structure, the Company seeks to attain an optimal balance between the total cost of capital on the one hand, and the Company’s assured long-term financial stability on the other.

BASIC PRINCIPLES OF DEBT PORTFOLIO MANAGEMENT

1. In.accordance.with.the.Group’s.Management.Discussion.and.Analysis.for.the.three.months.ending.December.31,.and.September.30,.2013,.and.for.the.years.ending.on.December.31,.2013.and.2012.


Debt/EBITDA and Net debt/EBITDA performance

Item 2010 2011 2012 2013

NET.DEBT./.EBITDA.RATIO 0.86 0.71 0.51 0.59

Net.debt/EBITDA.Limit 1.50. .1.50 .1.50 1.50

Debt/EBITDA 1.06 0.82 0.80 0.99

Debt/EBITDA.Limit .3.00 .3.00 .3.00 3.00


Gazprom Neft Group’s debt repayment schedule, RUB million

ItemUnder 1

year6-12

months 1–2 years 2–5 years 5 years +

Bank.loans 9,014 23,556 27,158 38,833 5,778

Local.bonds 921 2,476 14,483 55,646 –

Loan.participation.notes 848 1,067 4,921 49,557 121,346

Other.borrowings 17,706 2,114 1,098 444 1,276

TOTAL 28,489 29,213 47,660 144,480 128,400




CONTENTS

* Short-term.loans.and.borrowings,.and.current.part.of.long-term.loans.and.borrowings.

Alongside.rate.and.maturity,.further.optimization.of.the.Company’s.debt.portfolio.is.achieved.through.a.structural.diversification.of.instruments.and.investors,.as.this.reduces.the.Company’s.dependence.on.volatility.in.the.debt.capital.markets..At.present,.OJSC.Gazprom.Neft’s.credit.portfolio.includes.debt.financing.tools,.such.as.pre-export.financing,.guarantees.of.the.Export.Credit.Agency.(ECA),.syndicated.credits,.local.bonds.and.Eurobonds..

In 2013, the Company continued to adhere to the principle of diversified sources of financing: .� In.April.2013,.the.Company.signed.an.agreement.with.an.international.banking.group.to.obtain.a.syndicated.loan.of.USD.1.billion..

This.loan.structure,.combining.non-revolving.(USD.700.million).and.revolving.(USD.300.million).credit.lines.in.the.same.agreement,.was.unique.for.the.Russian.market.when.the.loan.was.made..The.use.of.a.revolving.credit.line.as.a.financing.tool.gives.extra.flexibility.to.the.Company’s.debt.policy.and.raises.liquidity.control.efficiency,.which.has.been.met.with.favorable.responses.from.rating.agencies.

.� In.April.2013.the.Company.placed.its.first.Eurobond.issue.for.EUR.750.million.maturing.in.2018.with.a.2.933%.per.annum.coupon.

.� In.May.2013,.the.Company.mobilized.EUR.258.million.under.an.agreement.to.take.a.loan.secured.by.the.ECA...

In.2013,.the.transaction.of.ECA-secured.loan.won.two.awards:...� Deal.of.the.Year”.by.Trade.Finance.Magazine,.specializing.in.commercial.and.export.financing.and.owned.by.“EUROMONEY”,.one.of.the.most.authoritative.publishing.groups.in.the.world.in.financing.and.capital.markets;.

.� “Best.Deal.of.2012”.by.Global.Trade.Review,.one.of.the.leading.global.magazines.in.international.trade.financing...

.� In.November.2013,.the.Company.placed.an.issue.of.Eurobonds.for.USD.1,500.million.maturing.in.2023.and.with.a.6.0%.per.annum.coupon.

.� In.November.2013,.an.agreement.was.signed.with.an.international.banking.group.to.raise.a.club.loan.for.USD.2,150.million..

The.second.club.loan.in.2013.was.the.largest.taken.by.the.Company.since.2007,.and.its.flexible.access.and.repayment.schedule.will.help.the.Company.to.optimize.its.borrowing.policy..Owing.to.a.favorable.market.situation.existing.at.the.time.of.the.loan.and.considerable.interest.on.the.part.of.major.financial.institutions,.the.agreement.recorded.the.lowest.interest.rate.for.5-year.loans.afforded.to.Russian.oil-and-gas.sector.companies.in.2013.(LIBOR.+.1.50%.per.annum).

Following.the.implementation.of.its.debt.policy,.Gazprom.Neft.Group’s.debt.portfolio.was.RUB.313.9.billion.as.of.December.31,.2013,.or.RUB.70.3.billion.higher.than.as.of.December.31,.2012.(RUB.243.6.billion).

One.of.the.fundamental.principles.of.the.Company’s.debt.policy.is.also.to.maintain.a.high.level.of.information.transparency.by.disclosing.the.results.of.Gazprom.Neft.Group’s.portfolio.management.on.the.official.corporate.website..In.2013,.the.respective..section.of.the.corporate.website.was.completely.redesigned.and.updated:..http://ir.gazprom-neft.com/debt-relations/debt-profile/.

Funds.borrowed.in.2013.were.used.for.general.corporate.purposes.


Debt portfolio structure by maturity, RUB million

2010 2011 2012 2013

Short-term.loans.and.borrowings* 52,860 44,330 77,193 52,413

Long-term.loans.and.borrowings 149,424 176,979 166,447 261,455

TOTAL 202,284 221,309 243,640 313,868

Share.of.short-term.loans.and.borrowings 26.13% 20.03% 31.68% 16.7%

Share.of.long-term.loans.and.borrowings 73.87% 79.97% 68.32% 83.3%



http://ir.gazprom-neft.com/debt-relations/debt-profile/


CONTENTS

COMPLIANCE WITH MAIN LOAN CONTRACT COVENANTS

According.to.the.loan.contracts.made.by.the.Company,.the.consolidated.loan.debt.to.consolidated.EBITDA.ratio.shall.not.exceed.3..The.Company’s.loan.contract.compliance.monitoring.and.enforcement.system.shows.that,.during.the.reporting.period.and.as.of.December.31,.2013,.the.Company.fully.complied.with.all.such.requirements,.as.well.as.other.obligations.under.loan.contracts.

POSSIBLE DEBT FINANCING TOOLS IN 2014

Depending.on.the.Company’s.requirements.for.debt.financing,.the.following.financing.tools.can.be.used.in.2014:.� ruble.bonds,.� Eurobonds.� bilateral.loans,.� syndicated.credits,.� ECA.financing,.� other.external.financing.sources.

On.February.21,.2013,.in.order.to.facilitate.(if.required).prompt.debt.financing.for.OJSC.Gazprom.Neft,.the.Company’s.Board.of.Directors.approved.a.prospectus.and.a.resolution.for.seven.ruble.bond.issues.of.17–23.series.worth.a.total.of.RUB.55.billion,.and.adopted.resolutions.on.their.placement..The.prospectus.will.remain.effective.until.April.09,.2014.

At.the.current.time,.the.Company’s.Board.is.going.to.consider.the.proposed.changes.to.the.prospectus.and.a.decision.to.issue.exchange.bonds.(XB).as.a.measure.to.bring.the.documents.in.compliance.with.the.effective.federal.legal.regulation.on.the.securities.market..The.XB.prospectus.is.permanent,.allowing.the.Company.to.make.quick.arrangements.for.future.XB.issues.should.the.need.arise..

CREDIT RATINGS

OJSC.Gazprom.Neft.has.been.assigned.credit.ratings.by.three.international.credit.agencies:.Standard.&.Poor’s.(S&P),.Moody’s.and.Fitch..

In.October.2013.Gazprom.Neft.was.assigned.a.credit.rating.BBB.(stable.outlook).by.Fitch.Ratings.for.the.first.time..In.November.2013,.Moody’s.raised.the.Company’s.credit.rating.by.another.step.to.Baa2.(stable.outlook)..Gazprom.Neft’s.stable.financial.performance.also.triggered.S&P.to.review.its.2014.outlook,.changing.it.from.stable.to.positive,.while.the.credit.rating.was.confirmed.at.«BBB-».

The.Company’s.credit.ratings.are.investment.level.ratings.and.approximate.the.country.(sovereign).ratings.assigned.by.these.rating.agencies.to.the.Russian.Federation..

The.investment.level.ratings.assigned.to.OJSC.Gazprom.Neft.contribute.to.maintaining.and.expanding.the.potential.for.debt.financing.and.reducing.the.Company’s.borrowing.costs.

Gazprom Neft credit ratings

Agency Scale Rating Outlook

Standard&Poor’s International.scale,.foreign.currency.

ВВВ- Stable

International.scale,.national.currency.

ВВВ- Stable

National.scale.(Russia). ruAAA Stable

Moody’s International.scale,.foreign.currency.

Baa2 Stable

Fitch Long-term.foreign.and.local.currency.issuer.default.rating

ВВВ Stable

Source:.Rating.agencies.data

CORPORATE GOVERNANCE DEBT PORTFOLIO MANAGEMENT & CREDIT RATINGS



CONTENTS

KEY RISK FACTORS

Gazprom Neft has a Risk Management Policy that defines the goals and principles of risk management in order to make the Company’s business more secure in both the short and the long term.

RISK MANAGEMENT HAS BECOME AN INTEGRAL PART OF THE CORPORATE ENVIRONMENT OF GAZPROM NEFT, BY VIRTUE OF THE FOLLOWING PROCESSES:

.� Implementing.a.risk-oriented.approach.in.all.aspects.of.production.and.management;

.� Undertaking.systematic.analysis.of.identified.risks;

.� Building.a.system.to.control.risks.and.monitor.the.efficiency.of.risk.management.activities;

.� Making.all.employees.aware.of.Gazprom.Neft’s.basic.principles.and.approaches.to.risk.management;

.� Ensuring.the.required.regulatory.and.methodological.support;.

.� Distributing.authority.and.responsibility.for.risk.management.between.the.Company’s.business.units.

RISK MANAGEMENT OBJECTIVES

The.Company’s.goal.in.risk.management.is.to.ensure.that.Gazprom.Neft.can.achieve.its.strategic.goals,.as.far.as.possible,.by.identifying.and.guarding.against.risks,.and.by.putting.effective.mechanisms.in.place.to.deal.with.them.

Gazprom.Neft’s.risk.management.system.ensures.the.smooth.operation.of.the.Company’s.production.and.business.processes.by.anticipating.threats.and.mitigating.the.impact.of.adverse.external.and.internal.factors.

THE GOAL IS TO BE ACHIEVED THROUGH THE FOLLOWING OBJECTIVES:

.� Building.a.risk.management.culture.in.the.Company.that.will.create.a.shared.understanding.of.risk.management.principles.and.approaches.among.the.management.and.employees;

.� Generating.and.implementing.a.system-based.approach.to.identify.and.assess.risks.inherent.in.the.Company.as.a.whole.and.its.individual.activities;

.� Promoting.exchange.of.risk-related.information.among.the..Company’s.structural.subdivisions,.and.joint.generation.of.risk.management.action.plans;

.� Providing.consistent.information.about.risks.to.the.Company’s.management.bodies.




CONTENTS

KEY IRMS DEPLOYMENT STAGES

Implementation of the integrated risk management system at the Company began in August 2008, when the Company’s management board approved the concept.

2008–2010 2011–2012 2013–2014 (aims)

Developed.the.IRMS.implementation.concept.and.received.the.Management.Board’s.approval.

The.scope.of.the.IRMS.was.expanded.to.include.subsidiaries.and.affiliates,.joint.ventures.and.major.projects..Risk.management.procedures.were.established.for.major.projects..

Continued.integration.of.the.IRMS.at.new.assets.

Introduced.a.new.corporate.standard,.“IRMS:.Procedure.for.identifying.and.assessing.risks,.preparing.responses,.and.monitoring.compliance”.

Introduced.risk-oriented.planning.for.internal.audit. Further.improvement.of.risk.assessment.methodology,.adoption.of.regulatory.and.methodology.documents.for.the.quantitative.assessment.of.individual.risks.

Expanded.the.scope.of.the.IRMS.to.cover.29.business.entities.(20.subsidiaries.and.affiliates,.and.nine.sub-divisions.at.the.Corporate.Center)..

Analyzed.the.IRMS.to.ascertain.its.compliance.with.best.international.practices.(Ernst.&.Young)...The.development.of.the.IRMS.was.recognized.as.compliant.with.best.practice..Integrated.IRMS.processes.into.executive.decision-making.procedures,.an.important.factor.in.the.current.stage.of.corporate.development.

Integration.of.the.IRMS.into.corporate.business.processes.(business.planning,.project.management,.target-based.management,.and.others).

In.two.phases,.in.June.2009.and.March.2011,.the.IRMS.was.analyzed.to.ascertain.its.compliance.with.best.practices.(by.Ernst.&.Young)..The.risk.management.system.was.found.to.be.compliant.with.best.international.practice.in.terms.of.ERM.(Enterprise.Risk.Management).system.building.

Developing.an.IT.system.to.support.IRMS.processes.

IRMS DEPLOYMENT

The.Company.has.developed.and.formalized.a.uniform.approach.to.its.risk.management.processes,.which.is.fully.contained.in.the.”Integrated.Risk.Management.System”.(IRMS).corporate.standard.

Gazprom.Neft’s.IRMS.is.a.systematic,.continuous.process.that.identifies,.assesses.and.manages.risks.

Its.key.principle.is.that.the.responsibility.for.managing.different.risks.is.assigned.to.managers.at.various.levels,.depending.on.the.potential.financial.impact.of.each.specific.risk.

By.late.2011,.the.Company.had.implemented.basic.IRMS.processes.at.most.of.its.major.subsidiaries.and.affiliates,.and.was.therefore.able.to.develop.a.detailed.corporate.risk.map.for.2011.by.consolidating.identified.risks.from.individual.subsidiary.and.affiliate.levels.across.the.entire.Company..In.2012-2013,.the.scope.of.the.IRMS.was.extended.as.the.asset.portfolio.grew,..with.11.new.assets.in.the.Exploration.and.Production.Segment.(EPS)..and.four.assets.added.to.the.Logistics,.Refinement.and.Sales.Segment.(LRSS)..At.the.end.of.2013,.the.IRMS.covered.all.of.OJSC.Gazprom.Neft’s.major.assets;.it.will.be.extended.further.whenever.new.projects.are.launched.or.operating.assets.are.acquired.

This.approach.made.it.possible.to.outline.risk.management.responsibility.areas,.and.to.monitor.these.at.every.level.of.corporate.management,.and.to.have.customized.response.plans.to.address.material.risks.at.each.subsidiary/affiliate.and.throughout.the.Company.

The.IRMS.standards.and.methods.are.included.in.the.following.documents:.� Risk.management.policy;.� The.corporate.standard.“Integrated.Risk.Management.System.Procedure.for.identifying.and.assessing.risks,.preparing.responses,.and.monitoring.compliance”;.and

.� Guidelines.for.the.risk.management.process,.including.the.Risk.Registry,.Card.and.Matrix.templates.

The.Company.works.continuously.to.improve.its.basic.IRMS.processes.with.a.particular.emphasis.on.assessing.risks.and.integrating.risk.management.processes.into.key.corporate.processes,.such.as.business.planning,.project.management.and.M&A.

To.make.IRMS.processes.more.efficient,.in.2013.Gazprom.Neft.embarked.upon.an.IRMS.automation.project..By.the.year.end,.phase.one.was.completed,.which.involved.the.creating.and.commissioning.of.a.central.database.to.monitor.the.Company’s.risks..The.plan.for.2014.is.to.populate.the.database.with.updated.content,.train.users.and.produce.executive.reports.

CORPORATE GOVERNANCE KEY RISK FACTORS



CONTENTS

IRMS process flow chart in relation to the business planning process

RISK DETECTION / REVIEW

ANNUALLY

QUALITATIVE / QUANTITATIVE RISK

ASSESSMENT

ANNUALLY

DESIGNING RISK CONTROL

ACTIVITIES

ANNUALLY

ACTION MONITORING

EVERY QUARTER/ HALF-YEAR/YEAR*

*.Depending.on.the.severity.of.risks.

KE

YR

ISK

S The.Management.Board.is.responsible.for.key.decisions.and.assesment.of.risk.management...The.immediate.control.of.this.risk.category.is.carried.out.by.business.blocks

BU

SIN

ES

S

BLO

CK R

ISK

S

Risk.management.and.monitoring.at.the.business.block.level

SU

BS

IDIA

RY

R

ISK

S

Risk.management.and.monitoring.at.the.subsidiary.and.affiliate.level

Impact level of financial risks and delegation of authority within the IRMS

ME

THO

DO

LOG

Y O

RD

ER

ING

CON

SO

LID

ATIO

N O

F R

ISK

-RE

LAT

ED

INFO

RM

ATIO

N

BLOCK BLOCK

MANAGEMENT BOARD

SUBSIDIARIES AND

AFFILIATES

SUBSIDIARIES AND

AFFILIATES

SUBSIDIARIES AND

AFFILIATES

SUBSIDIARIES AND

AFFILIATES

INTEGRATION OF THE IRMS INTO THE BUSINESS PLANNING PROCESS

During.the.reporting.year,.risk.assessment.became.an.integral.part.of.the.business.planning.process..As.a.result,.EPS-.and.LRSS-related.business.plans.for.2013.to.2015.are,.therefore,.characterized.by.a.more.detailed.approach.to.risk.assessment:.the.existing.assessment.and.description.of.risk.factors.have.been.revised.at.the.subsidiary.and.affiliate.level.taking.into.account.changing.conditions.and.new.plans;.and.information.on.the.key.risks.faced.by.subsidiaries,.affiliates.and.business.blocks,.as.well.as.risk.mitigation.measures,.have.been.incorporated.into.the.respective.business.plans.

As.part.of.the.efforts.to.integrate.risk.management.processes.into.the.Company’s.project.management.processes.(primarily.major.exploration.and.production.projects),.a.methodological.base.was.developed.in.2013.to.enable.analysis.of.project.risks..Its.purpose.is.to.work.out.a.project.plan.(starting.with.a.time.schedule).that.is.balanced.through.correlation.of.the.objectives.with.the.level.of.uncertainty.(risks);.this.helps.to.set.goals.that.are.both.ambitious.and.achievable..In.2014,.the.Company.plans.to.fully.deploy.this.methodology.on.each.major.project.




CONTENTS

Risks Description Risk management activities

Risks related to possible changes in prices for purchased materials and services

In.the.course.of.its.business,.Gazprom.Neft.utilizes.the.transportation.infrastructure.of.monopolistic.providers.for.crude.oil.and.petroleum.transportation;..and.purchases.electricity.from.monopolistic.suppliers

The.Company.has.no.control.over.the.infrastructure.of.these.monopolistic.providers,.nor.can.it.control.the.tariff.rates.payable..It.should.be.noted.that.tariff.rates.are.controlled.by.Russian.Government.agencies,.but.the.rates.increase.from.year.to.year,.creating.additional.costs.for.the.Company.

The.Company.takes.various.steps.to.mitigate.such.risks:.� Long-term.planning.of.commodity.flows;.timely.reservation.of.transportation.services.and.rolling.stock.for.crude.oil.and.petroleum.products;

.� Optimizing.the.distribution.of.commodity.flows.between.different.types.of.transportation;.and

.� Using.alternative.energy.and.the.Company’s.own.sources.of.power.generation.

These.steps.reduce.the.risks.related.to.services.and.products.purchased.from.monopolists.to.acceptable.levels,.and.ensure.the.continuity.of.the.Company’s.operations.

Risks related to possible changes in prices for crude oil and petrochemicals

The.Company’s.financial.performance.relates.directly.to.the.prices.of.its.crude.oil.and.petrochemicals..The.Company.is.unable.to.fully.control.the.prices.of.its.products,.which.depend.on.the.balance.of.supply.and.demand.in.global.and.domestic.markets.for.crude.oil.and.petroleum.products,.and.on.the.actions.of.regulatory.agencies.

.� The.Company.uses.a.range.of.actions.to.reduce.mineral.extraction.costs;

.� A.business.planning.system.is.used.to.calculate.different.scenarios.for.the.Company’s.key.performance.factors.depending.on.global.oil.prices..This.approach.can.decrease.costs.by.reducing.or.rescheduling.investment.programs,.and.by.other.mechanisms.

Such.activities.help.to.lower.risks.to.an.acceptable.level.and.ensure.that.the.Company.can.perform.as.planned.

INDUSTRY RISKSThe.main.businesses.of.Gazprom.Neft.are.the.production.of.crude.oil.and.gas,.oil.refining,.and.the.sales.of.crude.oil.and.petroleum.products..Therefore,.the.risks.that.the.Company.faces.are.typical.for.the.whole.oil.and.gas.industry,.specifically:

.� Risks.related.to.possible.changes.in.prices.for.purchased.materials.and.services;

.� Risks.related.to.possible.changes.in.prices.for.crude.oil.and.petrochemicals;

.� Risks.related.to.competition.within.the.industry;.and

.� Risks.related.to.geological.exploration.




CONTENTS

INDUSTRY RISKS (CONTINUED)


Risks related to competition within the industry

There.is.tough.competition.between.leading.Russian.oil.and.gas.producers.in.their.main.lines.of.business,.including:.� The.acquisition.of.sub-soil.usage.licenses.for.hydrocarbon.production.in.auction.sales.arranged.by.the.Russian.Government;

.� The.purchase.of.other.companies.that.own.sub-soil.licenses.or.assets.related.to.hydrocarbon.production;

.� The.implementation.of.foreign.projects;

.� Contracting.with.major.third-party.service.providers;

.� The.purchase.of.high-tech.equipment;

.� The.purchase.of.existing.retail.chains.and.of.land.to.build.new.retail.outlets;.and

.� Expanding.sales.markets.and.sales.volumes.

Management.implements.a.portfolio.of.strategic.projects.to.develop.Gazprom.Neft’s.business.in.its.main.segments,.ensuring.the.gradual.strengthening.of.the.Company’s.positions.in.the.competitive.oil.and.gas.industry,.and.reducing.risks.associated.with.industry.competition.

Gazprom.Neft.has.extensive.experience.in.geological.surveying.and.in.using.the.most.advanced.geophysical.methods.for.hydrocarbon.exploration.and.surveying;.and.also.has.modern.technologies.for.drilling.and.deposit.development..These.capabilities.reduce.risks.related.to.geological.factors.

Risks related to geological exploration

A.key.strategic.objective.for.the.Company.is.to.increase.the.quantity.and.quality.of.its.hydrocarbon.resource.base.in.order.to.ensure.satisfactory.production.levels..This,.in.turn,.is.largely.dependent.on.the.success.of.geological.exploration.

The.main.risk.associated.with.geological.exploration.is.that.target.levels.of.hydrocarbon.reserves.will.fail.to.be.confirmed..Another.important.factor.is.that.geological.surveying.is.carried.out.in.various.geographical.regions,.including.some.with.harsh.climates,.which.often.incurs.the.risk.of.additional.costs..

Gazprom.Neft.has.extensive.experience.in.geological.surveying.and.in.using.the.most.advanced.geophysical.methods.for.hydrocarbon.exploration.and.surveying;.and.also.has.modern.technologies.for.drilling.and.deposit.development..These.capabilities.reduce.risks.related.to.geological.factors.




CONTENTS

COUNTRY & REGIONAL RISKS


Political risks The.political.situation.in.Russia.is.stable.at.present,.with.strong.executive.departments.at.the.federal.and.regional.levels.of.government.

OJSC.Gazprom.Neft.is.a.registered.taxpayer.in.the.city.of.Saint.Petersburg,.the.second-largest.city.in.the.Russian.Federation,.and.the.capital.of.the.Northwest.Federal.District,.which.has.enormous.natural.resource.potential,.advanced.industries,.and.a.dense.transportation.network.

Subsidiaries.of.OJSC.Gazprom.Neft.are.present.in.the.following.Federal.Districts:.Central,.Northwest,.Ural,.Volga,.Siberia,.and.the.Russian.Far.East.

On.the.whole,.the.Company.views.the.political.situation.in.Russia.as.stable.and.does.not.see.any.risk.of.negative.developments.at.present.

Risks related to foreign assets

The.Company.has.undertaken.a.number.of.foreign.projects.with.the.aim.of.expanding.its.geographical.areas.of.production.

Expansion.into.new.regions.is.associated.both.with.the.possible.benefit.of.obtaining.extra.competitive.advantages,.and.with.the.risk.of.underestimating.the.economic.and.political.situation.in.the.countries.where.the.Company’s.assets.are.located..This.could.then.lead.to.a.failure.to.achieve.performance.targets.

Currently,.Gazprom.Neft.sees.the.level.of.risks.related.to.its.foreign.assets.as.acceptable;.however,.adverse.changes.cannot.be.ruled.out,.since.such.risks.are.beyond.the.Company’s.control.

Corruption risks As.the.Company.actively.enters.new.international.mar-kets,.there.are.increasing.risks.of.anti-corruption.laws.in.the.US.and.UK.being.extended.to.the.Company..

Gazprom.Neft.is.working.on.a.program.to.control.corruption.risks..Essentially,.the.strategy.is.to.take.proactive.steps.to.minimize.the.risks.of.liability.for.any.lack.of.procedures.to.prevent.bribery..The.program.will.assess.the.role.of.corruption.risk.in.the.Company’s.risk.management.system,.design.a.corporate.policy,.and.devise.a.communications.strategy.and.provide.appropriate.employee.training.required.for.the.project.implementation.

ENVIRONMENTAL RISKS


Environmental risks Gazprom.Neft’s.operations.have.an.inherent.risk.of.damage.to.or.pollution.of.the.natural.environment..This.may.give.rise.to.civil.law.liability.and.require.action.to.mitigate.such.damage..The.Company.is.fully.aware.of.its.public.responsibility,.and.its.obligation.to.ensure.safe.working.conditions.and.protection.of.the.natural.environment..The.Company.ensures.that.its.operations.comply.with.applicable.environmental.standards.and.implements.environmental.protection.programs.

Gazprom.Neft’s.environmental.policy.aims.to.comply.with.the.effective.environmental.regulations.by.investing.considerable.funds.in.environmental.activities,.including.the.use.of.technologies.that.minimize.adverse.impacts.on.the.environment..As.a.result,.risks.related.to.environmental.pollution.have.been.greatly.reduced.




CONTENTS

FINANCIAL RISKSThe.management.of.the.Company’s.financial.risks.is.the.responsibility.of.employees.acting.within.the.scope.of.their.respective.professional.activities.

The.Company’s.Financial.Risk.Management.Panel.defines.a.uniform.approach.to.financial.risk.management.at.the.Company.and.its.subsidiaries..Risk.management.activities.carried.out.by.Company.employees.and.the.Financial.Risk.Management.Panel.minimize.potential.financial.losses.and.help.to.achieve.corporate.targets.


Credit risk Risk.related.to.the.failure.of.the.Company’s.counterpar-ties.to.meet.their.financial.obligations.in.full.or.in.part.

Gazprom.Neft.has.taken.a.number.of.steps.to.manage.credit.risk,.including:.counterparty.solvency.evaluation;.individual.lending.limits.depending.on.the.coun-terparty’s.financial.situation;.control.of.advance.payments;.activities.on.handling.accounts.receivable.by.lines.of.business,.etc.

Debt financing risk Risk.related.to.the.inability.to.obtain.a.loan.on.favorable.terms.(scope,.timeframe,.and.cost).to.implement.the.Company’s.investment.program.

The.Company’s.debt.portfolio.is.highly.diversified.in.terms.of.both.the.pool.of.creditors.and.investors.and.the.use.of.different.financing.facilities..The.Company’s.stable.financial.situation.(as.confirmed.by.investment.ratings.from.international.rating.agencies).helps.it.to.find.opportunities.to.mobilize.sufficient.funds.in.the.capital.markets.on.favorable.terms.

Currency risk Gazprom.Neft.generates.most.of.its.gross.revenues.from.export.sales.of.crude.oil.and.petroleum.products..This.means.that.fluctuations.in.the.ruble.exchange.rates.may.impact.the.Company’s.financial.and.business.performance.

The.Company’s.currency.risk.is.considerably.mitigated.by.its.foreign.currency.liabilities..The.Company.holds.a.large.part.of.its.loans.on.the.international.credit.market.in.US.dollars,.and.associated.debt.servicing.costs.are.also.in.US.dollars.

The.currency.structure.of.revenues.and.liabilities.acts.as.a.hedging.mechanism.where.opposite.factors.offset.each.other..A.balanced.structure.of.currency.claims.and.liabilities.minimizes.the.impact.of.currency.risk.factors.on.the.Company’s.financial.and.business.performance.

Interest risk As.a.major.borrower,.the.Company.is.exposed.to.the.risk.of.changing.interest.rates..The.international.financial.market.remains.the.main.source.of.loans..Most.of.the.Company’s.debt.portfolio.is.denominated.in.US.dollars..The.interest.rates.on.a.portion.of.the.Company’s.debt.(this.exact.share.is.not.fixed.and.may.vary).are.based.on.LIBOR.rates..Increases.in.LIBOR.may.cause.the.cost.of.debt.servicing.to.increase.for.the.Company..Higher.borrowing.costs.could.potentially.have.a.negative.impact.on.the.Company’s.ability.to.meet.its.liabilities.and.on.its.liquidity.

The.LIBOR.rate.has.recently.increased.slightly;.however,.the.need.to.stimulate.more.growth.in.the.global.economy.makes.the.probability.of.significant.increases.(over.1%).negligible..Therefore,.taking.account.of.OJSC.Gazprom.Neft’s.current.loan.portfolio.structure,.the.Company.believes.it.faces.low.interest.risks.at.present..




CONTENTS

LEGAL RISKSGazprom.Neft.acts.in.strict.compliance.with.the.requirements.of.Russian.law.and.those.of.other.jurisdictions.where.it.operates.

The.Company.cannot.rule.out.the.risk.of.any.future.changes.in.Russian.law.that.may.have.a.negative.impact.on.the.Company,.since.most.associated.risk.factors.are.beyond.the.Company’s.control.

Negative.impacts.in.this.risk.category.are.mitigated.by.monitoring.and.responding.in.a.timely.manner.to.changes.in.various.areas.of.the.law,.and.through.continuous.engagement.with.legislative.and.executive.governments,.and.with.social.organizations.in.relation.to.the.interpretation,.correct.application,.and.improvement.in.legislation.


Risks related to changes in tax law

Gazprom.Neft.is.one.of.the.largest.taxpayers.in.the.Russian.Federation;.it.pays.federal.taxes,.regional.and.local.taxes,.including.value-added.tax,.corporate.income.tax,.mineral.extraction.taxes,.corporate.property.taxes.and.land.taxes..

In.the.course.of.its.business,.the.Company.constantly.monitors.all.changes.in.tax.law,.and.changes.in.the.interpretation.and.application.of.existing.tax.law..The.Company.also.advises.the.Government.on.improving.legislation.and.on.creating.new.regulatory.acts.in.the.field.of.taxation.

Risks related to changes in customs regulations and duties

The.Company.is.engaged.in.foreign.trade,.and.is.therefore.exposed.to.risks.related.to.changes.in.laws.and.government.regulation.in.the.area.of.foreign.trade,.and.to.customs.laws.which.specify.procedures.for.the.passage.of.commodities.across.the.customs.border.of.the.Russian.Federation,.adoption.and.enforcement.of.customs.regimes,.and.the.introduction.and.collection.of.customs.duties.

Risks.include.the.possibility.that.the.Russian.Government.might.change.the.level.of.customs.duties.(both.import.and.export.duties).payable.on.various.commodities.for.which.Gazprom.Neft.has.signed.foreign.contracts..The.main.consequence.of.such.risk.would.be.higher.costs.and.a.less.efficient.exports.business.

OJSC.Gazprom.Neft.complies.with.customs.control.procedures.and.processes.all.documents.required.for.both.export.and.import.operations..It.has.sufficient.financial.and.human.resources.to.ensure.compliance.with.customs-related.rules.and.regulations.

Risks related to changes in license compliance for main business lines

Sub-soil.legislation.is.evolving.towards.a.more.detailed.regulation.of.sub-soil.usage.by.the.Government,.more.rational.use.of.sub-soil.areas,.and.strict.compliance.with.legal.standards.for.environmental.protection.

Gazprom.Neft.operates.its.license.areas.in.strict.compliance.with.the.requirements.of.Russian.sub-soil.legislation,.and.updates.its.license.agreements.to.ensure.their.compliance.with.relevant.laws.

The.Company.analyzes.and.assesses.legislative.initiatives.by.relevant.ministries.and.departments.in.the.area.of.sub-soil.legislation.and.licensing..The.proposed.and.discussed.amendments.to.the.current.legislation.will.have.an.overall.positive.effect.on.the.regime.of.sub-soil.use.and.on.the.performance.of.licensable.operations.in.the.Russian.Federation.

Gazprom.Neft.is.not.aware.of.any.legal.risks.directly.associated.with.the.loss.of.sub-soil.rights.or.breaches.of.current.law.due.to.these.legislative.changes.

Risks related to changes in court practice on issues relevant to Company business

Under.the.current.system.of.enforcement,.in.the.Russian.Federation.the.highest.courts.have.the.most.significant.legal.positions.(the.Constitutional.Court.of.the.Russian.Fed-eration,.the.Supreme.Court.of.the.Russian.Federation,.and.the.Supreme.Arbitration.Court.of.the.Russian.Federation),.which.can.influence.the.Company’s.business.activities.

Gazprom.Neft.regularly.monitors.verdicts.by.high.courts,.and.assesses.the.impact.of.trends.in.legal.interpretation.by.district.arbitration.courts..The.Company.proactively.uses.the.results.of.such.monitoring.to.protect.its.lawful.rights.and.interests.in.court,.and.to.resolve.legal.issues.that.arise.from.its.operations..Therefore,.risks.related.to.changes.in.court.practices.are.viewed.as.negligible.




CONTENTS

ADDITIONAL INFORMATION

MAIN MACROECONOMIC DRIVERS INFLUENCING PERFORMANCE

The.main.factors.that.influence.the.Group’s.performance.include:..� changes.of.market.prices.of.crude.oil.and.petroleum.products;.� changes.of.the.RUB.to.USD.exchange.rate.and.inflation.rate;.� taxation;..� changes.in.transportation.tariffs.of.crude.oil.and.petroleum.products.

CHANGES OF MARKET PRICES OF CRUDE OIL AND PETROLEUM PRODUCTS

Prices.of.crude.oil.and.petroleum.products.on.the.global.and.Russian.markets.are.the.main.factors.that.affect.the.Group’s.performance..

Prices.of.petroleum.products.on.the.global.market.depend.primarily.on.the.global.crude.oil.market,.demand.and.supply.of.petroleum.products,.and.competition.in.individual.markets..Price.changes.on.the.global.market,.in.turn,.affect.domestic.market.prices,.which.differ.depending.on.the.type.of.petroleum.product.

. 2013 2012 ∆, %

INTERNATIONAL MARKET (USD/BBL)

Brent.oil 108.66 111.67 (2.7)

Urals.oil.(cp..Med.and.NWE) 107.87 110.43 (2.3)

. (USD/TONNE)

Premium.Gasoline.(cp..NWE) 985.21 1.036.40 (4.9)

Naphtha.(cp..Med.and.NWE) 889.28 926.84 (4.1)

Diesel.fuel.(cp..NWE) 937.27 980.17 (4.4)

Gas-oil.0.2%.(cp..Med.and.NWE) 919.51 953.79 (3.6)

Fuel.oil.3.5%.(cp..NWE) 583.81 623.48 (6.4)

DOMESTIC MARKET (RUB/TONNE)

High-octane.gasoline 28,344 26,205 8.2

Low-octane.gasoline 24,882 23,239 7.1

Diesel.fuel 26,894 24,270 10.8

Fuel.oil 8,732 9,167 (4.7)

Sources:.Platts.(international.market),.Kortes.(domestic.market)




CONTENTS

CHANGES OF THE RUB TO USD EXCHANGE RATE AND INFLATION RATE

The.Group’s.management.uses.the.Russian.ruble.as.the.base.currency.for.its.financial.statements.and.reports...The.functional.currency.for.each.subsidiary.is.the.currency.used.in.its.business.environment...However,.the.majority.of.subsidiaries.still.use.the.Russian.ruble.as.its.base.currency.

. 2013 2012

Change.of.the.Consumer.Price.Index.(CPI),.% 6.5 6,6

Change.of.the.Manufacturer.Price.Index.(MPI),.% 3.7 5,1

Ruble.to.USD.rate.at.the.end.of.period,.RUB 32.73 30,37

Period.average.ruble.to.USD.rate,.RUB 31.85 31,09

TAXATION

Average.tax.and.duty.rates.effective.during.the.reporting.period.for.oil.and.gas.companies.in.Russia:

. 2013 2012 ∆, %

EXPORT CUSTOMS DUTY . (USD/TONNE)

Crude.oil 392.20 404.26 (3.0)

Light.petroleum.products 258.82 266.78 (3.0)

Gasoline.and.naphtha 352.97 363.82 (3.0)

Dark.petroleum.products 258.82 266.78 (3.0)

MINING TAX.

Crude.oil.(RUB/tonne) 5,329 5,066 5.2

Natural.gas:.for.Unified.Gas.Supply.System.owners.and.subsidiaries,.RUB/thousand.cubic.meters 602 509 18.3

Natural.gas:.for.other.categories,.RUB/thousand.cubic.meters 334 251 32.9

CUSTOMS DUTY RATE FOR CRUDE OIL EXPORTS

Under.Federal.Law.No..239-FZ.of.December.03,.2012,.starting.from.April.01,.2013,.the.procedure.for.setting.customs.duties.for.the.exports.of.crude.oil.and.petroleum.products.was.changed..Previously,.oil.and.petroleum.product.export.customs.duty.rates.were.fixed.by.the.Russian.Government.on.a.monthly.basis...Following.the.introduction.of.the.RF.Government.Regulation.No..276.of.March.29,.2013,.which.endorses.the.“Methodology.to.Calculate.Export.Customs.Duties.for.Crude.Oil.and.Specific.Categories.of.Petroleum.Products”,.the.Federal.Ministry.of.Economic.Development.now.calculates.the.rates.of.export.customs.duties.for.the.following.calendar.month.

EXPORT CUSTOMS DUTY FOR CRUDE OIL

а).According.to.par..4,.article.3.1.of.RF.Federal.Law.of.May.21,.1993,.No..5003-1.“Customs.Tariff”,.customs.duty.rates.for.crude.oil.exports.may.not.exceed.the.maximum.duty.rates,.calculated.as.follows:

Price quotation of Urals (P), USD per tonne Maximum export customs duty rate

≤109.50 0%

109.50.<.P.≤.146.00 35.0%.*.(P.–.109.50)

146.00<.P.≤182.50 12.78.+.45.0%.*.(P.–.146.00)

>182.50 29.20.+.65.0%.*.(P.–.182.50)

Crude.oil.export.customs.duty.is.not.charged.on.crude.oil.exported.to.the.CIS.member.states.who.are.also.members.of.the.Customs.Union.(Kazakhstan.and.Belarus).

In.October.2011,.following.the.adoption.of.the.60/66/90.tax.regime,.the.customs.duty.rate.for.crude.oil.exports.is.set.based.on.a.new.formula.that.assumes.a.reduced.ratio.from.65%.to.60%..It.should.be.noted.that.this.change.was.not.directly.part.of.the.effective.customs.regulation.but.instead.was.stated.in.the.aforementioned.RF.Government.Decree.No..276.of.March.29,.2013..Federal.Law.No..263-FZ.envisages.a.further.reduction.of.the.percentage.ratio.formula.as.follows:.59%.in.2014,.57%.in.2015,.and.to.55%.in.2016.

b).The.above.Federal.Law.No..239-FZ.of.December.03,.2012.regulates.how.the.RF.Government.can.introduce.special.formulas.to.calculate.reduced.customs.duty.rates.for.exported.crude.oil.with.specific.physical.and.chemical.properties.as.classified.by.codes.TN.VED.TS.2709.00.900.1.and.2709.00.900.3,.the.level.of.which,.under.RF.Government.Decree.No..276.of.March.29,.2013,.is.established.depending.on.the.actual.average.price.of.Urals.crude.oil.in.the.period,.specifically:

Urals Quotation (P), USD per tonne Customs duty export rate

≤365 0

>365 45.0%.*.(P–.365)

By.Decree.No..846.of.September.26,.2013,.the.Federal.Government.approved.the.procedure.to.prepare.proposals.on.the.usage.of.specific.formulas.to.calculate.duty.rates.for.crude.oil.exports,.and.on.the.monitoring.of.their.correct.use,.regarding.the.Group’s.new.projects.based.in.the.Republic.of.Sakha.(Yakutia),.Irkutsk.Oblast,.Krasnoyarsk.Territory,.above.65.degrees.latitude.north.in.the.Yamal-Nenets.Autonomous.District,.and.the.continental.shelf.of.the.Russian.Federation.

By.Executive.Order.No.868.of.December.03,.2013,.the.RF.Ministry.of.Energy.approved.the.application.procedures.and.analysis.methods.for.the.valid.use.of.the.specific.formulas.used.to.calculate.duty.rates.for.crude.oil.exports.

ADDITIONAL INFORMATION



CONTENTS

EXPORT CUSTOMS DUTY FOR PETROLEUM PRODUCTS

In.accordance.with.Clause.3.1.of.the.Federal.Law.On.Customs.Tariff,.the.export.customs.duty.rate.for.certain.categories.of.petroleum.products.is.fixed.by.the.Russian.Government..Petroleum.products.exported.to.CIS.country.members.of.the.Customs.Union.(Kazakhstan.and.Republic.of.Belarus).are.not.subject.to.the.export.customs.duty..On.January.01,.2011,.export.duties.were.also.abolished.for.petroleum.products.exported.to.Kyrgyzstan.

Until.February.01,.2011,.the.following.formula.was.used.to.calculate.the.export.customs.duty.rate.for.light.and.medium.distillates:.0.438.*.(Price.*.7.3.–.109.5),.where.the.Price.is.the.average.monthly.price.of.Urals.in.US.dollars.per.barrel..Export.customs.duty.rates.for.dark.petroleum.products.were.calculated.as:..0.236.*.(Price.*.7.3.–.109.5)..

The.RF.Government.Decree.No..1155.of.December.27,.2010.ruled.that.starting.from.February.01,.2011,.export.customs.duties.for.petroleum.products.should.be.calculated.using.the.following.formula:.Стнп.=.К.*.Стн,.where.Стн.is.the.export.customs.duty.rate.for.crude.oil,.and.К.is.the.adjustment.coefficient.for.a.specific.category.of.petroleum.products,.as.defined.in.the.table.below:

. 2011 2012 2013

Light.and.medium.distillates 0.67 0.64 0.60

Fuel.oil 0.467 0.529 0.60

From.May.2011,.the.adjustment.coefficient.(К).for.commodity.gasoline.was.set.at.0.9..Starting.from.June.2011,.the.same.coefficient.value.was.also.set.for.straight-run.gasoline.

In.August.2011,.the.RF.Government.Decree.No..1155.of.December.27,.2010.enforced.changes.and,.since.October.2011,.the.coefficients.used.to.calculate.customs.duty.rates.for.exported.petroleum.products.were.established.as.follows:

. Between October 01, 2011 and December 31, 2014

Light.and.medium.distillates 0.66

Fuel.oil 0.66

Gasoline 0.90

RF.Government.Decree.No..276.of.March.29,.2013.established.the.procedure.to.determine.customs.duty.rates.for.exported.petroleum.products.that.is.similar.to.the.one.described.earlier.in.RF.Government.Decree.No..1155.of.December.27,.2010.

EXCISE ON PETROLEUM PRODUCTS

Taxpayers.who.pay.excise.on.petroleum.products.in.the.Russian.Federation.are.manufacturers.of.petroleum.products..Tax.is.also.paid.by.corporate.entities.when.they.import.excisable.commodities.into.Russia.

RF.Federal.Law.No..203-FZ.of.November.29,.2012.established.the.following.excise.rates.for.petroleum.products.by.making.relevant.changes.to.the.RF.Tax.Code:

2012 (January 01 –June 30) 2012 (July 01 – December 31) 2013 (January 01 –June 30) 2013 (July 01 – December 31)

GASOLINE

Below.class.3 7,725 8,225 10,100 10,100

Class.3 7,382 7,882 9,750 9,750

Class.4 6,822 6,822 8,560 8,960

Class.5 6,822 5,143 5,143 5,750

Straight-run 7,824 7,824 10,229 10,229

DIESEL FUEL

Below.class.3 4,098 4,300 5,860 5,860

Class.3 3,814 4,300 5,860 5,860

Class.4 3,562 3,562 4,934 5,100

Class.5 3,562 2,962 4,334 4,500

Furnace.fuel – – – 5,860

Motor.oil 6,072 6,072 7,509 7,509




CONTENTS

MINERAL EXTRACTION TAX (MET)

The.MET.rate.for.crude.oil.(R).from.January.01,.2013,.is.calculated.using.the.formula:.

R.=.470.*.Кц.*.Кв.*.Кз,..

where:. КЦ.is.the.coefficient.that.describes.global.price.dynamics.of.crude.oil,.calculated.using.the.formula:.Кц.=.(Ц.–.15).*.P./.261,.where.Ц.is.the.average.monthly.price.of.Urals.at.the.Rotterdam.and.Mediterranean.Exchanges.(USD/barrel),.and.P.is.the.average.monthly.ruble.to.USD.exchange.rate.

КВ..is.the.coefficient.that.describes.the.extent.of.depletion.of.deposits.in.the.specific.sub-soil.area..The.coefficient.envisages.reduced.MET.rates.for.crude.oil.from.highly.exhausted.deposit.fields..The.extent.of.deposit.depletion.is.calculated.as.N/V,.where.N.is.the.cumulative.total.produced.oil.in.the.specific.mining.area,.and.V.is.the.initial.recoverable.deposits.of.А,.В,.С1,.and.С2.crude.oil.in.the.specific.deposit.area.as.of.January.01,.2006..If.the.extent.of.depletion.of.deposits.in.the.specific.sub-soil.area.is.greater.than.or.equal.to.0.8.and.is.less.than.or.equal.to.1,.the.Кв.coefficient.is.calculated.using.the.formula:.Кв.=.3.8.–.3.5.*.N/V..If.the.extent.of.depletion.of.deposits.in.the.specific.sub-soil.area.is.greater.than.1,.the.Кв.coefficient.is.assumed.as.0.3..For.other.cases,.the.Кв.coefficient.is.assumed.as.1.

КЗ.is.the.coefficient.that.describes.deposits.available.in.the.specific.sub-soil.area..The.coefficient.envisages.reduced.MET.rates.for.small.fields..If.initial.recoverable.oil.deposits.(Vз.being.initial.recoverable.deposits.of.А,.В,.С1,.and.С2.crude.oil.in.the.specific.sub-soil.area.as.of.January.01.of.the.year.before.the.tax.period).are.less.than.5.million.tonnes,.and.the.extent.of.sub-soil.area.depletion.(N./.Vз,.where.N.is.cumulative.total.produced.oil.in.the.specific.sub-soil.area).is.less.than.or.equal.to.0.05,.then.the.coefficient.Кз.is.calculated.using.the.formula:.Кз.=.0.125.х.Vз.+.0.375.

From.September.01,.2013,.under.Federal.Law.No..213-FZ.of.July.23,.2013,.the.formula.to.calculate.MET.rates.for.crude.oil.(R).also.includes.coefficients.Кд.and.Кдв.that.reduce.the.MET.rate.for.hard-to-recover.oil.deposits,.and.therefore.the.formula.now.appears.as:

R.=.470.*.Кц.*.Кв.*.Кз.*.Кд.*.Кдв,.

where:. КД.is.the.coefficient.that.describes.the.level.of.difficulty.of.petroleum.extraction,.ranging.from.0.to.1.depending.on.how.difficult.it.is.to.extract.oil.from.specific.deposits:

.� 0.–.when.oil.is.extracted.from.a.specific.hydrocarbon.pool.that.is.part.of.the.Bazhenov,.Abalak,.Khadum.and.Domanik.production.deposits.according.to.the.federal.balance.registry.of.mineral.deposits;

.� 0.2.–.when.oil.is.extracted.from.a.specific.hydrocarbon.pool.with.a.confirmed.permeability.level.not.exceeding.2.*.10-3.mcm2.and.the.effective.oil-saturated.layer.thickness.of.the.pool.not.above.10.meters;

.� 0.4.–.when.oil.is.extracted.from.a.specific.hydrocarbon.pool.with.a.confirmed.permeability.level.not.exceeding.2.*.10-3.mcm2.and.the.effective.oil-saturated.layer.thickness.of.the.pool.is.over.10.meters;

.� 0.8.–.when.oil.is.extracted.from.a.specific.hydrocarbon.pool.that.is.part.of.the.Tyumen.suite.production.deposits.according.to.the.federal.balance.registry.of.mineral.deposits;

.� 1.–.when.oil.is.extracted.from.other.hydrocarbon.pools.

КДВ.–.is.the.coefficient.that.describes.the.extent.of.depletion.of.a.specific.hydrocarbon.pool..The.coefficient.envisages.reduced.MET.rates.for.crude.oil.from.highly.exhausted.deposits..The.extent.of.deposit.depletion.is.calculated.by.Nдв/Vдв,.where.Nдв.is.the.cumulative.total.produced.oil.in.the.specific.pool.and.Vдв.represents.the.initial.recoverable.deposits.of.А,.В,.С1,.and.С2.crude.oil.in.the.specific.pool.as.of.January.01.of.the.year.before.the.tax.year..If.the.level.of.the.deposit.depletion.specific.pool.is.greater.than.or.equal.to.0.8.and.is.less.than.or.equal.to.1,.the.coefficient.Кдв.is.calculated.using.the.formula:.Кдв.=.3.8.–.3.5.*.Nдв/Vдв..If.the.level.of.the.deposit.depletion.specific.pool.is.greater.than.1,.the.coefficient.Кдв.is.assumed.as.0.3..For.other.cases,.the.coefficient.Кдв.is.assumed.as.1..For.pools.with.hard-to-recover.oil.deposits,.the.Кв.coefficient.is.assumed.as.1.

Federal.Law.No..307-FZ.of.November.27,.2010.sets.the.following.base.MET.rates.for.crude.oil:

. 2011 2012 2013

MET.for.crude.oil.(RUB.per.tonne) 419 446 470

The.tax.legislation.also.provides.for.some.MET.exemptions,.where.a.zero.rate.is.applicable.to.crude.oil.extracted.in.certain.Russian.regions,.provided.the.Company.meets.the.respective.requirements.stipulated.in.the.RF.Tax.Code.

ADDITIONAL INFORMATION TAXATION



CONTENTS

Q4 2013 Q3 2013 ∆, % . 2013 2012 ∆, %

5,471 5,631 (2.8) Base.applicable.MET.rate.for.crude.oil 5,329 5,066 5.2

5,302 5,449 (2.7) Effective.MET.rate.for.crude.oil.(with.Кв.and.Кз.applied) 5,154 4,901 5.2

169 182 . Deviation.of.the.effective.MET.rate.for.oil.from.the.generally.established.rate,.RUB/t

175 165 .

3.1% 3.2% . Deviation.of.the.effective.MET.rate.for.oil.from.the.generally.established.rate,.%

3.3% 3.3% .

After.2013,.the.effective.MET.rate.for.crude.oil.was.5,154.RUB/tonne,.or.175.RUB/tonne.less.than.the.legislated.base.rate..The.difference.was.due.to.the.impact.of.the.step-down.change.in.the.coefficients.(Кв,.Кз.and.Кд).applied.to.the.crude.oil.MET.calculation.

MET RATES FOR NATURAL GAS AND GAS CONDENSATE

RF.Federal.Law.No..204-FZ.of.November.29,.2012.sets.the.following.MET.rates.for.natural.gas.and.gas.condensate:

. 2012 2013 (January 01 – June 30)

2013 (July 01 – December 31)

Natural.gas.(rubles/.‘000.m3)251* 265 402

509 582 622

Gas.condensate.(rubles./.tonne) 556 590 590

*. Reduced.MET.rate.for.gas.exists.for.taxpayers.who.are.not.owners.of.the.facilities.that.form.the.United.Gas.Supply.System,.and.who.are.not.entities.directly.and/or.indirectly.owned.(through.a.stakeholding).by.the.owners.of.the.facilities.that.form.the.United.Gas.Supply.System,.whose.holdings.in.such.entities.are.greater.than.50%.

According.to.changes.introduced.by.Federal.Law.No.263-FZ.of.September.30,.2013,.after.July.01,.2014,.companies.are.required.to.use.a.formula.to.calculate.the.MET.for.natural.gas.and.gas.condensate..Calculated.MET.rates.for.natural.gas.and.gas.condensate.are.the.product.of.the.MET.base.rate.(35.rubles.per.1,000.m3.of.natural.gas,.and.42.rubles.per.1.tonne.of.gas.condensate),.and.the.two.following.variables:.base.value.of.conventional.fuel.unit.(Еут),.and.the.coefficient.ascribed.to.the.difficulty.of.extracting.the.mineral.from.the.hydrocarbon.pool.(Кс)..From.2015,.in.order.to.calculate.the.MET.for.natural.gas,.companies.will.also.need.to.factor.in.a.figure.that.describes.the.transportation.cost.of.natural.gas.(Тг).

CHANGES IN TRANSPORTATION TARIFFS OF CRUDE OIL AND PETROLEUM PRODUCTS.

The.transportation.tariffs.policy.is.regulated.by.the.government.in.an.effort.to.balance.the.interests.of.the.government.and.other.parties.involved.in.the.process.of.transportation..Transportation.tariffs.for.natural.monopolies.are.set.by.the.Federal.Service.for.Tariffs.(“FST”).of.the.Russian.Federation..Tariffs.depend.on.transportation.routes,.volume.of.supplies,.distances.to.destination,.and.other.factors..Changes.in.tariffs.depend.on.inflation.rate.estimates.by.the.RF.Ministry.of.Economic.Development,.the.level.of.capital.investment.required.by.the.owners.of.the.transportation.infrastructure,.other.macroeconomic.factors,.and.on.the.compensation.of.economically.reasonable.costs.incurred.by.natural.monopolies..The.FST.reviews.the.tariffs.at.least.once.every.year;.such.reviews.include.tariffs.for.handling,.transshipment,.carrying,.and.others.tariffs.

EFFECTIVE MET RATE FOR CRUDE OIL IN THE GROUP




CONTENTS

APPENDIXESLarge & Related-Party Transactions

List.of.related-party.transactions.in.2013,.approved.by.the.governing.bodies.of.OJSC.Gazprom.Neft.

No Name of counterparty Object and main terms of the transaction Related party in the transactionMinutes No. and date

TRANSACTIONS APPROVED BY THE BOARD OF DIRECTORS

1 OJSC.Gazprom.NeftCJSC.FC.Zenit

Execution.of.Additional.Agreement.No..No..1.under.Contract.No..ГПН-12/09000/00043/Р.of.January.01,.2012.

.� The.OJSC.Gazprom.Neft.shareholder.(OJSC.Gazprom),.whose.affiliates.(GPB.(JSC),.OOO.“Gazprom.transgaz.Saint-Petersburg.LLC”).hold.more.than.20%.of.stock.in.CJSC.FC.Zenit,.a.transacting.party;

.� Member.of.the.Board.of.Directors,.Chief.Executive.Officer.of.OJSC.Gazprom.Neft,.A..V..Dyukov,.and.a.member.of.the.Board.of.Directors.and.President.of.CJSC.FC.Zenit,.a.transacting.party;

.� K..G..Seleznev,.member.of.the.Board.of.Directors.of.JSC.Gazprom.Neft,.and.member.of.the.Board.of.Directors.of.CJSC.FC.Zenit.

ПТ-0102/03February.21,.2013

2 OJSC.Gazprom.NeftCJSC.FC.Zenit

Execution.of.Additional.Agreement.No..2.under.Contract.No..ГПН-12/09000/00043/Р.of.January.01,.2012.Service.period:Service.beginning.date.–.January.01,.2013.Service.completion.date.–.June.30,.2013.

.� The.OJSC.Gazprom.Neft.shareholder.(OJSC.Gazprom),.whose.affiliates.(GPB.(JSC),.OOO.“Gazprom.transgaz.Saint-Petersburg.LLC”).hold.more.than.20%.of.stock.in.CJSC.FC.Zenit,.a.transacting.party;

.� Member.of.the.Board.of.Directors,.Chief.Executive.Officer.of.OJSC.Gazprom.Neft,.A..V..Dyukov,.and.a.member.of.the.Board.of.Directors.and.President.of.CJSC.FC.Zenit,.a.transacting.party;

.� Member.of.the.Board.of.Directors.of.OJSC.Gazprom.Neft,.K..G..Seleznev,.and.a.member.of.the.Board.of.Directors.of.CJSC.FC.Zenit.

ПТ-0102/03February.21,.2013

APPENDIXES



CONTENTS


3 Surety:..OJSC.Gazprom.NeftBank/Guarantor:..GPB.(JSC)Principal:..CJSC.Gazpromneft.–.Aero

Providing.suretyship.to.securing.liabilities.assumed.under.contract.of.bank.guarantee.on.the.following.principal.conditions:Maximum.amount.of.concurrent.bank.guarantees:.RUB.8.billion;Effective.period.of.the.guarantee:.until.June.21,.2016;Period.of.guarantee.provision.under.the.contract.of.bank.guarantee:.until.December.21,.2013;Guarantor’s.fee:.0.4%.per.annum.of.guaranteed.value,.but.at.least.USD.300.00.for.each.calendar.quarter,.or.part.thereof;Effective.period.of.the.Suretyship.Contract:.until.June.21,.2019.

.� Members.of.the.Board.of.Directors.of.OJSC.Gazprom.Neft,.who.are.also.members.of.the.Board.of.Directors.of.GPB.(JSC):.A.B..Miller,.A.V..Kruglov,.K.G..Seleznev;

.� The.OJSC.Gazprom.Neft.shareholder.(OJSC.Gazprom),.which.owns.more.than.20%.of.the.Bank.shares,.and.because.its.affiliated.persons.(A.B..Miller,.A.V..Kruglov,.K.G..Seleznev,.M.L..Sereda,.E.A..Vasilieva).simultaneously.hold.positions.in.the.GPB.(JSC).Board.of.Directors.

ПТ-0102/09March.22,.2013

4 Borrower:..OJSC.Gazprom.NeftCreditor/Bank:..JSC.Sberbank.of.Russia

OJSC.Gazprom.Neft.signed.a.Master.Agreement.for.the.short-term.loan.with.JSC.Sberbank.of.Russia.(“the.Parties”).on.the.following.principal.conditions:Subject.of.the.transaction:.According.to.the.Master.Agreement,.the.Parties.shall.enter.into.individual.loan.transactions.(“the.Loan.Transactions”).providing.for.extension.of.loans.in.US.dollars,.and/or.EURO,.and/or.rubles.of.the.Russian.Federation..As.they.enter.into.Loan.Transactions,.the.Parties.agree.on.the.following.principal.conditions.of.each.Loan.Transaction:..� loan.principal;.� loan.currency;.� interest.rate.and/or.procedure.to.calculate.it;.� loan.accommodation.date;.� loan.repayment.date;.� banking.details.

The.maximum.debt.limit.under.Loan.Transactions.within.the.duration.of.the.Master.Agreement.shall.not.exceed.RUB.12,000,000,000.00Interest.rate:.The.interest.rate.charged.for.the.loan,.including.all.fees.and.charges.(if.any).payable.under.the.Master.Agreement.and.Endorsements,.may.not.exceed:.� 11%.(Eleven).percent.per.annum.for.Loan.Transactions.to.access.loan.funds.in.rubles.of.the.Russian.Federation;.

.� 5%.(Five).percent.per.annum.for.Loan.Transactions.to.access.loan.funds.in.US.dollars;.

.� 5%.(Five).percent.per.annum.for.Loan.Transactions.to.access.loan.funds.in.EUROS.

The.OJSC.Gazprom.shareholder,.as.its.affiliate.is.a.member.of.the.Board.of.Directors,.V..A..Mau,.who.is.also.a.member.of.the.Sberbank.of.Russia.Supervisory.Council.

ПТ-0102/10March.22,.2013




CONTENTS


5 Supplier:.OJSC.Gazprom.NeftBuyer:.ООО.“Gazprom.Mezhregiongaz”

Gas.supply.contract.signed.between.OJSC.Gazprom.Neft.and.ООО.Gazprom.Mezhregiongaz.on.the.following.principal.conditions:.� Subject.of.transaction:.supply.of.gas;.� Scope.of.supply:.not.more.than.5.2.billion.m3;.� Contract.price:.no.more.than.14.5.billion.rubles.(not.including.VAT);.� Service.period:.until.December.31,.2013.

.� The.OJSC.Gazprom.Neft.shareholder.(OJSC.Gazprom),.because.its.affiliate.(ООО.Gazprom.Mezhregiongaz).is.a.transacting.party;

.� Member.of.the.Board.of.Directors.OJSC.Gazprom.Neft,.K.G..Seleznev,.who.concurrently.is.CEO.of.ООО.Gazprom.Mezhregiongaz.

ПТ-0102/10March.22,.2013

6 Borrower:.ООО.Gazprom.NeftfinanceLender:..OJSC.Gazprom.Neft

Interest.loan.provided.on.the.following.principal.conditions:.Loan.principal:.not.more.than.1,400,000,000.rubles.Repayment.date:.not.later.than.December.31,.2018.Interest.rate.on.the.loan:.equal.to.MIBID.rate.(Moscow.InterBank.Bid).for.the.period.from.181.days.to.1.year,.published.by.the.Bank.of.Russia.at.its.website.www.cbr.ru/mkr_base/main.asp,.effective.on.the.day.of.loan.accommodation,.for.the.first.year.and.on.the.first.business.day.of.the.second.and.each.subsequent.year.

The.OJSC.Gazprom.Neft.shareholder.(OJSC.Gazprom),.because.its.affiliate.(ООО.Gazprom.Neftfinance).is.a.transacting.party.

ПТ-0102/13March.27,.2013

7 Contractor:..OJSC.Gazprom.NeftCustomer:..OJSC.Gazprom

Execution.of.a.service.contract.for.organizing.and.inventory.taking.of.fixed.assets.of.OJSC.Gazprom.leased.to.OJSC.Gazprom.Neft.on.the.following.principal.conditions:Subject.of.the.transaction:.the.Contractor.shall.provide.services.of.organizing.and.inventory.taking.of.fixed.assets,.on.the.terms.stated.in.Contract.(appendix).Transaction.value:.896.(eight.hundred.and.ninety-six).rublesServices.provided.between..provision:.from.October.30,..2012.to.December.19,.2012,.inclusively..

.� OJSC.Gazprom,.because.it.is.a.transacting.party;

.� Chairman.of.the.Board.of.Directors.of.OJSC.Gazprom.Neft,.A..B..Miller,.who.holds.simultaneously.the.position.of.Chairman.of.the.OJSC.Gazprom.Board.of.Directors;

.� Members.of.the.Board.of.Directors.of.OJSC.Gazprom.Neft,.who.are.simultaneously.members.of.the.OJSC.Gazprom.Management.Committee:.V..A..Golubev,.K..G..Seleznev,.N..N..Dubik,.A..V..Kruglov,.E.V..Mikhailova,.V..V..Cherepanov.

ПТ-0102/17April.10,2013

APPENDIXES LARGE & RELATED-PARTY TRANSACTIONS


http://www.cbr.ru/mkr_base/main.asp


CONTENTS


8 Issuer:..OJSC.Gazprom.NeftUnderwriter:.GPB.(OJSC)

Execution.of.a.service.contract.for.providing.underwriting.services.on.the.placement.of.documentary.interest-bearing.non-convertible.bonds.of.OJSC.Gazprom.Neft,.series.12,.par.value.10,000,000,000.rubles,.maturity.date.on.the.3,640th.day.from.the.first.placement.date,.registered.with.the.RF.FSFM.on.December.28,.2011,.state.registration.number.4-12-00146-А.(“the.Bonds”),.on.the.following.principal.conditions:Subject.of.the.Contract:.The.Issuer.commissions,.and.the.Agent.shall.provide.services.of.the.Bonds.placement.as.and.how.described.in.the.decision.to.issue.the.Bonds.and.the.Bonds.prospectus.in.compliance.with.the.effective.legislation.of.the.Russian.Federation,.corporate.regulations.of.MICEX.Stock.Exchange.and.CJSC.NCO.National.Clearing.Depository.Fee:.10,000.rubles..The.fee.amount.shall.be.increased.by.the.VAT.amount.at.the.rate.effective.on.the.billing.date.Effective.period:.until.November.30,.2013,.or.until.the.parties.have.fully.performed.their.obligations.under.the.contract.

.� Members.of.the.Board.of.Directors.of.OJSC.Gazprom.Neft,.who.are.also.members.of.the.Board.of.Directors.of.GPB.(JSC):.A..B..Miller,.A..V..Kruglov,.K..G..Seleznev;

.� The.OJSC.Gazprom.Neft.shareholder.(OJSC.Gazprom),.which.owns.more.than.20%.of.the.Bank.shares,.and.because.its.affiliated.persons.(A.B..Miller,.A.V..Kruglov,.K.G..Seleznev,.M.L..Sereda,.E.A..Vasilieva).simultaneously.hold.positions.in.the.GPB.(JSC).Board.of.Directors.

ПТ-0102/21April.22,.2013


Execution.of.a.service.contract.for.gas.transportation.on.the.following.principal.conditions:Subject.of.transaction:.the.Contractor.shall.provide.services.and.organize.transportation.of.gas.in.the.quantity.and.on.the.terms.stated.in.Contract.(appendix).Transaction.amount:.not.more.than..6,000,000,000.rubles.Services.provided.between.January.01,.2013,.to.December.31,.2013,.inclusively.


.� Chairman.of.the.Board.of.Directors.of.OJSC.Gazprom.Neft,.A..B..Miller,.who.holds.simultaneously.the.position.of.Chairman.of.the.OJSC.Gazprom.Board.of.Directors;

.� Members.of.the.Board.of.Directors.of.OJSC.Gazprom.Neft,.who.are.simultaneously.members.of.the.OJSC.Gazprom.Management.Committee:.V..A..Golubev,.K..G..Seleznev,.N..N..Dubik,.A..V..Kruglov,.E.V..Mikhailova,.V..V..Cherepanov.

ПТ-0102/24June.05,.2013

10 Advertising.Agent:.OJSC.GazpromneftAdvertising.Distributor:.Noncommercial.partnership.Sports.club.“Avangard”

Execution.of.an.advertising.services.contract.on.the.following.principal.conditions:Subject.of.transaction:.providing.services.to.NP.SK.Avangard.to.publish.advertising.materials.promoting.retail.brands.of.OJSC.Gazprom.Neft.at.KHL.and.MHL.Championship.matches,.and.other.ice.hockey.tournaments..Services.provided.between.August.01,.2013.to.April.30,.2014;Transaction.price,.calculated.based.on.the.market.price.of.advertising.services.provided,.is.684,400,000.(Six.hundred.and.eighty-four.million.four.hundred.thousand).rubles,.including.VAT.

Member.of.the.Management.Committee.of.OJSC.Gazprom.Neft,.A..M..Dybal,.who.simultaneously.holds.the.position.of.Chairman.of.the.Board.of.Directors.of.noncommercial.partnership.Sports.Club.Avangard,.a.party.to.the.transaction.

ПТ-0102/25June.05,.2013




CONTENTS


11 Advertising.Agent:.OJSC.Gazprom.NeftAdvertising.Distributor:.ZAO.SKA.Ice.Hockey.Club

Subject.of.transaction:.ZAO.SKA.Ice.Hockey.Club,.on.instructions.from.the.Advertising.Agent,.shall.conduct.campaigns.to.promote.the.Advertising.Agent’s.retail.brands,.within.the.framework.of.which.the.Advertising.Agent.is.granted.the.status.of.“Sponsor.of.SKA.Ice.Hockey.Club”.and.a.sponsorship.package.of.advertising.services,.to.be.provided,.inter.alia,.in.connection.with.the.team.of.the.ZAO.SKA.Ice.Hockey.Club.entering.the.Championship.of.the.Continental.Ice.Hockey.League.–.Russian.Ice.Hockey.Cup,.2012–2013.season.Services.provided.between.January.01,.2013.and.April.30,.2013.Transaction.price.determined,.based.on.market.price.of.the.advertising.services.provided,.is.495,600,000.(Four.hundred.and.ninety-five.million.six.hundred.thousand).rubles,.including.VAT.at.18%.

Member.of.the.Board.of.Directors.of.OJSC.Gazprom.Neft,.CEO.A.V..Dyukov,.who.is.also.a.member.of.the.Board.of.Directors.of.ZAO.SKA.Ice.Hockey.Club,.a.transacting.party.

ПТ-0102/25June.05,.2013

12 Buyer:..OJSC.Gazprom.NeftSupplier:..OJSC.NOVATEK

Execution.of.a.contract.for.the.supply..of.stable.gas.condensate.and.related.supplementary.agreements.on.the.following.principal.conditions:

Subject:.Supply.of.stable.gas.condensate.made.by.Purov.Condensate.Processing.Plant.(“the.Product”)

Terms.of.supply:.the.Supplier.shall.deliver.the.Product.by.rail.in.tank.cars.to.the.destination:.Kombinatskaya.Station,.West-Siberia.Railroads

Maximum.price:.3,000,000,000.Russian.rubles,.including.VAT.at.18%...Term:.from.May.25,.2012.to.December.31,.2013

K.G..Seleznev,.Member.of.the.Board.of.Directors.of.OJSC.Gazprom.Neft,.who.concurrently.is.a.member.of.the.Board.of.OJSC.NOVATEK,.a.transacting.party.

ПТ-0102/29July.15,.2013

13 OJSC.Gazprom.NeftCJSC.Gazprom.Neft.Orenburg

Purchase.by.OJSC.Gazprom.Neft.of.1,555,500.common.registered.shares.of.CJSC.Gazprom.Neft.Orenburg,.par.value.20.rubles,.total.par.value.31,110,000.rubles,.or.38.2%.of.all.voting.stock.of.CJSC.Gazprom.Neft.Orenburg,.at.the.market.value,.calculated.by.independent.appraiser.ООО.Ernst.&.Young-Value.Consulting,.859,000,000.00.rubles.payable.in.cash..

The.OJSC.Gazprom.Neft.shareholder.(OJSC.Gazprom),.because.its.affiliate.(CJSC.Gazprom.Neft.Orenburg).is.a.transacting.party.

ПТ-0102/30July.16,.2013

14 Borrower:..ZAO.Okhta.Obschestvenno-Delovoy.CentrLender:..OJSC.Gazprom.Neft

Execution.of.Additional.Agreement.under.Loan.Contract.No..ГПН.–.12/12100/00998.of.November.14,.2012,.on.the.following.principal.conditions:Loan.principal:.not.more.than.10,040,326,000.rubles.Maturity.date:.no.later.than.December.31,.2014.Interest.rate:.interest-free.

.� The.OJSC.Gazprom.Neft.shareholder.(OJSC.Gazprom),.because.its.affiliate.ZAO.“Okhta.Obschestvenno-Delovoy.Centr.is.a.transacting.party;

.� Member.of.the.Management.Board,.E.A..Ilyukhina,.who.simultaneously.holds.office.in.governing.bodies.of.CJSC.Okhta.Public.and.Business.Centre,.a.counterparty.in.the.transaction.

ПТ-0102/31July.17,.2013




CONTENTS


15 JSC.Slavneft-YANOS,.an.OJSC.Gazprom.Neft.Plant

Execution.of.a.contract.to.process.crude.oil.and.other.materials.on.the.following.principal.conditions:.Subject.of.transaction:.providing.services.of.processing.oil.and.other.materials,.perform.handover.of.commodity.petroleum.products.to.carriers.by.road.and.rail,.delivery.of.commodity.petroleum.products.over.pipeline.transport.systems.Quantities:.� crude.processing:.up.to.6,272,000.tonnes;.� processing.other.raw.materials:.up.to.430,000.tonnes;.� shipment.of.petroleum.products:.up.to.700,000.tonnes.

Amount:.up.to.8,200,000,000.rubles,.VAT.not.included;Effective.term:.until.December.31,.2013,.extendable.

А.М..Cherner,.member.of.the.Management.Board.of.OJSC.Gazprom.Neft,.who.concurrently.is.a.member.of.the.Board.of.Directors.at.JSC.Slavneft-YANOS.

ПТ-0102/32July.22,.2013

16 Seller:..OJSC.Gazprom.Neft;Buyer:..CJSC.Gazprom..Neft-North-West

Execution.of.fuel.filling.stations.purchase.and.sale.contracts.on.the.following.terms:Total.contract.price:.472,000,000.rubles,.including.VAT..Contract.price.is.based.on.the.market.value.of.assets.being.disposed.of,.as.calculated.by.ООО.Peterburgskaya.Otcenochnaya.Kompaniya;

The.OJSC.Gazprom.Neft.shareholder.(OJSC.Gazprom),.because.its.affiliate.CJSC.Gazprom.Neft-North-West.is.a.transacting.party.

ПТ-0102/41October.17,.2013

17 OJSC.Gazprom.Neft;.LLC.National.Oil.Consortium.(LLC.NOC)

Execution.of.Additional.Agreement.Execution.of.Additional.Agreement.No..1.to.target.loan.contract.No..ГПН-10/12100/01677/Д.of.October.13,.2010.(“the.Contract”),.under.which:Par..1.1.of.the.Contract.shall.be.worded.as.follows:“The.Lender.hereby.provides.to.the.Borrower.a.target.loan.in.the.amount.not.exceeding.3,303,326,400.rubles.on.the.terms.herein.described,.while.the.Borrower.shall.repay.the.loan.principal.and.all.interest.due.as.and.when.herein.specified”.

.� The.OJSC.Gazprom.Neft.shareholder.(OJSC.Gazprom),.because.its.affiliate.(OJSC.Gazprom.Neft).holds.more.than.20%.in.OOO.National.Oil.Consortium,.which.is.a.transacting.party;

.� OJSC.Gazprom.Neft.CEO.(A.V..Dyukov),.who.is.also.a.member.of.the.Board.of.Directors.of.ООО.National.Oil.Consortium.

ПТ-0102/43October.21,.2013

18 OJSC.Gazprom.Neft;LLC.National.Oil.Consortium.(LLC.NOC)

Execution.of.Additional.Agreement.No..2.to.target.loan.contract.No..ГПН-10/12100/01677/Д.of.October.13,.2010.(hereinafter.referred.to.as.the.Contract).providing.for.the.following:Par..1.1.of.the.Contract.shall.be.worded.as.follows:“The.Lender.hereby.provides.to.the.Borrower.a.target.loan.in.the.amount.not.exceeding.RUB.563,639,500.on.the.terms.herein.described,.while.the.Borrower.shall.repay.the.loan.principal.and.all.interest.due.as.and.when.herein.specified”.Par..4.1.of.the.Contract.shall.be.worded.as.follows:“Under.Art..3.hereof,.the.Borrower.shall.repay.the.loan.(and.all.interest.due).entirely.by.December.31,.2018.the.latest”.

.� The.OJSC.Gazprom.Neft.shareholder.(OJSC.Gazprom),.because.its.affiliate.(OJSC.Gazprom.Neft).holds.more.than.20%.in.OOO.NNC,.which.is.a.transacting.party;

.� OJSC.Gazprom.Neft.CEO.(A.V..Dyukov),.who.is.also.a.member.of.the.Board.of.Directors.of.ООО.NNC.

ПТ-0102/43October.21,.2013




CONTENTS


19 Customer:..OJSC.Gazprom.NeftContractor:.ООО.ITSK

Execution.of.a.contract.to.host.3rd.OJSC.Gazprom.Neft.Metrology.Conference.titled:.“Main.Aspects.of.Metrological.Support.to.Energy.Resources.Accounting.at.OJSC.Gazprom.Neft.Facilities”,.on.the.following.principal.conditions:Transaction.amount:.RUB.158,894,07,.based.on.the.market.value.Services.provided.until.June.25,.2013,.inclusively.

.� The.OJSC.Gazprom.Neft.shareholder.(OJSC.Gazprom),.as.its.affiliate.OJSC.Gazprom.Neft.owns.more.than.20%.share.in.LLC.ITSC,.a.counterparty.in.the.transaction.

.� V.V..Baranov,.member.of.the.Management.Board.of.OJSC.Gazprom.Neft,.who.concurrently.is.a.member.of.the.Board.of.Directors.of.ООО.ITSK.

ПТ-0102/43October.21,.2013

20 Seller:..OJSC.Gazprom.Neft;.Purchaser:..OJSC.Gazprom..Neft-Noyabrskneftegaz.

Execution.of.property.sale.and.purchase.contracts.on.the.following.terms:Transaction.price:.5,693,796,180.rubles,.incl..VAT.of.868,545,180.rubles,.based.on.market.value.of.assets.disposed.of,.as.calculated.by.ООО.Avers.Appraisal.Center;Items.sold:.list.of.movable.and.immovable.assets.owned.by.OJSC.Gazprom.Neft,.at.the.Romanovskoye,.Vorgenskoye.and.Valyntoyskoye.fields.(Appendix.1):.� movable.and.immovable.assets.at.the.Romanovskoye.field,.at.the.price.3,809,441,200.rubles,.incl..VAT.of.581,101,200.rubles;

.� movable.and.immovable.assets.at.the.Vorgenskoye.field,.at.the.price.1,286,401,780.rubles,.incl..VAT.of.196,230,780.rubles;

.� movable.and.immovable.assets,.at.the.Valyntoyskoye.field,.at.the.price.597,953,200.rubles,.incl..VAT.of.91,213,200.rubles.

The.OJSC.Gazprom.Neft.shareholder,.OJSC.”Gazprom”,.because.its.affiliate,.OJSC.Gazpromneft-Noyabrskneftegaz,.is.a.transacting.party.

ПТ-0102/45November.01,.2013

21 Seller:.OJSC.Gazprom.Neft.Purchaser:..LLC.Gazprom.Neft-East

Execution.of.property.sale.and.purchase.contracts.on.the.following.terms:Total.transaction.price:.6,600,920,000.rubles,.incl..VAT.of.1,006,920,000.rubles..Transaction.price.based.on.market.value.of.assets.being.disposed,.as.calculated.by.ООО.Avers.Appraisal.CenterItems.sold:.list.of.movable.and.immovable.assets.owned.by.OJSC.Gazprom.Neft,.in.the.South-Western.part.of.the.Krapivinskoye.field.(Appendix.2):.� movable.and.immovable.assets,.in..Omsk.Oblast,.at.the.price.6,383,634,800.rubles,.including.VAT.of.973,774,800.rubles;

.� movable.and.immovable.assets,.in.Tomsk.Oblast,.at.the.price.of.217,285,200.rubles,.including.VAT.of.33,145,200.rubles.

The.OJSC.Gazprom.Neft.shareholder,.OJSC.”Gazprom”,.because.its.affiliate,.LLC.Gazpromneft-East,.is.a.transacting.party.

ПТ-0102/45November.01,.2013




CONTENTS


22 Borrower:.ООО.Gazprom.NeftfinanceLender:..OJSC.Gazprom.Neft

Provision.of.an.interest.loan.issued.on.the.following.principal.conditions:Loan.principal:.not.more.than.680,000,000.00.rubles.Repayment.date:.December.31,.2018.the.latest..Interest.rate:.equal.to.MIBID*.(Moscow.InterBank.Bid).rate..for.the.period.from.181.days.to.1.year,.published.by.the.Bank.of.Russia.at.website.www.cbr.ru/mkr_base/main.asp,.effective.on.the.day.of.loan.accommodation,.for.the.first.year.and.on.the.first.business.day.of.the.second.and.each.subsequent.year.

The.OJSC.Gazprom.Neft.shareholder.(OJSC.Gazprom),.because.its.affiliate.ООО.Gazprom.Neftfinance.is.a.transacting.party.

ПТ-0102/49December.09,.2013

23 ООО.Gazprom.Neft.Shipping.ООО.Gazprom.Neft.Terminal.SPbООО.Gazprom.Neft-Invest

Execution.of.Agreement.No..1.under.Contract.of.a.consolidated.taxpayer.group.establishment.No..ГПН-12/33000/01921.of.October.26,.2012.(“the.Contract”),.to.approve.a.new.list.of.corporate.members.of.the.consolidated.taxpayer.group.(Appendix.1):.other.essential.terms.of.the.Contract.to.remain.unchanged.

The.OJSC.Gazprom.Neft.shareholder.(OJSC.Gazprom),.because.its.affiliates,.ООО.Gazprom.Neft.Shipping,.ООО.Gazprom.Neft.Terminal.SPb,.and.ООО.Gazprom.Neft-Invest,.are.transacting.parties.

ПТ-0102/51December.11,.2013


Execution.of.a.contract.to.provide.services.of.organizing.and.taking.inventory.of.fixed.assets.of.OJSC.Gazprom.leased.to.OJSC.Gazprom.Neft.on.the.following.principal.conditions:Subject:.the.Contractor.to.provide.services.of.organizing.and.taking.inventory.of.fixed.assets.on.the.terms.stated.in.Contract.(supplement).Contract.price:.896.(eight.hundred.and.ninety-six).rubles..Services.provided.between.October.29,.2013.to.December.10,.2013,.inclusive..


.� Board.Chairman.of.OJSC.Gazprom.Neft,.A.B..Miller,.who.concurrently.is.Chairman.of.Management.Board,.Deputy.Chairman.of.the.Board.of.OJSC.Gazprom;

.� Board.Directors.of.OJSC.Gazprom.Neft,.who.are.also.members.of.the.Management.Board.of.OJSC.Gazprom:.V.A..Golubev,.K.G..Seleznev,.N.N..Dubik,.A.V..Kruglov,.E.V..Mikhailova,.V.V..Cherepanov.

ПТ-0102/55December.17,.2013

25 Advertising.Agent:.OJSC.Gazprom.Neft..Advertising.Distributor:.ZAO.SKA.Ice.Hockey.Club.

Subject:.ZAO.SKA.Ice.Hockey.Club,.on.instructions.from.the.Advertising.Agent,.to.conduct.campaigns.to.promote.the.Advertising.Agent’s.retail.brands,.with.the.Advertising.Agent.granted.the.status.of.“Sponsor.of.SKA.Ice.Hockey.Club”.and.to.provide.a.sponsorship.pack.of.advertising.services,.including.services.in.relation.to.the.ZAO.SKA.Ice.Hockey.Club.team.entering.the.Championship.of.the.Continental.Ice.Hockey.League.–.Russian.Ice.Hockey.Cup,.2013-2014.season.Period.of.service:.September.01,.2013.to.November.30,.2013;.Contract.price.based.on.market.price.of.the.advertising.services.is.684,.400,000.(six.hundred.and.eighty-four.million.four.hundred.thousand).rubles,.incl..VAT.of.18%.

OJSC.Gazprom.Neft.Board.Director,.CEO,.A.V..Dyukov,.who.is.also.a.member.of.the.Board.ZAO.SKA.Ice.Hockey.Club,.a.transacting.party.

ПТ-0102/56December.18,.2013

*. The.MIBID.rate.is.a.market.rate.calculated.by.the.Bank.of.Russia.based.on.the.statements.of.the.Russian.money.market.major.players.



http://www.cbr.ru/mkr_base/main.asp


CONTENTS


26 Advertising.Agent.OJSC.Gazprom.NeftAdvertising.Distributor:.ZAO.SKA.Ice.Hockey.Club

Execution.of.Additional.Agreement.to.Contract.No..ГПН-12/09000/02776/Р.of.22.12.12.to.provide.services.of.advertising.according.to.which:.Par..1.2.changed.to.read:“Service.period.hereunder:.beginning.of.service.period:.January.01,.2013,.end.of.service.period:.August.31,.2013,.a.calendar.month.being.the.reporting.period.hereunder.”Par..1.3.changed.to.read:“List.of.services.provided.by.the.Club.hereunder.is.available.in.Appendixes.No..1.and.No..2.that.are.integral.parts.hereof”.

Member.of.the.Board.of.Directors,.Chief.Executive.Officer.of.OJSC.Gazprom.Neft,.A..V..Dyukov,.who.is.also.member.of.the.Board.ZAO.SKA.Ice.Hockey.Club,.a.transacting.party.

ПТ-0102/56December.18,.2013

27 Advertising.Agent:.OJSC.Gazprom.NeftZAO.Advertising.Distributor:.Zenit.Soccer.Club.

Execution.of.a.contract.to.provide.services.of.advertising.on.these.terms:Subject:.The.Advertising.Agent.commissions,.and.the.Agent.shall.provide.advertising.services.to.the.Advertising.Agent.as.Zenit.Soccer.Club.conducts.official.games.of.Russia.Football.Championship.among.Premier.League.Clubs,.between.July.01,.2013.and.June.30,.2014,.Russia.Football.Cup.between.July.01,2013.and.June.30,2014,.unofficial.matches.between.July.01,.2013.and.June.30,.2014,.and.junior.tournament.of.Premier.League.clubs.between.July.01,.2013.and.June.30,.2014,.as,.how.and.when.specified.in.Appendix.No..1.that.is.an.integral.part.hereof.Service.period:.July.01,.2013.to.June.30,.2014.Contract.price:.Calculated.based.on.market.value.of.advertising.services,.622,232,820.00.rubles,.including.VAT.18%.

Member.of.the.Board.of.Directors,.A..V..Dyukov,.Chief.Executive.Officer.of.OJSC.Gazprom.Neft.and.member.of.the.Board.of.Directors.of.CJSC.Football.Club.Zenit,.a.counterparty.in.the.transaction.

ПТ-0102/56December.18,.2013

28 Borrower:..OJSC.Gazprom.NeftCreditor:..“GPB”.(OJSC).

OJSC.Gazprom.Neft.to.access.overdraft.loan.from.GPB.(OJSC).on.these.terms:Loan.principal:.up.to.8,000,000,000.00.rublesLoan.period:.until.August.06,.2014..(inclusive)Interest.rate:.MOSPRIME.1М.+.1.25%.per.annum.

.� Board.Directors.of.OJSC.Gazprom.Neft,.who.are.also.Board.Directors.of.GPB.(OJSC):.A.B..Miller,.A.V..Kruglov,.K.G..Seleznev;

.� OJSC.Gazprom.as.it.holds.more.than.20%.of.stock.in.the.Bank,.and.also.because.its.affiliates.(A.B..Miller,.A.V..Kruglov,.K.G..Seleznev,.M.L..Sereda,.E.A..Vasilyeva).concurrently.hold.positions.on.the.Board.of.Directors.of.GPB.(OJSC).

ПТ-0102/59December.30,.2013




CONTENTS


29 Surety:..OJSC.Gazprom.Neft.Underwriter:.“GPB”.(OJSC)Principal:..Beneficiary:..OJSC.Gazprom.Neft.–.MNPZCenter.Finansovikh.Raschetov.OJSC

Signing.a.surety.contract.to.secure.performance.of.OJSC.Gazprom.Neft-MNPZ.before.GPB.(OJSC).under.banker’s.guarantee.contract.on.the.following.principal.conditions:Subject:.The.Principal’s.performance.before.the.Bank,.under.the.banker’s.guarantee.contract,.including,.the.Principal’s.obligation.to.repay.to.the.Bank.amounts.that.the.Bank.may.pay.under.guarantees.issued.by.the.Bank.according.to.the.banker’s.guarantee.contract,.in.favor.of.Center.Finansovikh.Raschetov.OJSC.as.security.of.the.Principal’s.good.performance.under.the.contract.to.purchase.electric.power.awarded.in.competitive.tender.for.power.grid.balancing,.No.0385-BMA-E-KP-12.of.November.28,.2012,.and.electric.power.sale.contract.awarded.in.competitive.tender.of.day.supply.price.bids,.No.0385-RSV-E-KP-12.of.November.28,.2012,.signed.between.the.Principal.and.Beneficiary;.the.Principal’s.payment.of.all.of.the.Bank’s.fees.and.costs,.and.obligation.to.pay.penalties.and.other.amounts.chargeable.under.the.banker’s.guarantee.agreement.Effect.of.guarantee:.August.14,.2013.to.September.13,.2013.(inclusive).Underwriter’s.Fee:.1.%.per.annum.of.each.secured.amount.

.� Directors.of.OJSC.Gazprom.Neft,.who.are.also.Directors.of.GPB.(OJSC):.A.B..Miller,.A.V..Kruglov,.K.G..Seleznev;

.� OJSC.Gazprom.as.it.holds.more.than.20%.of.stock.in.the.Bank,.and.also.because.its.affiliates.(A.B..Miller,.A.V..Kruglov,.K.G..Seleznev,.M.L..Sereda,.E.A..Vasilyeva).concurrently.hold.positions.on.the.Board.of.Directors.of.GPB.(OJSC);

.� Member.of.the.Management.Board.of.OJSC.Gazprom.Neft.A..М..Cherner,.who.simultaneously.holds.the.position.of.the.Chairman.of.the.Board.of.Directors.of.OJSC.Moscow.Oil.Refinery,.the.beneficiary.in.the.transaction.

ПТ-0102/59December.30,.2013

30 Surety:..OJSC.Gazprom.Neft.Underwriter:.GPB.(OJSC)..Principal:..OJSC.Gazprom.Neft.–.MNPZ.RF.FNS.Inter-regional.Inspection.Office.No.1.for.Major.Taxpayers.

Signing.a.surety.contract.to.secure.performance.of.OJSC.Gazprom.Neft-MNPZ.before.GPB.(OJSC).under.contract.of.banker’s.guarantee.on.the.following.principal.conditions:Subject:.The.Principal’s.performance.before.the.Bank,.arising.under.the.banker’s.guarantee.contract,.including,.the.Principal.to.repay.to.the.Bank.amounts.that.the.Bank.may.pay.on.bank.guarantees.issued.under.the.banker’s.guarantee.contract;.the.Principal’s.payment.of.all.of.the.Bank’s.fees.and.costs,.and.obligation.to.pay.penalties.and.other.amounts.chargeable.under.the.banker’s.guarantee.agreement.Secured.amount.and.currency:.7,000,000,000.00.rubles.Effect.of.guarantee.–.until.June.21,.2019,.inclusive.Underwriter’s.Fee.–.0.35.%.per.annum.of.guaranteed.value.

.� Directors.of.OJSC.Gazprom.Neft,.who.are.also.Directors.of.GPB.(OJSC):.A.B..Miller,.A.V..Kruglov,.K.G..Seleznev;

.� OJSC.Gazprom.as.it.holds.more.than.20%.of.stock.in.the.Bank,.and.also.because.its.affiliates.(A.B..Miller,.A.V..Kruglov,.K.G..Seleznev,.M.L..Sereda,.E.A..Vasilyeva).concurrently.hold.positions.on.the.Board.of.Directors.of.GPB.(OJSC);

.� Member.of.the.Management.Board.of.OJSC.Gazprom.Neft.A..М..Cherner,.who.simultaneously.holds.the.position.of.the.Chairman.of.the.Board.of.Directors.of.OJSC.Moscow.Oil.Refinery,.the.beneficiary.in.the.transaction.

ПТ-0102/59December.30,.2013

31 Buyer:..OJSC.Gazprom.Neft.Seller:..OJSC.Tomsk.Neft.VNK

Purchase.of.up.to.5,280,000.tonnes.of.crude.oil.for.a.total.value.up.to.79,200,000,000.rubles.


ПТ-0101/05October.24,.2013




CONTENTS


32 Buyer:.О.Gazprom.Neft.Seller:.OJSC.SN-MNG.


OJSC.Gazprom.because.its.affiliate.(OJSC.Gazprom.Neft).holds.more.than.20%.in.a.transacting.party.

ПТ-0101/05October.24,.2013

33 Buyer:.OJSC.Gazprom.Neft.Salim.Petroleum.Development.NV


OJSC.Gazprom.because.its.affiliate.(OJSC.Gazprom.Neft).holds.more.than.20%.in.a.transacting.party.

ПТ-0101/05October.24,.2013

34 Buyer:.OJSC.Gazprom.Neft..Seller:.OJSC.Gazprom.Neft-NNG.


OJSC.Gazprom,.because.its.affiliate.(OJSC.”Gazprom.Neft-ННГ).is.a.transacting.party.

ПТ-0101/05October.24,.2013

35 Buyer:..OJSC.Gazprom.Neft.Seller:..ООО.Zapoliarneft.


OJSC.Gazprom,.because.its.affiliate.(ООО.Zapoliarneft).is.a.transacting.party.

ПТ-0101/05October.24,.2013

36 Seller:.OJSC.Gazprom.Neft..Buyer:.Gazprom.Neft.Trading.GMbH.

Sale.of.up.to.30,457,000.tonnes.of.crude.oil.for.a.total.value.up.to.USD.25,880,000,000.

OJSC.Gazprom,.because.its.affiliate.(Gazprom.Neft.Trading.GMbH).is.a.transacting.party.

ПТ-0101/05October.24,.2013

37 OJSC.Gazprom.Neft.OJSC.”Sberbank.of.Russia”

Conversion.transactions.to.buy/sell.rubles.and.foreign.currency.worth.up.to.15,000,000,000.rubles.or.equivalent.amount.in.foreign.currency.per.transaction.

OJSC.Gazprom,.because.its.affiliate,.V.A..Мау,.holds.an.executive.position.in.OJSC.Sberbank.of.Russia.

ПТ-0101/05.24.10.2013.г.

38 OJSC.Gazprom.Neft.GPB.(OJSC)

Conversion.transactions.to.buy/sell.rubles.and.foreign.currency.worth.up.to.15,000,000,000.rubles.or.equivalent.amount.in.foreign.currency.per.transaction.



ПТ-0101/05October.24,.2013

39 OJSC.Gazprom.Neft.OJSC.”Sberbank.of.Russia”

Deposit.transactions.with.OJSC.Gazprom.Neft.depositing.funds.in.rubles.and.foreign.currency.worth.up.to.15,000,000,000.rubles.or.equivalent.amount.in.foreign.currency.per.transaction.

OJSC.Gazprom,.because.its.affiliate,.V.A..Мау,.holds.an.executive.position.in.OJSC.Sberbank.of.Russia.

ПТ-0101/05October.24,.2013




CONTENTS


40 OJSC.Gazprom.Neft.GPB.(OJSC)

Deposit.transactions.with.OJSC.Gazprom.Neft.depositing.funds.in.rubles.and.foreign.currency.worth.up.to.15,000,000,000.rubles.or.equivalent.amount.in.foreign.currency.per.transaction.



ПТ-0101/05October.24,.2013

41 Supplier:..OJSC.Gazprom.Neft.Buyer:..OJSC.”Gazprom”.(Buyer)

Signing.a.contract.to.supply.up.to.1,852,070.tonnes.of.crude.oil.worth.up.to.30,000,000,000.rubles.


.� Board.Chairman.of.OJSC.Gazprom.Neft,.A.B..Miller,.who.concurrently.is.Chairman.of.the.Management.Board,.Deputy.Chairman.of.the.Board.in.OJSC.Gazprom;

.� Board.Directors.of.OJSC.Gazprom.Neft,.who.are.also.members.of.the.Management.Board.of.OJSC.Gazprom:.V.A..Golubev,.K.G..Seleznev,.N.N..Dubik,.A.V..Kruglov,.E.V..Mikhailova,.V.V.Cherepanov.

ПТ-0101/05October.24,.2013

42 Buyer:..OJSC.Gazprom.Neft.Supplier:..CJSC.Gazprom.Neft.Orenburg.

Signing.a.contract.to.supply.up.to.1,852,070.tonnes.worth.up.to.30,000,000,000.(thirty.billion).rubles.

OJSC.Gazprom,.because.its.affiliate.(CJSC.Gazprom.Neft.Orenburg).is.a.transacting.party.

ПТ-0101/05October.24,.2013

43 OJSC.Gazprom.Neft.ООО.ITSK

Signing.service.contract.to.provide.IT.services.and.support.of.IT.systems.worth.up.to.2,000,000,000.rubles.

.� OJSC.Gazprom,.because.its.affiliate.(ООО.ITSK).is.a.transacting.party;

.� Member.of.Management.Board.of.OJSC.Gazprom.Neft,.V.V..Baranov,.who.is.also.member.of.the.Board.ООО.ITSK.

ПТ-0101/05October.24,.2013

In.2013,.OJSC.Gazprom.Neft.was.not.part.to.any.transaction.that.qualifies.as.a.major.transaction.under.the.effective.legislation.of.the.Russian.Federation.




CONTENTS

ADDRESSES & CONTACTS

FULL NAME OF THE COMPANYOpen.Joint-Stock.Company.Gazprom.Neft

SHORT NAME OF THE COMPANYJSC.Gazprom.Neft

REGISTERED OFFICELet..A..Galernaya,.5.St..Petersburg,.ul,.190000,Russian.Federation.The.Company.was.registered.on.October.06,.1995.by.the.Registration..Chamber.of.the.City.of.Omsk..Statutory.Registration.Certificate.No..38606450...Main.Federal.Registration.Number.1025501701686.

MAILING ADDRESSUl..Pochtamtskaya,.3-5St..Petersburg,.190000,Russian.Federation,.

WEB ADDRESS http://www.gazprom-neft.com/

INFORMATION SERVICETel:.+7.(812).363-31-52Tel:.+7.(800).700.31.52.(free.call.in.Russia)Fax:.+7.(812).363-31-51E-mail:[email protected]

PRESS SERVICEMedia.enquiriesTel:.+7.(812).363-31-52Fax:.+7.(812).363-31-51E-mail:[email protected]

SHAREHOLDER RELATIONSCorporate.Regulation.DepartmentTel:+7.(812).363-31-52Fax:+7.(812).363-31-51E-mail:[email protected]

INVESTOR RELATIONSInvestor.Relations.AdministrationTel:.+7.(812).358-95-48E-mail:[email protected]

AUDITORThe.Company’s.accounting.(financial).reports.in.2013.were.audited..by.CJSC.PriceWaterhouseCoopers.Audit.(CJSC.PwC.Audit).Address:.Belaya.Ploschad.Business.CenterButirskiy.Val,.10,.Moscow,.ul..125047,.Russian.Federation,.Tel:.+7.(495).967-60-00Fax:.+7.(495).967-60-01Web.address:.www.pwc.ru

SHARE REGISTRARClosed.Joint-Stock.Company,.Specialized.Registrar.–..Register-Keeper.for.Gas.Industry.Shareholders.(CjSC.SR-DRAGa).Address:.Novocheriomushkinskaya,.71/32.Moscow,.ul.117420.Russian.Federation.Tel:.+7.(495).719-40-44Fax:.+7.(495).719-45-85Web.address:.http://www.draga.ruE-mail:[email protected]



http://www.gazprom-neft.com/

mailto:info%40gazprom-neft.ru?subject=

mailto:pr%40gazprom-neft.ru?subject=

mailto:shareholders%40gazprom-neft.ru?subject=

mailto:ir%40gazprom-neft.ru?subject=

http://www.pwc.ru

http://www.draga.ru

mailto:info%40draga.ru?subject=


CONTENTS

DISCLAIMER

This.Annual.Report.was.prepared.based.on.information.known.to.Open.Joint-Stock.Company.Gazprom.Neft.and.its.subsidiaries.(‘Gazprom.Neft’).on.the.date.of.reporting..This.Report.contains.forward-looking.statements.that.represent.expectations.of.the.Company’s.executive.management..Such.estimates.are.not.based.on.any.actual.circumstances,.and.they.include.all.statements.concerning.the.Company’s.intentions,.opinions.or.current.expectations.as.regards.its.activities,.financial.situation,.liquidity,.future.growth,.strategy,.and.the.industry.in.which.Gazprom.Neft.operates..By.their.very.nature,.such.forward-looking.statements.are.exposed.to.risks.and.factors.of.uncertainty.because.they.describe.events.and.depend.on.circumstances.that.may.or.may.not.occur.in.the.future.

Such.words.as.‘assume’,.‘believe’,.‘expect’,.‘estimate’,.‘intend’,.‘plan’,.‘surmise’,.‘examine’,.‘might’,.along.with.other.similar.words.and.phrases,.also.expressed.as.negations,.typically.mark.forward-looking.statements..Such.assumptions.contain.risks.and.uncertainties,.both.expected.and.unforeseeable..Therefore,.future.performance.may.differ.from.current.expectations,.and.the.users.of.this.information.must.not.base.their.own.estimates.solely.on.the.information.contained.herein..

Apart.from.the.official.information.on.the.activities.of.Gazprom.Neft.this.Annual.Report.includes.information.acquired.from.third.parties..Such.information.was.obtained.from.sources.viewed.by.Gazprom.Neft.as.reliable.

Nevertheless,.we.cannot.guarantee.the.accuracy.of.such.information,.which.may.be.abbreviated.or.incomplete.

Gazprom.Neft.does.not.guarantee.that.actual.results,.scope.or.indicators.of.its.performance.or.performance.of.the.industry.in.which.the.Company.operates.will.exactly.match.the.results,.scope.or.indicators.contained.explicitly.or.implicitly.in.any.forward-looking.statement.included.herein.or.elsewhere..Gazprom.Neft.cannot.be.held.responsible.for.any.losses.that.a.party.may.sustain.as.a.result.of.reliance.of.such.forward-looking.statements..Except.in.cases.directly.regulated.under.the.applicable.law,.the.Company.shall.not.assume.any.obligation.to.distribute.or.publish.any.updates.or.adjustments.to.its.forward-looking.statements.that.would.reflect.any.changes.of.expectation.or.contain.new.information,.or.describe.any.subsequent.events,.conditions.or.circumstances.




CONTENTS

KEY TERMS, DEFINITIONS & ACRONYMS

Shortening Definition

2D, 3D Seismic.exploration

AC Authorized.capital

ADR OF JSC GAZPROM NEFT American.depositary.receipt.issued.on.shares.of.JSC.Gazprom.Neft..1.ADR.equals.five.ordinary.shares.of.JSC.Gazprom.Neft.

APG Associated.petroleum.gas

APR Asia-Pacific.Region;.includes.countries.in.the.continents.of.Asia.and.America,.and.the.Pacific.Ocean

ASSOCIATE COMPANY, ASSOCIATE A.company.in.which.Gazprom.Neft.Group.holds.at.least.20%.of.voting.shares.(for.a.joint-stock.company).or.20%.of.registered.capital.(for.a.limited.liability.company)

BALTIC STATES Estonia,.Latvia.and.Lithuania

BOE Barrels.of.oil.equivalent

BRLH Broad.fraction.of.light.hydrocarbons

CATALYTIC CRACKING Thermal.catalytic.refining.of.petroleum.fractions.to.produce.high-octane.gasoline

CENTRAL ASIA Kazakhstan,.Kyrgyzstan,.Tajikistan,.Turkmenistan.and.Uzbekistan

CGTP Central.oil.gathering.and.treatment.plant

CIS Commonwealth.of.Independent.States:.all.former.Republics.of.the.USSR,.except.Estonia,.Latvia.and.Lithuania

COKING Refining.of.liquid.and.solid.fuels.by.heating.them.in.the.absence.of.air..As.the.fuel.decomposes,.it.produces.solid.coke.and.volatile.particles

CP Civil.Protection

CS Compressor.station

DNEPM Differentially.Normalized.Electric.Probing.Method

DOLLARS US.dollars

EBITDA Net.profit.before.interest,.tax,.depreciation.and.amortization

ЕU European.Union

FEC Fuel.and.energy.complex

FCF (FREE CASH FLOW) Free.cash.flow

FFMS OF RUSSIA Federal.Service.for.Financial.Markets

FFS Fuel.filling.station

FTS OF RUSSIA Federal.Tariff.Service

GAS PROCESSING PLANT Gas.and/or.condensate.refining.plant

GAZPROM NEFT GROUP, THE GROUP, GAZPROM NEFT

All.companies.of.the.Group.that.comprise.JSC.Gazprom.Neft.(the.parent.company).and.its.subsidiaries

GCS Gas-compressor.station

GEO Geological.and.engineering.operations

GEOLOGICAL SURVEY Geological.surveying.for.exploration.purposes

HSE Health,.safety,.&.the.environment


PREVIOUS CHAPTER


CONTENTS


HYDROCARBON RESERVES IN CATEGORIES A+B+C

Explored.reserves.according.to.the.Russian.classification..Represents.the.part.of.geological.reserves.that.it.would.be.economically.efficient.to.extract.at.the.date.of.the.estimate,.based.on.the.market.situation.and.rational.use.of.modern.equipment.and.technologies,.and.taking.into.account.requirements.for.the.protection.of.mineral.deposits.and.the.natural.environment..Explored.reserves.of.gas.in.categories.А+В+С1.are.viewed.as.fully.recoverable..For.reserves.of.oil.and.gas.condensate,.an.extraction.coefficient.based.on.geological.and.technical.factors.is.used

HYDROCARBON RESERVES IN CATEGORIES С1+С2

Category.С1.represents.reserves.of.oil.and.gas.proven.to.exist.in.standalone.wells,.with.favorable.industrial.and.geological.data.for.other.wells..Category.С2.represents.reserves.of.oil.and.gas,.the.existence.of.which.is.suggested.by.geological.and.geophysical.information.within.known.gas-producing.areas..Reserves.of.category.С2.are.preliminary.estimates.that.are.used.to.plan.detailed.survey.work.at.specific.fields

HYDROCRACKING A.cracking.technique.used.in.refining.of.crude.oil.fractions.with.a.high.boiling.point,.fuel.oils.or.tar.oil.to.make.gasoline,.diesel.fuel.and.jet.fuel,.lubricant.oils.etc.

HYDROTREATMENT Purification.of.petroleum.products.to.remove.organic.sulphuric,.nitric,.and.oxygen-based.compounds.using.molecules.of.hydrogen..Hydrotreatment.improves.the.quality.of.petroleum.products

IRMS Integrated.risk.management.system

ISO 14001 STANDARD International.standard.for.environmental.protection.that.sets.requirements.for.environment.management.quality.and.is.used.to.work.out.legally.compliant.environmental.policies..The.standard.regulates.environmental.aspects.of.corporate.activities.that.are.controllable.and.require.monitoring..This.is.a.voluntary.standard.that.does.not.supersede.legislated.requirements

JSC GAZPROM NEFT REPLACEMENT RATIO

Gross.increment.of.proven.reserves,.divided.by.total.production.in.the.period

JV Joint.venture

KHMAO Khanty-Mansiysk.AD.(KhMAD).Khanty-Mansi.Autonomous.District.–.Yugra

LA License.Area

LHG Liquefied.hydrocarbon.gases

LNG Liquefied.natural.gas

M3 Cubic.meter.of.natural.gas,.measured.at.the.pressure.of.one.atmosphere.and.temperature.of.20°С

MET Mineral.extraction.tax

MFP Maintenance.of.Formation.Pressure

MICEX Moscow.Interbank.Currency.Exchange

MIP Medium-term.Investment.Program

MNPZ Moscow.Refinery

NPZ Refinery

NON-CIS COUNTRIES Foreign.countries.with.the.exception.of.CIS.and.the.Baltic.states

OC Oil.Company

OE Oil.equivalent

OGCF Oil.and.gas.condensate.field

ONPZ Omsk.Refinery

OPSC Oil.products.supply.companies

ORF Oil.recovery.factor

OSH Occupational.safety.and.health

PBM Polymer-bituminous.binding.materials

POE Protection.of.environment

POL Petroleum,.oil.and.lubricants

POSSIBLE RESERVES Unproven.reserves,.which.are.less.likely.to.be.extracted.than.probable.reserves,.based.on.the.analysis.of.engineering.and.geological.data..There.must.be.at.least.10%.probability.that.actual.production.will.be.equal.to.or.more.than.the.estimate.of.proven,.probable.and.potential.reserves

PREVIOUS CHAPTER



CONTENTS


PRIMARY REFINING Crude.oil.distillation.using.atmospheric.vacuum.devices..Crude.oil.enters.the.distillation.columns.to.undergo.an.atmospheric.pressure.distillation.process,.which.splits.it.into.a.number.of.fractions:.light.and.heavy.gasoline.fractions,.kerosene.fraction,.diesel.fraction,.and.fuel.oil.as.a.residue..The.quality.of.the.obtained.fractions.does.not.meet.standards.for.marketable.petroleum.products,.so.the.fractions.must.undergo.further(secondary).refining

PRMS AND SEC INTERNATIONAL STANDARDS

International.classification.and.estimate.of.hydrocarbon.reserves.by.the.standards.of.the.Petroleum.Resources.Management.System.(PRMS).and.US.Securities.and.Exchange.Committee.(SEC)..These.standards.include.not.only.the.estimate.of.hydrocarbon.reserves,.but.also.provide.the.estimate.of.the.commercial.practicability.of.extraction.and.the.justifiability.of.its.availability..The.period.of.economically.viable.reserve.development.(period.of.validity.of.the.development.license).is.taken.into.account.as.well

PROBABLE RESERVES Unproven.reserves,.which.are.most.likely.to.be.extracted.based.on.the.analysis.of.engineering.and.geological.data..There.must.be.at.least.a.50%.probability.that.actual.production.will.be.equal.to.or.greater.than.the.estimate.of.proven.and.probable.reserves

PROSPECTING AND EXPLORATION DRILLING

All.prospecting.and.exploration.drilling.carried.out.during.the.reporting.period,.including.total.distance.drilled.in.wells,.which.have.been.fully.drilled.or.are.in.the.process.of.being.drilled,.but.will.be.completed.in.the.next.reporting.period

PROVEN RESERVES Quantities.of.liquid,.gaseous.and.solid.hydrocarbons,.which,.according.to.engineering.and.geological.information,.are.most.likely.to.be.produced.by.industrially.available.methods.from.known.deposits.starting.from.a.specific.date,.under.the.existing.economic.conditions,.with.generally.accepted.operating.techniques,.and.in.compliance.with.applicable.effective.national.regulations

PSA Production.sharing.agreement

R&D Research.and.development

REFINING DEPTH A.refining.indicator.defined.as.the.percentage.ratio.of.obtained.petroleum.products,.not.including.bulk.fuel.oil,.to.the.original.quantity.of.crude.oil..Measured.in.%

REFINING OUTPUT CAPACITY Maximum.possible.output.by.a.plant.unit.in.a.specific.period

RF Russian.Federation

SAA Surface-active.agent

SC Squeeze.cementing

SILCO (SIBERIAN LIGHT) Siberian.light.crude.oil

SUBSIDIARY Subsidiaries.and.Affiliates

TCF T. Tonne.of.conventional.fuel.(carbon.equivalent),.equals.877.m3.of.natural.gas

TP Total.proved

UGSF Underground.Gas.Storage.Facilities

UPGRADER Equipment.for.upgrading.oil.quality

VAT Value.added.tax

VCS Vacuum.Compressor.Station

VIOC Vertically.integrated.oil.company

WSLH Wide.spread.of.light.hydrocarbons

YAMAL– NENETS AD (YANAD) Yamal-Nenets.Autonomous.District

YANOS Yaroslavl.Refinary.Slavneft-YANOS


Chief Accountant O. N. Makretskaya (signature)

Chief Executive Officer A. V. Dykov (signature)

This.JSC.Gazprom.Neft.2013.Annual.Report.was.pre-approved.by.the.Board.of.Directors.of.JSC.Gazprom.Neft...Resolution.No..PT-0102/12.of.March..28,.2014

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JSC GAZPROM NEFT


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