ojsc severneftegazprom annual report 2011 (english)

ANNUAL REPORT 20112

INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . 3Message fROM The ChaIRMaNOf The BOaRD Of DIReCTORs. . . . . . . . . . . . . . 4Message fROM The geNeRal DIReCTOR. . . . . 6KeY eVeNTs Of 2011 . . . . . . . . . . . . . . . . . . . . . 8MaIN ResUlTs Of The COMPaNY’s fIRsT DeCaDe. . . . . . . . . . . . . . . . . . . . . . . . . . 10geNeRal INfORMaTION. . . . . . . . . . . . . . . . . . 11

Registration.Details . . . . . . . . . . . . . . . . . . . . 12Authorized.Capital . . . . . . . . . . . . . . . . . . . . . 13

COMPaNY DeVelOPMeNT. . . . . . . . . . . . . . . . . 16Mission.and.Strategy. . . . . . . . . . . . . . . . . . . 17Company.History. . . . . . . . . . . . . . . . . . . . . . 17Geography.of.Operations. . . . . . . . . . . . . . . . 19Situation.in.the.industry. . . . . . . . . . . . . . . . . 19High.Priority.Lines.of.Business.and.Development.Prospects . . . . . . . . . . . . . 20

MaNageMeNT BODIes aND BODIes fOR CONTROl Of fINaNCIal aND BUsINess OPeRaTIONs . . . . . . . . . . . . . . 21

Structure.of.Management.Bodies. . . . . . . . . . 22The.General.Meeting.of.Shareholders . . . . . . 22The.Board.of.Directors. . . . . . . . . . . . . . . . . . 23Technical.Committee.. . . . . . . . . . . . . . . . . . . 24Report.of.the.Company’s.Board..of.Directors.on.the.Work..in.Priority.Directions.of.the.Business. . . . . . . 25Information.on.the.Company’s.Auditor. . . . . . 27Internal.Audit.Commission. . . . . . . . . . . . . . . 27

KeY PeRfORMaNCe INDICaTORs . . . . . . . . . . 28The.Stats.of.the.Raw.Material.Base. . . . . . . . 29Geological.Exploration. . . . . . . . . . . . . . . . . . 31Production.Drilling. . . . . . . . . . . . . . . . . . . . . 31Gas.Production. . . . . . . . . . . . . . . . . . . . . . . . 33Gas.Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

fINaNCIal ResUlTs. . . . . . . . . . . . . . . . . . . . . 34Key.Indicators.over.2009–2011.. . . . . . . . . . . 35Implementation.of.the.Annual..Programme.of.Works.and.Budget..of.the.Company.in.2011. . . . . . . . . . . . . . . . . 35Analysis.of.Changes..in.the.Asset.Structure.of.the.Company.. . . . . 36Analysis.of.Change.in.the.Liabilities..Structure.of.the.Company.. . . . . . . . . . . . . . . 38

Analysis.of.Change..in.Indicators.of.the.Profit..and.Loss.Statement.for.2011. . . . . . . . . . . . . 40Analysis.of.Cash.Flow . . . . . . . . . . . . . . . . . . 41Analysis.of.Debt.Liabilities. . . . . . . . . . . . . . . 42Analysis.of.Key.Financial.Ratios. . . . . . . . . . . 43

INVesTMeNT OPeRaTIONs. . . . . . . . . . . . . . . . 44KeY RIsK faCTORs assOCIaTeD WITh The COMPaNY’s BUsINess . . . . . . . . . . 45

Industry.risks. . . . . . . . . . . . . . . . . . . . . . . . . 46Financial.risks .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 47Legal.risks. . . . . . . . . . . . . . . . . . . . . . . . . . . 48

eNeRgY CONsUMPTION . . . . . . . . . . . . . . . . . . 49sUsTaINaBle DeVelOPMeNT. . . . . . . . . . . . . . 50

Role.of.sustainable.development..in.the.Company’s.activity. . . . . . . . . . . . . . . . 51Social.policy. . . . . . . . . . . . . . . . . . . . . . . . . . 51Labour.protection.and.industrial.safety. . . . . 54Environmental.protection..and.ecological.safety. . . . . . . . . . . . . . . . . . . 55Main.indicators.of.environmental..protection.activities . . . . . . . . . . . . . . . . . . . . 58Main.directions.of.regional.policy..and.interaction.with.interested.parties. . . . . . 59

RePORT ON COMPlIaNCe WITh The CODe Of CORPORaTe CONDUCT. . . 62RePORT PaRaMeTeRs. . . . . . . . . . . . . . . . . . . 63DIsClOsURe Of INfORMaTION. . . . . . . . . . . . . 64

Appendix.1 ..Index.of.Standards..of.the.General.Reporting.Initiative . . . . . . . . . 65Appendix.2 ..List.of.the.Company’s..transactions.in.the.year.of.2011,..considered.as.interested.party..transactions.in.conformance..with.the.Federal.law..‘On.joint.stock.companies’ ... . . . . . . . . . . . . . 69Appendix.3 ..List.of.the.Company’s..transactions.in.2011.considered.as.major.transactions.in.conformance.with.the.Federal.law.‘On.joint.stock.companies’.as.well..as.other.transactions.subject..to.the.procedure.of.approval..of.major.transactions.pursuant..to.the.Company’s.Charter. . . . . . . . . . . . . . . . 76

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INTR

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This AnnuAl RepoRT (heReinAfTeR RefeRRed To As The RepoRT) shAll deTAil The key

peRfoRmAnce indicAToRs of opeRATions of seveRnefTegAzpRom open JoinT-sTock

compAny (heReinAfTeR RefeRRed To As oJsc seveRnefTegAzpRom, The compAny) foR 2011

And developmenT pRospecTs oRienTed TowARds shAping And ReAching sTRATegic goAls

And ensuRing The compAny’s long-TeRm business sTAbiliTy.

wiTh The dATA pResenTed in The RepoRT, sTAkeholdeRs cAn exAmine ResulTs of

compAny’s opeRATions And Assess iTs impAcT on economics, The enviRonmenT And

socieTy.

when compiling The RepoRT, we hAve TAken inTo AccounT All infoRmATion foR

suggesTed RepoRT useRs conceRning The compAny’s business opeRATions foR The

RepoRTing peRiod, indusTRiAl sAfeTy, enviRonmenT, sociAl And economic developmenT

AcTiviTies ThAT hAve TAken plAce duRing This peRiod.

TAking inTo AccounT The ResponsibiliTy And public inTeResT in iTs opeRATions, foR The

fiRsT Time The compAny exTends The RepoRT wiTh indicAToRs of The globAl RepoRTing

iniTiATive (gRi) v. 3.1 ThAT will chARAcTeRize The degRee of Applying susTAinAble

developmenT AppRoAches on An AnnuAl bAsis.

The RepoRT conTAins evAluATions And foRecAsTs of The compAny’s AuThoRized

mAnAgemenT bodies RegARding iTs opeRATing ResulTs And fuTuRe evenTs And/oR

AcTions, including compAny plAns, And The pRobAbiliTy of ceRTAin evenTs And AcTions.

foRwARd-looking sTATemenTs, by viRTue of TheiR nATuRe, ARe AssociATed wiTh inheRenT

Risk And unceRTAinTy of boTh geneRAl And specific chARAcTeR. The compAny emphAsizes

ThAT AcTuAl ResulTs mAy diffeR consideRAbly fRom Those pRovided, wheTheR diRecTly

oR indiRecTly, in The foRwARd-looking sTATemenTs in quesTion. in pARTiculAR, economic,

poliTicAl, sociAl, Technology-RelATed And oTheR condiTions cAn AffecT compAny

opeRATions boTh in RussiA And AbRoAd.

RepoRT useRs musT noT compleTely Rely upon AssessmenTs And foRecAsTs of

compAny’s mAnAgemenT bodies, As fuTuRe AcTuAl ResulTs of compAny’s opeRATions mAy

diffeR fRom foRecAsTed ResulTs foR mAny ReAsons.

ANNUAL REPORT 20114

Dear ShareholDerS!

2011 hAs compleTed The fiRsT decAde of oJsc seveRnefTegAzpRom

opeRATions, which hAve been mARked by A numbeR of noTAble

AchievemenTs.

The compAny hAs successfully pAssed ThRough An impoRTAnT sTAge

of developmenT And sTAbilizATion of iTs opeRATions And hAs enTeRed

inTo The RAnge of mosT pRomising And pRogRessively developing

enTeRpRises of gAzpRom gRoup.

evenTs of The pRevious decAde And Achieved ResulTs hAve esTAblished

A solid foundATion foR fuRTheR compAny developmenT, gRowTh of

iTs sTRATegic poTenTiAl, And long-TeRm incReAse of iTs vAlue And

shAReholdeRs’ income.

TodAy, oJsc seveRnefTegAzpRom demonsTRATes susTAinAble pRoducTion

And finAnciAl indicAToRs. in 2011, The compAny sTARTed expeRimenTAl

gAs pRoducTion in The TuRoniAn gAs deposiT of The yuzhno-Russkoye

gAs field. This is A milesTone pRoJecT boTh foR gAzpRom And The enTiRe

gAs indusTRy of ouR counTRy. AcTuAlly, This pRoJecT hAs iniTiATed A

new sTAge of iTs developmenT ThAT suggesTs pRoducTion fRom hARd To

RecoveR gAs ReseRves.

lAsT yeAR, An impoRTAnT evenT foR oAo gAzpRom wAs The

implemenTATion of The noRd sTReAm pRoJecT inTended To ensuRe

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We have recorded stable results

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Message from the Chairman of the Board of Directors

mAximum ReliAble gAs supply To euRopeAn consumeRs in The long TeRm. noRd sTReAm hAs diRecTly connecTed

The euRopeAn gAs mARkeT And lARge RussiAn fields, including The yuzhno-Russkoye gAs field, which is one of

iTs mAin ResouRce bAses. by enAbling new volumes of gAs supply in fuTuRe, developmenT of The TuRoniAn gAs

deposiT sTARTed by oJsc seveRnefTegAzpRom AT The sAme Time helps To Resolve one of The mosT impoRTAnT

goAls of gAzpRom gRoup As A gAs supplieR in A new gAs TRAnspoRT pRoJecT – ensuRing A sTAble supply of

lARge volume of nATuRAl gAs To euRope.

in The new decAde, The boARd of diRecToRs And mAnAgemenT of The compAny hAve been seT new chAllenges.

fiRsT of All, These ARe ReTAining posiTive developmenT dynAmics, ensuRing sTAble opeRATions wiTh

simulTAneous gRowTh in efficiency And impRovemenT of key indicAToRs.

on behAlf of The boARd of diRecToRs i would like To expRess ouR AppReciATion To employees And mAnAgeRs

of oJsc seveRnefTegAzpRom foR TheiR sense of puRpose, ResponsibiliTy And pRofessionAlism, And foR TheiR

fAiR woRk And pRiceless conTRibuTion in ensuRing sTAble And efficienT opeRATions of The compAny. i would

Also like To sAy ThAnk you To The compAny’s shAReholdeRs foR suppoRTing mAnAgemenT iniTiATives Aimed

AT ensuRing gRowTh And developmenT of oJsc seveRnefTegAzpRom. i hope we will conTinue ouR fRuiTful

coopeRATion wiTh shAReholdeRs.

i wish you All fuRTheR success And ReAching new goAls!

sinceRely,

ALExANDER MEDvEDEv

deputy chairman of the management committee, oAo gazprom

chairman of the board of directors, oJsc severneftegazprom

ANNUAL REPORT 20116

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Dear ShareholDerS, PartnerS anD ColleagueS!

summARizing The ResulTs of The compAny’s opeRATions foR 2011, i would

like To noTe ThAT This wAs A speciAl yeAR foR oJsc seveRnefTegAzpRom.

in June 2011, The compAny celebRATed iTs 10Th AnniveRsARy since iT wAs

esTAblished. These yeARs hAve become A TRue epoch – The peRiod of

compAny foRmATion And gRowTh And AchievemenT of impRessive ResulTs

ThAT hAve Allowed iT To Join The leAding pRoduceRs of gAzpRom gRoup.

in The shoRTesT TeRms possible, one yeAR AheAd of plAn, we hAve puT

The yuzhno-Russkoye oil gAs condensATe field inTo opeRATion, sTARTed

pRoducing gAs And hAve ReAched The plAnned pRoducTion level of As

much As 25 billion m3 gAs peR yeAR. To ensuRe conTinuous gAs pRoducTion,

one of The mosT sTATe-of-The-ART gAs fields in RussiA hAs been builT. All

pRoducTion-RelATed AchievemenTs hAve secuRed The sTAble finAnciAl

sTAnding of The compAny.

one cAn sAy ThAT The compAny hAs successfully compleTed iTs fiRsT

decAde which TuRned ouT To be A peRiod of pRogRessive developmenT

ResulTing in esTAblishing A flouRishing And sTAble opeRATing enTeRpRise

wiTh poweRful pRoducTion And woRkfoRce poTenTiAl.

TodAy, oJsc seveRnefTegAzpRom is A modeRn And innovATive compAny

Achieving fifTh plAce in TeRms of pRoducTion level Among gAzpRom

gRoup compAnies, And one of is An exAmple of successful inTeRnATionAl

coopeRATion in gAs pRoducTion.

2011 wAs no excepTion foR The compAny And wAs mARked by A numbeR of

AchievemenTs. The milesTone of The opeRATions wAs sTARTing The piloT

pRoducTion of The TuRoniAn gAs deposiT And supply of TuRoniAn gAs in The

unified gAs supply sysTem (ugss) of RussiA in decembeR lAsT yeAR. oJsc

seveRnefTegAzpRom becAme The fiRsT compAny ThAT sTARTed piloT gAs

We Will go further…

7

Message from the general Director

pRoducTion fRom The TuRoniAn deposiT in RussiA. An ouTsTAnding evenT in The AReA of coRpoRATe finAnce wAs The

deAl sTRuck in mAy 2011, which consisTed of ATTRAcTing pRoJecT finAncing ToTAlling 1.1 billion euR. iT’s woRTh

noTing ThAT This deAl wAs Recognized by The inTeRnATionAl finAnciAl communiTy And wAs Twice nominATed As

“TRAnsAcTion of The yeAR 2011” in gAs pRoducTion pRoJecT finAncing. commissioning The noRd sTReAm gAs pipeline

supplying gAs To euRope fRom mulTiple poinTs, including ouR yuzhno-Russkoye field, becAme AnoTheR milesTone

evenT foR ouR compAny, which Took plAce in novembeR.

in AddiTion To The Above, iT’s woRTh noTing ThAT 2011 conTinued oveRAll posiTive dynAmics of compAny

developmenT in TeRms of key indicAToRs, including finAnciAl ones, build-up of ResouRce bAse, And developmenT

And implemenTATion of new Technologies wiTh pRospecTs.

summARizing ResulTs of The fiRsT decAde And 2011, one cAn sTATe ThAT The compAny hAs successfully compleTed

iTs fiRsT sTAge of foRmATion And enTeRed A new Responsible sTAge of quAliTy impRovemenT And efficiency

enhAncemenT. The compAny hAs unique TechnicAl, mAnAgemenT, inTellecTuAl And finAnciAl poTenTiAl cApAble of

ensuRing deploymenT of The mosT complicATed unpRecedenTed pRoJecTs.

i would like To expRess my gRATiTude, fiRsT of All, To my colleAgues – employees of oJsc seveRnefTegAzpRom,

And Also To compAny shAReholdeRs And pARTneRs ThAT hAve suppoRTed iT

ThRoughouT The yeARs And hAve helped ReAch TodAy’s lAndmARk.

we ARe plAnning To go fuRTheR: we ARe AlReAdy mAking new plAns And seTTing

new sTRATegic goAls. i AssuRe you ThAT employees And mAnAgemenT of oJsc

seveRnefTegAzpRom will mAke TheiR besT effoRTs To enAble fuRTheR sTAble

And susTAinAble compAny developmenT.

sinceRely,

STANISLAv TSygANkOv

general director, oJsc severneftegazprom

ANNUAL REPORT 20118

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11January

.� OJSC.Severneftegazprom.was.awarded.the.second.and.third.prizes.at.the.IX.All.Russian.Conference.of.Young.Scientists,.Specialists.and.Students.Studying.Gas.Industry.Issues ..

february .� Stanislav.Evgenyevich.Tsygankov.was.appointed.in.the.post.of.the.Company’s.Director.

General .

.� The.Federal.Service.for.Intellectual.Property.(Rospatent).registered.OJSC.Severneft-egazprom’s.trade.mark .

.� The.Company.has.successfully.passed.the.first.compliance.audit.of.the.integrated.management.system.in.Quality.and.HSES.for.compliance.of.requirements.of.interna-tional.standards.ISO.9001:2008,.ISO.14001:2004,.and.OHSAS.18001:2007.(compliance.certification.took.place.in.February.2010) .

March.� As.a.result.of.many.years.of.cooperation.of.OJSC.Severneftegazprom.and.its.share-

holders.–.OAO.Gazprom,.Wintershall.Holding.GmbH.and.E .ON.Ruhrgas.E.&.P.GmbH.a.project.financing.agreement.totalling.1 .1.billion.EUR.was.signed .

.� Drilling.of.the.first.dual-bore.cluster.of.the.Turonian.Gas.Deposit.was.completed.and.completion.jobs.were.started.in.the.Western.Siberia.Turonian.Gas.Deposit.development.project,.which.is.unique.for.Russia .

.� The.corporate.website.of.OJSC.Severneftegazprom.(http://www.severneftegazprom.сom/).was.launched ...The.website.allowed.the.Company.to.publish.information.about.its.operations,.history,.sector.profile,.management.bodies,.and.fulfill.its.information.disclosure.obligations.as.provided.by.legislation.of.the.Russian.Federation.without.any.intermediaries .

May.� Gas.influx.from.unique.dual-bore.cluster.No.174.of.the.Turonian.Gas.Deposit.was.

obtained .

.� Financial.closure.of.the.deal.attracting.project.financing.totalling.1 .1.billion.EUR.was.realized ..The.credit.was.provided.by.an.international.consortium.of.foreign.banks.and.Russian.bank.Gazprombank.(OJSC) .

9

key events of 2011

June .� June.15,.the.Company.celebrated.its.10th.anniversary.since.

the.day.it.was.established .

.� June.30,.the.Annual.General.Meeting.of.Company.Sharehold-ers.was.held,.where.shareholders.considered.results.of.op-erations.for.2010,.unanimously.approved.the.Annual.Report.and.the.Annual.Financial.Statements,.and.the.Company’s.auditor.for.2011;.elected.members.of.the.Board.of.Directors.and.the.Audit.Commission;.approved.a.number.of.interested.party.transactions.for.the.following.corporate.year;.and.decided.on.profit.distribution .

august.� The.first.professional.skills.contest.for.the.“Best.Profes-

sional”.was.held .

.� According.to.the.decision.of.the.shareholders,.the.Company’s.authorized.capital.was.increased.60.times.by.increasing.the.nominal.value.of.all.shares .

November .� On.8.November,.the.Company’s.General.Director.took.part.

in.the.solemn.ceremony.of.commissioning.the.Nord.Stream.subsea.gas.pipeline,.with.the.Yuzhno-Russkoye.Field.being.the.foundation.of.the.resource.base.of.the.first.pipeline.run .

December .� Test.production.of.the.first.Turonian.well.was.started ..For.the.

first.time,.Turonian.gas.was.supplied.in.the.Unified.Gas.Sup-ply.System.of.the.Russian.Federation .

.� Owners.of.Company’s.ordinary.and.preferred.shares.were.paid.dividends.totalling.13 .2.billion.rubles.according.to.results.of.the.first.9.months.of.2011 .

.� The.Board.of.Directors.approved.the.Annual.Work.Pro-gramme.and.Budget.of.the.Company.for.2012 .

2012January

.� .Drawing.project.financing.to.develop.the.Yuzhno-Russkoye.Oil.Gas.Condensate.Field.was.announced.the.transaction.of.the.year.by.Thomson.Reuters.Project.Finance.International.Magazine.in.the.“Gas.Industry.Transaction”.category,.and.by.Euromoney.Institutional.Investor.plc ..Project.Finance.Maga-zine.in.the.“Transaction.of.the.Year.2011”.category .

.� The.second.compliance.audit.of.the.integrated.manage-ment.system.for.compliance.of.requirements.of.international.standards.ISO.9001:2008,.ISO.14001:2004.and.OHSAS.18001:2007.was.held .

february.� Stanislav.Tsygankov,.the.Company’s.General.Director,.and.

Ivan.Kostogriz,.Head.of.the.Administration.of.Novy.Urengoy,.signed.the.General.Agreement.for.Cooperation.between.OJSC.Severneftegazprom.and.Novy.Urengoy.City.Adminis-tration .

.� OJSC.Severneftegazprom.was.awarded.the.Deal.of.2011.prize.from.Project.Finance.Magazine.(PFM)

March .� Stanislav.Tsygankov,.OJSC.Severneftegazprom.General.

Director,.and.Vasily.Parshakov,.Head.of.Administration.of.Krasnoselkup.District,.signed.the.Agreement.for.Cooperation.between.the.Company.and.District.Administration.for.2012 .

ANNUAL REPORT 201110

OJSC.Severneftegazprom.is.currently.the.fifth.largest.producer.in.the.Gazprom.group.of.companies.with.an.annual.gas.production.of.over.25.billion.cubic.meters ..During.the.first.decade.of.its.activities,.Severneftegazprom.approached.the.landmark.of.100.billion.cubic.meters.of.accumulated.gas .

The.activity.of.OJSC.Severneftegazprom.is.of.strategic.importance.for.the.gas.industry:.the.Yuzhno-Russkoye.Gas.field.developed.by.the.company.is.a.major.component.of.the.resource.base.of.the.first.leg.of.the.Nord.Stream.pipeline,.transporting.gas.to.Germany,.France,.the.UK,.Denmark,.the.Netherlands,.Belgium,.Poland,.the.Czech.Republic.and.other.European.countries ..Moreover,.the.Company.is.the.only.Gazprom.gas.producing.enter-prise,.whose.activities.are.carried.out.via.project.financing .

OJSC.Severneftegazprom.is.the.first.company.in.Russia.to.implement.a.project.for.com-mercial.development.of.gas.deposits.in.the.Turonian.deposit ..In.December.2011,.the.first.Turonian.gas.was.supplied.to.the.gas.transport.system.of.Russia,.which.was.the.begin-ning.of.a.new.stage.of.development.for.the.gas.industry.involving.the.development.of.gas.reserves ..If.the.project.is.successful.in.developing.the.Turonian.deposits,.the.Company.will.be.able.to.produce.an.additional.5-8.billion.cubic.meters.of.gas.annually .

The.company.uses.the.latest.equipment.and.innovative.technology.to.allow.it.to.reach.the.maximum.efficiency.level.for.production.and.business.processes ..OJSC.Severneftegaz-prom.continuously.monitors.and.active.searches.for.new.technologies.and.production.solutions.that.will.not.only.bring.economic.but.also.environmental.benefits ..The.latest.projects.in.this.area.are.the.development.of.specialized.cleaning.systems.for.industrial.wastewater,.heat.recovery.and.power.generation.based.on.a.flue.gas.of.the.booster.com-pressor.station .

OJSC.Severneftegazprom.is.an.example.of.effective.cooperation.between.Russia.and.Germany ..In.recent.years,.the.Company.has.succeeded.in.building.an.efficient.model.of.interaction.and.corporate.management.taking.into.account.the.rights.and.needs.of.all.the.three.Company.shareholders ..It.manages.to.successfully.consolidate.and.use.accumu-lated.potential.and.experience.of.shareholders.in.its.business.operations .

OJSC.Severneftegazprom.now.plays.a.prominent.role.in.the.gas.market.in.Russia.and.is.recognized.as.one.of.the.most.successful.examples.of.international.cooperation.in.gas.production .

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11

REGISTRATION.DETAILS. . . . . . . . . . . . . . . . . . . . . . . .12

AUTHORIzED.CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . .13

gENE

RAL

INFO

RMAT

ION


general information

full company name:

Severneftegazprom.Open.Joint.Stock.CompanyShort.business.name.of.the.Company.in.Russian:ОАО «Севернефтегазпром» .Full.business.name.of.the.Company.in.English:Open Joint stock Company “severneftegazprom” .Short.business.name.of.the.Company.in.English:OJsC “severneftegazprom” .

legal and postal address:

legal address:.629380,.Yamalo-Nenets.Autonomous.Region,.Krasnoselkup.District,.Krasnoselkup.Village,.Lenina.street,.22 .Postal address: 629300,.Yamalo-Nenets.Autonomous.Region,.Novy.Urengoy,.p/b.1130 .e-mail.–[email protected] .

Information sources, in which the Company discloses information in compliance with requirements of securities laws.

OJSC.Severneftegazprom.website.at..http://www.severneftegazprom.com/ ..News.feed,.which.is.the.content.resource.updated.in.real.time.and.provided.to.the.Company.by.Interfax.Information.Agency..(zAO.Interfax.is.a.news.agency.for.the.securities.market).at..http://www.e-disclosure.ru/index.aspx .

state Registration Date and Registration Number

.� Certificate.No.R-16625 .16.of.registration.and.entry.in.the.state.register.of.commercial.entities.was.issued.to.OJSC.Severneftegazprom.in.connection.with.reorganization.of.Severneftegazprom.LLC.based.on.Minutes.No ..5.of.the.extraordinary.General.Meeting.of.Company.Members.dated.1.June,.2001.(previous.register.No .:.R-16447 .15.dated.31.May,.2001) ..Issued.15.June,.2001.by.the.State.registration.Chamber.at.the.Ministry.of.Justice.of.the.Russian.Federa-tion .

.� Certificate.of.the.entry.made.in.the.Unified.State.Regis-ter.of.Legal.Entities.of.the.legal.entity.registered.before.1.July,.2002,.under.Main.State.Registration.Number.1028900699035.dated.19.December,.2002.was.issued.by.

Interdistrict.Inspectorate.of.the.Ministry.of.Taxation.No.3.for.Yamalo-Nenets.Autonomous.District .

Information of the Company’s Registrar

zAO.“Specialized.Registrar.–.Gas.Industry.Shareholders’.Regis-trar”.(zAO.SR-DRAGa) .

location and postal address:.117420,.Moscow,.Novocher-emuskinskaya.street,.house.71/32,..tel.: +7.(495).719-40-44,.fax:.+7.(495)719-45-85 .

Register.maintenance.operations.licence.dated.26.December,.2003.No ..10-000-1-00291,.issued.by.the.Federal.Securities.Mar-ket.Commission.of.Russia.for.an.indefinite.term .

Core Operations

.� Yuzhno-Russkoye.Oil.Gas.Condensate.Field.development.and.facilities.construction;

.� recovery,.collection,.disposition.and.sales.of.natural.gas;

.� prospecting.and.exploration.work;

.� construction.customer.operations .

The Company holds the following main licences:

.� licence.for.exploration.and.raw.hydrocarbons.production.within.the.Yuzhno-Russkoye.mining.site.situated.in.Kras-noselkup.District.of.Yamalo-Nenets.Autonomous.District.of.Tyumen.Region ..Series.SLKh.No ..11049.NE ..Issued.22.June,.2001 ..Valid.until.31.December,.2043;

.� licence.for.operating.explosion-hazardous.production.facili-ties,.No ..EV-00-007716.(DK) ..Coming.into.force.7.August,.2007 ..Valid.until.7.August,.2012 .

Moreover,.the.Company.holds.over.10.permits.(licences).for.other.kinds.of.operations.and.is.a.member.of.Association.of.Gas.and.Oil.Industry.Constructors.Non-Commercial.Partnership ..

Company Representative Offices

OJSC.Severneftegazprom.has.representative.offices.in.Novy.Uren-goy,.Urengoy.Village,.Tyumen.and.Moscow ..The.Company.has.no.subsidiaries.and.affiliates .

Registration Details

13

general information

Authorized CapitalInformation about authorized Capital as of 31 December, 2011.

The.authorized.capital.is.presented.in.the.amount.of.nominal.value.of.ordinary.and.preferred.shares.placed.by.the.Company ..The.Com-

pany’s.authorized.capital.is.divided.into.533.330.shares.and.amounts.to.40.000.thousand.rubles.as.of.the.end.of.the.reporting.period .

No Types of SecurityPlaced Shares: Including:

Shares (pcs.) Amount at Par per Share (rub.) Paid in Full (pcs.) Paid in Part at Par (rub.)

1. The COMPaNY’s aUThORIzeD CaPITal TOTals TO: 533 330 – 533 330 NO

2. ORDINaRY shaRes 533 324 60.00 533 324 NO

2 .1 .. including.those.accounted.in.the.balance.sheet No No No No

3. PRefeRReD shaRes, INClUDINg: 6 6 NO

3 .1 . preferred.shares.of.type.A 2 2.461.620 .00 2 No

3 .1 .1 . including.those.accounted.in.the.balance.sheet No No No No

3 .2 . preferred.shares.of.type.B 3 666.692 .40 3 No


3 .3 . preferred.shares.of.type.C 1 1.076.992 .20 1 No


The.Company’s.authorized.capital.has.been.paid.in.full .

Information on Changes of the Company’s authorized Capital for the Reporting Year

Company.shareholders.(Minutes.of.the.extraordinary.General.Meeting.of.Shareholders.No ..17/2011.dated.11.May,.2011).took.the.decision.on.increasing.the.authorized.capital.by.increasing.

the.nominal.value.of.all.placed.shares.of.the.Company.(placement.method:.conversion.of.shares.in.shares.of.the.same.category.(type).with.higher.nominal.value) .

Share CategoryAs of 01.01.2011 As of 31.12.2011 Changes for 2011

Number of Shares Par value (rub.) Number of Shares Par value Number of Shares Changes per 1 Share 1, (rub.)

ORDINaRY 533 324 1.00 533 324 60.00 – + 59.00

PRefeRReD

Type.A 2 41.027 .00 2 2.461.620 .00 – +.2.420.593 .00

Type.B 3 11.111 .54 3 666.692 .40 – +.655.580 .86

Type.C 1 17.949 .87 1 1.076.992 .20 – +.1.059.042 .33


general information

Information of the Company’s Issuance securities

kind and Category (Type) of Securities

Nominal value of Each Security of the Issue, rub.

Total Number of Placed Securities of the Issue,

pcs

State Registration Number of the Issue

Date of the State Registration of the Issue

Ordinary.registered.shares 60 533.324 1-02-31375-D 05 .07 .2011

Preferred.shares.of.type.A 2.461.620 2 2-10-31375-D 03 .10 .2011

Preferred.shares.of.type.B 666.692 .4 3 2-08-31375-D 03 .10 .2011

Preferred.shares.of.type.C 1.076.992 .2 1 2-09-31375-D 03 .10 .2011

State.registration.of.all.issues.of.Company.shares.was.performed.by.the.Regional.Branch.of.the.Federal.Financial.Market.Service.in.the.Ural.Federal.District .

In.the.reporting.year,.the.Company.did.not.attract.cash.or.other.funds.as.a.result.of.securities.issuance .

The.Company’s.securities.are.not.listed.with.any.trade.organizer.on.the.securities.market.and.have.no.market.quotations .

Company shareholders holding over 5 % of Company’s Voting shares for the end of the Reporting Period

Shareholder Number of Shares, pcs. Nominal value, rub.Share in the Authorized

Capital, % Part of Ordinary Shares, %

OaO gazPROM 266 668 16 000 080.00 40.0004506028 50.00112502

Ordniary.shares 266.668 16.000.080 .00 40 .0004506028 50 .00112502

Preferred.shares,.A – – – –

Preferred.shares,.B – – – –

Preferred.shares,.C – – – –

WINTeRshall hOlDINg gMBh 133 331 13 999 912.20 34.9999997750 24.99943749

Ordniary.shares 133.328 7.999.680 .00 19 .9993252958 24 .9994

Preferred.shares,.A 2 4.923.240 .00 12 .3081771107 –

Preferred.shares,.B – – – –

Preferred.shares,.C 1 1.076.992 .20 2 .6924973685 –

e.ON RUhRgas e & P gMBh 133 331 9 999 757.20 24.9995496222 24.99943749

Ordniary.shares 133.328 7.999.680 .00 19 .9993252958 24 .99943749

Preferred.shares,.A – – – –

Preferred.shares,.B 3 2.000.077 .20 5 .0002243264 –

Preferred.shares,.C – – – –

TOTal: 533 330 39 999 749.4 100.00% 100.00%

25%

35%

40%

15

general information

Income from Ordinary and Preferred shares in the Reporting Year (Declared Dividends) Per share

№ Category (Type) of Security Amount of Income from

Securities in the Reporting Period, in Rubles per Share

1 Ordinary.share 19.800 .35

2 Preferred.share,.type.A 812.328.000 .00

3 Preferred.share,.type.B 220.000.000 .00

4 Preferred.share,.type.C 355.344.000 .00

Report of Payment of Declared (accrued) Dividends for Company shares (Draw) for Company shares (shares in the authorized Capital)

According.to.results.of.the.first.9.months.of.2011,.in.compliance.with.the.decision.of.the.extraordinary.General.Meeting.of.Share-holders.held.on.21.December,.2011.(Minutes.No ..22/2011.as.of.21.December,.2011).13,200.million.rubles.were.allocated.to.pay.dividends ..

Category (Type) of Security

Amount of Dividends Paid, TOTAL (thous. rubles)

Paid

Ordinary.shares 10.560.000 Dec-11

Preferred.shares,.type.A 1.624.656 Dec-11

Preferred.shares,.type.B 660.000 Dec-11

Preferred.shares,.type.C 355.344 Dec-11

TOTal: 13 200 000 Dec-11

As.of.31.December,.2011,.dividends.were.paid.in.full,.and.there.is.no.debt.for.dividend.payment .

Information on Changes of the Company’s Reserve fund

In.compliance.with.the.Articles.of.Association,.the.Company.established.a.reserve.fund.totalling.5.percent.of.the.authorized.capital ..Due.to.the.increase.of.nominal.value.of.shares.and.the.authorized.capital,.in.2011.the.reserve.fund.was.increased.by.1.967.000.rubles.and.amounted.to.2,000,000.rubles.as.of.31.December,.2011 ..

Financial Indicator for the Reporting Period

Amount of the Indicator for the Reporting Period, Rub.

Reserve.Fund.as.of.the.End.of.the.Period 2.000.000

Allocations.provided.in.the.Reserve.Fund 1.967.000

Amount.Used.from.the.Reserve.Fund.in.the.Reporting.Period 0

Information on Changes of the Company’s Capital surplus

Amounts.of.premium.on.capital.stock.received.from.placement.of.the.Company’s.shares.at.the.price.exceeding.their.nominal.value.are.accounted.as.part.of.the.Company’s.capital.surplus .

In.2011.the.capital.surplus.was.reduced.by.the.amount.of.39.333.000.rubles.as.its.funds.were.used.to.increase.the.charter.capital.by.increasing.the.nominal.value.of.shares ..As.of.December.31,.2011.the.capital.surplus.totaled.25.099.046.000.rubles .


CO

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MISSION.AND.STRATEGY. . . . . . . . . . . . . . . . . . . . . . .17

COMPANY.HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . .17

GEOGRAPHY.OF.OPERATIONS . . . . . . . . . . . . . . . . . . .19

SITUATION.IN.THE.INDUSTRY. . . . . . . . . . . . . . . . . . . .19

HIGH.PRIORITY.LINES.OF.BUSINESS..

AND.DEVELOPMENT.PROSPECTS . . . . . . . . . . . . . . . .20

17

Company development

Mission and StrategyOJSC.Severneftegazprom.views.its.mission.in.ensuring.long-term.and.balanced.growth.due.to.efficient.and.stable.production.and.sales.of.natural.hydrocarbons.through.use.of.state-of-the-art,.innovative.and.environmentally.friendly.technologies,.facilitating.social.and.economic.development.of.its.regions.of.presence.and.taking.care.of.its.employees .

Our.strategic.goal.is.to.become.a.technology.leader.in.producing.hard.to.recover.gas.reserves.in.the.framework.of.successful.Rus-sian.and.German.cooperation.that.unites.European.technologies.with.Russian.experience.to.achieve.maximum.efficiency.of.opera-tions,.with.reasonable.use.and.development.of.the.resource.base .

Main.Strategic.Principles.of.Operations:

.� enhancing.efficiency.of.core.operations.and.improving.per-formance.indicators;

.� improving.corporate.management.and.following.all.share-holders’.interests;

.� enhancing.transparency.of.business.operations.and.cost.control;

.� personal.liability.of.managers.for.management.decision.making;

.� minimizing.specific.negative.man-induced.impact.on.the.environment .

Principles.of.gas.production.operations:

.� building.a.reliable.foundation.for.future.stable.operations.through.preserving.and.developing.the.raw.material.base.due.to.required.scope.of.exploration.work.at.the.Yuzhno-Russkoye.licence.areas.and.possible.purchase.of.new.areas.with.prospects;

.� creating.long-term.growth.potential.–.improving.exploration.work.efficiency.due.to.thorough.selection.of.projects.and.use.of.state-of-the-art.technologies;

.� efficient.production.cost.control.due.to.use.of.state-of-the-art.technologies,.optimizing.operations.of.well.stock.and.used.field.development.systems.and.technologies;

.� applying.innovative.solutions.and.state-of-the-art.techniques.and.technologies.of.field.development.and.exploitation,.im-proving.exploration.work.and.gas.production.efficiency;

.� maximum.efficiency.in.producing.remaining.reserves.using.state-of-the-art,.innovative.and.safe.technologies.to.reduce.negative.environmental.impact .

Company history1969The.Yuzhno-Russkoye.Field.was.discovered.as.a.result.of.drilling.exploration.well.No ..6,.which,.when.tested.on.17.November,.gave.a.gas.spouter.from.Cenomanian.deposits ..Drilling.was.performed.by.the.Urengoy.oil/gas.exploratory.expedition .

1979For.the.first.time,.the.State.Commission.for.Reserves.of.Com-mercial.Minerals.under.the.aegis.of.the.Council.of.Ministers.of.the.USSR.(GKz.USSR).calculated.and.approved.reserves.of.the.Ceno-manian.and.Senonian.deposits.of.the.Yuzhno-Russkoye.Field ..Detailed.seismic.exploration.operations.were.conducted.in.Lower.Cretaceous.and.Jurassic.sediments.of.the.Yuzhno-Russkoye.Field ..Based.on.the.data.of.well.testing,.it.was.concluded.that.Lower.Cretaceous.and.Jurassic.sediments.had.prospects .

1990The.second.stage.of.prospecting.and.exploratory.drilling.of.Yuzhno-Russkoye.Field.deposits.began .

1993–1994Deposit.prospects.were.confirmed,.and.an.operating.evaluation.of.oil.and.gas.reserves.was.performed ..On.23.December,.1993,.the.state.subsoil.licence.for.the.Yuzhno-Russkoye.mining.site.came.into.force .

200115.June,.OJSC.Severneftegazprom.was.registered .22.June,.OJSC.Severneftegazprom.was.issued.a.licence.for.exploration.and.raw.hydrocarbons.production.within.the.Yuzhno-Russkoye.mining.site .

2004The.reservoir.management.plan.for.Cenomanian.(PK1).and.Seno-nian.(T1,.T2).deposits.of.Yuzhno-Russkoye.Field.was.performed.(by.OOO.TyumenNIIgiprogas) .

The.Yuzhno-Russkoye.Field.facilities.construction.project.design.was.performed.based.on.the.reservoir.management.plan.for.


Company development

Cenomanian.and.Senonian.deposits.(by.OAO.UzhNIIgiprogaz),.on.which.positive.expert.opinions.were.later.provided.in-house.and.by.the.Main.State.Expert.Review.Board .

It.was.determined.that.the.Yuzhno-Russkoye.Field.development.was.to.be.performed.using.project.financing.methods.(Resolution.of.the.Management.Board.of.OAO.Gazprom.No.51.“On.primary.measures.for.setting.into.operation.the.Yuzhno-Russkoye.field.subsurface.area.Site”) .

2006Yuzhno-Russkoye.Field.facilities.construction.operations.began .

2007Inclusion.into.the.Unified.Gas.Supply.System.of.OAO.Gazprom.was.performed.to.enable.gas.supply.from.the.Yuzhno-Russkoye.Field .

On.25.October,.at.3 .20am,.the.Yuzhno-Russkoye.Field.was.put.into.commercial.operation.with.a.daily.gas.production.rate.of..16 .8.million.m3 .

The.solemn.ceremony.of.commissioning.the.Yuzhno-Russkoye.Field.was.held.18.December,.at.the.central.office.of.OAO.Gazprom.in.the.presence.of.Dmitry.Medvedev,.First.Deputy.Chairman.of.the.Government.of.the.Russian.Federation,.Chairman.of.the.Board.of.Directors.of.OAO.Gazprom.and.Frank-Walter.Steinmeier,.Vice.Chancellor,.Minister.of.Foreign.Affairs.of.the.Federal.Republic.of.Germany .

As.a.result.of.asset.swap.transaction.between.OAO.Gazprom.and.BASF.AG,.BASF.AG’s.subsidiary,.Wintershall.Holding.AG,.was.included.into.the.Company’s.shareholders .

2009Russian.and.German.investors.signed.the.Shareholders’.Agree-ment.on.the.order.of.interaction.in.the.Yuzhno-Russkoye.Oil.and.Gas.Field.development .

One.year.ahead.of.plan,.the.Yuzhno-Russkoye.Field.design.capacity.of.gas.production.volume.of.25.billion.m3.per.year.was.reached .

As.a.result.of.asset.swap.transaction.between.OAO.Gazprom.and.E .ON.Ruhrgas.AG,.E .ON.Ruhrgas.AG’s.subsidiary,.E .ON.Ruhrgas.E.&.P.GmbH,.was.included.in.the.number.of.Company’s.shareholders .

The.Federal.Subsoil.Resources.Management.Agency.took.the.decision.to.extend.the.licence.for.exploration.and.raw.hydrocar-bons.production.within.the.Yuzhno-Russkoye.mining.site.until.31.December,.2043 .

2010In.June,.overall.gas.output.at.the.Yuzhno-Russkoye.Field.totalled.50.billion.m3 .

2011The.first.gas.was.obtained.from.development.of.the.Turonian.Gas.Deposit .

Financial.closure.of.the.deal.attracting.project.financing.totalling.1 .1.billion.EUR.was.implemented .

Commissioning.of.Nord.Stream.gas.pipeline,.with.the.Yuzhno-Russkoye.Field.being.one.of.the.components.of.its.resource.base .

OJSC.Severneftegazprom,.the.first.of.Gazprom.Group.producers,.started.pilot.gas.production.from.the.Turonian.Gas.Deposit .

19

Company development

geography of OperationsThe.Company.operates.in.the.territory.of.the.Yamalo-Nenets.Au-tonomous.District,.where.the.Yuzhno-Russkoye.Oil.Gas.Conden-sate.Field.is.situated .

The.Yuzhno-Russkoye.Field.is.situated.in.the.north-eastern.part.of.Western.Siberia.in.Krasnoselkup.District.of.Yamalo-Nenets.Autonomous.District.of.Tyumen.Region,.in.the.eastern.part.of.Taz.petroliferous.area.of.Pur.Taz.Oil.and.Gas.Province,.and.is.over..85.km.long.and.over.14.km.wide .

Human.settlements.that.are.nearest.to.the.field.are.Krasnoselkup.village,.which.is.situated.135.km.to.the.east.of.the.field,.and.Urengoy.village,.which.is.situated.90.km.to.the.west ..Three.runs.of.zapolyarnoye-Urengoy.connecting.gas.pipeline,.with.a.diameter.of.1.420.mm,.are.situated.60.km.away.from.the.northern.border.of.the.licence.area ..The.nearest.railway.station,.Korotchaevo,.is.situated.110.km.away.to.the.west.of.the.border.of.the.field ..The.nearest.river.port.and.airport.with.a.rough.airstrip.are.situated.in.Urengoy.village .

The.Company.is.fifth.in.Gazprom.Group.in.terms.of.production.volume ..As.gas.application.is.extended.and.its.consumption.grows,.gas.production.demand.is.also.increasing .

Situation in the industry

Yamalo-Nenets.Autonomous.District

Yuzhno-Russkoye.Oil.Gas.Condensate.Field


Company development

The.fuel.and.energy.complex.(FEC).plays.an.exceptional.role.in.the.country’s.economy.and.its.development ..The.fuel.and.energy.complex.provides.the.main.part.of.generating.added.value.to.the.country’s.GDP,.receipts.of.tax.and.customs.payments.to.the.state.treasury,.as.well.as.foreign.currency.receipts.from.export ..The.gas.industry.is.the.most.stable.and.efficient.segment.of.the.country’s.fuel.and.power.sector.that.enables.over.50%.of.domestic.power.consumption ..Gas.was.and.is.the.most.environmentally.friendly.and.socially.attractive.energy.source .

World.reserves.of.natural.gas.in.main.producing.regions.total.approximately.174 .14.trillion.m3 ..The.largest.producing.regions.in.the.world.are.Russia,.the.USA,.Canada,.Iran,.Norway,.Algeria.and.Qatar .

Russia’s.share.amounts.to.approximately.47 .65.trillion.m3.of.world.reserves.of.gas,.which.is.about.one.third.of.overall.gas.re-serves ..About.70%.of.Russian.reserves.belong.to.OAO.Gazprom .

According.to.results.of.2011,.the.Company.is.fifth.in.Gazprom.Group.in.terms.of.production.volume ..OJSC.Severneftegazprom.is.a.successfully.developing.producing.company ..The.share.of.natural.gas.produced.by.the.Company.during.2011.exceeds.4%.of.the.total.production.of.the.group.of.companies.of.OAO.Gazprom .

Meanwhile,.in.connection.with.the.expansion.of.the.use.of.gas.and.the.rise.in.its.consumption,.the.need.for.gas.production.is.increasing ..In.this.context,.OJSC.Severneftegazprom.is.imple-menting.a.project.to.develop.Turonian.natural.gas.deposits,.the.implementation.of.which.will.allow.an.annual.production.volume.increment.by.5-8.billion.cubic.meters.of.gas .

The.gas.production.level.planned.by.OAO.Gazprom.is.reached.due.to.existing.fields.and.new.fields.brought.into.development,.among.which.an.important.place.is.given.to.the.Yuzhno-Russkoye.Field .

Alexey.Miller,.Chairman.of.the.Management.Board.of..OAO.Gazprom,.on.congratulating.OJSC.Severneftegazprom.staff.on.the.10th.anniversary.underlined.the.serious.role.the.company.is.playing.in.the.development.of.the.industry:.“Being.an.example.of.effective.German-Russian.cooperation,.OJSC.Severneftegaz-prom.is.making.a.notable.contribution.to.the.provision.of.energy.security.in.Russia.and.Europe .

In.the.shortest.terms,.a.modern.gas.field.was.created.at.the.Yuzh-no-Russkoye.field,.which.is.one.of.the.best.in.Russia.in.terms.of.automation.and.technical.equipment ..Exemplary.implementation.of.all.environmental.requirements.and.the.high.level.of.social.respon-sibility.have.become.a.hallmark.of.OJSC.Severneftegazprom .”

high Priority Lines of Business and Development ProspectsThe.use.of.gas.is.expanding,.and.its.consumption.is.constantly.growing ..According.to.forecasts,.in.the.foreseeable.future.gas.demand.will.grow.faster.compared.to.that.of.any.other.kind.of.energy.source,.in.particular,.due.to.its.competitive.advantages.as.the.most.environmentally.clean.fuel .

The.following.are.high.priority.lines.of.business.in.OJSC.Severneftegazprom’s.operations:

.� performing.the.licence.agreement.stating.terms.and.condi-tions.of.using.the.Yuzhno-Russkoye.mining.site;

.� ensuring.planned.gas.production.level.of.25.billion.m3.per.year;

.� implementing.design.solutions.and.measures.to.control.the.Yuzhno-Russkoye.Field.development;

.� fulfilling.the.plan.of.exploration.work.and.reserves.increment;.

.� fulfilling.the.plan.of.reconstruction,.retrofitting.and.re-equip-ment.of.facilities.of.the.Yuzhno-Russkoye.Oil.and.Gas.Field.in.2011-2012;

.� developing.a.pilot.multi-branch.well,.with.a.set.of.investiga-tive.work.aimed.at.efficiently.developing.the.Turonian.(T1).Gas.Deposit.of.the.Yuzhno-Russkoye.Field.in.compliance.with.the.Project.of.Experimental.Development.of.Turonian.Gas.Deposits.of.the.Yuzhno-Russkoye.Field;

.� further.appraisal.of.producing.characteristics.of.the.Turonian.(T1).Gas.Deposit.of.the.Yuzhno-Russkoye.Field;

.� fulfilling.the.project.financing.agreement.provided.by.the.international.consortium.of.foreign.banks.and.Russian.bank.Gazprombank.(OAO);

.� successful.operation.of.the.integrated.management.system.in.Quality.and.HSES.in.compliance.with.requirements.of.international.standards.ISO.9001:2008,.ISO.14001:2004.and.OHSAS.18001:2007;

.� participating.in.social.and.economic.development.of.local.municipal.communities.–.Krasnoselkup.and.Purov.Districts,.as.well.as.in.implementing.programmes.supporting.native.minorities.of.the.northern.part.of.the.country .

A.strategic.plan.of.OJSC.Severneftegazprom’s.development,.ac-cording.to.which.current.operations.of.the.Company.are.planned,.is.the.Long-Term.Development.Plan.and.the.Budget.of.the.Yuzhno-Russkoye.Oil.and.Gas.Field.based.on.the.reservoir.management.plan.for.Cenomanian.(PK1).and.Senonian.(T1,.T2).deposits.of.Yuzhno-Russkoye.Oil.and.Gas.Field ..On.22.October,.2010.the.exist-ing.Long-Term.Development.Plan.was.amended.and.approved.by.the.Company’s.Board.of.Directors.(Minutes.of.the.meeting.of.the.Board.of.Directors.as.of.22.October,.2010.No ..34/2010) .

21

MAN

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STRUCTURE.OF.MANAGEMENT.BODIES. . . . . . . . . . . .22

THE.GENERAL.MEETING.OF.SHAREHOLDERS . . . . . . .22

THE.BOARD.OF.DIRECTORS . . . . . . . . . . . . . . . . . . . . .23

TECHNICAL.COMMITTEE.. . . . . . . . . . . . . . . . . . . . . . .24

REPORT.OF.THE.COMPANY’S.BOARD..

OF.DIRECTORS.ON.THE.WORK..

IN.PRIORITY.DIRECTIONS.OF.THE.BUSINESS. . . . . . . .25

INFORMATION.ON.THE.COMPANY’S.AUDITOR. . . . . . .27

INTERNAL.AUDIT.COMMISSION. . . . . . . . . . . . . . . . . .27


Management bodies and bodies for control of financial and business operations

Structure of Management BodiesThe general Meeting of shareholders.—.the.senior.management.body.whose.competence.includes.the.most.important.matters.of.the.Company’s.business .

The Board of Directors —.the.management.body.undertaking.general.management.of.the.Company.and.responsible.for.stra-tegic.management.aimed.at.achievement.of.objectives.and.aims.with.prospects.as.well.as.control.of.efficiency.of.the.Company’s.business .

The general Director.—.the.sole.executive.body.managing.current.activities.of.the.Company .

For.the.purpose.of.control.of.financial.and.business.operations,.the.general.meeting.of.shareholders.elects.the.Internal audit Commission.responsible.for.audit.and.analysis.of.financial..standing.of.the.Company,.operation.of.the.internal.control.system.and.verification.of.legality.of.business.operations .

For.the.purpose.of.annual.audit.of.financial.statements.prepared.in.accordance.with.Russian.Accounting.Standards.(RAS).and.

in.accordance.with.International.Financial.Reporting.Standards.(IFRS),.the.Company.engages.an.external.auditor ..The.candi-dature.of.the.independent.audit.is.annually.approved.by.the.general.meeting.of.shareholders.upon.suggestion.by.the.Board.of.Directors .

Matters.associated.with.formation,.competence.and.organization.of.activities.of.the.management.and.control.bodies.are.determined.in.the.Company’s.Charter.and.relevant.internal.documents.of.the.Company .

The.Charter.is.accessible.for.familiarization.to.all.interested.persons.on.the.official.web.site.of.the.Company.at:.http://www.severneftegazprom.com/ .

The general Meeting of ShareholdersNine.general.meetings.of.shareholders.of.the.Company.were.held.in.2011.including.an.annual.meeting.where.the.shareholders.ap-proved.the.Annual.Report.and.the.annual.accounting.statements.of.OJSC.Severneftegazprom.for.2010,.approved.the.auditor.of.the.Company.for.2011,.elected.the.Board.of.Directors.and.the.Internal.Audit.Commission,.and.considered.matters.associated.with.dis-tribution.of.profits.and.payment.of.considerations.to.members.of.the.Board.of.Directors .The.extraordinary.general.meeting.of.shareholders.dated.15.March,.2011.approved.the.project.facility.agreement.for.the.proj-ect.“Yuzhno-Russkoye.Oil.and.Gas.Deposit”.and.transactions.to.be.concluded.to.ensure.raising.of.the.project.facility .

In.addition,.shareholders.took.the.following.decisions.at.extraordinary.general.meetings.in.2011:

.� on.increase.of.the.authorized.capital.stock.of.the.Company;

.� on.amendment.of.the.current.version.of.the.Company’s.Char-ter.to.the.extent.of.change.of.rights.of.holders.of.preferred.shares.in.the.Company;

.� on.re-election.of.the.Board.of.Directors;

.� on.payment.of.dividends.following.the.results.of.9.months.of.2011;

.� on.approval.of.amendment.of.gas.supply.contracts.to.the.extent.of.price.and.volumes.of.gas.supply ..

23


The Board of DirectorsPursuant.to.the.Charter,.the.Board.of.Directors.of.the.Company.is.elected.with.8.members ..The.Board.of.Directors.is.headed.by.the.

Deputy.Chairman.of.the.Management.Board.of.OAO.Gazprom.and.General.Director.of.OOO.Gazprom.Export.–.A .I ..Medvedev .

The membership of the Board of Directors of the Company as of the end of the accounting period

No. Full name Background

1 .

alexander I. Medvedev – Chairman

of the Board of Directors

Born.on.14.August,.1955.in.Shakhtersk,.Sakhalin.Region ..Graduated.from.the.Moscow.Physical.and.Technical.Institute ..Academic.degree:.candidate.of.economic.sciences .2002–2008.–.member.of.the.Management.Board.of.OAO.Gazprom,.General.Director.of.LLC.Gazexport .Since.2008.–.Deputy.Chairman.of.the.Management.Board.of.OAO.Gazprom,.General.Director.of.LLC.Gazprom.Export .

2 . Olga P. Pavlova

Born.on.17.August,.1953.in.Vladivostok ..Graduated.from.the.Far-Eastern.State.University ..Academic.degree:.candidate.of.legal.sciences .Since.2003.–.head.of.the.Department.for.Property.Management.and.Corporate.Relations.at.OAO.GazpromSince.2004.–.member.of.the.Management.Board.of.OAO.Gazprom .

3 . Vsevolod V. Cherepanov

Born.on.25.November,.1966.in.Frunze ..Graduated.from.Lomonosov.Moscow.State.University ..Candidate.of.geological.and.mineralogical.sciences .2008–2010.–.Deputy.General.Director.–.chief.geologist.at.OOO.Gazprom.Dobycha.Nadym .Since.2010.–.member.of.the.Management.Board.of.OAO.Gazprom,.head.of.the.Department.for.mining.of.gas,.gas.condensate,.oil.at.OAO.Gazprom .

4 . alexander P. Dushko Born.on.22.June,.1964.in.Novodruzhesk ..Graduated.from.Saint-Petersburg.State.Engineering.Economic.Academy .Since.2005.–.Deputy.Head.of.the.Financial.Economic.Department.of.OAO.Gazprom .

5 . Dr. Rainer seele

Born.on.2.September,.1960.in.Bremerhaven.(Germany) ..Graduated.from.Gottingen.University.(Germany) ..Has.the.PhD.degree.in.chemistry .2000–2009.–.Executive.Officer.of.WINGAz.GmbH.und.Co .KG2002–2009.–.member.of.the.Management.Board.of.Wintershall.Holding.GmbH .2005–2009.–.Executive.Officer.of.Wintershall.Handelshaus.GmbH.and.Co ..KG,.executive.officer.of.WINGAz.Holding.GmbH .Since.2009.–.Chairman.of.the.Management.Board.of.Wintershall.Holding.GmbH,.Executive.Officer.of.Wintershall.Erdgas.Beteiligungs.GmbH .

6 . Mario Mehren

Born.on.24.November,.1970.in.Koblenz.(Germany) .Graduated.from.Saarland.University.(Germany),.specialization.“Business.Administration” .2006–2011.Head.of.the.Finance.and.Information.Management.Department.at.Wintershall.Holding.GmbH,.Managing.Director.of.Haidkopf.GmbH,.Managing.Director.of.Nordkaspische.Explorations-.und.Produktions.GmbH,.Managing.Director.of.Wintershall.Libien.Oil.and.Gas,.Managing.Director.of.Gewerkschaften.Rehling.GmbH,.Managing.Director.of.Wintershall.Russland.GmbH .2007–2011.–.member.of.the.Management.Board.of.Wintershall.AG .2009–2011.–.Managing.Director.of.Wintershall.Norwegen.Explorations-und-Produktions.GmbH .2008–2011.–.Managing.Director.of.Wintershall.Middle.East.GmbH .since.2011.–.member.of.the.Management.Board.of.Wintershall.Holding.GmbH .

7 . frank allan sivertsen

Born.on.21.August.21,.1957.in.Time.(Norway) ..Graduated.from.the.Norwegian.School.of.Economics.and.Business.Administration ..Master.of.Business.Administration.(MBA) .2005–2007.–.Managing.Director.of.E .ON.Ruhrgas.UK.North.Sea.(Great.Britain) .Since.2008.–.Managing.Director.at.E .ON.Ruhrgas.E.&.P.GmbH.(Germany) .

8 . alan James Weatherill

Born.on.17.December,.1955.in.Singapore .Graduated.from.Southampton.University ..Bachelor.of.science.specializing.in.“Engineering.Mechanics” .2005–2010.–.chief.engineer.at.Shell.Global.Solutions.B .V ..(Holland) .Since.2010.–.General.Director.of.E .ON.Ruhrgas.Exploration.and.Production.Russia.LLC



Information on changes in the membership of the Company’s Board of Directors in the accounting year

Board of Directors in 1 January – 20 December, 2011 Board of Directors in 20 December – 31 December, 2011

Alexander.I ..Medvedev. Alexander.I ..Medvedev.

Olga.P ..Pavlova Olga.P ..Pavlova

Vsevolod.V ..Cherepanov. Vsevolod.V ..Cherepanov.

Alexander.P ..Dushko. Alexander.P ..Dushko.

Dr ..Rainer.Seele Dr ..Rainer.Seele

Tiessen.Ties Mario.Mehren

Deters.Henning.Rolf Alan.James.Weatherill

Frank.Allan.Sivertsen Frank.Allan.Sivertsen

The.chairman.and.members.of.the.Board.of.Directors.did.not.hold.any.shares.in.the.Company.in.the.accounting.year ..No.transac-tions.for.acquisition.or.alienation.of.shares.in.the.Company.were.executed.in.the.accounting.year.by.members.of.the.Board.of.Directors .

Technical Committee For.the.purpose.of.preliminary.consideration.of.the.most.important.matters.covered.by.the.competence.of.the.Board.of.Directors.and.obtainment.of.recommendations.for.decision-making,.the.Company.created.the.Technical.Committee .

The.procedure.for.formation.and.operations.of.the.Technical.Committee.are.governed.by.the.Shareholders’.Agreement.of.OJSC.Severneftegazprom.and.the.Regulations.on.the.Techni-cal.Committee,.approved.by.the.Board.of.Directors .

The.Technical.Committee.consists.of.8.members.(since.No-vember.2009).who.are.appointed.by.the.Board.of.Directors ..Candidates.are.proposed.by.the.shareholders.of.the.Company.as.follows:.from.OAO.Gazprom.–.4.candidates,.and.from.Wintershall.Holding.GmbH.and.E .ON.E.and.P.GmbH.–..2.candidates.each .

The.function.of.the.Technical.Committee.consists.in.the.pro-vision.of.recommendations.for.the.Board.of.Directors.on.all.material.technical.aspects.of.the.Company’s.business.within.its.competence,.including.approval.by.the.Board.of.the.Long-Term.Development.Plan.and.Budget,.the.Draft.Additional.Field.Development.Plan,.the.Additional.Field.Development.Plan.and.Annual.Work.Programme.and.Budget.as.well.as.any.amend-ments.and/or.supplements.thereto .

Creation.of.a.committee.consisting.of.members.possess-ing.significant.experience.and.knowledge.in.special.areas.increases.efficiency.and.quality.of.work.of.the.Board.of.Directors.and.consequently.provides.efficient.mechanisms.of.control.over.activities.of.the.executive.body.of.the.Company .

25


The membership of the Technical Committee as of 31 December, 2011:

No. Full name Place of work Occupied position

1 . stanislav e. Tsygankov OJSC.Severneftegazprom General.Director

2 . Yulia V. sukhanova OJSC.Severneftegazprom Deputy.General.Director.for.Economy.and.Finance.

3 . egor a. efimochkin OAO.Gazprom Deputy.Head.of.the.Directorate.–.head.of.the.unit.for.mergers.and.acquisition.at.the.Department.of.Foreign.Economic.Activities.

4 . Nazhib a. Bilalov OAO.Gazprom Chief.Technologist.at.the.Directorate.of.Reconstruction.and.Development.of.New.Capacities.at.the.Department.of.Mining.of.Gas,.Gas.Condensate.and.Oil.

5 . Dr. Rolf Udo Norbert Pilling Wintershall.Russland.GmbH Deputy.Managing.Director.for.Matters.of.Technical.Development.and.Support.of.Joint.Ventures.

6 . hermann Ubbenjans OJSC.Severneftegazprom Deputy.General.Director.for.Development.and.Strategic.Planning.

7 . Dr. Peter Reichetseder E .ON.Ruhrgas.E&P.GMBH Managing.Director.for.Production.and.Technology.

8 . alan James WeatherillE .ON.Ruhrgas.Exploration.and.Production.Russia.LLC General.Director.

No.members.of.the.Technical.Committee.hold.shares.in.the.Company ..No.transactions.for.acquisition.or.alienation.of.shares.in.the.Company.were.executed.in.the.accounting.year.by.members.of.the.Technical.Committee .

The following persons were also members of the Technical Committee in the accounting year:

Full Name Occupied position

evgeny M. zeigman until 04.02.2011 Deputy.General.Director.–.chief.engineer.of.OJSC.Severneftegazprom

alexander P. Popov, until 22.04.2011 General.Director.of.OJSC.Severneftegazprom.

alexander a. Muzichenko, until 05.07.2011 Deputy.General.Director.for.Economy.and.Finance.at.OJSC.Severneftegazprom.

Robert frimpong, until 10.10.2011 Vice.President.for.Technology.at.Wintershall.Holding.GmbH

Report of the Company’s Board of Directors on the Work in Priority Directions of the BusinessThe.Board.of.Directors.plays.the.most.important.role.in.ensuring.share-holders’.rights,.formation.of.the.development.strategy.of.the.Company.and.ensuring.its.successful.financial.and.economic.operations ..

The.Board.of.Directors.assesses.the.performance.of.the.Company.in.priority.directions.of.business.in.the.accounting.year.as.suc-cessful.in.general .

17.meetings.of.the.Board.of.Directors.took.place.in.2011.which.considered.95.matters.in.various.directions.of.the.Company’s.business .

The.determinant.decisions.in.the.accounting.year.were.deci-sions.taken.by.the.Board.of.Directors.to.arrange.for.long-term.project.facilities.for.development.of.the.Yuzhno-Russkoye.



Deposit ..The.following.matters.were.addressed.by.the.Board.of.Directors.within.the.framework.of.preparation.for.raising.financing:

.� on.approval.of.transactions.under.the.competence.of.the.Board.of.Directors.to.be.concluded.to.ensure.ef-fectiveness.of.the.project.facility.agreement.in.relation.to.the.project.of.the.Yuzhno-Russkoye.Oil.and.Gas.Deposit;

.� on.convocation.of.an.extraordinary.general.meeting.of.share-holders;

.� on.recommendation.that.the.general.meeting.of.sharehold-ers.should.approve.the.project.facility.agreement.in.relation.to.the.project.of.the.Yuzhno-Russkoye.Oil.and.Gas.Deposit.and.transactions.to.be.concluded.to.ensure.effectiveness.of.the.project.facility.agreement .

The.Board.of.Directors.of.OJSC.Severneftegazprom.addressed.important.matters.associated.with.current.operations.of.the.Company:

.� on.re-election.of.the.General.Director.due.to.early.termination.of.powers.upon.agreement.of.the.parties;

.� on.consideration.of.proposals.of.shareholders.as.to.candi-dates.to.the.Company’s.Board.of.Directors.for.voting.at.the.general.meeting.of.shareholders;

.� on.approval.of.the.annual.programme.of.works.and.budget.of.the.Company.for.2012;

.� on.approval.of.related-party.transactions;

.� on.appointment.of.members.of.the.Committee.for.Technical.Matters;

.� on.determination.of.the.amount.of.consideration.for.auditors;

.� on.approval.of.decisions.on.issue.of.shares.and.Reports.on.results.of.share.issues;

.� on.convocation.of.extraordinary.general.meetings.of.share-holders .

The.Board.of.Directors.considered.the.following.matters.within.the.framework.of.preparation.for.extraordinary.general.meetings.of.shareholders:

.� on.determination.of.the.gas.sale.price.for.the.second.half.of.2011.and.the.first.half.of.2012;

.� on.recommendations.to.the.general.meeting.of.sharehold-ers.as.regard.to.increase.of.the.authorized.capital.stock.and.amendment.of.the.Charter.to.the.extent.of.rights.granted.by.preferred.shares;

.� on.the.recommendation.for.the.general.meeting.of.sharehold-ers.to.raise.loans.for.repayment.of.indebtedness.associated.with.a.multi-currency.loan.raised.by.the.Company.in.2010.from.a.group.of.banks;

.� on.recommendations.as.to.amount.of.dividends.on.the.Com-pany’s.shares.and.the.procedure.for.payment.thereof.following.the.results.of.the.first.9.months.of.the.financial.year.of.2011 .

Consideration of Members of the Board of Directors

The.total.considerations.paid.in.2011.to.members.of.the.Board.of.Directors.following.the.results.of.work.in.2010.amounted.to.3,936,250.rubles .

executive BodyAccording.to.the.Company’s.Charter,.there.is.no.collegial.execu-tive.body.of.the.Company.(Management.Board) ..The.sole.execu-tive.body.of.the.Company.is.the.General.Director .

Biographical Information of the general Director

stanislav TsygankovTerm.of.office:.from.25 .02 .2011.to.the.present

Born.on.27.July,.1966.in.Moscow .Graduated.from.the.Plekhanov.Russian.Economic.Academy,.specialization.“Finance.and.Credit” .

Positions.occupied.in.the.5.recent.years:

.� 2002–2011.–.Head.of.the.International.Business.Department.at.OAO.Gazprom .

.� since 25 february, 2011.–.the.General.Director.of.OJSC.Severneftegazprom .

The.labour.remuneration.of.the.Company’s.General.Director.is.stipulated.in.the.Agreement.on.Labour.Remuneration.being.an.ap-pendix.to.the.employment.agreement.which.also.provides.the.list.of.social.guarantees.and.compensations ...

The.General.Director.does.not.hold.any.shares.in.OJSC.Severneft-egazprom .

No.transactions.for.acquisition.or.alienation.of.shares.in.the.Company.were.executed.in.the.accounting.year.by.the.General.Director .

27


The.following.persons.fulfilled.the.functions.of.the.sole.executive.body.in.the.accounting.year:

.� alexander P. Popov Term.of.office:.until.18 .01 .2011.

.� alexander a. Dorofeev Term.of.office:.from.28 .01 .2011.to.24 .02 .2011..(temporary.fulfilment.of.duties) .

Information on the Company’s AuditorThe auditor of the Company.is.JSC.PricewaterhouseCoopers.Audit.(JSC.PwC.Audit)

address:.10.Butyrsky.Val,.Moscow.125047,.Russian.Federation;

Certificate.of.state.registration.of.the.joint.stock.company..No ..008 .890.issued.by.the.Moscow.Registration.Chamber.on.28 .02 .1992 .

Certificate.of.entry.of.a.record.into.the.Unified.State.Register.of.Le-gal.Entities.registered.before.01 .07 .2002.under.No ..1027700148431.dated.22 .08 .2002,.issued.by.the.Interdistrict.Inspectorate.of.the.Ministry.of.Taxation.of.Russia.No ..39.for.Moscow .

Member.of.the.Non-Commercial.Partnership.“Audit.Chamber.of.Russia”.(NP.APR),.a.self-regulating.organization.of.audi-

tors.–.registered.number.870.in.the.register.of.members.of.NP.APR .

The.audit.was.approved.by.the.general.meeting.of.shareholders.of.the.Company.on.30 .06 .2011 .

Internal Audit CommissionThe.Internal.Audit.Commission.is.a.permanent.internal.control.body,.independent.of.officials,.management.bodies.and.manage-ment.of.the.Company .

In.its.work,.the.Internal.Audit.Commission.is.guided.by.the.Federal.Law.“On.Joint.Stock.Companies”,.the.Charter.of.the.Company.and.Regulations.on.the.Internal.Audit.Commission ..Pursuant.to.the.Company’s.Charter,.the.Internal.Audit.Commission.consists.of.3.members .

Membership of the Internal audit Commission of the Company as of the end of the accounting Period

Full name Place of work Occupied position

Yulia N. antonovskaya

OAO.GazpromChief.Economist.of.the.Organizational.Directorate.at.the.Department.of.Internal.Audit.of.the.Management.Apparatus.

Judith BussE .ON.Ruhrgas.E.and.P.GmbH Chief.Financial.Officer.

larissa JanzWintershall.Russland.GmbH

Head.of.the.unit.for.finance.and.information.technologies.

No.members.of.the.Internal.Audit.Commission.hold.shares.in.the.Company ..No.transactions.for.acquisition.or.alienation.of.shares.in.the.Company.were.executed.in.the.accounting.year.by.mem-bers.of.the.Internal.Audit.Commission .


THE.STATUS.OF.THE.RAW.MATERIAL.BASE. . . . . . . . .29

GEOLOGICAL.EXPLORATION. . . . . . . . . . . . . . . . . . . . .31

PRODUCTION.DRILLING . . . . . . . . . . . . . . . . . . . . . . . .31

GAS.PRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

GAS.SALES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

k

Ey P

ERFO

RMAN

CE

IND

ICAT

ORS

29

key performance indicators

The Status of the Raw Material BaseThe.Company.possesses.licence.SLKh.No ..11049.NE.for.geologi-cal.exploration.and.mining.of.hydrocarbon.raw.materials.within.the.Yuzhno-Russkoye.subsoil.area ..The.area.includes.three.

deposits:.Yuzhno-Russkoye,.introduced.into.development.in.2007,.and.Yarovoye.and.zapadno-Cheselskoye,.accounted.for.in.the.governmental.balance.sheet.as.under.exploration ..

Description of the raw material base as of the end of the accounting period:

Deposit

Reserves of hydrocarbon raw materials as of 31.12.2011

gas, bln. m3 Condensate, mln. tons Oil, mln. tons

ABC1

C2

ABC1

C2

ABC1

C2

Yuzhno-Russkoye.Deposit 937.903 162.017 3.823 9.288 30.894

Yarovoye.Deposit 2.78 10.148 0.212 0.993 0.057 1.203

zapadno-Cheselskoye.Deposit 6.705 1.131 0.043

TOTal: 947 388 173 296 0 255 4 816 9 345 32 097

All.licence.liabilities.of.the.Company.regarding.geological.study.of.subsoil.were.fulfilled.in.full .

flow of reserves of the categories aBC1 and C2 in the accounting period

hydrocarbons

Reserves as of 01.01.2011

Changes in reserves in 2011 Reserves as of 31.12.2011

Mining + loss

Exploration Re-evaluation Transfer

АВС1

С2

АВС1

С2

АВС1

С2

АВС1

С2

АВС1

С2

Oil.(thousand.tons) 9.617 26.405 –272 +5692 9.345 32.097

Gas.(bln ..m3) 831.900 208.880 25.667 +141155 –35.584 947.388 173.296

Condensate.(thousand.tons) 261 2482 –6 +2334 255 4816



The Development of the Cenomanian gas reservoir. The comparative characteristics of design and actual indicators:

Indicators2011

Design Actual

Gas.extraction,.bln ..m3/year 25 .060 25 .655

Aggregate.gas.extraction,.bln ..m3 90 .990 90 .265

Gas.extraction.from.the.beginning.of.balance-sheet.reserves,.% 13 .68 13 .57

Gas.extraction.in.2011.from.the.beginning.of.balance-sheet.reserves,.% 3 .77 3 .86

Introduction.of.wells,.units: 1 –

.–.mining – –

.–.supervisory 1.(well.2n) –

The.fund.of.wells.as.of.the.end.of.the.year,.units: 162 161

.–.mining, 142 142

.including.active.ones 142 142

.–.supervisory 18 17

.–.absorbing 2 2

Power.of.the.Booster.Compressor.Station.(Booster.Pump.Station) 4*16MW 4*16MW

Well.utilization.rate 0 .95 0 .98

Utilization.rate.of.well.stock. 1 1

31


geological ExplorationGeological.exploration.in.the.territory.of.the.Yuzhno-Russkoye.licence.area.was.carried.out.in.2011.according.to.the.specified.geological.terms.of.reference.for.execution.of.geological.explora-tion,.as.approved.by.the.deputy.Chairman.of.the.Management.Board.of.OAO.Gazprom.A .G ..Ananenkov.on.24 .01 .2011.with.amendments.as.of.26 .12 .2011 .

The.works.were.carried.out.in.the.following.three.main.directions:.

.� topical.and.scientific-research.works;

.� seismic.research.of.the.territory;

.� environmental.activities.and.liquidation.of.unfavourable.conditions.of.construction .

No.geological.exploration.wells.were.built.in.2011,.and.there.were.no.tests.of.facilities.in.the.column .

The.comprehensive.processing.and.interpretation.of.results.of.seismic.exploration.works.on.the.basis.of.common.depth.point.method.3D.in.the.Yuzhno-Russkoye.licence.area.were.completed.in.2011.to.a.volume.of.1,462 .12.km2.and.the.field.stage.and.office.processing.of.detailed.seismic.research.with.high.density..to.a.volume.of.15 .2.km2.full-fold.survey.were.completed .

The.works.for.environmental.protection.and.liquidation.of.unfa-vourable.conditions.of.construction.were.completed,.and.6.wells.from.the.aged.geological.exploration.fund.were.liquidated:.Nos ..3,.15,.20,.23,.24,.25 .

The.works.for.re-calculation.of.reserves.of.free.gas.in.layers.PK1,.T1-2.and.the.works.for.calculation.of.hydrocarbon.reserves.in.Lower.Cretaceous.and.Jurassic.sediments.in.the.Yuzhno-Russkoye.licence.area.were.completed.(work.transferred.from.2009),.and.the.reports.underwent.expertise.and.were.approved.by.the.FGU.State.Commission.for.Mineral.Reserves.(minutes.of.State.Committee.for.Reserves.Rosnedra.No ..2500-dsp.dated.19 .08 .2011) .

expeRimenTAl Two-fAce well no. 174 dRilled inTo

The TuRoniAn gAs deposiT wAs commissioned in

decembeR 2011.

The.geological.terms.of.reference.did.not.plan.any.increase.in.reserves.for.2011,.however,.following.the.results.of.calculation.of.hydrocarbon.reserves.at.the.Yuzhno-Russkoye.and.Yarovoye.deposits.and.recalculation.of.reserves.of.free.gas.in.the.layer.PK1.and.Turonian.sediments.of.the.Yuzhno-Russkoye.deposit,.the.fol-lowing.changes.in.reserves.were.observed:

Deposit

Increase in reserves, category С1

No. of the minutes of the State

Committee for Reserves, date of

approval

gas, bln. m3

Oil, mln., tons

Conden-sate, mln.

tons

Yuzhno-Russkoye 139 .842 0 .572 0

No ..2500-dsp.dated.19 .08 .2011.Yarovoye 1 .313 –0 .844 –0 .006

TOTal 141.155 –0.272 –0.006

Production DrillingIt.was.planned.to.drill.1,460.meters.of.rock.and.complete.con-struction.of.2.wells.in.the.accounting.period ..

As.of.the.end.of.the.accounting.period:.

.� supervisory.single.well.No ..2n.was.completed ..The.length.of.heading.over.the.accounting.period.is.1,020.meters;.

.� production.two-face.well.No ..174.was.completed.and.com-missioned ..The.length.of.the.heading.is.1,647.meters;

.� the.total.heading.length.is.2.667.meters .



Indicators

Scope of works in physical terms: heading –meters, wells – units

2010 2011 Deviation from 2010,

+,–plan report

heading, meters 5307 1460 2667 –2640

including.gas 5307. 1460 2667 –2640.

number.of.wells.restored.by.the.horizontal.hole.

Number of completed wells, units 5 2 2 –3

including.gas.wells 5 2. 2. –3.

number.of.wells.restored.by.the.horizontal.hole. – – – –

number.of.wells.withdrawn.from.production.in.progress. – – – –

Number of wells accounted for in the balance sheet from among completed wells, units

5 2 1 –4

including.gas .5 2 1 –4.

number.of.wells.restored.by.the.horizontal.hole. – – – –

number.of.wells.withdrawn.from.production.in.progress. – – – –

Production two-face well No. 174Built.within.the.framework.of.experimental.production.develop-ment.of.the.Turonian.gas.deposit ..

The.well.consists.of.two.holes,.the.main.–.horizon.T2.and.side.–.lateral.T1 ..The.main.hole.was.drilled.to.the.depth.of.1,806.meters,.the.depth.of.running.of.an.extraction.column.with.the.diameter.of.245.mm.–.1,776.meters,.includes.a.filter.with.the.diameter.of.245.mm ..The.lateral.hole.is.drilled.to.the.depth.of.1,491.m,.the.depth.of.running.of.the.tail.filter.with.the.diameter.168.mm.is.1,468.m ..

The.main.hole.of.the.multi-face.well.(MGW).contains.a.well.completion.system.produced.by.Halliburton.designed.for.separate.operation.of.facilities.by.separate.columns.of.the.production.tub-ing.with.the.diameter.of.73.mm ..A.double.string.of.the.production.tubing.was.inserted.into.the.well;.this.was.done.for.the.first.time.in.the.area.of.the.Far.North ..

A.double.spider,.double.escalator.and.other.auxiliary.equipment.designed.and.produced.by.CJSC.NPP.SibBurMash.were.used.for.execution.of.that.operation ..

The.string.of.the.production.tubing.of.the.main.hole.was.equipped.with.a.packer.above.the.interval.of.the.production.facility ..This.system.of.parallel.tubing-string.completion.produced.by.Halli-burton.enables.to.carry.out.development.and.exploration.opera-tions.in.each.hole.of.the.multi-face.well.separately.and.provides.separate.access.through.the.production.tubing.to.the.main.and.lateral.holes.of.the.well.in.the.course.of.development.and.further.production ..

In.order.to.hang.casing.pipes,.insulate.the.ring.space.between.them.and.control.pressure.therein,.insulate.the.well.mouth,.hang.the.double.string.of.the.production.tubing,.control.and.regulate.the.working.regime.of.the.wells,.override.and.direct.extracted.products.to.a.gas.flowline.and.execution.of.various.technological.operations,.a.dual.production.treble.was.de-signed,.produced.by.AK.Korvet.and.successfully.applied.for.the.first.time.in.Russia .

In.addition,.a.top.drive.drill.rig.was.used.within.the.framework.of.this.project.for.the.purpose.to.comply.with.special.requirements ..

33

gas SalesAll.volumes.of.gas.mined.by.the.Company.are.sold.pursuant.to.long-term.gas.supply.contracts.to.the.following.consumers:

.� 40%.–.OJSC.Gazprom;

.� 35%.–.CJSC.Gazprom.YRGM.Trading;

.� 25%.–.CJSC.Gazprom.YRGM.Development.

gas sales in the accounting period::

Purchaser Sale volume, million m3 Changes in the

accounting period

2011 2010 mln. m3 in %

OAO.Gazprom 10.232 .5 10.130 .9 +.101 .6 +.1%

CJSC.Gazprom.YRGM.Trading 8.953 .4 8.864 .5 +.88 .9 +.1%

CJSC.Gazprom.YRGM.Development 6.395 .3 6.331 .8 +.63 .5 +1%

TOTal 25 581.3 25 327.3 + 254.0 + 1%

Gas.purchasers.mark.irreproachable.fulfilment.of.contractual.conditions.both.in.terms.and.quality.of.supplied.products .


OAO.Gazprom

CJSC.Gazprom.YRGM.Trading

CJSC.Gazprom.YRGM.Development

40%

35%

25%

gas sales

gas Production.� The.plan.of.gas.mining.for.2011.is.25,060.bln ..m3 ...� The.actual.gross.output.in.2011.was.25,651.bln ..m3.of.gas ...� The.plan.was.fulfilled.by.102 .4%.(+.591.mln ..m3) .

Indicator Measure 2010 report2011 Deviation 2011 /2010

plan report +,– %

Gross.gas.production. mln ..m3 25.358 .98 25.060 .00 25.651 .28 + .1 .2

including.gas.for.technical.needs 30.532 120.223 68.239 + .123 .50

Mines.volume.of.gas.condensate thousand.tons – – – – –

Mined.volume.of.oil – – – – – –

i ThAnk oJsc seveRnefTegAzpRom foR veRy cAReful obseRvAnce of The TeRms of gAs supply conTRAcTs. quAliTy of gAs TReATmenT AT fAciliTies of oJsc seveRnefTegAzpRom in The yuzhno-Russkoye oil And gAs deposiT is veRy impoRTAnT foR us, cJsc gAzpRom yRgm TRAding.

quAliTy of gAs supplied To The unified gAs TRAnspoRT sysTem of RussiA And Received by ouR euRopeAn consumeRs depends To A lARge exTenT on The woRk And pRofessionAlism of speciAlisTs of oJsc seveRnefTegAzpRom.

i wish ThAT The TeAm of oJsc seveRnefTegAzpRom would mAinTAin fuRTheR on iTs high sTAndARd of woRk And quAliTy of pRoduced goods!

besT RegARds,

e.a. efimoChkin

geneRAl diRecToRcJsc gAzpRom yRgm TRAding


KEY.INDICATORS.OVER.2009–2011.. . . . . . . . . . . . . . .35

IMPLEMENTATION.OF.THE.ANNUAL..

PROGRAMME.OF.WORKS.AND.BUDGET..

OF.THE.COMPANY.IN.2011.. . . . . . . . . . . . . . . . . . . . . .35

ANALYSIS.OF.CHANGES..

IN.THE.ASSET.STRUCTURE.OF.THE.COMPANY.. . . . . .36

ANALYSIS.OF.CHANGE.IN.THE.LIABILITIES..

STRUCTURE.OF.THE.COMPANY.. . . . . . . . . . . . . . . . . .38

ANALYSIS.OF.CHANGE..

IN.INDICATORS.OF.THE.PROFIT..

AND.LOSS.STATEMENT.FOR.2011 . . . . . . . . . . . . . . . .40

ANALYSIS.OF.CASH.FLOW . . . . . . . . . . . . . . . . . . . . . .41

ANALYSIS.OF.DEBT.LIABILITIES. . . . . . . . . . . . . . . . . .42

ANALYSIS.OF.KEY.FINANCIAL.RATIOS.. . . . . . . . . . . . .43

FI

NANC

IAL

RESU

LTS

35

Financial results

key Indicators over 2009–2011 Indicator, million rubles 2011 2010 2009

Change in %

2011 /2010 2010/2009

Sale.revenues 26.038 36.902 16.891 29% +.118%

Sale.profit 9.365 24.578 6.741 –.62% +.265%

Net.profit 5.786 19.304 1.424 –.70% +.1256%

Net.cash.from.operations..(current.operations). 13.796 23.322 11.745 –.41% +.100%

Net.assets 34.834 42.248 22.944 –.18% +.84%

Implementation of the Annual Programme of Works and Budget of the Company in 2011

Наименование2011 г.

отклонения факт / план 2011

план факт млн. руб. %

aNNUal PROgRaMMe Of WORKs

Gross.gas.production,.thousand.m3 25.060.000 25.651.278 591.278 2 .4%

Volume.of.marketable.gas,.thousand.m3 24.937.855 25.581.326 643.471 2 .6%

Total.marketable.gas.shipped,.thousand.m3 24.937.855 25.581.326 643.471 2 .6%

OAO.Gazprom 9.975.142 10.232.530 257.388 2 .6%

CJSC.Gazprom.YRGM.Trading. 8.728.249 8.953.464 225.215 2 .6%

CJSC.Gazprom.YRGM.Development 6.234.464 6.395.331 160.867 2 .6%

TOTal INCOMe, MIllION RUBles 25 374 26 038 664 2.6%

Total.revenues.from.gas.sales 25.374 26.038 664 2 .6%

OAO.Gazprom 10.149 10.415 266 2 .6%

CJSC.Gazprom.YRGM.Trading. 8.881 9.113 232 2 .6%

CJSC.Gazprom.YRGM.Development 6.343 6.510 167 2 .6%

TOTal exPeNDITURe, MlN. RUBles 19 584 18 787 –797 –4.1%

Materials 275 323 48 17 .5%

Gas.for.internal.needs. – –. –. –.

Purchased.energy 3 3 0 0 .0%

Expenses.for.salaries,.social.benefits.and.payments. 1.509 1.448 –61 –4 .0%

Insurance.contributions 129 154 25 19 .4%


Financial results

Наименование2011 г.

отклонения факт / план 2011

план факт млн. руб. %

Depreciation.(according.to.the.Russian.Accounting.Standards). 5.705 5.888 183 3 .2%

Lease.of.fixed.assets 107 118 11 10 .3%

Leasing . . . .

Taxes.and.other.compulsory.charges. 7.017 7.139 122 1 .7%

Mineral.extraction.tax 5.939 6.079 140 2 .4%

Other.taxes.covered.by.the.cost.of.products.(works,.services). 1.078 1.060 –18 –1 .7%

Geological.exploration.(contracting) 211 165 –46 –21 .8%

Costs.under.insurance.contracts 290 276 –14 –4 .8%

Overhaul.(contracting.without.MTR) 13 0 –13 –100%

Miscellaneous.expenses 4.324 3.273 –1.051 –24 .3%

Legal.and.advisory.services 186 143 –43 –23 .1%

Audit 11 10 –1 –9 .1%

Services.for.technical.maintenance.and.current.repair. 143 125 –18 –12 .6%

Geophysical.services 102 45 –57 –55 .9%

Other.services.of.external.organizations 582 474 –108 –18 .6%

Interest.and.lump-sum.payments.on.credits.and.loans. 2.637 2.340 –297 –11 .3%

Other 664 136 –528 –79 .5%

PROfIT (lOss) BefORe Tax 5 674 7 429 1 755 30.9%

.Current.profit.tax.(not.covered.by.Cts) 1.432 566 –866 –60 .5%

Expenses.not.subject.to.taxation.(accounted.for.in.2 .5 .4,.2 .5 .6.and.2 .5 .13 .7.for.inclusion.in.Cts) 443 294 –149 –33 .6%

CaPITal INVesTMeNTs 2 007 1 063 –944 –47.0%

Analysis of Changes in the Asset Structure of the Company

Line of form No. 1 Line number

Changes in natural terms Change of specific weight in assets

As of the end of the period

As of the beginning of the period

Change over the period Specific weight (y)

in thousand rubles

%As of the end of the period


Change of specific weight y

I. NON-CURReNT asseTs

Intangible.assets 1110 1.567 317 +1.250 394% 0% 0% 0%

Results.of.research.and.development 1120 11.094 – +11.094 100% 0% 0% 0%

Fixed.assets.including 1130 55.415.570 60.286.972 –4.871.402. –8% 68 .4% 67 .2% +1 .2%

Fixed.assets 1131 54.332.838 59.698.128 –5.365.290 –9% 67 .1% 66 .5% +0 .6%

37

Financial results






in thousand rubles




Capital.investments.in.progress 1134 1.082.732 588.844 +493.888 +83% 1 .3% 0 .7% +0 .6%

Deferred.tax.assets 1160 129.300 1.204.177 –1.074.877 –89% 0% 1 .3% –1 .3%

Other.non-current.assets,.including. 1170 1.915.797 1.972.781 –56.984 –3% 2 .4% 2 .2% +0 .2%

Expenses.for.development.of.natural.resources 1171 968.635 966.029 +2.606 +0 .3 1 .2% 1 .1% +0 .1%

Total.section.I. 1100 57.473.328 63.464.247 –5.990.919 –9% 71% 70 .7% +0 .3%

II. CURReNT asseTs

Stocks,.including 1210 673.532 .1.084.216 –410.684 –39% 0 .8% 1 .2% –0 .4%

Raw,.other.materials.and.other.similar.valuables. 1211 667.359 1.079.128 –411.769 –38% 0 .8% 1 .2% –0 .4%

Finished.products.for.resale. 1214 6.173 5.088 +373 +7% 0% 0% 0%

VAT.on.acquired.valuables. 1220 53 5.926 –5.873 –99% 0% 0% 0%

Receivables.including. 1230 5.052.553 7.522.116 –2.469.563 –33% 6 .2% 8 .4% –2 .2%

Receivables.due.after.12.months. 1231 430.643 570.114 –139.471 –25% 0 .5% 0 .6% –0 .1%

Receivables.due.within.12.months.including 1235 4.621.910 6.952.002 –2.330.092 –34% 5 .7% 7 .8% –2 .1%

Purchasers.and.customers 1236 2.748.962 5.634.799 –2.885.837 –51% 3 .4% 6 .3% –2 .9%

Advances.issued 1238 247.036 247.339 –303 –0 .1% 0 .3% 0 .3% 0%

Other.receivables 1239 1.625.912 1.069.864 +556.048 +52% 2% 1 .2% +0 .8%

Financial.investments 1240 – 10.750.000 –10.750.000 –100% 0% 12% –12%

Cash,.including. 1250 17.575.679 6.577.805 +10.997.874 167% 22% 7 .3% +14 .7%

Settlement.accounts 1252 12.767.517 8.050 +12.759.467 – 16% 0% +16%

Currency.accounts 1253 516 182.472 –181.958 100% 0% 0 .2% –0 .2%

Other.cash. 1259 4.807.646 6.387.283 –1.579.637 –25% 6% 7 .1% –1 .1%

Other.current.assets,.including. 1260 168.110 363.320 –195.210 –54% 0 .2% 0 .4% –0 .2%

Expenses.for.development.of.natural.resources 1261 96.972 279.741 –182.769 –65% 0 .1% 0 .3% –02%

Total section II 1200 23 469 927 26 303 383 –2 833 456 –11% 29% 29.3% –0.3%

BalaNCe (lines 1100 + 1200) 1600 80 943 255 89 767 630 –8 824 375 –10% 100% 100% –

Assets.of.the.balance.sheet.have.the.following.struc-ture.as.of.the.end.of.the.accounting.period:.

.� non-current.assets:.71,0%.of.the.balance.sheet.grand.total

.� current.assets:.29,0%.of.the.balance.sheet.grand.total

The.structure.of.non-current.assets.as.of.31 .12 .2011 .

.� fixed.assets:.94,5%..(or.67,1%.of.the.balance.sheet.grand.total)

.� capital.investments.in.progress:.1,9%..(or.1,3%.of.the.balance.sheet.grand.total)

.� other.non-current.assets:.3,6%.(or.2,5%.of.the.balance.sheet.grand.total)


Financial results

The.structure.of.current.assets.as.of.31 .12 .2011:

.� cash:.74,9%.(or.21,7%.of.the.balance.sheet.grand.total)

.� receivables:.21,5%.(or.6,3%.of.the.balance.sheet.grand.total)

.� reserves:.2,9%.(or.0,8%.of.the.balance.sheet.grand.total)

.� others:.0,7%.(or.0,3%.of.the.balance.sheet.grand.total)

Over.the.accounting.period.assets.of.the.Company.reduced.by.8 824 375 thousand rubles.(by.10%).and.amounted.to.80.943.255.thousand.rubles ..

The.amount.of.assets.reduced.due.to.the.following.items.of.the.balance.sheet.(without.limitation):

.� fixed assets.–.by.5 365 290 thousand rubles.or.by.9%,.mainly.due.to.assessed.depreciation.over.the.accounting.period;.

.� Receivables.–.by.2 469 563 thousand rubles.or.33% ..Reduction.of.receivables.due.after.12.months.after.the.ac-counting.date.(long-term.receivables).by.139.471.thousand.rubles.(or.25%).is.conditioned.by.repayment.by.OJSC.Gazprom.of.a.part.of.the.debt.(penalty).for.failure.to.take.

gas.in.2009 ..According.to.signed.undertakings.within.the.framework.of.the.gas.supply.contract,.the.total.amount.of.the.penalty.is.payable.within.5.years.from.01 .01 .2011.to.31 .12 .2015 ..Reduction.of.receivables.due.within.12.months.after.the.accounting.date.(short-term.receivables).by.2.330.092.thousand.rubles.(or.34%).is.mainly.due.to.reduction.of.the.gas.sale.price.in.2011.and.accordingly.reduction.of.sale.revenues.and.monthly.receivables.of.purchasers.for.sup-plied.products;

.� Reserves.–.by.410 684 thousand rubles.or.39% ..Reduction.of.this.item.is.mainly.due.to.assessment.of.a.provision.at.the.amount.of.380 .067.million.rubles.for.depre-ciation.of.inventories,.accrued.following.the.results.of.the.in-ventory.held.in.2011.and.the.report.on.independent.appraisal.of.the.market.value.of.inventories,.not.intended.for.use.in.production.operations.of.the.Company ..Such.inventories.are.mainly.presented.by.construction.materials.purchased.in.2006-2009.which.were.not.used.for.construction.of.facilities.at.the.Yuzhno-Russkoye.Oil.and.Gas.Deposit.due.to.amend-ments.to.design.and.technical.solutions ..

Analysis of Change in the Liabilities Structure of the Company






in thousand rubles




III. eQUITY aND PROVIsIONs

Authorized.capital.stock. 0 40.000 667 +39.333 +5.897% 0 0 –

Re-evaluation.of.non-current.assets 1340 47.142 47.142 – – 0 .1 0 .1 –

Additional.capital 1350 25.099.046 25.138.379 +39.333 –0 .2% 31% 28% +3%

Reserve.capital 1360 2000 33 +1.967 +5.961% 0% 0% –

Undistributed.profit 1370 9.645.859 17.062.086 –7.416.227 –43% 12% 19% –7%

Total section III 1300 34 834 047 42 248 307 –7 414 260 –17.6% 43% 47% –4%

IV. lONg-TeRM lIaBIlITIes

Borrowed.funds.including 1410 33.004.231 – +33.004.231 +100 41% 0% +41%

Bank.loans.repayable.after.12.months. 1411 33.044.231 – +33.004.231 +100 41% 0% +41%

Deferred.tax.liabilities 1420 3.741.398 3.738.715 +2.683 +0 .1% 4 .4% 4 .2% +0 .2%

39

Financial results






in thousand rubles




Total section IV 1400 36 745 629 3 738 715 +33 006 914 +883% 45.4% 4.2% +41.2%

V. shORT-TeRM lIaBIlITIes

Borrowed.funds.including 1510 6.902.967 40.849.518 –33.946.551 –83% 8 .5% 45 .5% –37%

Bank.loans.repayable.within.12.months. 1511 – 40.849.518 –40.849.518 –100% 0% 45 .5% –45 .5%

Current.part.of.long-term.loans.and.credits. 1513 6.902.967 – +6.902.967 +100% 8 .5% 0% +8 .5%

Payables.including 1520 2.157.728 2.653.456 –495.728 –18 .7% 2 .7% 3% –0 .3%

Suppliers.and.contractors 1521 231.606 362.203 –130.597 –36% 0 .3% 0 .4% –0 .1%

Payables.to.personnel 1522 – 1.041 –1.041 –100% 0% 0% –

Payable.taxes.and.duties 1524 1.918.818 2.277.179 –358.361 –16% 2 .4% 2 .6% –0 .2%

Other.payables 1525 7.304 13.033 –5729 –44% 0% 0% –

estimated liabilities 1540 302 884 277 634 +25 250 +9% 0.4% 0.3% 0.1%

Total section V 1500 9 363 579 43 780 608 –34 417 029 –78.6% 11.6% 48.8% –37.2%

BalaNCe (lINes 1300 + 1400+1500) 1700 80 943 255 89 767 630 –8 824 375 –10% 100% 100% –

Liabilities.of.the.balance.sheet.have.the.following.structure.as.of.the.end.of.the.accounting.period:.

.� Equity.and.provisions:.43%.of.the.balance.sheet.grand.total

.� Long-term.liabilities:.45%.of.the.balance.sheet.grand.total

.� Short-term.liabilities:.12%.of.the.balance.sheet.grand.total

The.structure.of.liabilities.of.the.balance.sheet.has.significantly.changed.over.the.accounting.period,.namely:

.� reduction.of.the.share.of.short-term.liabilities.in.the.structure.of.the.balance.sheet.37%;

.� increase.of.the.share.of.long-term.liabilities.in.the.structure.of.the.balance.sheet.41% .

The.structure.of.liabilities.changed.mainly.due.to.closure.in.May.2011.of.the.transaction.for.the.project.facility.at.the.total.amount.equivalent.to.EUR.1 .1.bln ..provided.by.the.international.consor-tium.of.banks.and.Russian.bank.Gazprombank.(OJSC) .

The.structure.of.long-term.liabilities.as.of.31 .12 .2011:

.� Bank.loans.repayable.after.12.months:.90%..(or.41%.of.the.balance.sheet.grand.total)

.� Deferred.tax.liabilities:.10%..(or.4.%.of.the.balance.sheet.grand.total)

The.structure.of.short-term.liabilities.as.of.31 .12 .2011:

.� Borrowed.funds:.74%..(or.8 .5%.of.the.balance.sheet.grand.total)

.� Payables:.23%.(or.2 .7%.of.the.balance.sheet.grand.total)

.� Estimated.liabilities:.3%..(or.0 .4%.of.the.balance.sheet.grand.total)

Over.the.accounting.period.liabilities.of.the.Company.decreased.by.8 824.375 million rubles.(by.10%).and.totalled.80.943 .255.million.rubles:.

The.amount.of.liabilities.reduced.due.to.the.following.items.of.the.balance.sheet.(without.limitation):

.� Undistributed profit.–.by.7 416.227 million rubles.or.43.%,.due.to.payment.in.2011.of.dividends.to.shareholders.follow-ing.the.results.of.the.first.9.months.according.to.Minutes.of.the.extraordinary.meeting.of.shareholders.No ..22/2011.dated.21 .12 .2011.at.the.total.amount.of.13.200.million.rubles;.

.� short-term borrowed funds.–.as.a.result.of.change.in.the.structure.of.long-term.and.short-term.borrowed.funds,.the.total.amount.of.borrowed.liabilities.in.the.accounting.period.decreased.by.902 320 million rubles.or.2 .2%;

.� Payables –.by.495.728 million rubles.or.19%,.mainly.due.to.reduction.of.tax.liabilities.as.of.the.end.of.the.accounting.period.by.358 .361.million.rubles .


Financial results

Analysis of Change in Indicators of the Profit and Loss Statement for 2011

Indicator, thousand rubles line 2011 2010 Deviation 2011/2010

Change in % 2011/2010 (+/–)

INCOMe aND exPeNDITURe fROM ORDINaRY OPeRaTIONs

Net.revenues. 2110 26.038.396 36.901.899 –10.863.503 –29%

Cost.of.sold.goods,.products,.works,.services. 2120 –15.410.801 –11.292.670 –4.118.131 +36%

gROss PROfIT 2100 10 627 595 25 609 229 –14 981 634 –59%

Commercial.expenditure 2210 – – – –

Management.expenditure 2220 –1.262.402 –1.031.332 –231.070 +22%

sale PROfIT (lOss) 2200 9 365 193 24 577 897 –15 212 704 –62%

Miscellaneous.income.and.expenditure.

Interest.receivables 2320 625.677 651.297 –25.620 –4%

Interest.payable 2330 –1.499.582 –1.626.896 127.314 –8%

Miscellaneous.income 2340 95.348.926 19.375.067 75.973.859 +392%

Miscellaneous.expenditure 2350 –96.411.240 –18.709.600 –77.701.640 +415%

PROfIT (lOss) BefORe Tax 2300 7 428 974 24 267 765 –16 838 791 –69%

Current.profit.tax 2410 –945.966 –2.051.544 1.105.578 –54%

Profit.tax.in.past.years 2411 380.351 – 380.351 –

Change.in.deferred.tax.liabilities. 2430 –989.510 –1.798.763 809.253 –45%

Change.in.deferred.tax.assets 2450 –75.442 –1.014.635 939.193 –93%

Other 2460 –12.667 –98.687 86.020 –87%

NeT PROfIT (lOss) Of The aCCOUNTINg PeRIOD 2400 5 785 740 19 304 136 –13 518 396 –70%

The.following.factors.influenced.the.indicators.in.the.profit.and.loss.statement.over.2011.and.accordingly.the.amount.of.net.profits.over.the.accounting.period:

.� revenues.from.sale.of.gas.in.2011.reduced.by.10.863 .503.million.rubles.or.by.29%.compared.to.the.preceding.period.and.amount.to.26.038 .396.million.rubles ..Reduction.of.revenues.from.sale.of.gas.was.conditioned.by.a.reduction.of.the.calculated.gas.sale.price.by.30%.due.to.a.change.of.the.formulae.of.the.gas.sale.price.fixed.in.the.Shareholder.Agree-ment ..This.formulae.includes.the.mechanism.of.the.compen-satory.component.which.significantly.influenced.an.increase.in.the.gas.sale.price.in.2010;

.� the.cost.of.sold.gas.increased.by.36%.or.by.4.118 .131..million.rubles.and.totalled.15.410 .801.million.rubles.versus.11.292 .670.million.rubles.over.the.previous.ac-counting.period ..The.increase.of.expenditure.is.mainly.due.

41

Financial results

to.an.increase.in.tax.deductions.for.the.mineral.extraction.tax.for.gas.due.to.an.increase.of.the.rate.by.a.factor.of.1 .6.times.(237.rubles.in.2011,.147.rubles.in.2010).and.an.increase.in.depreciation.deductions.in.2011.due.to.com-missioning.of.new.production.facilities;

.� management.expenses.increased.by.22%.or.231 .070.million.rubles.and.totalled.1.262 .402.million.rubles.versus.the.preceding.period ..The.increase.in.costs.was.due.to.an.increase.in.expenses.for.the.lease.of.property,.services.of.external.organizations,.expenses.for.labour.remunera-tion.in.connection.with.assessment.of.estimated.liabili-ties.for.payment.of.vacation.pay.and.yearly.bonuses.as.of.31 .12 .2011.as.well.as.retirement.pay.to.personnel.in.the.current.year.according.to.the.terms.of.the.Collective.Agreement.of.the.Company;

.� interest.payable.over.2011.totalled.1.499 .582.million.rubles.and.decreased.compared.to.the.previous.period.by.8%.due.to.a.reduction.of.the.average.effective.interest.rates.on.credits.and.loans.raised.by.the.Company.in.2011;

.� increase.in.miscellaneous.expenditure.in.2011.versus.2010.was.due.to.a.reduction.of.the.positive.exchange.difference.from.re-evaluation.of.the.Company’s.liabilities.in.foreign.currency.by.1.701 .172.million.rubles.due.to.lesser.weaken-ing.of.the.RUB/EUR.and.RUB/USD.exchange.rates.as.of.31 .12 .2011.compared.to.31 .12 .2010,.than.as.of.31 .12 .2010.compared.to.31 .12 .2009.(i .e ..accounting.dates);

.� increase.of.other.income.over.the.accounting.period.versus.2010.was.due.to.the.following:

.– the.financial.result.from.sale.and.purchase.of.shares.was.significant.due.to.repayment.of.loans.and.credits.within.the.framework.of.the.project.facility;

.– pursuant.to.the.Accounting.Policy.of.the.Company,.for.accounting.purposes,.the.effect.from.sale.and.purchase.of.currency.is.presented.broken.down.in.the.profit.and.loss.statement .

.� reduction.of.the.current.profit.tax.is.due.to.reduction.of.the.taxable.base.for.the.tax.over.2011;

.� the.tax.on.profit.of.previous.years.amounted.to.380 .351.million.rubles.due.to.application.in.the.accounting.year.of.accelerated.depreciation.norms.for.hazardous.production.facilities.over.2010;

.� reduction.of.the.change.in.deferred.tax.liabilities.and.assets.in.2011.compared.to.the.preceding.year.was.due.to.the.application.in.tax.accounting.of.10%.and.30%.depreciation.premiums.for.fixed.assets.of.the.Company.according.to.the.depreciation.group.in.2010 .

Analysis of Cash FlowIndicator, million rubles 2011 2010

Deviation 2011/2010

Change in % 2011/2010 (+/–)

Net.cash.from.operations. 13.796 23.322 –9.526 –.41%

Net.cash.from.(used.in).investment.operations. 9.878 –5.543 15.421 +.278%

Net.cash.from.(used.in).financial.operations –14.050 –16.189 2.139 +.13%

The.change.in.cash.from.operations.was.due.to.a.reduction.in.the.gas.sale.price.and.reduction.of.the.amount.of.revenue.from.purchasers.of.products .

The.change.in.cash.from.investment.operations.was.due.to.adjustment.of.the.accounting.statements.as.regard.to.

placed.deposits.for.the.term.over.3.months.of.2010.and.a.reduction.of.cash.applied.for.financing.of.investment.operations .

The.change.in.cash.from.financial.operations.was.due.to.the.change.in.the.structure.of.debt.liabilities .


Financial results

Analysis of Debt LiabilitiesIndicator, million rubles As of 31.12.2011 As of 31.12.2010

Deviation 2011 / 2010

Change in % 2011/2010 (+/–)

Short-term.credits.and.loans. 6.902 40.850 –33.948 –83%

Long-term.credits.and.loans 33.004 –. +33.004 +100%

Cash.and.cash.equivalents.including.cash.deposited.for.terms.over.3.months.and.accounted.for.as.financial.investments. –17.576 –17.328 –248 –1 .4%

NeT DeBT 22 330 23 522 – 1 192 – 5%

In.March.2011,.the.Company.repaid.short-term.multi-currency.loans.raised.from.the.bank.consortium.with.the.surety.of.BASF,.E .ON.and.OAO.Gazprom.at.the.amount.of.USD.1.084.142.000.and.EUR.193.183.000 ..The.total.amount.of.interest.paid.in.2011.under.such.loans.was.USD.3.974.000.and.EUR.1.035.000 ..Fees.paid.for.sureties.for.the.loans.amounted.to.EUR.1.083.000.and.EUR.774.000,.respectively ..

The.main.source.of.repayment.of.the.indebtedness.under.the.above.multi-currency.loans.were.loans.from.sharehold-ers.at.the.total.amount.of.RUB.32.500.million.at.the.interest.rate.5 .2%.per.annum,.provided.with.the.following.propor-tions:

.� OAO.Gazprom.–.13.000.million.rubles

.� Wintershall.Holding.GmbH.–.11.375.million.rubles

.� E .ON.Ruhrgas.E.and.P.GmbH.–.8.125.million.rubles

In.May.2011,.the.Company.repaid.loans.from.shareholders ..The.total.amount.paid.was.32.773.million.rubles ..

On.25.May.2011,.financial.closure.of.the.transaction.was.effected.pursuant.to.the.project.facility.agreement.signed.in.March.2011.at.the.total.amount.equivalent.to.EUR.1 .1.bln .,.provided.by.the.international.consortium.of.banks.and.Gazprombank.(OJSC),.with.three.tranches.–.USD.657.465.000,.EUR.474.088.000,.RUB.5.992.523.000.under.the.following.conditions:

.� the.loan.repayment.date.–.31.December,.2018.with.the.pos-sibility.of.prepayment.(cash.sweep);

.� for.tranches.in.foreign.currency,.the.interest.rate.including.Libor/Euribor.+.the.margin.(2 .35%.from.2011.to.31.March,.2014,.2 .50%.from.1.April,.2014.to.31.March,.2017,.2 .75%.from.1.April,.2017.to.31.December,.2018);

.� for.tranches.in.rubles.–.the.fixed.interest.rate.11 .4% .

OJSC.Severneftegazprom.won.the.“Deal.of.the.Year.2011”.award.of.Project.Finance.Magazine.(PFM) ..The.award.is.the.recognition.of.success.in.fundraising.of.EUR.1 .1.billion .

43

Financial results

Analysis of key Financial Ratios Key financial stability Ratios

Ratio

As of the beginning of

the accounting period

As of the end of the accounting

period

Change over the period

Economic value of ratiosRecommended

value

Equity.Ratio 0 .47 0 .43 –0 .04 Equity.to.Total.Capital >=.0 .65

Financial.Leverage.Ratio 1 .12 1 .32 +0 .02 Borrowed.Capital.to.Equity <=.0 .82

Working.capital.financed.by.equity.to.total.assets.ratio –0 .81 –0 .96* –0 .15 Own.current.assets.to.total.current.assets >=.0 .1

Investment.coverage.Ratio 0 .51 0 .88 +0 .37 Equity.and.long–term.liabilities.to.total.capital >=.0 .85

Current.Assets.to.Equity.Ratio. –0 .5 –0 .65* –0 .15 Own.current.assets.to.equity.sources >=.0 .05

Current.Assets.Mobility.Ratio. 0 .66 0 .75 +0 .09 The.most.mobile.part.of.current.assets.to.total.value.of.current.assets –

ReseRVes TO PRODUCTION RaTIO –19.57 –33.61* –14.04 OWN CURReNT asseTs TO sTOCK ValUe >= 0.5

* for calculation of the above ratios, long-term liabilities under project financing are taken into account by determining own current assets. in the case of calculation of own current assets without taking into account long-term liabilities under project financing, the ratios have the following values: - the working capital financed by equity to total assets ratio= 0.44; - the current Assets to equity Ratio = 0.30; - the Reserves to production Ratio = 15.39.

Key liquidity Ratios

Financial ratio

As of the beginning of

the accounting period

As of the end of the accounting

period

Change over the period

Economic value of ratiosRecommended

value

Current.Liquidity.Ratio..(Asset.Coverage.Ratio) 0 .6 2 .51 +1 .91 Current.assets.to.short-term.liabilities ..Shows.

coverage.of.short-term.liabilities.by.all.current.assets >=.2

Quick.(Intermediate).Liquidity.Ratio 0 .57 2 .42 +1 .85Liquid.assets.to.short-term.liabilities ..Shows.security.

of.short-term.liabilities.with.monetary.funds.and.short-term.financial.assets.and.short-term.receivables

>=.1 .0

Absolute.Liquidity.Ratio 0 .4 1 .88 +1 .48High-liquid.assets.to.short-term.liabilities ..Shows.

the.part.of.short-term.liabilities.which.may.be.repaid.immediately

>=.0 .2

Profitability analysis

Rates of Return 2011 2010Change over the

periodRecommended

value

Sales.gross.profit.margin.(in.kopecks.per.ruble.of.revenues). 36 66 .6 –30 .6 –

Return.on.sales.by.EBIT,.in.% 34 .3 70 .2 –35 .9 –

Return.on.sales.by.net.profit.(in.kopecks.per.ruble.of.revenues) 22 .2 52 .3 –30 .1 –

Interest.Payable.Coverage.Ratio.(ICR) 6 15 .9 –9 .9 >=.1 .5


INvE

STM

ENT

OPER

ATIO

NSIn.2011,.capital.construction.operations.were.carried.out.on.account.of.own.funds.of.the.Company .

The.key.objectives.of.capital.construction.are:.

.� achievement.of.key.indicators.of.the.long-term.plan.development.of.Cenomanian.and.Senonian.deposits.of.the.Yuzhno-Russkoye.Field;

.� implementation.of.approved.design.solutions.for.commissioning,.reconstruction.and.modernization.of.the.main.production.capacities.at.the.main.and.auxiliary.production;

.� fulfilment.of.the.plan.of.geological.exploration.works.according.to.existing.licence.obligations;

.� risk.minimization .

The.key.directions.of.the.investment.programme.are:

.� completion.in.2011.of.construction.and.commissioning.of.a.two-hole.operational.gas.well.in.the.Turonian.sediments.and.some.systems.and.facilities.at.the.Yuzhno-Russkoye.Oil.and.Gas.Field;

.� continuation.in.2011.of.design.and.construction.of.facilities.to.be.commissioned.in.2012.and.the.following.years;

.� commissioning.of.the.second.stage.of.the.booster.compressor.station.(BCS).in.2015.according.to.the.long-term.plan.of.development.of.the.Company;

.� reconstruction.and.modernization.of.facilities,.equipment.and.systems.of.the.Yuzhno-Russkoye.Field.to.ensure.safe.operation.of.facilities.according.to.production.safety,.labour.protection.and.environmental.protection.requirements .

Capital Investments

Indicator 2010 2011 Change in 2011 / 2010

Actual Plan Actual +, - %

Capital.investments. 4.329 .8 2.006 .7 1.062 .6 -3267 .1 -75 .5%

The.main.investment.project.which.is.currently.being.implemented.is.completion.of.construction.of.facilities.at.the.YROGF.(Cenomanian.gas.deposit) ..In.2012,.the.Company.will.proceed.design.and.exploration.at.the.Booster.Compressor.Station-1.(the.second.stage),.construction.will.be.started.in.2014.and.commissioning.is.planned.for.2015 ..In.2017,.it.is.planned.to.carry.out.design.and.exploration.for.construction.of.the.Booster.Compressor.Station-2.to.be.constructed.in.2018.and.commissioned.in.2019 .

The.main.investment.project.for.the.future.is.development.and.arrangement.of.the.Turonian.gas.deposit .

The.following.production.facilities.were.commissioned.in.2011:

.� the.two-hole.production.gas.well.at.the.Turonian.deposit;

.� the.automated.system.of.control.of.technical.maintenance.and.report.of.equipment.(ASC.TM&R);

.� open.storage.sites.within.the.“Customer’s.base.of.the.Yuzhno-Russkoye.Oil.and.Gas.Field”.with.the.total.area.of.14 .8.thous ..m2;

.� re-equipment.of.equipment.at.the.emergency.diesel.power.plant.–.4.units .

The.amount.of.commissioned.fixed.assets.is.535 .3.million.rubles .

45

INDUSTRY.RISKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46

FINANCIAL.RISKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

LEGAL.RISKS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48

kEy

RIS

k FA

CTOR

S AS

SOCI

ATED

W

ITh

Th

E CO

MPA

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BU

SINE

SS


key risk factors associated with the company’s business

INDUSTRy RISkSThe.Company.in.its.business.is.exposed.to.industry.risks,.the.most.important.being.prices.for.raw.hydrocarbons.and.techno-logical.risks.associated.with.the.particulars.of.the.production.process ..Moreover,.general.industry.risks.include.transport.restrictions.of.a.technological.nature.which.may.become.a.serious.obstacle.in.achieving.long-term.objectives.of.the.Energy.Strategy.of.Russia ..Search.and.development.of.deposits,.transportation.and.processing.of.gas.and.liquid.hydrocarbons.represents.a.complicated.and.capital-intensive.process.bearing.technological.and.ecological.risks ..The.company,.strictly.observing.industry.requirements.and.standards,.implementing.new.technologies.and.technique.at.all.stages.of.the.production.process,.minimizes.these.risks .

The risk of reduction of salesThe.risk.of.reduction.of.sales.is.associated.with.the.possibility.of.decline.of.demand.for.hydrocarbons.in.the.long-term.which.may.adversely.affect.project.indicators ..However,.according.to.long-term.gas.supply.contracts.valid.until.2018,.the.purchaser.pays.for.the.entire.volume.of.contracted.gas.notwithstanding.the.actual.intake.which.excludes.the.considered.risk.for.the.Company.until.expiration.of.such.contracts .

The risk of material change in the market price for gas

A.material.change.in.the.market.price.for.gas.downwards.may.affect.cash.flows.required.for.stable.production.and.business.operations.of.the.Company ..The.risk.is.considered.as.low.since,.according.to.gas.supply.contracts,.the.price.of.gas.is.determined.according.to.the.formulae.taking.into.account.the.Company’s.expenses.and.the.required.rate.of.return .

Risks associated with validity of licences

The.Company.undertakes.activities.in.relation.to.the.Yuzhno-Russkoye.deposit.pursuant.to.the.licences.for.use.of.subsoil.and.other.licensed.activities ..Applicable.laws.of.the.Russian.Federation.and/or.licenses.provide.for.possible.limitation,.suspension.or.early.termination.of.the.right.for.use.of.subsoil/exercise.of.a.licensed.activity.in.case.of.non-observance.of.conditions.of.licence.agree-ments.or.violation.of.requirements.of.applicable.Russian.laws.in.the.area.of.licensing .

47


The.Company.has.completely.fulfilled.requirements.of.licence.agreements.and.has.taken.all.necessary.steps.to.observe.appli-cable.laws.governing.licensing,.in.order.to.minimize.this.risk .

environmental RisksActivities.of.the.Company.associated.with.development.of.the.Yuzhno-Russkoye.are.potential.exposed.to.the.risk.of.environ-mental.impact ..Therefore,.one.of.the.priority.directions.of.the.Company’s.efforts.is.environmental.protection ..Key.project.so-lutions.applied.in.the.course.of.construction.of.infrastructural.and.operational.facilities.at.the.deposit.comply.with.environ-mental.standards .

Technological RisksProduction.activities.of.the.Company.associated.with.operation.of.the.Yuzhno-Russkoye.Deposit.may.be.exposed.to.the.impact.of.negative.factors.associated.with.failure.of.equipment ..Mean-while,.technologies.used.for.mining,.treatment.and.transporta-tion.of.gas.comply.with.up-to-date.requirements.for.reliability.and.safety.in.operation.of.the.equipment.which.enables.minimi-zation.of.such.risks .

In.addition,.the.Company.pays.special.attention.to.observance.of.labour.protection,.industrial,.fire.and.well-kill.safety,.includ-ing:.training.and.certification.of.the.Company’s.personnel.in.the.area.of.labour.protection,.industrial.and.fire.safety.as.well.as.well-kill.safety.on.the.basis.of.the.course.“Well.Control ..

Control.of.Well.at.Oil,.Gas.and.Water.Show”.which.also.re-duces.the.above.risks .

For.resolution.of.primary.objectives.associated.with.planning.of.efforts.for.prevention.and.liquidation.of.extraordinary.situa-tions.for.hazardous.production.facilities.at.the.Yuzhno-Russkoye.Deposit,.the.following.documents.were.prepared:.the.Plan.of.Liquidation.of.Possible.Accidents,.the.Plan.for.Prevention.and.Liquidation.of.Spreading.of.Oil.Products.in.the.Site.of.Technologi-cal.Capacities.of.Reagents.and.Oils.at.the.gas.treatment.unit.of.the.Yuzhno-Russkoye.Oil.and.Gas.Field.of.OJSC.Severneftegazprom,.the.Plan.for.Prevention.and.Liquidation.of.Spreading.of.Oil.Prod-ucts.in.Fuelling.Stations.(stations.for.fuelling.of.motor.transport).of.OJSC.Severneftegazprom,.and.the.Technological.regulations.on.Operation.of.the.gas.treatment.unit.of.the.Yuzhno-Russkoye.Oil.and.Gas.Deposit.05 .125-TP”.with.Amendment.No .1 ..Pursuant.to.the.above.mentioned.plans,.trainings.are.carried.out.to.train.the.personnel.to.acts.to.be.taken.in.case.of.emergency .

In.addition,.in.order.to.minimize.and.avoid.emergency.situations,.a.contract.was.concluded.with.GUP.YaNAO.“Yamal.Militarized.Well-Kill.Part”,.administrative.and.production.control.of.the.status.of.labour.protection,.industrial,.and.fire.and.well-kiss.safety.has.been.organized.and.undertaken.which.also.reduces.possible.risks .

Certified.equipment.and.technical.devices.meeting.up-to-date.safety.and.reliability.requirements.are.applied.at.hazardous.pro-duction.facilities.of.the.Yuzhno-Russkoye.Deposit ..The.equipment.and.technical.devices.are.maintained.in.a.timely.manner.by.the.Company’s.personnel.or.specialized.organizations,.which.also.reduces.the.above.mentioned.risks .

FINANCIAL RISkSInflation RisksThe.inflation.rate.in.2011.was.6 .1%.which.is.the.record.lowest.in-dicator.over.last.twenty.years.in.the.Russian.economy ..The.lowest.consumer.price.indices.were.observed.in.2009.and.2010.–.8 .8%.per.year ..According.to.observations,.inflation.rates.are.relatively.stable.and.the.Russian.Ministry.of.Finance.forecasts.that.inflation.in.2012.will.correspond.to.forecasts.–.about.6 .1% ..On.the.basis.of.this,.the.conclusion.may.be.made.that.inflation.will.not.cause.any.material.impact.on.financial.and.economic.indicators.of.the.Company.in.the.foreseeable.future .

Interest RiskBeing.a.large.borrower,.the.Company.is.exposed.to.risks.as-sociated.with.changes.in.interest.rates ..The.debt.portfolio.of.the.Company.within.the.framework.of.the.raised.project.facil-ity.is.mainly.presented.by.loans.denominated.in.USD.and.EUR ..

The.interest.rate.for.service.of.such.loans.is.based.on.internal.credit.rates.(LIBOR/.Euribor) ..An.increase.in.such.interest.rates.may.render.service.of.the.Company’s.debt.more.expensive ..An.increase.in.the.cost.of.loans.for.the.Company.may.affect.solvency.and.liquidity.indicators ..However,.LIBOR.is.currently.at.a.relatively.low.historical.level.and.has.a.medium-term.tendency.towards.stabilization ..However,.taking.into.consideration.that.according.to.gas.supply.contracts.the.gas.price.is.determined.according.to.the.formulae.taking.into.account.the.compensatory.component,.the.risk.is.deemed.low .

Currency RiskSince.the.debt.portfolio.of.the.Company.includes.liabilities,.assessable,.accruable.and.repayable.in.foreign.currencies,.fluctuations.of.exchange.rates.to.the.ruble.materially.affect.the.result.of.financial.and.business.operations.of.the.Company ..Due.to.the.absence.of.any.revenues.in.foreign.currency,.the.



balanced.currency.structure.of.claims.and.liabilities,.used.as.a.hedging.mechanism,.is.not.applicable.to.the.Company,.taking.into.consideration.that.according.to.gas.supply.contracts.the.

gas.price.is.determined.according.to.the.formulae.taking.into.account.the.compensatory.component,.the.risk.is.deemed.moderate .

LEgAL RISkSRisks associated with application and possible changes in tax laws of the Russian federationSome.laws.have.been.adopted.during.recent.years.which.intro-duced.significant.amendments.to.tax.laws .

Amendments.introduced.into.the.Russian.tax.system.are.aimed.at.elimination.of.its.deficiencies.and.therefore.some.provisions.of.the.Russian.Tax.Code.may.be.amended.which.may.result.in.a.future.increase.or.reduction.of.the.tax.burden.versus.the.account-ing.year .

Amendments.of.tax.laws.of.the.Russian.Federation.making.the.position.of.a.taxpayer.less.favourable.do.not.as.a.rule.apply.retrospectively.(unlike.various.interpretations.of.some.provisions.of.tax.laws) .

Since.interpretations.of.some.norms.of.tax.laws.by.tax.authori-ties.(the.Ministry.of.Finance.of.the.Russian.Federation,.judicial.authorities).may.not.match.interpretations.of.the.Company’s.man-agement,.the.amount.of.tax.liabilities.following.the.results.of.tax.audits.at.the.Company,.both.in.the.accounting.year.and.preceding.periods,.may.change.and.cause.tax.risks.(in.particular,.additional.taxes,.penalties.and.fines.may.be.imposed.on.the.Company) .

In.order.to.avoid.tax.risks,.the.Company.regularly.monitors.any.amendments.made.to.the.Russian.Tax.Code.and.law.enforcement.practice.with.further.application.of.the.same.in.its.activities .

Pursuant.to.Russian.accounting.rules,.any.change.of.tax.liabilities.over.preceding.periods.is.accounted.for.in.statements.over.that.period.when.such.changes.were.actually.effected .

Risks of legal Proceedings and Restrictions of the Company’s BusinessNo.change.in.legal.practice.as.regard.to.matters.associated.with.the.Company’s.activities.as.well.as.rules.of.legal.proceedings.will.have.material.impact.on.the.Company’s.business.since.the.Company.tries.to.settle.any.disputes.extra.judicially ..At.present,.the.Company.is.not.involved.in.any.material.legal.proceedings.and.does.not.bear.any.liability.for.debts.of.third.parties .

legal Risks associated with application and Possible Change of Currency lawsThe.Company.concludes.foreign.economic.transactions.and.executes.currency.operations.with.non-residents,.and.there-fore.changes.in.currency.regulation.may.affect.fulfilment.of.the.Company’s.liabilities.to.foreign.counteragents ..In.particular,.changes.in.currency.regulation.which.may.concern.enforcement.of.control.over.execution.of.currency.transactions.and.introduc-tion.of.restrictions,.may.lead.to.losses.under.foreign.trade.con-tracts.and/or.delays.in.fulfilment.thereof ..Due.to.the.existence.of.foreign.economic.transactions,.the.Company.is.exposed.to.risks.of.bringing.to.administrative.liability.for.violations.of.currency.laws.of.the.Russian.Federation.and.acts.of.currency.regulators,.including.without.limitation,.violation.of.the.established.unified.rules.of.execution.(re-execution).of.transaction.passports.and.non-observance.of.the.established.procedure.or.terms.of.submis-sion.of.accounting.forms.and.reports.on.currency.transactions ..For.the.purpose.of.observance.of.currency.laws.of.the.Russian.Federation,.within.the.framework.of.relations.with.non-resident.companies,.structural.subdivisions.of.the.Company.take.measures.of.control.over.timely.and.quality.submission.of.documentation.required.for.execution.of.currency.transactions .

49

ENER

gy C

ONSU

MPT

ION

The.Company.takes.efforts.to.ensure.efficient.use.of.energy,.and.develops.and.implements.measures.for.reduction.of.power.consumption,.programmes.for.efficient.use.of.energy.resources ..

Key.objectives.for.improvement.of.energy.efficiency.are.the.following:

.� use.of.advanced.methods.and.approaches.in.management.of.energy.efficiency;

.� optimization.of.existing.technological.processes.and.improvement.of.energy.efficiency.in.terms.of.energy.costs.at.maintenance.of.key.parameters.of.technological.processes;

.� improvement.of.energy.efficiency.in.power.and.heat.transmission.and.distribution.systems;

.� use.of.the.criterion.of.energy.efficiency.for.analysis.and.improvement.of.existing.business.process-es.and.in.design.and.implementation.of.new.production.facilities;

.� implementation.of.up-to-date.systems.for.technological.accounting.energy.and.technical.account-ing.of.key.technological.parameters.of.production.processes .

For.the.purpose.of.improving.efficiency.of.its.operations.the.Company.has.been.progressively.imple-menting.a.policy.of.energy.saving.and.improvement.of.energy.efficiency.of.production.processes ..This.work.is.done.on.the.system.basis.using.mechanisms.of.medium-term.and.long-term.planning .

A.plan.of.efforts.for.improvement.of.energy.efficiency.at.the.Company.for.2011-2013.was.prepared.in.December.2010 .

The.main.objectives.of.the.Company.in.that.area.are.the.following:

.� maximum.realization.of.the.potential.of.energy.saving.in.all.types.of.activity.on.the.basis.of.gov-ernmental.support.of.the.energy.saving.policy.of.the.Company.and.improvement.of.energy.saving.management;

.� improvement.of.energy.efficiency.of.the.Company.by.means.of.innovative.technologies.and.equipment;

.� ensuring.reduction.of.the.technical.load.on.the.environment .

Consumption of energy resources in the accounting period in physical and monetary terms:

Type the energy

resourcesUoM

2010 2011Deviation from 2010

report plan report

totalIncluding

own production

total TotalIncluding

own production

+,- %

Natural.gasmln ..m3 30 .532 30 .532 120 .223 68 .239 68 .239 37 .707 123.5%

mln ..rubles – – – 43 .73 43 .73 43 .73 0%

Powerthousand.kW*h 28.356 27.485 32.233 26.635 25.573 –1721 –6%

mln ..rubles 224 .08 222 .15 195 .5 216 .34 213 .7 –7 .74 –3%

Heat.energyGcal 36.196 35.283 41.086 32.956 31.817 –3240 –9%

mln ..rubles 55 .30 54 .99 64 .86 75 .56 73 .46 20 .26 37%

Diesel.fuelthousand.tons 0 .73 – x 0 .75 – 0 .02 3%

mln ..rubles 16 .81 – x 20 .17 – 3 .36 20%

Car.petrol.AI-95.thousand.tons 0 .17 – x 0 .19 – 0 .02 12%

mln ..rubles 4 .56 – x 5 .38 – 0 .82 18%

Car.petrol.AI-92thousand.tons 0 .30 – x 0 .27 – –0 .03 –10%

mln. rubles 7.47 – x 6.98 – –0.49 –7%


ROLE.OF.SUSTAINABLE.DEVELOPMENT..

IN.THE.COMPANY’S.ACTIVITY. . . . . . . . . . . . . . . . . . . .51

SOCIAL.POLICY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

LABOUR.PROTECTION.AND.INDUSTRIAL.SAFETY. . . .54

ENVIRONMENTAL.PROTECTION..

AND.ECOLOGICAL.SAFETY. . . . . . . . . . . . . . . . . . . . . .55

MAIN.INDICATORS.OF.ENVIRONMENTAL..

PROTECTION.ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . .58

MAIN.DIRECTIONS.OF.REGIONAL.POLICY..

AND.INTERACTION.WITH.INTERESTED.PARTIES . . . . .59

SUST

AINA

BLE

DEv

ELOP

MEN

T

51

Sustainable development

Role of sustainable development in the Company’s activityThe.Company’s.sustainable.development.policy.is.an.integral.part.of.the.OJSC.Severneftegazprom’s.management.model .

At.present,.the.Company.is.at.the.initial.stage.of.introducing.the.sustainable.development.principles.of.the.Global.Reporting.Initiative.–.C.level.–.and.expresses.its.intention.to.develop.each.project.under.implementation.in.accordance.with.the.sustainable.development.principles.applying.them.for.specific.short-term.and.medium-term.plans.of.activity .

The.Company.realizes.that.within.the.framework.of.sustainable.development.the.Company’s.activity.shall.ensure.the.balance.in.the.long.term.when.the.current.generation’s.needs.are.satisfied.without.any.damage.for.the.possibilities.of.future.generations.to.satisfy.their.own.needs .

Being.one.of.the.leading.Russian.enterprises.operating.in.the.oil.and.gas.sector,.the.OJSC.Severneftegazprom.understands.

that.ensuring.a.stable.power.supply.is.not.possible.without.strict.observance.of.the.population’s.interests:.economic.growth.and.fair.redistribution.of.national.wealth,.environmental.protection.and.economic.use.of.resources,.social.development.and.provision.of.opportunities.for.all.the.Company’s.members.to.participate.in.decision-making .

OJSC.Severneftegazprom.has.always.remained.a.responsible.enterprise.which.observed.environmental.and.social.standards.of.the.law,.which.is.why.we.are.confident.that.application.of.the.sustainable.development.principles.in.the.long.term.will.become.an.important.source.of.the.Company’s.competitive.advantage ..Continuous.endeavour.to.increase.its.operational.and.financial.indicators.taking.into.account.the.application.of.the.sustainable.development.approaches.demonstrates.the.Company’s.wish.to.carry.out.its.activity.based.on.innovations,.transparency.and.inter-action.with.the.interested.parties.on.a.long-term.basis.for.general.welfare.that.was.announced.as.the.Company’s.business.values .

Social policyOJSC.Severneftegazprom.is.aware.of.the.significance.of.human.resources.development.and.implements.the.activities.on.forma-tion.of.competitive,.highly.professional,.responsible.and.team-ori-ented.staff.that.provides.labour.productivity.growth.and.efficiently.solves.the.problem.faced.by.the.Company .

The.Company.is.interested.in.creating.favourable.working.condi-tions.for.its.employees,.providing.them.with.various.allowances.and.benefits,.medical.insurance,.non-state.pension.programmes,.as.well.as.a.decent.salary .

Human.resource.management.is.implemented.on.the.basis.of.principles.of.observance.of.law,.occupational.and.industrial.safety,.corporate.and.professional.ethics,.social.responsibility,.and.joint.consideration.of.the.Company’s.strategic.priorities.and.personal.interests.of.each.employee .

As.at.31 .12 .2011,.991.employees.worked.at.OJSC.Severneftegaz-prom,.compared.to.963.employees.at.the.end.of.the.previous.reporting.period ..The.Company.pays.most.attention.to.regions.of.the.Far.North.(Krasnoselkup.and.Purovskiy.Districts,.the.city.of.Novy.Urengoy).were.914.employees.(166.women.and.748.men).worked.there.as.at.31 .12 .2011 ..

Movement and composition People, %

Number.of.employees.hired.during.the.year. 149

Number.of.employees.who.left.employment.during.the.year 121

By.gender:

Men,.% 70

Women,.% 30

By.age:

Younger.than.30.years 54

From.30.to.50.years 47

Older.than.50.years 20

Labour.turnover,.% 4 .48

Retired.employees 12

Number.of.employees,.in.total 991

Number.of.employees,.by.gender:

Men,.% 80

Women,.% 20



In.2011,.the.Company.developed.and.successfully.introduced.the.Comprehensive.programme.on.HR.management.for.the.period.of.2011-2015,.stipulating.the.improvement.of.labour.management,.staff.motivation,.programme.of.training.and.development.of.employees,.and.introduction.of.corporate.com-munications .

OJSC.Severneftegazprom.employs.young.specialists.every.year ..More.than.half.of.the.staff.consists.of.employees.who.have.not.reached.the.age.of.40 .

Moreover,.according.to.the.International.Labour.Organization’s.Con-vention.No .138.on.the.Minimum.Age.for.Admission.to.Employment.adopted.in.1973,.and.the.Russian.Labour.Law,.the.Company.does.not.hire.persons.under.the.age.of.18.for.work.at.industrial.facilities1 ..

Manufacturing.processes.of.OJSC.Severneftegazprom.are.clas-sified.as.a.project.with.potentially.significant.negative.social.and.environmental.impacts.which.are.of.multilateral,.irreversible.or.unprecedented.nature.(in.accordance.with.the.Equator.Principles.and.standards.of.activity.of.the.International.Finance.Corporation,.based.on.the.opinion.of.the.independent.ecological.consultant.–.Environmental.Resources.Management.(Eurasia).Limited) .

The.Company’s.management.team.takes.a.hard.line.against.the.use.of.child.labour.for.commercial.purposes .

Staff composition, by age Managers Specialists Industrial and office workers

Younger.than.30.years 8 79 74

From.30.to.40.years 101 115 165

From.40.to.50.years 79 62 180

Older.than.50.years. 35 30 63

In total 223 286 482

1.Article.3.Paragraph.1:.The.minimum.age.for.admission.to.any.type.of.

employment.or.work.which.by.its.nature.or.the.circumstances.in.which.it.is.carried.

out.is.likely.to.jeopardize.the.health,.safety.or.morals.of.young.persons.shall.not.be.

less.than.18.years .

53


The.Company.constantly.examines.the.main.needs.and.problems.of.its.staff.and.tries.to.provide.them.with.comfortable.and.safe.working.conditions.and.a.decent.salary .

The.Collective.Agreement.is.in.force.in.the.Company,.specify-ing,.within.the.framework.of.financial.and.economic.capabilities.of.the.Company,.a.higher.level.of.preferences,.guarantees.and.compensations.as.compared.to.the.effective.Russian.Labour.Law.for.all.its.workers.and.retired.persons ..The.Company.provides.for.the.opportunity.to.encourage.its.employees.by.carrying.out.housing.programmes,.providing.sanatorium-and-resort.treatment,.rendering.financial.aid.and.giving.corporate.benefits.for.purchase.of.membership.pass.to.sports.and.fitness.centres.and.material.aid.is.given.to.some.categories .

The.Regulation.concerning.the.Committee.is.in.force.in.the.Company,.controlling.social.and.labour.relations,.within.the.framework.of.the.Committee.the.Company’s.workers.are.able.to.have.through.their.representatives.influence.on.decisions.made.by.the.management.in.the.sphere.of.social.and.labour.relations.as.well.as.socio-economic.relations ..The.Committee.is.formed.on.an.equal.basis.from.the.employer’s.representatives.and.work-ers.vested.with.the.necessary.authority .

The.main.tasks.of.the.Committee.are.to.organize.and.carry.on.col-lective.negotiations,.establish.and.maintain.the.current.Collective.

Agreement,.settle.disputes.both.while.implementing.the.Collective.Agreement’s.provisions.and.individual.labour.disputes .

The.Company.has.concluded.the.Voluntary.Medical.Insurance.Agreement.according.to.which.the.employees.are.provided.with.free.medical.services ..The.Company.has.also.signed.the.Accident.Insurance.Agreement .

One.of.the.main.tasks.of.the.OJSC.Severneftegazprom.is.to.make.the.process.of.substitution.of.its.retired.experienced.and.profes-sional.employees.more.gradual.and.smooth,.and.to.hire.employ-ees.who.should.not.only.correspond.to.professional.requirements.but.also.have.high.moral.standards ..The.Company.executes.a.non-state.staff.retirement.programme.through.“Gazfond”.non-state.pension.fund.in.order.to.ensure.a.decent.quality.of.life.and.social.protection.for.retired.workers .

The.Company.is.interested.in.the.personal.and.professional.growth.of.its.employees ..For.this.purpose,.the.professional.devel-opment.programme.has.been.elaborated.and.operated ..Training.sessions.are.mainly.carried.out.in.corporate.training.centres.of.OAO.Gazprom ..In.2011,.various.categories.of.employees.at-tended.31.660.hours.of.professional.development.classes ..This.is.certainly.a.high.indicator.which.characterizes.the.intention.of.OJSC.Severneftegazprom’s.management.to.maintain.theoretical.knowledge.and.practical.skills.of.the.employees .



Employee category Number of employees Number of training hours Average number of training hours per person

Managers 71 4632 65 .2

Specialists 60 3840 64

Workers 174 23188 133 .2

Total 305 31660 262.4

Moreover,.the.data.base.of.candidates.(applicants).for.the.Compa-ny’s.vacancies.is.formed.on.a.regular.basis,.as.well.as.the.candidate.pool.is.annually.renewed.(among.the.employees).to.promote.the.employees.to.executive.positions ..In.2011,.six.employees.from.the.candidate.pool.were.promoted ..In.addition,.30.employees.of.the.Company.from.the.candidate.pool.took.professional.development.training.sessions.in.training.facilities.of.OAO.Gazprom.and.leading.higher.educational.institutions.of.the.Russian.Federation ..The.Com-pany’s.employees.actively.participate.in.international.conferences.and.seminars.and.publish.their.scientific.articles.in.leading.local.and.foreign.magazines.and.newspapers ..The.exchange.of.experience.is.regularly.made.at.the.enterprises.of.foreign.shareholders.–.Winter-shall.Holding.GmbH.and.E .ON.Ruhrgas.E&P.GmbH .

OJSC.Severneftegazprom.offers.its.employees.education.grants.to.obtain.postgraduate.and.doctoral.degrees ..The.maximum.grant.amount.for.the.entire.education.period.is:

.� for.post-graduate.students.–.210.000.rubles;

.� for.doctoral.students.–.300.000.rubles .

In.order.to.attract.young.professionals,.the.Company.organizes.internships.for.students.of.sector.institutions.for.higher.and.sec-ondary.vocational.education ..34.students.took.internship.during.the.reporting.period .

Professional.skills.competitions.as.well.as.sports.and.cultural.events.in.mini-football,.volleyball,.etc ..are.conducted.on.a.regular.basis.among.the.employees .

The.plans.of.OJSC.Severneftegazprom.include.continual.improvement.of.social.programmes,.provision.of.a.system.of.continual.interaction.with.employees,.normalization.of.bilateral.dialogue.and.solution.of.all.problems.arising .

The.activity.of.OJSC.Severneftegazprom.is.socially.significant.and.a.legacy.of.the.successful.development.of.the.Company.is.the.creation.of.welfare.work.favourable.atmosphere.when.every.company.employee.can.feel.certain.about.future.stability .

Labour protection and industrial safetyOne.of.OJSC.Severneftegazprom’s.priorities.is.labour.protection.and.industrial.safety.since.the.economic.efficiency.of.industrial.activity.depends.on.reliable.and.secure.operation.of.the.equip-ment.and.on.qualified.actions.of.personnel .

Operation.of.industrial.objects.of.the.Company.is.performed.on.the.basis.and.according.to.the.requirements.of.the.Russian.Law,.as.well.as.corporate.and.international.standards .

Within.the.framework.of.integrated.quality.management.system,.the.Company.is.certified.for.compliance.with.the.requirements.of.international.standards.in.the.sphere.of.professional.health.and.safety.–.OHSAS.18001:2007.“Occupational.Health.and.Safety.Management.Systems” .

In.the.reporting.period,.the.Company.spent.12.042.200.rubles.for.labour.protection.activities ..The.majority.of.these.funds.(9.559.100.rubles).was.spent.for.Krasnoselkup.District.where.the.main.production.capacities.of.the.Company.operate .

On.a.regular.basis,.the.Company.carries.out.inspection.of.labour.conditions.at.workplaces,.observance.of.safety.requirements.while.operating.high-risk.facilities,.as.well.as.implementation.of.rules.of.labour.protection.and.industrial.safety .

Organization.of.training.and.checking.the.knowledge.of.the.Company’s.employees.with.regard.to.labour.protection.and.industrial.safety.is.carried.out.in.accordance.with.the.regula-tory.requirements.of.the.Russian.Federation.and.corporate.standards ..Training.on.fire.safety.measures.for.the.Company’s.employees.is.organized.and.conducted.in.accordance.with.the.fire.safety.regulations.–.“Training.of.the.enterprises’.employ-ees.on.fire.safety.measures”.approved.by.the.Order.of.EMER-COM.(Emergency.Control.Ministry).of.Russia.No ..645.dated.12 .12 .2007 .

Assessment.of.workplaces.is.carried.out.on.a.continuing.basis ..Since.2011,.the.Action.Plan.on.improvement.and.perfection.of.labour.conditions.has.come.into.force .

55


OJSC.Severneftegazprom.annually.conducts.pre-employment.and.periodic.medical.examinations.of.employees ..In.the.reporting.period,.based.on.the.results.of.the.periodic.medical.examination,.no.any.occupational.diseases.were.detected .

With.the.purpose.of.rendering.first.aid.to.gas.field.workers.there.is.the.first.aid.unit.licensed.to.carry.out.the.medical.activities.in.the.rotational.camp ..The.first.aid.unit.performs.the.prevention.of.disease,.injuries,.infectious.and.virus.diseases,.provides.emergency.and.immediate.medical.care,.and.carries.out.pre-trip.and.post-trip.medical.check-ups.of.vehicle.driv-ers ..Medical.staff.can.be.called.at.any.time.of.day.or.night,.if.required .

Structure of the first aid unit’s activities

Microtraumas 60

Medical.procedures 779

Diseases 1.615

Medical.check-ups 44.037

In total: 46 491

In.order.to.prevent.disease.in.April.and.November.2011,.non-specific.immunization.(multivitamin.intake).was.carried.out.among.gas.field.workers,.as.a.result.of.which.the.flu.outbreak.was.avoided ..One.more.measure.to.prevent.infectious.and.virus.diseases.is.a.medical.check-up.of.workers.living.in.the.rotational.camp .

During.the.reporting.period,.one.accident.took.place.–.falling.from.an.elevation.that.was.classified.as.“breakdown.in.the.technologi-cal.process” ..As.a.result.of.disability.of.the.injured.person.during.the.accident,.130.man-days.were.lost ..In.accordance.with.the.requirements.of.the.law,.an.investigation.was.carried.out,.ac-cident.causes.were.determined,.and.an.extraordinary.briefing.for.employees.on.the.rules.of.safe.performance.of.work.at.heights.was.conducted .

OJSC.Severneftegazprom.pays.a.great.attention.to.ensuring.the.fire.safety ..The.Company’s.Fire.Department.consisting.of.

56.workers.organizes.fire.prevention.activities ..Continuous.control.over.the.condition.of.firefighting.equipment,.devices,.systems.of.automatic.fire.protection.and.fire.alarm,.as.well.as.over.safe.operation.of.facilities.is.carried.out ..Maintenance.of.firefighting.equipment.is.conducted ..There.were.no.any.cases.of.fire.at.the.Company’s.facilities.in.2011 .

The.Central.Permanent.Commission.(CPC).continued.its.work,.its.responsibilities.include.the.following:.control.over.the.condition.of.labour.protection,.fire.and.environmental.safety.at.the.Company’s.facilities ..The.CPC.conducts.regular.inspections.to.ensure.the.fire.safety .

In.October.2011,.the.state.fire.supervision.authority.carried.out.the.scheduled.inspection.over.the.fulfilment.of.licensed.require-ments.by.the.Company.in.the.sphere.of.fire.safety ..No.deviations.were.found,.it.was.confirmed.that.the.Company’s.facilities.that.should.be.protected.comply.with.the.law.requirements .

The.Company.identified.its.hazardous.production.facili-ties.and.included.them.into.the.State.register.of.hazardous.production.facilities ..At.present,.the.Company.operates.16.hazardous.production.facilities ..The.hazardous.production.facilities.are.insured.against.liability.for.damage.caused.to.the.life,.health.or.property.of.the.third.parties.and.damage.caused.to.environment.in.case.of.any.incident.or.accident ...In.2011,.the.Regulations.on.industrial.inspection.of.obser-vance.of.industrial.safety.requirements.at.hazardous.produc-tion.facilities.of.the.Company.were.updated,.according.to.which.the.Company.carries.out.industrial.inspection.at.the.hazardous.production.facilities .

In.2011,.the.regional.service.of.the.Federal.Environmental,.Process.and.Nuclear.Supervision.Agency.(Rostekhnadzor).(the.Novy.Urengoy.integrated.department.of.the.Severo-Uralsk.Administration.of.the.Federal.Environmental,.Process.and.Nuclear.Supervision.Agency).executed.two.inspections.of.the.Company’s.facilities,.during.which.no.violations.were.detected .

During.the.reporting.period.no.incidents.and.accidents.at.hazard-ous.production.facilities.or.traffic.accidents.with.participation.of.the.Company’s.motor.vehicles.were.registered .

Environmental protection and ecological safetyProduction.activity.of.OJSC.Severneftegazprom.is.inextricably.linked.to.the.environment.and.environmental.care,.which.is.a.legacy.of.efficient.development.of.the.company ..In.this.connec-tion,.the.Company.pays.great.attention.to.the.delicate.ecosystem.of.the.Far.North .

One.of.the.most.important.principles.of.the.Company’s.work.is.a.solicitous.attitude.to.environment,.conservation.and.rational.use.of.natural.resources ..Continuous.and.planned.reduction.of.the.environmental.impact.of.the.manufacturing.process.while.using.modern.technologies.and.self-engineered.products.allows.to.



the.Company.to.reach.high.indicators.in.environmental.protec-tion.and.ecological.safety.activities ..The.Company.implements.its.activity.based.on.the.principles.of.strict.observance.of.the.norms.of.the.law.and.standards.in.the.sphere.of.environmental.protection .

In.accordance.with.the.requirements.of.Russian.Law,.the.Company:

.� has.required.permits.(licences.in.the.sphere.of.the.natu-ral.resources.use),.including.for.execution.of.activities.of.collection,.use,.deactivation,.transporting,.placement.of.hazardous.wastes.(OT-59-000262.(89));.for.the.right.to.use.natural.resources.for.extraction.of.fresh.subsurface.water.for.drinking.and.industrial.water.supply.of.the.objects.of.development.(SLKh.01821.VE);.for.extraction.of.fresh.subsurface.drinking.and.industrial.water.supply.of.cluster.sites.during.construction.of.operating.wells.(SLKh.No ..01383.VE);.

.� conducts.industrial.inspection.of.emissions.and.discharges.of.pollutants;

.� carries.out.water.abstraction.from.underground.sources.within.established.limits;

.� observes.standards.and.limits.of.pollution.emissions.into.the.atmosphere,.deep.well.injection.of.wastes,.formation.and.disposal.of.wastes;

.� makes.payments.for.negative.environmental.impact.in.a.timely.manner.and.in.full;

.� carries.out.technical.and.biological.reclamation.of.lands.disturbed.as.a.result.of.construction.works;.

.� conducts.industrial.ecological.inspection.and.monitoring .

In.accordance.with.the.corporate.and.international.standards.the.Company:

.� controls.greenhouse.gas.emissions;

.� implements.a.programme.of.gas.flaring.reduction.that.gives.an.opportunity.to.reduce.main.greenhouse.gas.emissions;

.� implements.a.programme.of.electric.power.reduction .

Within.the.framework.of.the.integrated.quality.management.system,.the.Company.is.certified.for.compliance.with.the.require-ments.of.international.standards.in.the.sphere.of.environmental.protection.–.ISO.14001:2004.“Environmental.Management.Sys-tems” ..The.Company.also.meets.the.requirements.of.the.Interna-tional.Finance.Corporation’s.performance.standards .

The.total.volume.of.emissions.into.atmosphere.caused.by.industrial.activity.sources.was.2.023 .639.tons.which.is.greater.by.345 .048.tons.than.in.2010 ..The.increase.in.the.total.weight.of.pol-lution.emissions.is.connected.with.commissioning.the.first.phase.of.the.Boost.Compressor.Station.in.November.2010 ..

hazardous substance Weight of emissions (tons)

Methane 1.326 .783

Hydrocarbon.oxide 337 .676

NOх.expressed.as.NO2 205 .167

Methanol 93 .644

Sulfur.dioxide 1 .467

57


hazardous substance Weight of emissions (tons)

Volatile.organic.compounds.(VOCs) 151 .774

Solid.contaminants. 0 .771

Emissions.from.stationary.emission.sources. 1.775 .160

Emissions.from.fugitive.emission.sources. 248 .479

In.2011,.the.authorized.volume.of.pollution.emissions.into.the.at-mosphere.by.production.facilities.was.11.143 .534.tons,.by.drilling.targets.–.461 .5.tons,.and.in.Urengoy.settlement.–.5 .436.tons .

Pollution emissions into the atmosphere (tons)

Authorized.emissions. 11.610 .47

Actual.emissions 2.023 .639

The.basic.mass.of.emissions.–.methane.–.was.formed.during.emptying.of.equipment,.as.well.as.commissioning.and.shutting.down.of.gas-compressor.units.of.the.Boost.Compressor.Station ..A.significant.amount.of.carbon.oxide.was.formed.while.burning.gas.at.gas-burners.during.the.survey.of.wells .

The.emission.structure.contains.methane.(65 .5%),.carbonic.oxide.(16 .6%),.nitric.oxide.(10 .1%),.as.well.as.other.substances,.includ-ing.solid.aerosols.and.volatile.organic.compounds.(7 .8%) .

The.specific.weight.of.pollutants.emitted.to.the.atmosphere.was.0 .078.t/mln ..m3.of.produced.gas ..

From.the.total.emission.mass,.the.emission.from.production.facilities.is.1929 .149.tons,.and.the.emission.from.well.construc-tion.is.94 .49.tons .

Regular.inspection.of.toxicity.of.motor.vehicle.exhaust.gases.is.carried.out.while.implementing.maintenance.works.in.the.mechanical-repair.department.of.the.gas.field .

In.2011,.the.Company.conducted.activities.on.emission.reduction ..In.particular,.generation.and.use.of.electric.power.for.lighting.of.gas.field.facilities.was.reduced.by.installing.LED.floodlights.and.lamps,.as.well.as.the.reliability.of.pipelines.and.equipment.increased.as.a.result.of.technical.diagnostics.of.gas.flow-lines ..In.the.future,.the.Company.plans.to.reduce.flaring.of.degassing.gas.at.the.Gas.Treatment.Facility.by.use.of.degassing.gas.as.a.fuel.at.the.heat.regeneration.block.of.three-ethylene.glycol ..A.non-flare.system.of.gas.production.is.under.development:.selection.of.technology.for.reversion.of.degassing.gas.of.process.liquids.and.gas.while.emptying.reservoirs.and.pipelines.in.the.technological.cycle.of.gas.production ..

In.2011,.neither.significant.nor.insignificant.spills.occurred,.and.emergency.emissions.and.discharges.of.pollutants.into.the.atmo-sphere.were.not.registered .

In.the.reporting.year,.the.total.amount.of.greenhouse.gas.emis-sions.(records.are.kept.based.on.STO.Gazprom.Standards.–.102-2011.“Greenhouse.gas.emissions.inventory”).was.181.918.tons.of.

CO2-equivalent.(there.were.272.tons.of.indirect.emissions.among.them,.according.to.calculation.methods.of.HSE.MS.of.Wintershall.Holding.GmbH.(WINS).–.(HSE.MS)),.that.is.greater.by.94.172.tons.than.in.2010 ..The.rise.in.emissions.is.connected.with.the.increase.of.the.cumulative.operating.time.of.gas-compressor.units.of.the.Boost.Compressor.Station .

Special.heat.stabilizers.represented.by.hermetically-sealed.metal.pipes.buried.up.to.8.meters.underground.are.used.for.freezing.and.temperature.stabilization.of.permanently.frozen.soil ..Carbonic.acid.totalling.1.kg.is.used.as.a.cooling.agent ..Replenishment.or.replacement.of.carbonic.acid.is.not.envisaged.during.the.opera-tion.life.of.heat.stabilizers .

As.for.ozone-depleting.substances.included.in.Annexes.A,.B,.C.and.E.of.the.Montreal.Protocol.on.Substances.that.Deplete.the.Ozone.Layer,.there.was.no.emission.of.them.in.2011 ..Refriger-ant.gas.(R404а).used.for.air.conditioning.and.refrigerating.units.(designed.for.food.storage).has.zero.ozone.depletion.potential ..As.of.today,.no.limitations.for.utilization.of.Refrigerant.gas.R404a.are.planned.in.Russia.until.2020,.which.corresponds.to.the.require-ments.of.the.Montreal.Protocol .

The.Company.supplies.water.from.aquifers ..Water.intake.from.superficial.reservoirs.was.not.implemented ..Water.supply.was.carried.out.on.the.basis.of.all.the.required.permission.documents .

Total.volume.of.produced.water.in.2011.was.64.600.m3,.including:

.� 56.440.m3.from.underground.aquifers.(60.490.m3.in.2010);

.� 81.60.m3.–.formation.water.produced.jointly.with.natural.gas .

Production.of.underground.water.was.only.28 .4%.of.the.estab-lished.limit.(30 .4%.in.2010) ..Water.produced.from.underground.aquifers.is.treated.in.domestic.water.purification.units.in.accor-dance.with.the.sanitary.standards .

Reduction.of.water.consumption.in.2011.compared.with.2010.was.caused.as.a.result.of.lessening.of.need.in.water.during.the.construction.of.development.wells.that.was.related.to.completion.of.drilling.works.in.the.first.quarter.of.2011 .

A.domestic.wastewater.disposal.system.operates.in.gas.field ..It.provides.deep.injection.of.industrial.and.domestic.wastes.after.their.treatment.at.the.special.units.of.the.Company .

2.093.tons.of.wastes.were.utilized.in.2011.compared.to.3.848.tons.in.2010 ..98 .8%.of.the.total.quantity.of.the.produced.wastes.are.low-hazard.wastes ..71%.of.all.wastes.are.utilized.in.the.Com-pany’s.own.solid.wastes.landfills,.the.rest.part.is.transferred.for.repeated.use.or.utilization.by.outside.organizations .

The.Company.maintains.technical.condition.of.the.production.equipment.at.the.corresponding.level,.implements.environmental.protection.measures.for.maximum.possible.prevention.of.envi-ronment.contamination.and.reduction.of.negative.impact.of.the.industrial.and.economic.activity.on.nature .



Main indicators of environmental protection activities

No. Indicator Unit of measurement 2010 2011 Deviation from

2010, %Forecast for

2012

1 . Gross.emissions.of.dangerous.wastes.into.the.atmosphere.–.total thous ..tons 1 .678 2 .023 20 .6 3 .132

Including:

within.permissible.emission.limits.(PEL) -”- 1 .678 1 .996 19 3 .132

within.temporarily.approved.emission.limit.(TAEL).(above.PEL) -”- 0 0 0 0

above-limit.emissions.(above.TAEL) -”- 0 0 .026 100 0

Including:

gross.emissions.of.methane -”- 0 .908 1 .326 46 1 .431

Specific.NOx.emissions.(per.transport.unit) tons/bln ..m3•km 0 0 0 0

Specific.NOx.emissions.(per.unit.of.fuel.gas) thous ..tons./mln ..m3 0 .002 0 .002 0 0 .008

2 . Intake.of.water.–.total thous ..m3 86 .57 56 .4 -34 .9 66

3 . Water.discharge.–.total thous ..m3 47 .87 52 .72 10 .1 63 .96

4 . Wastes.per.year.–.total thous ..tons 3 .848 2 .093 -45 .6 0 .264

Including.wastes.sent.for.disposal. thous ..tons 3 .751 1 .998 -46 .7 0 .171

5 . Waste.ratio.sent.for.disposal.

%.of.amount.of.waste.produced.during.the.reporting.period.

taking.into.consideration.waste.availability.for.the.beginning.of.

the.year.

97 .45 95 .4 -2 65

6 . Land.re-cultivated.area.per.year. ha 1.687 .06 160 .7 -90 .5 85

7 . Expenses.for.environmental.protection.–.total mln ..rub . 384 .7 103 .5 -73 213 .2

8 . Current.expenses.for.environmental.protection.measures.–.total thous ..rub . 103.837 103.502 -0 .3 207.945

9 . Expenses.for.development.and.approval.of.environmental.documents thous ..rub . 93 .76 1.182 1.160 1.053

10 . Expenses.for.production.environmental.monitoring.and.production.ecological.control. thous ..rub . 6.772 .36 6.006 -11 .3 4737

11 . Expenses.for.major.repair.of.fixed.assets.on.environmental.protection. thous ..rub . 10.320 .3 0 -100 0

12 . Payment.for.negative.environmental.impacts.–.total thous ..rub . 1.423 .68 1.108 .4 -22 .1 491 .6

Including:

environmental.impact.within.permitted.limits.(emissions,.discharges,.waste.disposal) -”- 1.423 .68 1.026 .6 -27 .9 491 .6

environmental.impact.above.permitted.limits.(emissions,.discharges,.waste.disposal) -”- 0 81 .8 100 0

Fines.imposed.for.breaking.of.environmental.regulations. thous ..rub . 0 0 0 0

Legal.actions.for.recovery.of.compensation.of.damage.caused.to.environment,.including.resulting.from.accidents. thous ..rub . 0 0 0 0

13 . Investments.into.Fixed.capital,.directed.to.environmental.protection.–.total mln ..rub . 280 .94 0 -100 4 .816

14 . Number.of.inspections.by.state.environmental.agencies. number 0 0 0 0

15 . Number.of.violations.of.environmental.regulations.(according.to.inspection.acts.of.state.environmental.agencies) number 0 0 0 0

59


Main directions of regional policy and interaction with interested partiesSustainable.development.of.OJSC.Severneftegazprom.is.inextri-cably.linked.with.the.establishment.of.long-term.partnership.with.operations.areas.and.interaction.with.interested.parties.through.implementation.of.mutual.projects.in.accordance.with.the.follow-ing.principles:

.� respect.of.opinion.of.an.interested.party;

.� timely.notification.of.interested.parties;

.� interaction.on.a.regular.basis;

.� observance.of.obligations.undertaken.and.the.requirement.to.observe.them.by.interested.parties .

In.order.to.determine.key.interested.parties.of.social.links.integra-tion.which.can.influence,.or.on.the.contrary,.can.be.influenced.in.

the.process.of.production.activity.implementation.and.selection.of.channels.of.interaction.with.such.people.and.organizations,.the.Company.has.developed.an.internal.document.–.the.Public.Con.sultation.and.Disclosure.Plan.(PCDP) ..The.document.describes.the.procedures.of.information.disclosure.in.accordance.with.the.requirements.of.the.Russian.Law.and.international.standards,.carrying.out.consultations.of.the.Company.with.interested.parties,.as.well.as.describes.the.mechanism.of.recording.the.responses.and.opinions.of.population.and.employees.of.the.Company.on.a.regular.basis.during.the.entire.life.cycle.of.the.project .

The.generalized.information.regarding.the.interested.parties.with.which.the.Company.has.an.active.dialogue.is.presented.below:.

Sector Organization/representative Interaction subject Periodicity Interaction method

sTaT

e ag

eNCI

es a

ND

INsT

ITU

TIO

Ns

Administration.of.Municipal.Formation.of.Krasnoselkup.District.

Fulfilment.of.conditions.of.the.Licence.Agreement,.charitable.and.sponsorship.assistance,.interaction.on.social.and.economic.issues.of.the.region,.periodical.reporting.on.activity.including.reporting.on.proper.use.of.funds .

Discussion.of.amount,.types.and.directions.of.use.of.charitable.and.sponsorship.assistance.in.the.medium-term.and.short-term.planning.horizons .

Personal.meetings,.preparation.of.information.letters,.formation.of.additional.agreements.to.the.General.agreements.for.the.coming.period,.reporting.on.fulfillment.of.contractual.obligations .

Administration.of.Municipal.Formation.of.Purovskiy.District

“Lesa.Yamala”.(“Forests.of.Yamal”).District.Autonomous.Institution.

Regular.reporting,.obtaining.permissions.–.interaction.established.by.the.law.of.the.Russian.Federation .

In.accordance.with.the.requirements.of.the.law.of.the.Russian.Federation,.if.required .

Personal.meetings,.preparation.of.information.letters.and.reporting.documents .

Directorate.of.the.Federal.Supervisory.Natural.Resources.Management.Service.(Rosprirodnadzor).for.Yamalo-Nenetsky.Autonomous.District.

Directorate.of.the.Federal.Environmental,.Process.and.Nuclear.Supervision.Agency.of.the.Russian.Federation.(Rostekhnadzor).for.Yamalo-Nenetsky.Autonomous.District

Directorate.of.the.Federal.Service.on.Customers’.Rights.Protection.and.Human.Well-Being.Surveillance.(Rospotrebnadzor).for.Yamalo-Nenetsky.Autonomous.District

Department.for.Natural.Resources.Management.and.Oil.and.Gas.Complex.Development.of.the.Administration.of.Yamalo-Nenetsky.Autonomous.District

“Yamal-nedra”.State.Administration.

Federal.Agency.for.Water.Resources.for.Yamalo-Nenetsky.Autonomous.District

Nizhneobskoye.Basin.and.Water.Resources.Authority.(Department.for.Yamalo-Nenetsky.Autonomous.District)



Sector Organization/representative Interaction subject Periodicity Interaction method

eMPl

OYee

s

Gas.field.workers. Fulfilment.of.requirements.of.labour.protection.and.fire.safety.

Not

ifica

tion.

on.th

e.pr

ojec

t.(ch

ange

s.in

.pro

duct

ion.

proc

ess,

.env

ironm

enta

l.and

.soc

ial.i

nnov

atio

ns) ..

Acce

ptan

ce.o

f.res

pons

es.a

nd.o

pini

ons .

Training.given.by.the.representatives.of.the.Labour.Protection.and.Fire.Safety.Department.on.a.regular.basis.in.accordance.with.the.internal.normative.documents

Not

ifica

tion.

on.th

e.pr

ojec

t.–.w

hen.

requ

ired.

new

swor

thy.

info

rmat

ion .

Personal.meetings .Information.on.the.project.is.placed.on.information.bulletin.boards.(operation.and.maintenance.block,.rotational.camp) .Boxes.for.collecting.responses.and.opinions ..Submission.of.written.statements.to.top.management ..Telephone.hotline

Employees.of.subcontracting.organizations.working.in.gas.fields.

Fulfilment.of.requirements.to.environmental.protection.

Training.given.by.the.representatives.of.the.Environmental.Protection.Department.after.starting.the.works.at.the.site.

Security.guards.working.in.the.territory.of.gas.deposits.

Requirements.and.responsibilities.in.the.process.of.work.

Requirements.and.responsibilities.in.the.process.of.work.shall.be.stated.in.the.Agreement.with.the.Private.Security.Agency.

Employees.of.the.Company.(offices.in.Moscow,.city.of.Novy.Urengoy,.Krasnoselkup.settlement,.Urengoy.settlement)

News.distribution.by.email .Submission.of.written.statements.to.top.management .Boxes.for.collecting.responses.and.opinions .Telephone.hotline

POPU

laTI

ON

Citizens.of.Krasnoselkup.and.Purovskiy.regions.

Mass.media .Boxes.for.collecting.responses.and.opinions .Telephone.hotline

Mas

s M

eDIa

Municipal.media.(“Severniy.Kray”.(“Northern.Territory”).newspaper,.“Alliance”.television.and.radio.broadcasting.company,.“Severniy.Luch”.(“Northern.Ray”).newspaper,.“Luch”.(“Ray”).television.and.radio.broadcasting.company

In.accordance.with.the.Publication.Plan.(according.to.the.Budget.of.income.and.expenditures.of.the.Company)

Placement.of.announcements,articles,.interviews,.reports,.video.plots

OR

ga

NIz

aTIO

Ns

“Polyarniy”.Sovkhoz..(Krasnoselkup.settlement)

Mass.Media.Agreements.on.Cooperation

OJSC.Gazprom

Determination.of.the.Company’s.development.strategy,.approval.of.reports.on.execution.of.annual.budgets.and.work.programmes.

In.accordance.with.the.working.meeting.plan:.Committee.on.technical.issues,.Technical.Dialogue,.Board.of.Directors

Personal.meetings .Submission.of.written.statements .Telephone.communication

Wintershall.Holding.GmbH.

E .ON.Ruhrgas.E&P.GmbH.

CJSC.Gazprom.YRGM.Trading Work.within.the.framework.of.liabilities.under.the.gas.supply.agreement,.monthly.payments.for.gas.supply.

Monthly ..If.required,.when.any.business.issue.arises.CJSC.Gazprom.YRGM.Development

Suppliers.and.contractors. Within.the.framework.of.contractual.relations

Within.the.framework.of.contractual.relations

Syndicate.of.banks.participating.in.the.project.finance.transaction Project.financing. Regular.reporting.on.production.

activity.and.financial.results.

NO

N-g

OVe

RN

MeN

Tal

OR

ga

NIz

aTIO

Ns

Russian.Association.of.Indigenous.Peoples.of.the.North.“Yamal.to.our.descendants!”.(Krasnoselkup.and.Purovsk.departments)

Sponsorship.assistance .Notification.on.the.project.(changes.in.production.process,.environmental.and.social.innovations) .Acceptance.of.responses.and.opinions

Discussion.of.sponsorship.assistance.–.for.the.current.period,.notification.on.the.project.–.when.there.is.any.newsworthy.information

Annual.additional.agreements.(one.of.the.parties) ..Personal.meetings .Mass.media .Boxes.for.collecting.responses.and.opinions

Being.aware.of.its.responsibility.for.the.development.of.operations.areas,.OJSC.Severneftegazprom.tends.to.develop.those.areas.where.its.industrial.and.economic.activity.is.car-ried.out ..

The.traditional.areas.of.activity.of.OJSC.Severneftegazprom.include.Krasnoselkup.and.Purovskiy.districts.of.Yamalo-Nenets.Autono-mous.District.–.the.lands.originally.inhabited.by.indigenous.small-numbered.peoples.of.the.North.of.Russia.–.the.Selkups.and.the.

61


Nenets ..Mutual.relations.with.native.citizens,.government.bodies.and.local.self-government.bodies.are.regulated.on.the.basis.of.the.General.Agreements.on.cooperation.concluded.between.the.Com-pany.and.Administrations.of.Purovskiy.and.Krasnoselkup.districts,.as.well.as.additional.agreements.to.them.concluded.annually .

The.priorities.of.the.General.Agreements.include.the.lines.of.activity.such.as.rational.and.effective.use.of.the.subsoil.and.lands.located.in.the.territory.of.regions.where.the.Company.carries.out.its.economic.activity ..Within.the.framework.of.these.Agreements.the.Company.implements.the.activities.directed.to.social.and.economic.development.of.these.territories.provides.significant.support.to.traditional.sectors.of.agriculture.and.life.of.small-num-bered.peoples.of.the.North .

Some.of.the.brightest.examples.of.mutual.activities.include.the.following:

.� reconstruction.of.a.dormitory.block.of.the.boarding.school.for.future.construction.of.kindergarten.in.Tolka.settlement;

.� repair.of.a.church.in.Krasnoselkup.settlement;

.� construction.of.a.medical.and.obstetric.centre.in.Ratta.settle-ment;

.� acquisition.of.accommodation.for.employees.of.OJSC.Kharampurovskaya.Agricultural.Community;

.� acquisition.of.an.oil.barge.to.deliver.fuel.and.lubricants.to.remote.trading.posts.and.fishing.areas.of.OJSC.Kharampu-rovskaya.Agricultural.Community .

The.volume.of.financing.activities.carried.out.by.the.Company.in.the.reporting.period.was.31.mln ..rubles.for.Krasnoselkup.district,.and.10.mln ..rubles.for.Purovskiy.district .

While.financing.social.programmes,.the.Company.creates.a.reli-able.basis.for.further.development.of.Krasnoselkup.and.Purovskiy.districts.in.the.long.term .

While.maintaining.economic.development.in.its.operations.areas,.OJSC.Severneftegazprom.observes.the.obligations.stipulated.in.the.Licence.Agreement.and.its.own.competitive.bidding.policy,.and.all.other.things.being.equal,.it.gives.preference.to.the.Russian.enterprises.and,.first.of.all,.to.local.suppliers.registered.in.the.ter-ritory.of.Yamalo-Nenetsky.Autonomous.District .

An.important.component.of.the.OJSC.Severneftegazprom’s.influ-ence.on.communities.in.order.to.achieve.long-term.success.is.to.render.charitable.assistance ..The.Company.actively.finances.various.charitable.activities:.purchase.of.gifts.to.the.Fisher’s.Day.and.Rein-deer.Herder’s.Day,.assistance.during.the.construction.of.churches,.reimbursement.of.expenses.for.public.utilities.to.retired.veterans,.etc .

Interaction.with.mass.media.is.carried.out.at.federal.and.munici-pal.levels ..The.main.interaction.direction.is.media.coverage.of.industrial.and.social.activities,.events.and.festivities.of..OJSC.Severneftegazprom ..In.particular,.the.media.organizes.regular.coverage.of.the.industrial.and.social.activities,.events.and.celebrations.held.by.the.Company.in.the.framework.of.social.sup-port.of.the.regional.population .

Interaction.with.the.local.population.is.carried.out.in.accordance.with.the.interests.and.rights.of.small-numbered.peoples.of.the.Far.North.to.keep.their.traditional.way.of.life.and.preserve.their.natural.habitat ..Indigenous.small-numbered.peoples.do.not.live.on.the.licensed.site.of.OJSC.Severneftegazprom.or.nearby,.and.this.territory.is.not.an.area.of.their.traditional.land.tenure,.thus,.the.Company’s.activity.does.not.have.a.negative.impact.on.keeping.the.traditional.common.and.cultural.way.of.life.of.the.local.popula-tion.and.customary.forms.of.its.occupation ..

OJSC.Severneftegazprom.has.made.a.significant.contribution.to.upbringing.and.educating.the.rising.generation.of.native.northern-ers.of.Krasnoselkup.region ..In.particular,.the.contribution.included.providing.grants.to.teachers.and.students.of.educational.institu-tions,.paying.tuition.fees.for.students.of.higher.educational.insti-tutions,.purchasing.musical.instruments.for.the.Center.of.leisure.and.folk.arts,.repairing.the.buildings.of.schools.and.kindergar-tens,.and.providing.motor.and.air.transport ..In.order.to.support.traditional.crafts,.the.Company.subsidizes.the.purchase.of.special.clothing,.repair.of.special.equipment,.and.finances.the.celebration.of.public.holidays .

OJSC.Severneftegazprom.has.a.respectful.attitude.towards.sports.providing.sponsorship.support.to.“Geologist”.Children.and.Youth.Sports.School ..The.Sports.School’s.alumni.are.multiple.cham-pions.of.Yamalo-Nenetsky.Autonomous.District.and.winners.of.Russian.and.international.tournaments ..Supporting.sports.teams,.providing.them.with.material.resources,.organizing.matches,.all.these.are.the.Company’s.contribution.to.youth.sports.develop-ment.in.the.operations.area .

The.effective.interaction.of.the.Company.and.local.population.results.in.the.fact.that.during.the.entire.period.of.the.Company’s.industrial.activity.there.was.no.protest.from.indigenous.small-numbered.peoples.of.the.North ..The.Company.understands.that.rendering.active.assistance.to.the.native.population.is.not.only.a.method.of.paying.homage.to.working.people,.but.also.an.oppor-tunity.to.preserve.the.rich.cultural.heritage.for.their.descendants.and.create.favourable.conditions.for.living.and.work.in.difficult.climatic.conditions .


OJSC.Severneftegazprom,.an.open.joint.stock.company,.strives.to.comply.with.the.following.provisions.of.the.Code.of.Corporate.Conduct.recommended.according.to.the.Order.issued.by.the.Federal.Commis-sion.for.the.Securities.Market.of.Russia.under.No ..421/r.on.4.April,.2002:

.� The.shareholders.must.have.access.to.the.list.of.persons.entitled.to.take.part.in.the.general.meeting.of.shareholders.beginning.from.the.date.when.information.about.holding.the.general.meeting.of.shareholders.was.published.and.until.the.closure.of.the.general.meeting.of.shareholders.held.in.person,.and.in.case.of.an.absentee.general.meeting.of.shareholders.–.prior.to.the.deadline.fixed.for.accepting.voting.bulletins;

.� The.shareholder.must.have.the.opportunity.to.bring.in.items.for.the.agenda.of.a.general.meeting.of.shareholders.or.require.the.convocation.of.a.general.meeting.of.shareholders.without.presenting.an.extract.from.the.register.of.shareholders.if.the.shareholder’s.right.to.shares.is.registered.with.the.system.of.maintenance.of.the.register.of.shareholders;

.� The.Charter.of.the.Company.must.provide.for.authorities.of.the.Board.of.Directors.related.to.annual.approval.of.the.Company’s.financial.and.economic.plan;

.� Absence.of.people.found.guilty.of.committing.crimes.in.the.field.of.economic.activities.or.crimes.against.state.authorities,.interests.of.state.service.and.local.governments.or.people,.on.which.administrative.punishments.were.imposed.for.civil.injuries.in.the.field.of.entrepreneurial.activities,.finances,.taxes,.charges.or.securities.market,.among.members.of.the.Company’s.Board.of.Direc-tors;

.� Persons.being.a.general.director,.a.member.of.the.management.board.or.an.employee.of.a.legal.person.competing.with.the.Company.must.not.occupy.positions.in.the.Company’s.Board.of.Direc-tors;

.� The.Charter.of.the.Company.must.provide.for.the.requirement.to.elect.the.Board.of.Directors.by.cumulative.voting;

.� Sessions.of.the.Company’s.Board.of.Directors.must.be.held.for.the.year.of.preparing.the.annual.report.with.a.frequency.of.not.less.than.once.every.six.weeks;

.� Presence.of.the.Company’s.internal.documents.approved.by.the.Board.of.Directors.providing.for.the.procedure.of.forming.and.operating.standing.committees.of.the.Board.of.Directors;

.� The.procedure.of.approving.of.operations.exceeding.the.limits.of.the.Company’s.financial.and.eco-nomic.plan.must.be.provided.in.the.Company’s.inner.documents;

.� A.special.official.(the.Company’s.secretary).in.charge.of.compliance.with.the.procedural.require-ments.guaranteeing.the.implementation.of.rights.and.legal.interests.of.the.Company’s.shareholders.by.the.Company’s.bodies.and.officials.must.be.employed.by.the.Company;

.� The.Charter.of.the.Company.or.internal.documents.must.provide.for.the.requirement.about.approval.of.a.large-scale.transaction.prior.to.it.being.implemented;

.� The.Charter.of.the.Company.must.not.exempt.the.transferee.from.the.obligation.to.offer.sharehold-ers.to.sell.the.ordinary.shares.held.by.them.in.the.Company.upon.redemption;

.� Presence.of.a.special.department.in.the.Company.providing.for.compliance.with.the.internal.control.procedures.(internal.audit.department);

.� Absence.of.people.found.guilty.of.committing.crimes.in.the.field.of.economic.activities.or.crimes.against.state.authorities,.interests.of.state.service.and.local.governments.or.people,.on.which.administrative.punishments.were.imposed.for.civil.injuries.in.the.field.of.entrepreneurial.activities,.finances,.taxes,.charges.or.securities.market,.among.members.of.the.audit.service;

.� Persons.being.members.of.the.Company’s.executive.authorities.as.well.as.people.being.a.general.director,.members.of.the.management.bodies.or.employee.of.a.legal.person.competing.with.the.Company.must.not.occupy.positions.in.the.audit.service .

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The Content of the Report This.report.provides.an.analysis.of.the.corporate.activity.in.connection.with.exploration.and.production.of.natural.gas,.the.economic.activity,.social.policy,.industrial.safety.and.environment.protection ..It.is.the.first.time.that.the.Company.discloses.information.pursuant.to.the.provisions.of.the.GRI.and.integrates.them.into.its.Annual.Report .

Boundaries and scope of the Report The.report.records.the.activity.of.the.Company.in.the.Russian.Federation.as.well.as.its.relationship.with.international.partners ..The.information.used.herein.has.been.prepared.using.the.consistent.methods.applied.in.the.previous.reporting.periods .

In.preparation.of.the.Report,.research.was.carried.out.according.to.which.some.aspects.are.highlighted.which.may.be.of.interested.to.the.widest.range.of.interested.parties ..In.the.compilation.of.the.Report,.all.significant.information.was.taken.into.account.which.may.provide.the.presumed.users.hereof.with.an.adequate.representation.of.the.influence.of.the.Company.to.economics,.the.environment.and.society .

Principles applied to ensure Quality of the Report In.its.Report,.the.Company.has.tried.to.provide.a.balanced.representation.of.items.required.by.Russian.law.and.of.interest.to.interested.parties ..The.Report.includes.data.officially.recognized.by.the.Company.and.supported.by.internal.documents.and.publicly.available.information ..The.Report.generally.does.not.contain.either.professional.terms.or.data.requiring.special.knowledge ..One.of.the.purposes.of.the.Report.is.to.explain.to.interested.parties.the.nature.of.the.Company’s.activity.and.the.characteristics.of.the.deci-sions.made.by.it .

Contact information for issues regarding the Report:anatoliy anatolyevich VecherkaDeputy.General.Director.for.Legal.Issues.and.Corporate.ManagementTelephone:.+7.(495).620.6333e-mail: [email protected]

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APPENDIX.1 ..INDEX.OF.STANDARDS..

OF.THE.GENERAL.REPORTING.INITIATIVE. . . . . . . . . . .65

APPENDIX.2 ..LIST.OF.THE.COMPANY’S..

TRANSACTIONS.IN.THE.YEAR.OF.2011,..

CONSIDERED.AS.INTERESTED.PARTY..

TRANSACTIONS.IN.CONFORMANCE..

WITH.THE.FEDERAL.LAW..

‘ON.JOINT.STOCK.COMPANIES’ .. . . . . . . . . . . . . . . . . .69

APPENDIX.3 ..LIST.OF.THE.COMPANY’S..

TRANSACTIONS.IN.2011.CONSIDERED.AS.MAJOR.

TRANSACTIONS.IN.CONFORMANCE.WITH.THE.

FEDERAL.LAW.‘ON.JOINT.STOCK.COMPANIES’.

AS.WELL.AS.OTHER.TRANSACTIONS.SUBJECT.

TO.THE.PROCEDURE.OF.APPROVAL.OF.MAJOR.

TRANSACTIONS.PURSUANT..

TO.THE.COMPANY’S.CHARTER. . . . . . . . . . . . . . . . . . .76

DIS

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65

Disclosure of Information

Appendix 1. Index of standards of the general Reporting Initiative

Page Comments

1. sTRaTegY aND aNalYsIs

. 1 .1 Statement.from.the.most.senior.decision-maker.of.the.organization.(e .g .,.CEO,.chair,.or.equivalent.senior.position).about.the.relevance.of.sustainability.to.the.organization.and.its.strategy 4-7

. 1 .2 Key.impacts,.risks.and.opportunities 45-49

2. ORgaNIzaTIONal PROfIle

. 2 .1 Name.of.the.organization 12

. 2 .2 Primary.brands,.products.and.services 12

. 2 .3 Operational.structure 22-27

. 2 .4 Location.of.organization’s.headquarters.and.operations 12

. 2 .5 Number.of.countries.in.which.the.organization.operates.and.name.of.countries.where.its.main.operations.are.located.or.are.especially.relevant.to.the.questions.of.sustainability.covered.by.the.report 12,19

. 2 .6 Nature.of.ownership.and.legal.form 12

. 2 .7 Markets.served 19-20

. 2 .8 Markets.attended.(including.a.geographic.description,.sectors.attended,.and.types.of.clients/beneficiaries) 19-20,.51-52

. 2 .9 Significant.changes.regarding.size,.structure.or.ownership.during.the.reporting.period 13-15

. 2 .10 Awards.received.in.the.reporting.period 9

3. RePORT PaRaMeTeRs

. 3 .1 Reporting.period.(such.as.fiscal/calendar.year).for.the.information.provided 3

. 3 .2 Date.of.most.recent.previous.report.(if.any)Irrelevant:.the.Company.announces.Global.Reporting.Initiative.indicators.for.the.first.time

. 3 .3 Reporting.cycle.(annual,.biennial,.etc .) 3

. 3 .4 Contact.information 63

. 3 .5 Defining.report.content 63

. 3 .6 Boundary.of.the.report.(e .g .,.countries,.divisions,.subsidiaries,.leased.facilities,.joint.ventures,.suppliers) ..See.GRI.Boundary.Protocol.for.further.guidance 63

. 3 .7 Statement.about.any.specific.limitations.on.the.scope.or.boundary.of.the.report

. 3 .8 Basis.for.reporting.on.joint.ventures,.subsidiaries,.leased.facilities,.outsourced.operations,.and.other.entities.that.can.significantly.affect.comparability.from.period.to.period.and/or.between.organizations

Irrelevant:.the.Company.announces.Global.Reporting.Initiative.indicators.for.the.first.time

. 3 .9 Data.measurement.techniques.and.the.bases.of.calculations,.including.assumptions.and.techniques.underlying.estimations.applied.to.the.compilation.of.the.Indicators.and.other.information.in.the.report

. 3 .10Explanation.of.the.effect.of.any.re-statements.of.information.provided.in.earlier.reports,.and.the.reasons.for.such.re-statement.(e .g .,mergers/acquisitions,.change.of.base.years/periods,.nature.of.business,.measurement.methods)


. 3 .11 Significant.changes.from.previous.reporting.periods.in.the.scope,.boundary,.or.measurement.methods.applied.in.the.report


. 3 .12 Table.identifying.the.location.of.the.Standard.Disclosures.in.the.report 65-68

. 3 .13 Policy.and.current.practice.with.regard.to.seeking.external.assurance.for.the.report

4. gOVeRNaNCe, COMMITMeNTs aND eNgageMeNT

. 4 .1 Governance.structure.of.the.organization 21-27

. 4 .2 Indicate.whether.the.Chair.of.the.highest.governance.body.is.also.an.executive.officer.(and,.if.so,.their.function.within.the.organization’s.management.and.the.reasons.for.this.arrangement)

General.director.is.not.the.Chairman.of.the.Board.of.Directors .



Page Comments

. 4 .3 For.organizations.that.have.a.unitary.board.structure,.state.the.number.of.members.of.the.highest.governance.body.that.are.independent.and/or.non-executive.members There.are.no.independent.members

. 4 .4 Mechanisms.for.shareholders.and.employees.to.provide.recommendations.or.direction.to.the.highest.governance.body 24-25,.53

. 4 .14 List.of.stakeholder.groups.engaged.by.the.organization 59-60

. 4 .15 Basis.for.identification.and.selection.of.stakeholders.with.whom.to.engage 59

eCONOMIC PeRfORMaNCe INDICaTORs

. EC1Direct.economic.value.generated.and.distributed,.including.revenues,.operating.costs,.employee.compensation,.donations.and.other.community.investments,.retained.earnings,.and.payments.to.capital.providers.and.governments

34-44

. EC2 Financial.implications.and.other.risks.and.opportunities.for.the.organization's.activities.due.to.climate.change

. EC3 Coverage.of.the.organization's.defined.benefit.plan.obligations

. EC4 Significant.financial.assistance.received.from.government

. EC5 Range.of.ratios.of.standard.entry.level.wage.compared.to.local.minimum.wage.at.significant.locations.of.operation

. EC6 Policy,.practices,.and.proportion.of.spending.on.locally-based.suppliers.at.significant.locations.of.operation 61

. EC7 Procedures.for.local.hiring.and.proportion.of.senior.management.hired.from.the.local.community.at.significant.locations.of.operation

. EC8 Development.and.impact.of.infrastructure.investments.and.services.provided.primarily.for.public.benefit.through.commercial,.in-kind,.or.pro.bono.engagement

eNVIRONMeNTal PeRfORMaNCe INDICaTORs

. EN1 Materials.used.by.weight.or.volume

. EN2 Percentage.of.materials.used.that.are.recycled.input.materials

. EN3 Direct.energy.consumption.by.primary.energy.source

. EN4 Indirect.energy.consumption.by.primary.source

. EN5 Energy.saved.due.to.conservation.and.efficiency.improvements

. EN6 Initiatives.to.provide.energy-efficient.or.renewable.energy.based.products.and.services,.and.reductions.in.energy.requirements.as.a.result.of.these.initiatives

. EN7 Initiatives.to.reduce.indirect.energy.consumption.and.reductions.achieved

. EN8 Total.water.withdrawal.by.source

. EN9 Water.sources.significantly.affected.by.the.removal.of.water

.EN10 Percentage.and.total.volume.of.water.recycled.and.reused

.EN11 Location.and.size.of.land.owned,.leased,.managed.in,.or.adjacent.to,.protected.areas.and.areas.of.high.biodiversity.value.outside.protected.areas

.EN12 Description.of.significant.impacts.of.activities,.products,.and.services.on.biodiversity.in.protected.areas.and.areas.of.high.biodiversity.value.outside.protected.areas

.EN13 Habitats.protected.or.restored

.EN14 Strategies,.current.actions,.and.future.plans.for.managing.impacts.on.biodiversity

.EN15 Number.of.IUCN.Red.List.species.and.national.conservation.lists.species.with.habitats.in.areas.affected.by.operations,.by.level.of.extinction.risk

.EN16 Total.direct.and.indirect.greenhouse.gas.emissions.by.weight 57

.EN17 Other.relevant.indirect.greenhouse.gas.emissions.by.weight

.EN18 Initiatives.to.reduce.greenhouse.gas.emissions.and.reductions.achieved

.EN19 Emissions.of.ozone-depleting.substances.by.weight

.EN20 NOx,.SOx,.and.other.significant.air.emissions.by.type.and.weight 56,.58

67


Page Comments

.EN21 Total.water.discharge.by.quality.and.destination

.EN22 Total.weight.of.waste.by.type.and.disposal.method

.EN23 Total.number.and.volume.of.significant.spills 56

.EN24 Weight.of.transported,.imported,.exported.or.treated.waste.deemed.hazardous.under.the.terms.of.the.Basel.Convention.–.Annex.I,.II,.III.and.VIII,.and.percentage.of.transported.waste.shipped.internationally

.EN25 Identity,.size,.protected.status,.and.biodiversity.value.of.water.bodies.and.related.habitats.significantly.affected.by.the.reporting.organization’s.discharges.of.water.and.runoff

.EN26 Initiatives.to.mitigate.environmental.impacts.of.products.and.services,.and.extent.of.impact.mitigation

.EN27 Percentage.of.products.sold.and.their.packaging.materials.that.are.reclaimed.by.category

.EN28 Monetary.value.of.significant.fines.and.total.number.of.non-monetary.sanctions.for.non-compliance.with.environmental.laws.and.regulations

.EN29 Significant.environmental.impacts.of.transporting.products.and.other.goods.and.materials.used.for.the.organization’s.operations,.and.transporting.members.of.the.workforce

.EN30 Total.environmental.protection.expenditures.and.investments.by.type

PeRfORMaNCe INDICaTORs ON aPPROaChes TO laBOUR PRaCTICes aND DeCeNT WORK

. LA1 Total.workforce.by.employment.type,.employment.contract,.and.region 51-52

. LA2 Total.number.and.rate.of.employee.turnover.by.age.group,.gender,.and.region 51-52

. LA3 Benefits.provided.to.full-time.employees.that.are.not.provided.to.temporary.or.part-time.employees,.by.major.operations

. LA4 Percentage.of.employees.covered.by.collective.bargaining.agreements 54-55

. LA5 Minimum.notice.period(s).regarding.significant.operational.changes,.including.whether.it.is.specified.in.collective.agreements

. LA6 Percentage.of.total.workforce.represented.in.formal.joint.management-worker.health.and.safety.committees.that.help.monitor.and.advice.on.occupational.health.and.safety.programmes

. LA7 Rates.of.injury,.occupational.diseases,.lost.days,.and.absenteeism,.and.number.of.work-related.fatalities.by.region 55

. LA8 Education,.training,.counseling,.prevention,.and.risk-control.programmes.in.place.to.assist.workforce.members,.their.families,.or.community.members.regarding.serious.diseases

. LA9 Health.and.safety.topics.covered.in.formal.agreements.with.trade.union

.LA10 Average.hours.of.training.per.year.per.employee.by.employee.category 53-54

.LA11 Programmes.for.skills.management.and.lifelong.learning.that.support.the.continued.employability.of.employees.and.assist.them.in.managing.career.endings

.LA12 Percentage.of.employees.receiving.regular.performance.and.career.development.reviews

.LA13 Composition.of.governance.bodies.and.breakdown.of.employees.per.category.according.to.gender,.age.group,.minority.group.membership,.and.other.indicators.of.diversity

.LA14 Ratio.of.basic.salary.of.men.to.women.by.employee.category

hUMaN RIghTs PeRfORMaNCe INDICaTORs

. HR1 Percentage.and.total.number.of.significant.investment.agreements.that.include.human.rights.clauses.or.that.have.undergone.human.rights.screening

. HR2 Percentage.of.significant.suppliers.and.contractors.that.have.undergone.screening.on.human.rights.and.actions.taken

. HR3 Total.hours.of.employee.training.on.policies.and.procedures.concerning.aspects.of.human.rights.relevant.to.operations,.including.the.percentage.of.employees.trained

. HR4 Total.number.of.incidents.of.discrimination.and.actions.taken

. HR5 Operations.identified.in.which.the.right.to.exercise.freedom.of.association.and.collective.bargaining.may.be.at.significant.risk.and.actions.taken.to.support.these.rights

. HR6 Operations.identified.as.having.significant.risk.for.incidents.of.child.labour,.and.measures.taken.to.contribute.to.the.elimination.of.child.labour 52



Page Comments

. HR7 Operations.identified.as.having.significant.risk.for.incidents.of.forced.or.compulsory.labour,.and.measures.taken.to.contribute.to.the.elimination.of.forced.or.compulsory.labour

. HR8 Percentage.of.security.personnel.trained.in.the.organization’s.policies.or.procedures.concerning.aspects.of.human.rights.that.are.relevant.to.operations

. HR9 Total.number.of.incidents.of.violations.involving.rights.of.indigenous.people.and.actions.taken

sOCIeTY PeRfORMaNCe INDICaTORs

. SO1 Nature,.scope,.and.effectiveness.of.any.programmes.and.practices.that.assess.and.manage.the.impacts.of.operations.on.communities,.including.entering,.operating,.and.exiting 59-61

. SO2 Percentage.and.total.number.of.business.units.analyzed.for.risks.related.to.corruption

. SO3 Percentage.of.employees.trained.in.organization’s.anti-corruption.policies.and.procedures

. SO4 Actions.taken.in.response.to.incidents.of.corruption

. SO5 Public.policy.positions.and.participation.in.public.policy.development.and.lobbying

. SO6 Total.value.of.financial.and.in-kind.contributions.to.political.parties,.politicians.and.related.institutions.by.country

. SO7 Total.number.of.legal.actions.for.SO7.anti-competitive.behaviour,.anti-trust,.and.monopoly.practices.and.their.outcomes

. SO8 Monetary.value.of.significant.fines.and.total.number.of.non-monetary.sanctions.for.non-compliance.with.laws.and.regulations

PRODUCT ResPONsIBIlITY PeRfORMaNCe INDICaTORs

. PR1 Life.cycle.stages.in.which.health.and.safety.impacts.of.products.and.services.are.assessed.for.improvement,.and.percentage.of.significant.products.and.services.categories.subject.to.such.procedures

. PR2 Total.number.of.incidents.of.non-compliance.with.regulations.and.voluntary.codes.concerning.health.and.safety.impacts.of.products.and.services.during.their.life.cycle,.by.type.of.outcomes

. PR3 Type.of.product.and.service.information.required.by.procedures,.and.percentage.of.significant.products.and.services.subject.to.such.information.requirements

. PR4 Total.number.of.incidents.of.non-compliance.with.regulations.and.voluntary.codes.concerning.product.and.service.information.and.labelling.by.type.of.outcomes

. PR5 Practices.related.to.customer.satisfaction,.including.results.of.surveys.measuring.customer.satisfaction 33

. PR6 Programmes.for.adherence.to.laws,.standards,.and.voluntary.codes.related.to.marketing.communications,.including.advertising,.promotion,.and.sponsorship

. PR7 Total.number.of.incidents.of.non-compliance.with.regulations.and.voluntary.codes.concerning.marketing.communications,.including.advertising,.promotion,.and.sponsorship,.by.type.of.outcomes

. PR8 Total.number.of.substantiated.complaints.regarding.breaches.of.privacy.and.loss.of.customer.data

. PR9 Monetary.value.of.significant.fines.for.non-compliance.with.laws.and.regulations.concerning.the.provision.and.use.of.products.and.services

.– fully disclosed

.– partially disclosed

.– not disclosed

69


Appendix 2. list of the Company’s transactions in the year of 2011, considered as interested party transactions in conformance with the federal law ‘On joint stock companies’.

Essential conditionsPersons interested in settlement of

the transaction

Management body that took the decision on approval of the

transaction

1 .

Supplementary.Agreement.No ..01/11.of.01 .01 .2011.to.Agreement.No .272.of.01 .04 .2007.concluded.with.LLC.Gazprom.Svyaz.according.to.which.LLC.Gazprom.Svyaz.provides.telecommunications.services.with.an.access.through.Gazprom.network ..The.agreement.amount.is.RUB.241.711 .20 .

OAO.Gazprom,.shareholder.of.the.Company. Annual.General.Meeting,.Minutes.of.29 .06 .2010.No ..11/2010

2 .

Agreement.No ..S1-11/045.of.18 .03 .2011.concluded.with.LLC.Gazprom.Gazobezopasnost.(the.Contractor).according.to.which.the.Contractor.undertakes.to.ensure.blowout.safety.control.during.construction.(drilling,.cementing.and.development).of.key.wells.of.the.Yuzhno-Russkiy.licence.area ..The.agreement.amount.is.781.322 .84.incl ..VAT .


3 .

Agreement.No ..10007.AN.28 .04 .2011.concluded.with.OJSC.YuzhNIIgiprogaz.for.designer’s.supervision.of.construction.of.‘Health.rehabilitation.centre.at.the.Shift.village.of.the.Yuzhno-.Russkoye.oil.and.gas.condensate.field’ ..The.agreement.amount.is.RUB.2.066.723 .98.incl ..VAT ..Performance.time:.from.01.May.to.30.December,.2011 .


4 .

Agreement.No ..16/SNGP-2011/11PP085.of.29 .01 .2011.concluded.with.SOJSC.Orgenergogaz.for.the.acquisition.of.rights,.installation,.support.and.maintenance.of.Remote.Terminal.of.Infotech.Data.Acquisition.System.software ..The.agreement.amount.is.RUB.3.500.000.(incl ..VAT.of.RUB.251.694 .92) ..


5 .

Project.Finance.Agreement.regarding.Yuzhno-.Russkoye.oil.and.gas.field.w/n.of.16 .03 .2011.concluded.between.the.Company.(the.Borrower).and.a.group.of.foreign.banks:.UniCredit.Bank.AG,.ING.Bank.N .V .,.Credit.Agricole.CIB.CJSC,.Credit.Agricole.CIB,.Société.Européenne.de.Banque;.Credit.Agricole.Corporate.and.Investment.Bank;.Gazprombank.(Open.Joint.Stock.Company);.ING.Bank.N .V .;.Mizuho.Corporate.Bank.Nederland.N .V .;.Natixis;.SGBT.Asset.Based.Funding.S .A .;.Sumitomo.Mitsui.Finance.Dublin.Limited;.Bank.of.Tokyo-Mitsubishi.UFJ.(Holland).N .V .;.UniCredit.Bank.AG;.UniCredit.Bank.CJSC;.BNP.Paribas;.BNP.Pariba.Bank.(CJSC);.WestLB.AG,.London.Branch;.Dz.Bank.AG,.London.Branch).(the.Creditors) ..The.Borrower.was.granted.a.term.triple-currency.loan.facility.in.Euro,.USD.and.Rubles.of.not.more.than.the.amount.equivalent.to.Euro.1.100.000.000 .

OAO.Gazprom,.shareholder.of.the.Company. General.Meeting,.Minutes.No ..16/2011.of.15 .03 .2011

6 .

G&I.Loan.of.21 .04 .2011.regarding.guarantee.provision.by.OJSC.Gazprom.between.the.Company.(the.Borrower).and.OJSC.Gazprom.(the.Lender) ..The.Borrower.acting.as.the.guarantor.pursuant.to.Guarantee.Agreement.shall.undertake.a.liability.before.the.security.agent.to.provide.any.amount.to.the.Borrower.payable.by.the.guarantor.pursuant.to.the.Guarantee.Agreement.under.the.terms.of.the.Loan.Facility.Agreement ..The.borrowed.assets.shall.amount.up.to.RUB.100.000.000.000 ..Interest.under.the.Loan.shall.be.5 .6%.per.annum.or.any.other.interest.rate.as.may.be.agreed.by.the.parties .

OAO.Gazprom,.shareholder.of.the.Company,.Members.of.the.Board.of.Directors:..A ..I ..Medvedev,.O ..P ..Pavlova,..V ..V ..Cherepanov

General.Meeting,.Minutes.No ..16/2011.of.15 .03 .2011

7 .

Agreement.of.21 .04 .2011.on.terms.of.discharge.of.claims.arising.from.subrogation.rights.(G&I.Resulting.Loan).concluded.by.and.between.the.Company.(the.Borrower).and.OJSC.Gazprom.(the.Lender) ..The.Borrower.acting.as.the.guarantor.shall.be.granted.a.subrogation.right.regarding.OJSC.Severneftegazprom.in.relation.to.any.amounts.payable.by.the.guarantor.in.favour.of.the.guarantee.agent.under.the.Guarantee.Agreement ..The.debt.arising.from.the.subrogation.rights.shall.not.exceed.that.equivalent.to.EUR.506.000.000.(as.fixed.in.USD,.Euro.and.Rubles.as.of.the.date.of.signing.of.project.finance.agreement) ..Annual.interest.rate:.for.Euro,.2,50%.and.EURIBOR.over.6.months;.for.USD,.2 .50%.and.LIBOR.over.six.months;.for.Ruble,.11 .4%;.or.any.other.interest.rate.as.may.be.agreed.by.the.parties ..



8 .

G&I.Loan.Agreement.of.21 .04 .2011.(CJSC.Gazprom.YRGM.Trading).concluded.by.and.between.concluded.by.and.between.the.Company.(the.Borrower).and.CJSC.Gazprom.YRGM.Trading.(the.Lender) ..The.Lender.acting.as.the.guarantor.under.the.guarantee.agreement.undertakes.before.the.security.agent.to.provide.the.Company.with.any.amount.payable.by.the.guarantor.pursuant.to.the.Guarantee.Agreement.pursuant.to.the.terms.of.the.Loan.Agreement ..Borrowed.assets.shall.amount.up.to.RUB.88.000.000.000 ..Interest.rate:.5 .6%.per.annum.or.any.other.interest.rate.as.may.be.agreed.by.the.parties .





the transaction


transaction

9 .

Agreement.on.terms.of.discharge.of.claims.arising.from.subrogation.rights.(G&I.Resulting.Loan).of.21 .04 .2011.(CJSC.Gazprom.YRGM.Trading).concluded.by.and.between.the.Company.(the.Borrower).and.CJSC.Gazprom.YRGM.Trading.(the.Lender) ..The.Lender.acting.as.the.guarantor.shall.be.entitled.to.a.subrogation.right.against.the.Company.in.relation.to.any.amounts.payable.by.the.guarantor.in.favour.of.the.security.agent.under.the.Guarantee.Agreement ..The.debt.arising.from.the.subrogation.rights.shall.not.exceed.that.equivalent.to.EUR.442.750.000 ..Annual.interest.rate:.for.Euro,.2 .50%.and.EURIBOR.over.6.months;.for.USD,.2.50%.and.LIBOR.over.six.months;.for.Ruble,.11 .4%;.or.any.other.interest.rate.as.may.be.agreed.by.the.parties .


10 .

G&I.Loan.Agreement.of.21 .04 .2011.(CJSC.Gazprom.YRGM.Development).concluded.by.and.between.the.Company.(the.Borrower).and.CJSC.Gazprom.YRGM.Development.(the.Lender) ..The.Lender.acting.as.the.guarantor.shall.unconditionally.and.irrevocably.undertake.before.the.security.agent.to.provide.the.Company.acting.as.the.seller.with.any.amount.payable.by.the.guarantor.pursuant.to.the.Guarantee.Agreement.under.the.Loan.Agreement ..Borrowed.assets.amount.up.to.RUB.63.000.000.000 ..Interest.rate.on.the.Loan:.5 .6%.per.annum.or.any.other.interest.rate.as.may.be.agreed.by.the.parties .


11 .

Agreement.on.terms.of.discharge.of.claims.arising.from.subrogation.rights.(G&I.Resulting.Loan).of.21 .04 .2011.(CJSC.Gazprom.YRGM.Development).concluded.by.and.between.the.Company.(the.Borrower).and.CJSC.Gazprom.YRGM.Development.(the.Lender) ..The.Lender.acting.as.the.guarantor.is.entitled.to.the.subrogation.rights.against.the.Company.in.relation.to.any.amounts.paid.by.the.guarantor.in.favour.of.the.security.agent.under.the.Guarantee.Agreement ..The.amount.of.debt.arising.from.the.subrogation.rights.shall.not.exceed.that.equivalent.to.EUR.316.250.000 ..Annual.interest.rate:.for.Euro,.2,50%.and.EURIBOR.over.6.months;.for.USD,.2 .50%.and.LIBOR.over.six.months;.for.Ruble,.11 .4%;.or.any.other.interest.rate.as.may.be.agreed.by.the.parties .


12 .

Gazprom.TradeCo.1.Loan.Agreement.of.21 .04 .2011.concluded.by.and.between.the.Company.(the.Borrower).and.OJSC.Gazprom.(the.Lender) ..The.Lender.acting.as.the.guarantor.shall.unconditionally.and.irrevocably.undertake.before.the.security.agent.to.provide.the.Company.acting.as.the.seller.with.any.amount.payable.by.the.guarantor.pursuant.to.the.Guarantee.Agreement.under.the.Loan.Agreement ..Borrowed.assets.amount.up.to.RUB.88.000.000.000 ..Interest.rate.under.the.Loan:.5 .6%.per.annum.or.any.other.interest.rate.as.may.be.agreed.by.the.parties .



13 .

Agreement.on.terms.of.discharge.of.claims.arising.from.subrogation.rights.(Gazprom.TradeCo.1.Resulting.Loan).of.21 .04 .2011.concluded.by.and.between.the.Company.(the.Borrower).and.OJSC.Gazprom.(the.Lender) ..The.Lender.acting.as.the.guarantor.is.entitled.to.the.subrogation.rights.against.the.Company.in.relation.to.any.amount.paid.by.the.guarantor.in.favour.of.the.security.agent.pursuant.to.the.Guarantee.Agreement ..The.amount.of.debt.arising.from.the.subrogation.rights.shall.not.exceed.that.equivalent.to.EUR.442,750,000 ..Annual.interest.rate:.for.Euro,.2 .50%.and.EURIBOR.over.6.months;.for.USD,.2 .50%.and.LIBOR.over.six.months;.for.Ruble,.11 .4%;.or.any.other.interest.rate.as.may.be.agreed.by.the.parties .

OAO.Gazprom,.shareholder.of.the.Company,.Members.of.the.Board.of.Directors:.A ..I ..Medvedev,.O ..P ..Pavlova,.V ..V ..Cherepanov


14 .

Gazprom.TradeCo.2.Loan.Agreement.of.21 .04 .2011.concluded.by.and.between.the.Company.(the.Borrower).and.OJSC.Gazprom.(the.Lender) ..The.Lender.acting.as.the.guarantor.shall.unconditionally.and.irrevocably.undertake.before.the.security.agent.to.provide.OJSC.Severneftegazprom,.acting.as.the.seller,.with.any.amount.payable.by.the.guarantor.pursuant.to.the.Guarantee.Agreement.under.the.Loan.Agreement ..Borrowed.assets.amount.up.to.RUB.63.000.000.000 ..Interest.rate.on.the.Loan:.5 .6%.per.annum.or.any.other.interest.rate.as.may.be.agreed.by.the.parties .



15 .

Agreement.on.terms.of.discharge.of.claims.arising.from.subrogation.rights.(Gazprom.TradeCo.2.Resulting.Loan).of.21 .04 .2011.concluded.by.and.between.the.Company.(the.Borrower).and.OJSC.Gazprom.(the.Lender) ..The.Lender.acting.as.the.guarantor.is.entitled.to.the.subrogation.rights.against.the.Company.in.relation.to.any.amount.paid.by.the.guarantor.in.favour.of.the.security.agent.pursuant.to.the.Guarantee.Agreement ..The.amount.of.debt.arising.from.the.subrogation.rights.shall.not.exceed.that.equivalent.to.EUR.316.250.000 ..Annual.interest.rate:.for.Euro,.2 .50%.and.EURIBOR.over.6.months;.for.USD,.2 .50%.and.LIBOR.over.six.months;.for.Ruble,.11 .4%;.or.any.other.interest.rate.as.may.be.agreed.by.the.parties .



16 .

Operation.accounts.direct.debit.agreement.of.16 .03 .2011.concluded.by.an.between.the.Company.(the.Client),.UniCredit.Bank.AG.(the.facility.agent).and.OJSC.Gazprombank.(operation.accounts.bank) ..To.ensure.fulfilment.of.the.Company’s.obligations.under.the.Project.Finance.Agreement.UniCredit.Bank.AG.was.granted.a.right.to.directly.debit.funds.off.the.accounts.of.OJSC.Severneftegazprom.opened.with.OJSC.Gazprombank.in.cases.set.out.in.the.Direct.Debit.Agreement ..


71



the transaction


transaction

17 .

BASF.TradeCo.1.Loan.Agreement.of.21 .04 .2011.concluded.by.and.between.the.Company.(the.Borrower).and.BASF.SE.(the.Lender) ..The.Lender.acting.as.the.guarantor.shall.undertake.before.the.security.agent.to.provide.the.Company,.acting.as.the.seller,.with.any.amount.payable.by.the.guarantor.pursuant.to.the.Guarantee.Agreement.under.the.Loan.Agreement ..Borrowed.assets.amount.up.to.RUB.88.000.000.000 ..Interest.rate.on.the.Loan:.5 .6%.per.annum.or.any.other.interest.rate.as.may.be.agreed.by.the.parties .

Wintershall.Holding.GmbH,.shareholder.of.the.Company


18 .

Agreement.on.terms.of.discharge.of.claims.arising.from.subrogation.rights.(BASF.TradeCo.1.Resulting.Loan).of.21 .04 .2011.concluded.by.and.between.the.Company.(the.Borrower).and.BASF.SE.(the.Lender) ..The.Lender.acting.as.the.guarantor.is.entitled.to.the.subrogation.rights.against.the.Company.any.amount.payable.by.the.guarantor.in.favour.of.the.security.agent.pursuant.to.the.Guarantee.Agreement ..The.amount.of.debt.arising.from.the.subrogation.rights.shall.not.exceed.that.equivalent.to.Euro.442.750.000 ..Annual.interest.rate:.for.Euro,.2,50%.and.EURIBOR.over.6.months;.for.USD,.2 .50%.and.LIBOR.over.six.months;.for.Ruble,.11 .4%;.or.any.other.interest.rate.as.may.be.agreed.by.the.parties .



19 .

E .ON.AG.TradeCo.2.Loan.Agreement.of.21 .04 .2011.concluded.by.and.between.the.Company.(the.Borrower).and.E .ON.AG.(the.Lender) ..The.Lender.acting.as.the.guarantor.shall.undertake.before.the.security.agent.to.provide.the.Company,.acting.as.the.seller,.with.any.amount.payable.by.the.guarantor.pursuant.to.the.Guarantee.Agreement.under.the.Loan.Agreement ..Borrowed.assets.amount.up.to.RUB.63.000.000.000 ..Interest.rate.on.the.Loan:.5 .6%.per.annum.or.any.other.interest.rate.as.may.be.agreed.by.the.parties .

E .ON.Ruhrgas.E&P.GmbH,.shareholder.of.the.Company


20 .

Agreement.on.terms.of.discharge.of.claims.arising.from.subrogation.rights.(E .ON.AG.TradeCo.2.Resulting.Loan).of.21 .04 .2011.concluded.by.and.between.the.Company.(the.Borrower).and.E .ON.AG.(the.Lender) ..The.Lender.acting.as.the.guarantor.is.entitled.to.the.subrogation.rights.against.the.Company.in.relation.to.any.amount.paid.by.the.guarantor.in.favour.of.the.security.agent.pursuant.to.the.Guarantee.Agreement ..The.amount.of.debt.arising.from.the.subrogation.rights.shall.not.exceed.that.equivalent.to.Euro.316,250,000 ..Annual.interest.rate:.for.Euro,.2 .50%.and.EURIBOR.over.6.months;.for.USD,.2 .50%.and.LIBOR.over.six.months;.for.Ruble,.11 .4%;.or.any.other.interest.rate.as.may.be.agreed.by.the.parties .



21 .

Loan.Facility.Agreement.No ..1/11.of.28 .03 .2011.concluded.with.OJSC.Gazprom.on.granting.the.Company.with.an.amount.of.no.more.than.RUB.13.000.000.000 .00 ..Interest.rate.shall.be.no.more.than.10%.(ten.per.cent).per.annum.on.actual.loans.receivable ..The.loan.(together.with.any.accrued.and.unpaid.interest).shall.be.repaid.on.or.before.30.September,.2011 ..The.loan.shall.be.used.for.repayment.of.debt.related.to.the.loans.granted.by.the.group.of.banks .



22 .

Loan.Facility.Agreement.No ..3/E .ON-3.of.28 .03 .2011.concluded.with.E .ON.Ruhrgas.E.&.P.GmbH.on.granting.the.Company.with.an.amount.of.no.more.than.RUB.8.125.000.000 .00 ..Interest.rate.shall.be.no.more.than.10%.(ten.per.cent).per.annum.on.actual.loans.receivable ..The.loan.(together.with.any.accrued.and.unpaid.interest).shall.be.repaid.on.or.before.30.September,.2011 ..The.loan.shall.be.used.for.repayment.of.debt.related.to.the.loans.granted.by.the.group.of.banks .

GmbH,.E .ON.Ruhrgas.E&P.GmbH,.shareholder.of.the.Company,.members.of.the.Board.of.Directors.Frank.Allan.Sivertsen


23 .

Loan.Facility.Agreement.No ..10/WH-15.of.28 .03 .2011.concluded.with.Wintershall.Vermögensverwaltungsgesellschaft.mbH.on.granting.the.Company.with.an.amount.of.no.more.than.RUB.11.375.000.000 .00 ..Interest.rate.shall.be.no.more.than.10%.(ten.per.cent).per.annum.on.actual.loans.receivable ..The.loan.(together.with.any.accrued.and.unpaid.interest).shall.be.repaid.on.or.before.30.September,.2011 ..The.loan.shall.be.used.for.repayment.of.debt.related.to.the.loans.granted.by.the.group.of.banks .

OAO.Gazprom,.Wintershall.Holding.GmbH,.shareholders.of.the.Company


24 .

Supplementary.Agreement.No ..11.of.30 .06 .2011.to.Gas.Supply.Agreement.No .25.Pk-2007.of.13 .12 .2007.concluded.with.OJSC.Gazprom.on.setting.the.price.of.gas.supplied.in.the.second.half.of.the.year.of.2011.in.the.amount.of.RUB.981 .55.per.1.000.cub .m ..of.gas.(excl ..VAT) .



25 .

Supplementary.Agreement.No ..9.of.30 .06 .2011.to.Gas.Supply.Agreement.No .28.Pk-2007.of.13 .12 .2007.concluded.with.CJSC.Gazprom.YRGM.Trading.on.setting.the.price.of.gas.supplied.in.the.second.half.of.the.year.of.2011.in.the.amount.of.RUB.981 .55.per.1.000.cub .m ..of.gas.(excl ..VAT) .

OAO.Gazprom,.shareholder.of.the.Company General.Meeting,.Minutes.No ..18/2011.of.24 .06 .2011

26 .

Supplementary.Agreement.No ..5.of.30 .06 .2011.to.Gas.Supply.Agreement.No .144/SNGP-2009.of.29 .10 .2009.concluded.with.CJSC.Gazprom.YRGM.Development.on.setting.the.price.of.gas.supplied.in.the.second.half.of.the.year.of.2011.in.the.amount.of.RUB.981 .55.per.1.000.cub .m ..of.gas.(excl ..VAT) .

OAO.Gazprom,.shareholder.of.the.Company General.Meeting,.Minutes.No ..18/2011.of.24 .06 .2011

27 .

Agreement.No ..S1-11/175/112.of.16 .06 .2011.concluded.with.OJSC.Gazprom.Gazobezopasnost.on.performance.of.gas.dangerous.works.on.replacement.of.the.valve.of.the.annular.space.without.killing.well.No ..43 ..The.agreement.amount.is.RUB.316.198.(incl ..VAT) .

OAO.Gazprom,.shareholder.of.the.Company. Annual.General.Meeting,.Minutes.No ..19/2011.of.30 .06 .2011




the transaction


transaction

28 .

Agreement.No ..91/SNGP-2011.of.21 .03 .2011.concluded.with.OJSC.Georesurs.for.performance.of.geophysical.exploration.and.works.in.wells.during.development.of.Yuzhno-.Russkoye.oil.and.gas.field ..The.agreement.amount.is.RUB.57.0244.993 .9.incl ..VAT ..Implementation.time.from.01.April,.2011.and.until.31.January,.2012 .


29 .

Agreement.No ..25/11.of.20 .10 .2011.concluded.with.OJSC.Gazprom.Dobycha.Urengoy.for.medical.services.in.relation.with.mandatory.before-trip.and.after-trip.medical.examination.of.drivers ..The.agreement.amount.is.RUB.689,000.(not.subject.to.VAT) ..Performance.time.from.01.January.to.31.December,.2012 .


30 .

Agreements.of.deposits.in.Rubles.and.foreign.currency.with.the.maximum.amount.on.each.transaction.not.exceeding.RUB.1,000,000,000.pursuant.to.General.Agreement.No ..34/SNGP-2009.of.11 .03 .2009.concluded.with.Gazprombank.(Open.Joint.Stock.Company) ..


31 .

Supplementary.Agreement.No ..12.of.27 .12 .2011.to.Gas.Supply.Agreement.No ..25.Pk-2007.of.13.December,.2007.concluded.with.OJSC.Gazprom.for.supply.of.annual.agreed.quantity.of.gas.in.the.volume.of.9.961.448.000.cub .m ..and.setting.the.price.of.gas.supplied.within.first.half.of.the.year.of.2012.in.the.amount.of.RUB.1.276 .35.per.1.000.cub .m ..of.gas.(excl ..VAT) ..Change.of.specifications .



32 .

Supplementary.Agreement.No ..10.of.27 .12 .2011.to.Gas.Supply.Agreement.No ..28.Pk-2007.of.13.December,.2007.concluded.with.CJSC.Gazprom.YRGM.Trading.for.supply.of.annual.agreed.quantity.of.gas.in.the.volume.of.8.716.267.000.cub .m ..and.setting.the.price.of.gas.supplied.within.first.half.of.the.year.of.2012.in.the.amount.of.RUB.1.276 .35.per.1.000.m3.of.gas.(excl ..VAT) ..Change.of.specifications .


33 .

Supplementary.Agreement.No ..6.of.27 .12 .2011.to.Gas.Supply.Agreement.No ..144/SNGP-2009.of.29.October,.2009.concluded.with.CJSC.Gazprom.YRGM.Development.for.supply.of.annual.agreed.quantity.of.gas.in.the.volume.of.6.225.904.000.cub .m ..and.setting.the.price.of.gas.supplied.within.first.half.of.the.year.of.2012.in.the.amount.of.RUB.1.276 .35.per.1.000.cub .m ..of.gas.(excl ..VAT) ..Change.of.specifications .


34 .

Agreement.No ..310-2010.of.31 .01 .2011.concluded.with.LLC.TyumenNIIgiprogaz.for.development.of.the.‘Project.of.Development.of.Senoman.Gas.Deposit.of.the.Yuzhno-.Russkoye.Field’.in.accordance.with.the.technical.specifications ..The.amount.of.the.Agreement.is.RUB.24.999.952.incl ..VAT ..Implementation.time.from.11.January.to.15.October,.2011 .

OAO.Gazprom,.shareholder.of.the.Company. Board.of.Directors,.Minutes.No ..41/2011.of.04 .02 .2011

35 .

Direct.agreement.in.relation.to.the.gas.sales.agreement.of.21 .04 .2011.regarding.the.Agreement.for.supply.of.gas.for.the.project.of.Yuzhno-.Russkoye.oil.and.gas.field.(OJSC.Gazprom).concluded.by.and.between.the.Company.(the.Seller),.OJSC.Gazprom.(the.Customer).and.ING.Bank.N .V ..(the.security.agent) ..The.Customer.shall.undertake.before.the.security.agent.not.to.terminate,.not.to.express.an.intention.to.terminate.and.not.take.any.steps.to.terminate.or.suspend.their.obligations.under.Gas.Supply.Agreement.No ..25.Pk-2007.of.13.December,.2007.except.for.the.respective.provisions.of.the.Gas.Supply.Agreement.and.subject.to.compliance.with.the.provisions.of.the.Direct.agreement .


Board.of.Directors,.Minutes.No ..42/2011.of.22 .02 .2011

36 .

Direct.agreement.in.relation.to.the.gas.sales.agreement.of.21 .04 .2011.regarding.the.Agreement.for.supply.of.gas.for.the.project.of.Yuzhno-.Russkoye.oil.and.gas.field.(CJSC.Gazprom.YRGM.Trading).concluded.by.and.between.the.Company.(the.Seller),.CJSC.Gazprom.YRGM.Trading.(the.Customer).and.ING.Bank.N .V ..(the.security.agent) ..The.Customer.shall.undertake.before.the.security.agent.not.to.terminate,.not.to.express.an.intention.to.terminate.and.not.take.any.steps.to.terminate.or.suspend.their.obligations.under.Gas.Supply.Agreement.28.Pk-2007.of.13.December,.2007.except.for.the.respective.provisions.of.the.Gas.Supply.Agreement.and.subject.to.compliance.with.the.provisions.of.the.Direct.agreement .


37 .

Direct.agreement.in.relation.to.the.gas.sales.agreement.of.21 .04 .2011.regarding.the.Agreement.for.supply.of.gas.for.the.project.of.Yuzhno-.Russkoye.oil.and.gas.field.(CJSC.Gazprom.YRGM.Development).concluded.by.and.between.the.Company.(the.Seller),.CJSC.Gazprom.YRGM.Development.(the.Customer).and.ING.Bank.N .V ..(the.security.agent) ..The.Customer.shall.undertake.before.the.security.agent.not.to.terminate,.not.to.express.an.intention.to.terminate.and.not.take.any.steps.to.terminate.or.suspend.their.obligations.under.Gas.Supply.Agreement.No ..144/SNGP-2009.of.29.October,.2009.except.for.the.respective.provisions.of.the.Gas.Supply.Agreement.and.subject.to.compliance.with.the.provisions.of.the.Direct.agreement .


73



the transaction


transaction

38 .

Direct.agreement.in.relation.to.the.shareholders’.agreement.of.the.company.21 .04 .2011.concluded.by.and.between.E .ON.Ruhrgas.E&P.GmbH,.OJSC.Gazprom.and.Wintershall.Holding.GmbH.(the.shareholders),.the.Company.(the.Company),.ING.Bank.N .V ..(the.security.agent),.UniCredit.Bank.AG.(the.facility.agent).and.Credit.Agricole.CIB.(the.technical.bank) ..The.shareholders.undertake.not.to.modify.any.material.provision.of.the.Shareholders’.agreement.and.the.Company.Charter.(as.defined.in.the.Direct.agreement),.make.efforts.to.ensure.that.the.directors.elected.by.a.shareholder.for.the.board.of.directors.of.the.Company.do.not.modify.the.material.provisions.of.the.Long-term.development.plan.or.waive.performance.of.the.Long-term.development.plan,.or.order.to.reduce.gas.production.in.any.year,.or.suspend.gas.production.completely ..

OAO.Gazprom,.Wintershall.Holding.GmbH,.E .ON.Ruhrgas.E&P.GmbH,.shareholders.of.the.Company


39 .

Deed.of.limited.recourse.performance.guarantee.and.indemnity.and.undertaking.to.lend.in.respect.of.gas.sale.agreement.trigger.events.of.21 .04 .2011.(OJSC.Gazprom).concluded.by.and.between.the.Company.(the.Seller),.OJSC.Gazprom.(the.guarantor),.UniCredit.Bank.AG.(the.facility.agent).and.ING.Bank.N .V ..(the.security.agent) ..OJSC.Gazprom.assumes.the.following.obligations:.under.the.guarantee.of.performance.by.OJSC.Severneftegazprom.of.all.of.its.obligations.before.the.facility.agent.and.the.banks.under.the.project.finance.agreement.in.case.the.reserve.amount.of.service.of.the.debt.of.OJSC.Severneftegazprom.under.project.finance.agreement.has.not.been.paid;.shall.provide.a.loan.to.OJSC.Severneftegazprom.as.the.seller.under.gas.supply.agreement.No ..25.Pk-2007.of.13.December,.2007.in.the.amount.calculated.pursuant.to.Guarantee.agreement,.upon.occurrence.of.the.conditions.of.provision.of.the.loan.(as.defined.below).and.occurrence.of.the.conditions.of.guarantee.reimburse.the.facility.agent.for.any.documented.costs,.damages.or.losses.in.case.the.Guarantee.becomes.impractical.or.legally.void.through.any.reason ..



40 .

Deed.of.limited.recourse.performance.guarantee.and.indemnity.and.undertaking.to.lend.in.respect.of.gas.sale.agreement.trigger.events.of.21 .04 .2011.(CJSC.Gazprom.YRGM.Trading).concluded.by.and.between.the.Company.(the.Seller),.CJSC.Gazprom.YRGM.Trading.(the.guarantor),.UniCredit.Bank.AG.(the.facility.agent).and.ING.Bank.N .V ..(the.security.agent) ..OJSC.Gazprom.YRGM.Trading.assumes.the.following.obligations:.under.the.guarantee.of.performance.by.OJSC.Severneftegazprom.of.all.of.its.obligations.before.the.facility.agent.and.the.banks.under.the.project.finance.agreement.in.case.the.reserve.amount.of.service.of.the.debt.of.OJSC.Severneftegazprom.under.project.finance.agreement.has.not.been.paid;.shall.provide.a.loan.to.OJSC.Severneftegazprom.as.the.seller.under.gas.supply.agreement.No ..25.Pk-2007.of.13.December,.2007.in.the.amount.calculated.pursuant.to.Guarantee.agreement,.upon.occurrence.of.the.conditions.of.provision.of.the.loan.(as.defined.below).and.occurrence.of.the.conditions.of.guarantee.reimburse.the.facility.agent.for.any.documented.costs,.damages.or.losses.in.case.the.Guarantee.becomes.impractical.or.legally.void.through.any.reason .


41 .

Deed.of.limited.recourse.performance.guarantee.and.indemnity.and.undertaking.to.lend.in.respect.of.gas.sale.agreement.trigger.events.of.21 .04 .2011.(CJSC.Gazprom.YRGM.Development.concluded.by.and.between.the.Company.(the.Seller),.CJSC.Gazprom.YRGM.Development.(the.guarantor),.UniCredit.Bank.AG.(the.facility.agent).and.ING.Bank.N .V ..(the.security.agent) ..CJSC.Gazprom.YRGM.Development.Trading.assumes.the.following.obligations:.under.the.guarantee.of.performance.by.OJSC.Severneftegazprom.of.all.of.its.obligations.before.the.facility.agent.and.the.banks.under.the.project.finance.agreement.in.case.the.reserve.amount.of.service.of.the.debt.of.OJSC.Severneftegazprom.under.project.finance.agreement.in.the.amount.of.interest.and.scheduled.payments.has.not.been.paid;.shall.provide.a.loan.to.OJSC.Severneftegazprom.as.the.seller.under.gas.supply.agreement.No ..144/SNGP-2009.of.29.October,.2009.in.the.amount.calculated.pursuant.to.Guarantee.agreement,.upon.occurrence.of.the.conditions.of.provision.of.the.loan.(as.defined.below).and.occurrence.of.the.conditions.of.guarantee.reimburse.the.facility.agent.for.any.documented.costs,.damages.or.losses.in.case.the.Guarantee.becomes.impractical.or.legally.void.through.any.reason .


42 .

Deed.of.limited.recourse.guarantee.and.undertaking.to.lend.in.respect.of.certain.obligations.of.TradeCo.1of.21 .04 .2011.(OJSC.Gazprom).concluded.by.and.between.the.Company.(the.Seller),.OJSC.Gazprom.(the.guarantor),.CJSC.Gazprom.YRGM.Trading.(the.purchaser),.UniCredit.Bank.AG.(the.facility.agent).and.ING.Bank.N .V ..(the.security.agent) ..OJSC.Gazprom.assumes.the.following.obligations:.under.the.guarantee.of.performance.by.OJSC.Severneftegazprom.of.all.of.its.obligations.before.the.facility.agent.and.the.banks.under.the.project.finance.agreement.to.the.extent.of.the.payment.obligations.under.the.Guarantee.agreement.upon.occurrence.of.the.Conditions.and.in.case.the.reserve.amount.of.service.of.the.debt.of.OJSC.Severneftegazprom.in.the.amount.of.interest.and.scheduled.payments.has.not.been.paid;.shall.provide.a.loan.to.OJSC.Severneftegazprom.as.the.seller.under.gas.supply.agreement.No ..28.Pk-2007.of.13.December,.2007.in.the.amount.calculated.pursuant.to.Guarantee.agreement,.upon.occurrence.and.effect.of.the.Condition,.and.upon.occurrence.of.the.Conditions.under.the.Guarantee.agreement.reimburse.the.facility.agent.for.any.documented.costs,.damages.or.losses.in.case.the.Guarantee.becomes.impractical.or.legally.void.through.any.reason .






the transaction


transaction

43 .

BASF.Deed.of.limited.recourse.guarantee.and.undertaking.to.lend.in.respect.of.certain.obligations.of.TradeCo.1of.21 .04 .2011.concluded.by.and.between.the.Company.(the.Seller),.BASF.SE.(the.guarantor),.CJSC.Gazprom.YRGM.Trading.(the.purchaser),.UniCredit.Bank.AG.(the.facility.agent).and.ING.Bank.N .V ..(the.security.agent) ..BASF.SE.assumes.the.following.obligations:.under.the.guarantee.of.performance.by.OJSC.Severneftegazprom.of.all.of.its.obligations.before.the.facility.agent.and.the.banks.under.the.project.finance.agreement.to.the.extent.of.the.payment.obligations.under.the.Guarantee.agreement.upon.occurrence.of.the.Conditions.and.in.case.the.reserve.amount.of.service.of.the.debt.of.OJSC.Severneftegazprom.in.the.amount.of.interest.and.scheduled.payments.has.not.been.paid;.shall.provide.a.loan.to.OJSC.Severneftegazprom.as.the.seller.under.gas.supply.agreement.No ..28.Pk-2007.of.13.December,.2007.upon.occurrence.and.effect.of.the.Condition,.and.upon.occurrence.of.the.Conditions.under.the.Guarantee.agreement.reimburse.the.facility.agent.for.any.documented.costs,.damages.or.losses.in.case.the.Guarantee.becomes.impractical.or.legally.void.through.any.reason .



44 .

Deed.of.limited.recourse.guarantee.and.undertaking.to.lend.in.respect.of.certain.obligations.of.TradeCo.2.of.21 .04 .2011.(OJSC.Gazprom).concluded.by.and.between.the.Company.(the.Seller),.OJSC.Gazprom.(the.guarantor),.CJSC.Gazprom.YRGM.Development.(the.purchaser),.UniCredit.Bank.AG.(the.facility.agent).and.ING.Bank.N .V ..(the.security.agent) ..OJSC.Gazprom.assumes.the.following.obligations:.under.the.guarantee.of.performance.by.OJSC.Severneftegazprom.of.all.of.its.obligations.before.the.facility.agent.and.the.banks.under.the.project.finance.agreement.to.the.extent.of.the.payment.obligations.under.the.Guarantee.agreement.upon.occurrence.of.the.Conditions.and.in.case.the.reserve.amount.of.service.of.the.debt.of.OJSC.Severneftegazprom.in.the.amount.of.interest.and.scheduled.payments.has.not.been.paid;.shall.provide.a.loan.to.OJSC.Severneftegazprom.as.the.seller.under.gas.supply.agreement.No ..144/SNGP-2009.of.29.December9,.2009.in.the.amount.calculated.pursuant.to.Guarantee.agreement,.upon.occurrence.and.effect.of.the.Condition,.and.upon.occurrence.of.the.Conditions.under.the.Guarantee.agreement.reimburse.the.facility.agent.for.any.documented.costs,.damages.or.losses.in.case.the.Guarantee.becomes.impractical.or.legally.void.through.any.reason .


Board.of.Directors,.Minutes.No ..42/2011.of.22 .02 .2011.

45 .

Deed.of.limited.recourse.guarantee.and.undertaking.to.lend.in.respect.of.certain.obligations.of.TradeCo.2.of.21 .04 .2011.(E .ON.AG).concluded.by.and.between.the.Company.(the.Seller),.E .ON.AG.(the.guarantor),.CJSC.Gazprom.YRGM.Development.(the.purchaser),.UniCredit.Bank.AG.(the.facility.agent).and.ING.Bank.N .V ..(the.security.agent) ..E .ON.AG.assumes.the.following.obligations:.under.the.guarantee.of.performance.by.OJSC.Severneftegazprom.of.all.of.its.obligations.before.the.facility.agent.and.the.banks.under.the.project.finance.agreement.to.the.extent.of.the.payment.obligations.under.the.Guarantee.agreement.upon.occurrence.of.the.Conditions.and.in.case.the.reserve.amount.of.service.of.the.debt.of.OJSC.Severneftegazprom.in.the.amount.of.interest.and.scheduled.payments.has.not.been.paid;.shall.provide.a.loan.to.OJSC.Severneftegazprom.as.the.seller.under.gas.supply.agreement.No ..144/SNGP-2009.of.29.December,.2009.in.the.amount.calculated.pursuant.to.Guarantee.agreement,.upon.occurrence.and.effect.of.the.Condition,.and.upon.occurrence.of.the.Conditions.under.the.Guarantee.agreement.reimburse.the.facility.agent.for.any.documented.costs,.damages.or.losses.in.case.the.Guarantee.becomes.impractical.or.legally.void.through.any.reason .



46 .

Supplementary.Agreement.No ..10.of.18 .04 .2011.to.Gas.Supply.Agreement.No ..25.Pk-2007.of.13 .12 .2007.concluded.with.OJSC.Gazprom ..Any.due.payments.shall.be.made.to.the.settlement.account.of.the.respective.party ..This.party.has.provided.its.bank.details.to.the.other.party ..In.the.absence.of.the.notification.any.due.amount.shall.be.transferred.to.the.account.of.the.respective.party.as.set.out.in.the.Gas.Supply.Agreement ..



47 .

Supplementary.Agreement.No ..8.of.18 .04 .2011.to.Gas.Supply.Agreement.No ..28.Pk-2007.of.13 .12 .2007.concluded.with.CJSC.Gazprom.YRGM.Trading ..Any.due.payments.shall.be.made.to.the.settlement.account.of.the.respective.party ..This.party.has.provided.its.bank.details.to.the.other.party ..In.the.absence.of.the.notification.any.due.amount.shall.be.transferred.to.the.account.of.the.respective.party.as.set.out.in.the.Gas.Supply.Agreement .


48 .

Supplementary.Agreement.No ..4.of.12 .04 .2011.to.Gas.Supply.Agreement.No ..144/SNGP-2009.of.29 .10 .2009.concluded.with.CJSC.Gazprom.YRGM.Development ..Any.due.payments.shall.be.made.to.the.settlement.account.of.the.respective.party ..This.party.has.provided.its.bank.details.to.the.other.party ..In.the.absence.of.the.notification.any.due.amount.shall.be.transferred.to.the.account.of.the.respective.party.as.set.out.in.the.Gas.Supply.Agreement .


75



the transaction


transaction

49 .

Priority.deed.of.21 .04 .2011.concluded.by.and.between.the.Company.(the.borrower),.OJSC.Gazprom.and.E .ON.Ruhrgas.E&P.GmbH.and.Wintershall.Holding.GmbH.(shareholders,.purchasers,.guarantors,.junior.creditors),.BASF.SE,.E .ON.AG.(the.guarantor.of.TradeCo),.CJSC.Gazprom.YRGM.Trading.and.CJSC.Gazprom.YRGM.Development.(the.Purchasers),.Wintershall.Vermögensverwaltungsgesellschaft.mbH.(junior.creditor) ..Pursuant.to.the.agreement.between.the.creditors.the.parties.assume.obligations.before.senior.creditors.and.agree.that.the.senior.debt.shall.be.of.more.priority.than.the.junior.debt.in.terms.of.the.rights.to.the.payment.and.the.payment.priority ..The.agreement.was.made.to.establish.the.priority.of.various.classes.of.junior.debts.and.settle.certain.issues.of.payment.priority.between.the.parties ..



50 .

Deed.of.undertaking.relating.to.registration.of.share.pledges.of.19 .05 .2011.concluded.by.and.between.the.Company,.OAO.Gazprom,.E .ON.Ruhrgas.E&P.GmbH.and.Wintershall.Holding.GmbH ..The.obligations.of.shareholders.and.the.borrower.under.simultaneous.registration.pertaining.to.registration.of.the.pledge.created.through.share.pledge.agreements ..



51 .

Intershareholder.deed.of.21 .04 .2011.concluded.by.and.between.the.Company.(the.company),.OAO.Gazprom,.E .ON.Ruhrgas.E&P.GmbH.and.Wintershall.Holding.GmbH.(the.shareholders).for.the.purpose.of.assuming.certain.obligations.related.to.the.right.to.offer.similar.conditions.for.purchase.of.shares.of.OJSC.Severneftegazprom.upon.agreement.on.the.agreement.of.the.company.shareholders.to.be.concluded.by.and.between,.among.other,.E .ON.Ruhrgas.E&P.GmbH,.OAO.Gazprom,.Wintershall.Holding.GmbH.as.shareholders,.OJSC.Severneftegazprom.as.the.company.and.UniCredit.Bank.AG.as.the.facility.agent ..



52 .

Intercreditor.deed.of.21 .04 .2011.concluded.with,.among.others,.the.Company.(the.borrower),.OAO.Gazprom,.E .ON.Ruhrgas.E&P.GmbH.and.Wintershall.Holding.GmbH.(shareholders,.purchasers,.guarantors,.junior.creditors),.Société.Européenne.de.Banque;.Credit.Agricole.Corporate.and.Investment.Bank;.Gazprombank.(Open.Joint.Stock.Company);.ING.Bank.N .V .;.Mizuho.Corporate.Bank.Nederland.N .V .;.Natixis;.SGBT.Asset.Based.Funding.S .A .;.Sumitomo.Mitsui.Finance.Dublin.Limited;.Bank.of.Tokyo-Mitsubishi.UFJ.(Holland).N .V .;.UniCredit.Bank.AG;.UniCredit.Bank.CJSC;.BNP.Paribas;.BNP.Pariba.Bank.(CJSC);.WestLB.AG,.London.Branch;.Dz.Bank.AG,.London.Branch.–.original.creditors,.BASF.SE,.E .ON.AG.(the.guarantor.of.TradeCo),.CJSC.Gazprom.YRGM.Trading.and.CJSC.Gazprom.YRGM.Development.(the.Purchasers),.Wintershall.Vermögensverwaltungsgesellschaft.mbH.(junior.creditor),.UniCredit.Bank.AG.as.the.facility.agent;.ING.Bank.N .V ..as.the.joint.and.several.creditors;.and.ING.Bank.N .V ..as.the.security.agent ..The.Company,.the.Junior.finance.parties.and.Senior.creditors.assume.the.main.obligations.regarding.the.Senior.debt.and.the.Junior.debt.in.relation.with.the.Project.Finance.Agreement.of.16 .03 .2011 ..



53 .

Agreement.No ..315-2011.of.25 .04 .2011.concluded.with.LLC.TyumenNIIgiprogaz.for.scientific.and.research.works.on.the.subject.‘Development.of.the.methods.for.processing.the.results.of.well.flow.tests.carried.out.in.subhorizontal.wells.of.the.Yuzhno-.Russkoye.oil.and.gas.field’ ..The.cost.of.works.is.RUB.4.999.955 .00.incl ..VAT ..Implementation.time.from.01.February.and.until.10.December,.2011 .


54 .

Agreement.No ..115/SNGP-2011/201119818.of.04 .04 .2011.concluded.with.LLC.Gazprom.VNIIGAz.for.scientific.and.research.works.and.development.engineering.works.on.the.subject.‘Study.of.the.conditions.facilitation.formation.of.hydrates.during.development,.testing.and.operation.of.Turonian.deposits.(T1,.T2).of.the.Yuzhno-.Russkoye.oil.and.gas.field’.in.the.amount.of.RUB.6.000.000.(not.subject.to.VAT) ..Implementation.time.from.04.April.2011.and.until.01.March,.2012 ..


55 .

Agreement.No ..321-2011.of.20 .06 .2011.concluded.with.LLC.TyumenNIIgiprogaz.for.development.of.works.on.the.subject.‘Process.schematics.of.development.of.Turonian.gas.deposit.of.the.Yuzhno-.Russkoye.oil.and.gas.field’.in.the.amount.of.RUB.19.998.640 .00.incl ..VAT ..Implementation.time.from.01.May,.2011.and.until.30.April,.2012 ..


56 .

Agreement.No ..174/SNGP-2011.of.19 .09 .2011.concluded.with.SOJSC.Gazproektengineering.for.performance.of.preinvestment.studies.of.the.technical.security.equipment.set.implemented.at.the.Yuzhno-.Russkoye.oil.and.gas.field ..The.agreement.amount.is.RUB.847.240 .00.incl ..VAT ..Implementation.time.from.01.October.to.30.October,.2011


57 .

Agreement.No ..11092.of.24 .11 .2011.concluded.with.OJSC.YUzHNIIGIPROGAz.for.development.of.‘Estimation.of.the.cost.of.abandonment.operations.of.the.facilities.of.the.Yuzhno-.Russkoye.oil.and.gas.field’.in.the.amount.of.RUB.1.084.660 .72.incl ..VAT ..Implementation.time.from.30.September.and.until.10.December,.2011

OAO.Gazprom,.shareholder.of.the.Company. Board.of.Directors,.Minutes.No .54/2011.of.24 .11 .2011

58 .

Non-residential.premises.lease.agreement.concluded.by.and.between.the.Company.(the.Landlord).and.CJSC.Gazprom.YRGM.Trading.(the.Tenant).for.the.period.from.01.September,.2011.and.until.31.July,.2012.in.the.amount.of.RUB.494.714.incl ..VAT .

OAO.Gazprom,.shareholder.of.the.Company. Board.of.Directors,.Minutes.No .54/2011.of.24 .11 .2011



Appendix 3. list of the Company’s transactions in 2011 considered as major transactions in conformance with the federal law ‘On joint stock companies’ as well as other transactions subject to the procedure of approval of major transactions pursuant to the Company’s Charter

Essential conditionsManagement body that took the

decision on approval of the transaction

1 .

Agreement.on.the.pledge.of.rights.under.the.on-shore.bank.account.agreements.of.16 .03 .2011.concluded.by.and.between.the.Company.(the.pledger).and.ING.Bank.N .V ..(the.pledgee).to.secure.performance.of.the.obligations.of.OJSC.Severneftegazprom.under.the.project.finance.agreement ..The.object.of.the.pledge.is.the.rights.of.OJSC.Severneftegazprom.under.bank.account.agreements.concluded.with.CJSC.Credit.Agricole.CIB ..For.the.purpose.of.article.339.of.the.Civil.Code.of.the.Russian.Federation,.the.pledged.rights.have.been.estimated.at.RUB.86.145.000.000 .00 .

General.Meeting,.Minutes.No .16/2011.of.15 .03 .2011

2 .

Agreement.on.the.pledge.of.rights.under.the.operation.accounts.bank.account.agreements.of.16 .03 .2011.concluded.by.and.between.the.Company.(the.pledger).and.ING.Bank.N .V ..(the.pledgee).to.secure.performance.of.the.Company’s.obligations.under.the.project.finance.agreement ..The.object.of.the.pledge.is.the.rights.of.the.Company.under.bank.account.agreements.concluded.with.OJSC.Gazprombank ..For.the.purpose.of.article.339.of.the.Civil.Code.of.the.Russian.Federation,.the.pledged.rights.have.been.estimated.at.RUB.1.000.000.000 .00 .


3 . Charge.over.off-shore.accounts.agreement.of.16 .03 .2011.concluded.by.and.between.the.Company.(the.Borrower).and.ING.Bank.N .V ..(the.security.agent).to.secure.performance.of.the.Company’s.obligations.under.the.project.finance.agreement .


4 .

On-shore.accounts.direct.debit.agreement.of.16 .03 .2011.concluded.by.and.between.the.Company.(the.client,.UniCredit.Bank.AG.(the.facility.agent).and.CJSC.Credit.Agricole.CIB.(on-shore.accounts.bank).to.secure.performance.of.the.Company’s.obligations.under.the.project.finance.agreement ..UniCredit.Bank.AG.was.granted.the.right.to.directly.debit.funds.off.the.accounts.of.OJSC.Severneftegazprom.opened.with.CJSC.Credit.Agricole.CIB.in.cases.set.out.in.the.Direct.Debit.Agreement ..


5 .

Mortgage.agreement.of.16 .03 .2011.concluded.by.and.between.the.Company.(the.pledger).and.ING.Bank.N .V ..(the.pledgee).to.secure.performance.of.the.obligations.of.the.Company.(as.the.borrower).under.the.project.finance.agreement ..Mortgaged.real.property.includes.gas.wells,.gas.pipe,.gas.processing.facility.and.the.lease.rights.regarding.land.plots.under.lease.agreements ..For.the.purpose.of.article.339.of.the.Civil.Code.of.the.Russian.Federation.the.mortgaged.rights.have.been.estimated.at.RUB.26.209.616.644 .01 .


6 .

Agreement.on.the.pledge.of.rights.under.the.gas.sale.agreements.of.16 .03 .2011.concluded.by.and.between.the.Company.(the.pledger).and.ING.Bank.N .V ..(the.pledgee).to.secure.performance.of.the.obligations.of.the.Company.(as.the.borrower).under.the.project.finance.agreement ..The.object.of.the.pledge.is.the.rights.of.the.Company.under.gas.supply.agreements.No ..25.Pk-2007.of.13.December,.2007.(as.amended);.No ..28.Pk-2007.of.13.December,.2007.(as.amended);.and.No ..144/SNGP-2009.of.29.October,.2009.(as.amended) ..For.the.purpose.of.article.339.of.the.Civil.Code.of.the.Russian.Federation.the.mortgaged.rights.have.been.estimated.at.RUB.13.356.826.479 .00 .


7 .

Agreement.on.the.pledge.of.rights.under.the.insurances.of.16 .03 .2011.concluded.by.and.between.the.Company.(the.pledger).and.ING.Bank.N .V ..(the.pledgee).to.secure.performance.of.the.obligations.of.the.Company.under.the.project.finance.agreement ..For.the.purpose.of.article.339.of.the.Civil.Code.of.the.Russian.Federation.the.mortgaged.rights.have.been.estimated.at.RUB.1.498.160.496 .00 .


ojsc severneftegazprom annual report 2011 (english)

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