Dividends

In May 2006, Rosneft’s Board of Directors voted to approve the Regulation on Dividend Policy, developed in accordance with Russian legislation, the Company Charter, and the Corporate Governance Code of Rosneft.

Rosneft's dividend policy is aimed at striking a balance between shareholders' interests and the Company's business needs, as well as at improving Rosneft's investment attractiveness and shareholder value. The Company strictly observes the rights, and strives to continuously increase the returns of its numerous shareholders.

The decision to pay dividends (and the amount of dividends and the form of payment) is taken by the General Shareholders’ Meeting of Rosneft, based on recommendations of the Board of Directors. In deciding dividend amounts the Board is guided by the level of net profit, as reflected in non-consolidated financial accounts of Rosneft to Russian Accounting Standards. Company dividend policy requires that dividends should be equal to at least 10% of net profit.

Rosneft’s strategy is to steadily increase dividend payments in absolute terms. In determining the amount of annual dividends, the Board of Directors also takes account of dividend policy of other oil & gas companies. A number of other factors may also have impact on the size of dividend payments. Such factors include: Company business prospects, the Company’s financial situation and financing needs, the overall macroeconomic situation and market environment, as well as other factors, including aspects connected with tax and legislation.

On April 28, 2009, Rosneft’s Board of Directors recommended the Annual General Shareholders’ Meeting to approve an increase of annual dividends for 2008 by 20% compared with the previous year, to RUB 1.92 per share. Total amount of recommended dividends (for all issued ordinary shares) for 2008 is RUB 20,349 mln, which is 14.4% of net income as reflected in non-consolidated financial accounts of Rosneft to Russian Accounting Standards. On June 19, 2009, the Annual General Shareholders Meeting approved the dividend recommended by the Board of Directors.

Dividend payments on shares held as GDRs are made to the Depositary in rubles. The Depositary converts the dividends into US dollars and distributes them to GDR holders (net of the Depositary’s fees).

Rosneft’s Dividend History

¹ — The 1:100 share split of September 2005 is factored in the amount of dividends per share
² — Net income for 2006 is adjusted for the effect from recognition of Yukos payables.
³ — Dividends are translated from RUB to USD at the CBR exchange rate as of the date of the General Shareholders Meeting, which approved the respective dividends.
⁴ — Expected amount, calculated as total outstanding shares as of the record date multiplied by dividends per share in US dollars at the CBR exchange rate as of the date of the Annual General Shareholders Meeting. The above amount may differ from the actual figure presented in the Company’s consolidated financial statements under US GAAP.
⁵ — Net income is adjusted for major extraordinary items, such as effects from disposal of a stake in OJSC Sevmorneftegaz in 2005, gains from Yukos bankruptcy proceedings in 2007, as well as for the accrual of fines and penalties related to OJSC Yuganskneftegaz tax liabilities.

Key Dividend Dates