Licensing

In accordance with current legislation of the Russian Federation, hydrocarbon exploration and production in Russia is subject to licensing. As of December 31, 2007, the Rosneft group of companies held 529 hydrocarbon exploration and production licenses. The majority of licenses are valid until 2013—2030. In compliance with Russian legislation, mineral licenses can be extended by a subsurface user, provided there have been no violations of license terms. Rosneft strictly complies with its license obligations, and had no outstanding official claims from licensing authorities as of year-end 2007.

In line with its long-term development strategy, the Company continuously expands the exploration and production portfolio through acquiring licenses in key strategic regions of operation. During 2007, Rosneft won several auctions of exploration and production licenses in East and West Siberia, and in Central Russia.

In June 2007, Rosneft’s subsidiary, OJSC Samaraneftegaz, won an auction of exploration and production licenses to the Sovetsky and Biryukovsky blocks in the Samara region. The licenses, worth RUB 932 mln. (USD 36.0 mln.) in total, expire in June 2027 and June 2032, respectively.

In July 2007, the Company won an auction of an exploration and production license to the Preobrazhensky block in the Irkutsk region. The license, worth RUB 928 mln. (USD 36.3 mln.), expires in September 2032. In addition, LLC Vostok Energy, a joint venture of Rosneft and China National Petroleum Corporation, won an auction of exploration and production licenses to the West-Chonsky and Verkhneichersky blocks. The blocks are located 90—120 km. away from the East Siberia — Pacific Ocean pipeline, which is currently under construction. The licenses cost RUB 400 mln. (USD 15.6 mln.) and 780 mln. (USD 30.5 mln.), respectively, and expire in September 2032.

In December 2007, Rosneft won an auction of an exploration and production license to the South-Teplovsky block in the Khanty-Mansiysk Autonomous District. The 25-year license cost RUB 147 mln. (USD 6.0 mln.).