Rosneft at a Glance

Rosneft is the leader of the Russian petroleum industry, and ranks among the world’s top publicly traded oil and gas companies. The Company is primarily engaged in hydrocarbon exploration and production, production of petroleum products and petrochemicals, and marketing of these outputs. In 2007, Rosneft was included in the Russian Government’s List of Strategic Enterprises and Organizations. The state holds a little over 75% in the Company, while approximately 15% of shares are free-floated.

Rosneft performs large-scale exploration and production activities in all key hydrocarbon regions of Russia — West Siberia, Southern and Central Russia, Timan-Pechora, East Siberia, and the Far East. In addition, the Company participates in several exploration projects in Kazakhstan, Algeria, and Turkmenistan. Rosneft’s seven major refineries enjoy convenient locations throughout the country, from the Black Sea coast to the Russian Far East, while the Company’s retail network covers 36 regions of the Russian Federation.

Unlike many of its competitors, Rosneft has a vast and high-quality reserve base that ensures remarkable prospects for accelerated business growth. The Company’s proved, probable, and possible hydrocarbon reserves are nearly 49 bln. boe, among the highest for a global publicly traded oil and gas company, while Rosneft’s proved liquid hydrocarbon reserves are currently second-to-none. The Company’s proved reserve-to-production ratio is 27 years. Rosneft is also well positioned to effectively increase hydrocarbon production, as it operates mainly conventional reserves.

To ensure sustainable production growth in the long term, Rosneft is particularly focused on expanding its reserve base through more extensive exploration and new acquisitions. In recent years, the Company has consistently demonstrated superb reserve replacement performance — in 2007, Rosneft’s proved reserve replacement ratio hit 300%. Rosneft’s major exploration projects are being developed in the most promising oil and gas provinces of Russia, such as East Siberia, the Far East, and Southern Seas’ shelves. As a result, the Company has access to more than 75 bln. boe of prospective hydrocarbon resources.

Rosneft has been successfully implementing its accelerated production growth strategy, which is further supported by ongoing monitoring and introduction of innovative technology. In 2007, the Company became the largest national oil producer, and hit a landmark annual crude output of 100 mln. tonnes (over two mln. barrels per day). Thus, over the last seven years, Rosneft’s crude oil production grew more than seven times. Furthermore, the Company consistently maintains high operating efficiency, and has the lowest upstream production and operating expenses among its national and major international peers.

Rosneft is also one of the leading independent national gas producers, with an annual output of natural and associated gas exceeding 15 bcm. The Company’s vast and unique reserve portfolio ensures steady long-term growth in gas output. Rosneft is currently implementing comprehensive measures aimed at achieving a target gas utilization rate of 95%, one of the key strategic objectives for the Company.

Rosneft previously had a limited degree of vertical integration, as it operated only two refineries with a combined capacity of about 80 mln. barrels (11 mln. tonnes) per year. However, the acquisition of five new refineries in 2007 allowed Rosneft to bring its aggregate capacity to 415 mln. barrels (56.7 mln. tonnes) per year, currently a record high for Russian oil companies. Favorable refinery locations enable the Company to substantially improve the efficiency of petroleum product sales. Rosneft is actively involved in expanding and upgrading its refineries to further enhance the balance between crude output and refinery throughput, and to boost the production of higher value-added petroleum products meeting the latest environmental and quality standards.

Rosneft also operates proprietary marine terminals in Tuapse, De-Kastri, Nakhodka, and Arkhangelsk, which allows the Company to capture higher margins on petroleum product exports. Rosneft is currently implementing comprehensive expansion and modernization programs at its terminals to ensure their capacity will meet the planned export volumes.

Seeking to increase its petroleum product sales to end customers, Rosneft is focused on further extending its retail infrastructure, which now comprises about 1,700 filling stations in 36 regions of Russia — the country’s second largest marketing network.

Rosneft strictly complies with international standards of corporate governance, information disclosure, and financial reporting. Reputable non-executive directors have held one third of the Board’s seats since 2006. The Company also pursues a policy of high social responsibility toward its employees and members of their families, to the people in the regions where it operates, and, most importantly, to society at large.