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March, 2014

Investor Day 2014

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Agenda
Presentation of gas business

Strategy
Dmitry Lyugai Member of Gazprom Management Committee Head of the Prospective Development Department

Transportation
Oleg Aksyutin Member of Gazprom Management Committee Head of the Gas Transportation, Underground Storage and Utilization Department, CEO & Executive Member of the BoD of South Stream Transport B.V.

Export
Alexander Medvedev
Deputy Chairman of Gazprom Management Committee CEO of Gazprom Export

Finance
Andrey Kruglov
Deputy Chairman of Gazprom Management Committee Head of the Department for Finance and Economics

Special sections
Gazprom Neft
Alexei Yankevich Member of the Management Board of Gazprom Neft Deputy CEO for Economics and Finance of Gazprom Neft

Gazprom Power Generation
Denis Fedorov Head of Gazprom Directorate for Development of Power and Heat Generation CEO of Gazprom Energoholding

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Investor Day 2014

Disclaimer
This presentation has been prepared by OJSC Gazprom (the “Company”), and comprises the slides for a presentation to investors concerning the Company. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares or other securities representing shares in the Company, nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision.
No reliance may be placed for any purposes whatsoever on the information contained in this presentation, or any other material discussed at any presentation or on its completeness, accuracy or fairness. The information in this presentation should not be treated as giving investment advice. Care has been taken to ensure that the facts stated in this presentation are accurate, and that the opinions expressed are fair and reasonable. However, the contents of this presentation have not been verified by the Company. Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its members, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in or discussed at this presentation. None of the Company or any of their respective members, directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. The information in this presentation includes forward-looking statements. These forward-looking statements include all matters that are not historical facts, statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which the Company operates. By their nature, forward-looking statements involve risks and uncertainties, including, without limitation, the risks and uncertainties to be set forth in the prospectus, because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if the Company’s results of operations, financial condition and liquidity and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. The information and opinions contained in this presentation are provided as at the date of this presentation and are subject to change without notice. No person is under any obligation to update or keep current the information contained herein. By attending the presentation you agree to be bound by the foregoing limitations.
The following sources are used in the presentation: BP Statistical Review of World Energy 2013 (June 2013); IEA, World Energy Outlook 2013, New Policies Scenario (November 2013); CEDIGAZ Statistical Database (August 2013); EIA, International Energy Outlook 2013, Reference case (July 2013); Wood Mackenzie; Platts; FactSet; Bloomberg Calorific value of natural gas = 8,850 kcal/m3 (20 0С )

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Part 1. Strategy Dmitry Lyugai
Member of Gazprom Management Committee Head of Prospective Development Department

3

World gas demand 2030
SHARE OF NATURAL GAS IN WORLD TOTAL PRIMARY ENERGY CONSUMPTION NATURAL GAS CONSUMPTION BY REGION

2030 forecast

2012
19% 3% 26%

17% 4% 6% 9%

23% 24%

12%

3.6
tcm
20%

North America 5% 15% Central and South America OECD Europe Other Europe and Eurasia Middle East

2012
30% 25% 26%
2030 forecast

22%

33%

28% 4%

4.6
tcm
17%

Africa 5%
13% Asia Oceania

Gas Coal Renewables

Oil Nuclear

14%

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Strategy - Investor Day 2014

Global gas import/export in 2030
1200 1000 800 NATURAL GAS CONSUMPTION AND PRODUCTION BY REGION IN 2012 AND 2030

2012 actual

2030 forecast

bcm

600 400 200 0 North Central OECD America and South Europe America Other Europe and Eurasia Middle East Africa Asia Australia North Central OECD America and South Europe America Other Europe and Eurasia Middle East Africa Asia Australia

Consumption

Production

WORLD NET NATURAL GAS TRADE BY REGION IN 2012 AND 2030 400 300 200 100 0 -100 -200 -300 -400 -500 North Central OECD America and South Europe America Other Europe and Eurasia

2012 actual

net import net export

2030 forecast

bcm

Middle East

Africa

Asia

Australia

North Central OECD America and South Europe America

Other Europe and Eurasia

Middle East

Africa

Asia

Australia

Europe, Asia – 2 main gas import regions CIS, Middle East, Africa, Australia – 4 exporting regions North America, Central and South America gas markets are self-sufficient

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Strategy - Investor Day 2014

Gazprom in the Russian domestic market
STRUCTURE OF GAZPROM’S GAS SALES REVENUE (1), 2012 51% 20% 29% 900 Europe FSU Countries Russia 80% 100% GAS PRODUCTION STRUCTURE IN RUSSIA GAS DELIVERIES TO RUSSIAN CONSUMERS * 500

Independent gas producers
78 74
Russian Energy Strategy target

bcm; RR bln

600 300

683

795

RR / 1 000 cm

bcm

2,373

2,745

2,961 815
3,000 2,000 1,000 0 60%

74

400

73 310
300

350

40% 200

288
0

290
2011

275
2012

2010

20%

Domestic Market Volumes (bcm) Revenue (RR bn) Domestic Average Price (RR / 1 000 cm)

* - incl. gas purchases from other companies
0%
2010 2015 2020 2025 2030 100 2010 2015 2020 2025 2030

TOTAL FINAL CONSUMPTION

2008
Coal
19% 51%

2012
Oil
19%

Energy Strategy of Russia Adopted
Oil
19%

2030
Coal

Energy Strategy of Russia Project
Other
15% 13% 20%

Other
11%

Coal
18%

Other
11%

Coal
19%

Other
12%

Oil
22%

Oil

52%

47%

52%

Gas
Source: Base Prospectus. 1. Excluding custom duties

Gas

Gas

Gas Gas share stabilization in Fuel and Energy Balance

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Strategy - Investor Day 2014

Europe: Gazprom’s traditional market
FORECAST – GAS PRODUCTION VS. CONSUMPTION IN EUROPE
300 800

GAZPROM’S PIPELINE GAS DELIVERIES TO EUROPE ■ ■ ■ ■ ■ decrease of indigenous gas production in Europe no success in shale gas developments slow down of nuclear energy development increase of gas consumption in transportation sector new sectors of gas consumption

700
600

Consumption
200

bcm

500 400 300

Production

207

517

bcm

100

200
100 0

■ regasification terminals network development ■ policy approach – diversification of suppliers and supply routes ■ regulatory frameworks in energy sector become tougher ■ policies on energy efficiency ■ renewable sources of energy subsidizing
2010 2015 2020 2025 2030

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2030

2029

0

SHALE GAS IN EUROPE AND CIS

GAZPROM’S SHARE AT THE EUROPEAN MARKET

UKRAINE

2012

2030

POLAND

49*

0*

26%
TURKEY

29% %
Min

28

GREAT BRITAIN

4*

5*

2013
* - number of wells, end 2013

2030
5-60 bcm
JSC "Gazprom"

Max
Other sources of gas

Production

0 bcm

Source: Wood Mackenzie, EIA, Platts, ERI RAS, IEA, IHS, Rystad Energy, BP

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Strategy - Investor Day 2014

Upstream development
Key Gazprom gas greenfields
Urengoyskoye (achimov deposits) Pestsovoye (neocomian-jurassic) Yubileynoye (apt-albian, senomanian deposits) Bovanenkovskoye Kharasaveiskoye Severo-Kamennomysskoye Kamennomysskoye -sea Kirinskoye Kirinskiy licensed section Chayandinskoye Kovyktinskoye
«Sakhalin-3»

Field productivity in 2014-2030 period, bcm/year
24.7 2 1.75 115 32 16.1 15.1 5.5 14.6 – 16.0 25 35

North of West Siberia and Yamal peninsula Fields

Pre-Yamal shelf Pechorskoye Sea shelf Kharasaveiskoye Bovanenkovskoye

Severo-Kamennomysskoye Kamennomysskoye-sea Pestsovoye Urengoiskoye Yubileynoye Chayandinskoye

RUSSIA
Gas field Continental shelf area DYNAMICS OF PRODUCTION AND GAS RESERVES DEVELOPMENT
1,000

Eastern Siberia and Far East Fields

Kirinskoye Kirinskiy licensed section

Kovyktinskoye
140%
160 110 800 600

PROSPECTIVE SOURCES OF GAZPROM’S GAS PRODUCTION Other new fields East Siberia and Far East fields Yamal Megaproject Operating fields

800
bcm

96%

400 200 0

522

540

545

555

556

549

550

462

509

513

60

bcm

600

79% 69%

105% 106% 108% 106% 102% 108%

118%

400

487

%

10 -40

200
0 2012 2020 min 2030 min 2020 max 2030 max

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Gas production

% of gas reserves replenishment

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Strategy - Investor Day 2014

Gazprom LNG projects
Forecast of LNG demand in the world
800 Plants under construction Operating plants Consumption consensus forecast Pessimistic consumption forecast Optimistic consumption forecast

mln t/year

600

Baltic LNG Sakhalin-2 Vladivostok LNG

400

Operating LNG plant

Prospective LNG plant

200

Baltic LNG
Source: IНS CERA, Wood Mackenzie, Pace Global, CEDIGAZ, Poten

Vladivostok LNG
■ ■ ■ ■ Capacity – 10 mln t/year Date of commissioning – 2018 (1-st line) Project status – feasibility study done (February 2013) Targeted markets – Japan, Korea, China, Taiwan, Singapore, India

0

2005

2000

2010

2015

2020

2025

9

2030

■ ■ ■ ■

Capacity – 10 mln t/year Date of commissioning – 2019 (1-st line) Project status – pre-feasibility stage Targeted markets – Spain, Portugal, Great Britain, Latin America, India, small-scale LNG

Strategy - Investor Day 2014

Gas infrastructure development in Eastern Siberia and Far East regions
Transportation site
Trunk pipeline “Power of Siberia”

Date of put into operation (not earlier)
2019

Length, km
4,000

Fields

Trunk pipeline “Power of Siberia”

Pipelines: existing under construction possible designed Operating lines of LNG plants LNG plants under construction

CHINA

Production sites
Chayandinskoye Kovyktinskoye (incl. Chikanskoye field)

Date of put into operation (not earlier)
2019 2021

Plateau production, bcm /year
25 35

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Strategy - Investor Day 2014

Mutual interest in gas export contract conclusion

RUSSIA

CHINA
■ DYNAMIC GAS CONSUMPTION GROWTH IN THE COUNTRY ■ LIMITED RESOURCE BASE AT THE TARGETED RUSSIAN GAS MARKETS ■ DETERIORATION OF ENVIRONMENTAL SITUATION IN THE COUNTRY ■ HIGH CURRENT AND PROSPEKTIVE COST OF GAS IMPORT (PIPELINE AND LNG) FROM OTHER SOURCES ■ SIGNIFICANT PRICE GROWTH ON GAS CONSUMPTION IN THE DOMESTIC MARKET AS A RESULT OF PRICING REFORM IN CHINA ■ NO CONSIDERABLE PROGRESS IN SHALE GAS PRODUCTION ■ DIVERSIFICATION OF IMPORT GAS SOURCES ■ PROVISION OF THE COUNTRY’S ENERGY SECURITY BY FUEL ENERGY BALANCE VIA GAS

■ DIVERSIFICATION OF EXPORT MARKETS ■ POSSIBILITY OF GAS SALES AT THE PREMIUM MARKET (APR) ■ WELL DEVELOPED RESERVES BASE RESULTING FROM EXPLORATION IN THE EAST ■ MONETIZATION OF GAS RESERVES IN THE EAST ■ GASIFICATION OF THE EAST SIBERIA AND FAR EAST REGIONS IN PARALLEL

■ EXPANSION OF TRADE AND ECONOMIC COLLABORATION BETWEEN RUSSIA AND CHINA, STRENGTHING THE COUNTRIES’ POSITIONS IN THE REGION AND WORLDWIDE ■ SWITCH FROM WESTERN TO EASTERN ROUTE OF GAS DELIVERIES DURING THE NEGOTIATIONS
Logo “Year of China in Russia 2007” was used in this slide.

11

Strategy - Investor Day 2014

Forecast of capital investments
Structure of CAPEX by gas business segment
GAZPROM DEVELOPMENT PROGRAM FOR A TEN-YEAR PERIOD

average annual Up to 960 bn RR p.a.
PROCESSING

8%

TRANSPORT (incl. UGS1)

52 %

GAZPROM'S INVESTMENT PROGRAM

INNOVATIVE DEVELOPMENT PROGRAM TO 2020

PRODUCTION

34 %

6% EXPLORATION 1.UGS is underground gas storage UGSS is unified gas supply system

Structure of CAPEX by major project
Yamal Megaproject

29%
NPRT Yamal South Stream
Eastern Program

LNG Projects

35%

Eastern Siberia and the Far East Reconstruction in Transport Reconstruction s in Production Other projects within UGSS exploration; existing and new production and transport projects, processing and LNG projects

3%
14%
NPTR – Nadym-Pur-Taz Region

20%

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Strategy - Investor Day 2014

Part 2. Transportation Oleg Aksyutin
Member of Gazprom Management Committee Head of the Gas Transportation, Underground Storage and Utilization Department CEO, Executive Member of the Board of Directors of South Stream Transport B.V

13

Gas transportation system
Total pipelines’ length – 168.3 thousand km Number of compressor stations - 222 units Number of gas compressor units – 3,738 units Gross installed capacity – 43,9 million kW Number of gas distribution stations – 3,945 units Average length of transportation for domestic market – 2,780 km Average length of transportation for export – 3,430 km

ANADYR

NORWAY
OSLO

SWEDEN
MURMANSK

STOCKHOLM

FINLAND ESTONIA
RIGA Tallinn HELSINKI SAINT PETERSBURG CHEREPOVETS GRYAZOVETC KOTLAS SMOLENSK TORZHOK BRYANSK MOSCOW RYAZAN KIROV SYKTYVKAR URENGOY ARKHANGELSK UKHTA SOBOLEVO

KALININGRAD

LITHUANIA LATVIA
VILNIUS MINSK PSKOV

PETROPAVLOVSKKAMCHATSKY

BELORUSSIA
KIEV

RUSSIA

Sea of Japan

TULA
YELETS

UKRAINE

KURSK

KAZAN
IZHEVSK NIZHNEKAMSK UFA NIZHNEVARTOVSK EKATERINBURG TYUMEN CHELYABINSK ORENBURG ORSK ASTANA OMSK NOVOSIBIRSK BOGUCHANY TOMSK KRASNOYARSK NIZHNYAYA POIMA BALAGANSK IRKUTSK CHITA

OSTROGOZHSK ALGASOVO PETROVSK SAMARA

SARATOV ROSTOV-ONDON ARMAVIR KRASNODAR NEFTEKUMSK SUKHUMI ASTRAKHAN ABKHAZIA MOZDOK TBILISI MAKHACHKALA

SKOVORODINO BLAGOVESHCHENSK BIROBIDZHAN

KOMSOMOLSKON-AMUR
KHABAROVSK

KORSAKOV

PROSKOKOVO ABAKAN

JAPAN

GEORGIA

BARNAUL BIYSK

NOVOKUZNETSK GORNOALTAYSK

CHINA
VLADIVOSTOK

ARMENIA

EREVAN

Caspian Sea BAKU

KAZAKHSTAN

AZERBAIJAN

CHINA

MONGOLIA

ULAN-BATOR

NORTH KOREA

14

Transportation - Investor Day 2014

Development of gas transportation system
Yamal
GERMANY

South Stream
BOVANENKOVO SWITZERLAND URENGOY FRANCE Tarvizio SLOVENIA ITALY UKHTA PEREGREBNOYE SURGUT YUGORSK CROATIA AUSTRIA HUNGARY ROMANIA Anapa SERBIA MOLDOVA SLOVAKIA UKRAINE

BARENTS SEA
NORWAY SWEDEN

NADYM

Svobodnica BOSNIA AND HERZEGOVINA

Zvornik

CS Russkaya

FINLAND

HELSINKI
TALLINN ESTONIA

RUSSIA
VYBORG SAINT PETERSBURG GRYAZOVETS KAZAN PERM UFA

MONTENEGRO
TYUMEN MACEDONIA ASTANA KAZAKHSTAN ALBANIA BULGARIA

South Stream Transport B.V.

Varna

RIGA TORZHOK LATVIA LITHUANIA VILNIUS MINSK BELORUSSIA

MOSCOW VOSKRESENSK TULA

‘South Stream’ pipeline route Russia – Bulgaria – Serbia – Hungary – Slovenia – Italy

GREECE

TURKEY

Branches To Croatia from Serbia To Republic of Srpska from Serbia

‘Bovanenkovo — Ukhta’ pipeline
length — 1,100 km first string – 2012 design capacity — 115 bcm p.a. second string — 2017 (plan)

Offshore part of ‘South Stream’
length — 925 km design capacity — 63 bcm p.a.

CS Pochinki

CS Mokshanskaya

RUSSIA

CS Petrovsk

first gas supplies are scheduled for the end of 2015
CS Pisarevka

CS Zhirnovskaya

‘Ukhta — Torzhok’ pipeline
length — 1,300 km design capacity — 81.5 bcm p.a.

Onshore part of ‘South Stream’
length — 2,506 km 10 compressor stations with a total capacity of 1,516 МW

Ukraine
CS Shashtinskaya

CS Volgogradskaya

Sea of Azov
CS Korenovskaya CS Kazachya CS Russkaya

CS Salskaya

first string launching is scheduled for 2015

project to be finalized in 2018

CS Kubanskaya Projected CS Existing CS

Black Sea

15

Transportation - Investor Day 2014

Development of gas transportation systems in Eastern Siberia and the Far East
Gas production centers
URENGOY 1 Krasnoyarskiy 2 Irkutskiy 3 Yakutskiy OKHA

NIZHNEVARTOVSK TYUMEN

YurubchenoTokhomskoye

1

4

4 Sakhalin

SobinskoPaiginskoye Chayandinskoye

SAKHALIN

Planned GPP and Gas Chemical Complex Fields

BOGUCHANY
OMSK TOMSK KRASNOYARSK

3
SKOVORODINO

Malositinskoye UGS

KOMSOMOLSKON-AMUR KHABAROVSK

KORSAKOV

2
Kovyktinskoye

NOVOSIBIRSK

BLAGOVESHCHENSK

PROSKOKOVO ABAKAN BARNAUL KAZAKHSTAN NOVOKUZNETSK BALAGANSK IRKUSTK CHINA

BIROBIDZHAN

JAPAN

BIYSK

GORNO-ALTAYSK

VLADIVOSTOK

MONGOLIA CHINA

NORTH KOREA

Sakhalin – Khabarovsk – Vladivostok
Length Capacity Date of coming on stream >1,800 km (1st section – 1350) 30 bcm p.a. (1st section – 6) 1st section - 2011

Power of Siberia
4,000 km 61 bcm p.a. 1st section – late 2019

16

Transportation - Investor Day 2014

Underground gas storage
Gas storage of Gazprom(1)
Kaliningrad Saint Petersburg Arkhangelsk

853.6
Minsk

Ukhta Moscow RUSSIA Urengoy Khabarovsk

811.8 745.8 585.8 616 73.22 657.6 74.78

BELORUSSIA

Kazan Izhevsk Tyumen Saratov Volgograd Orenburg

Surgut

69.94
Tomsk

Novosibirsk Irkutsk

2013/2014F
Current underground gas storage facilities Under-construction and planned facilities of underground gas storage Areas under exploration for underground gas storage facilities

2014/2015F

2015/2016F

Underground gas storage in Europe
Active volume, bcm Daily capacity, mmcm per day

2013F
2.29 23.5

2014F
4.29 55.6

2018F
4.54 80.5

Operating reserve at the beginning of the withdrawal season, bcm Maximum daily production at the beginning of the season, mmcm per day Average daily production in December-February, mmcm per day

1. Including gas storage in Belorussia

17

Transportation - Investor Day 2014

Gazprom energy efficiency improvement
Fuel and Energy resources saving
Target savings for the period till 2020 – 28.2 mln toe

Reduction in specific gas consumption for own process needs and losses
Target reduction for the period till 2020 – 11.4%

Greenhouse gas emissions reduction
Target reduction for the period till 2020 – 48.6 mln t

7.3 7.96

17.6

Actually achieved savings in 2011-2013 – 7.3 mln toe

Actually achieved reduction in 2011-2013 – 7.96%

Actually achieved reduction in 2011-2013 – 17.6 mln t

18

Transportation - Investor Day 2014

Gas transportation system efficiency improvement
Implementation of innovative technologies

Specific gas consumption for process needs
cm/mmcm/km 35

Increase of operating pressure up to 11.8 mPa in the onshore of main gas pipelines and up to 22 MPа (at the offshore Nord Stream gas pipeline)

31.7
30 25 20 2004

30.9

30.5

29.6

29.4 27.6 25.4

27.9 25.5 25.3

Use of high-strength large diameter pipes with flow coating
Use of tie-in pipeline under pressure technology Gas pumping from linear parts of main gas pipelines that are withdrawn for repair with the use of transportable compressor stations Use of renewable energy sources

2005

2006

2007

2008

2009

2010

2011

2012 2013F

 

Technological losses as a percentage of the transported gas volume
% 1

0.86

0.7

0.51

0.47

0.5

0.46

0 2009 2010 2011 2012 2013F

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Transportation - Investor Day 2014

Part 3. Export Alexander Medvedev
Deputy Chairman of Gazprom Management Committee CEO of Gazprom export

20

European Natural Gas Market Dynamics
bcm 800 600 400 200
307.0 311.6

Balance of European Gas Consumption
565.2
258.2

Share of Gazprom Deliveries in European Consumption increased from 25.6% in 2012 to 30% in 2013
541.0
253.0 288.1

609.8
298.2

556.0
267.6 288.4

546.7
254.5 292.3

25.6%

30.0%

0 2009

2010
Domestic production Consumption

2011

2012

2013E

2012

2013

Imports (+balance of storage)

bcm 300 250 200 150 100
14.4 6.7 12.1

Import Deliveries by Sources
250.9
31.3 46.5

252.7 -20.9
24.8 37.9 13.6 6.2 7.5

bcm 250 200 150 100

Deliveries by Major European Producers
43.8 72.6

-2.9 +8.9 -6.0

40.9 81.5

50
0

139.9

+22.9

162.7

50 0

121.4

115.4

2012
Gazprom Nigeria, LNG Algeria, incl. LNG Libya, incl. LNG

2013
Qatar, LNG Other import deliveries

2012
Norway Netherlands

2013
UK

Source: IEA, Eurostat, Lloyds, GIE, Gazprom Export analysis, Gas calorific value: 1cm = 37 MJ

21

Export - Investor Day 2014

Gazprom Sales to European and CIS Markets
bcm 180
120 60 0 2010 Export volumes 2011 2012 Other deliveries

Gazprom Gas Deliveries to Europe*
148.1
9.5

156.6
6.6

151.0
11.1

173.7
11.0

$/mcm bcm 500 80
450 60 400 387 350 300 40 20

Gazprom Gas Deliveries to CIS and Baltics
68.0

71.1

$/mcm 400 350 300

64.4

56.1

138.6

150.0

383

139.9

402

162.7

298 235

308

302

274 250

250 2013E Average export price

0
2010 2011 Volumes 2012 Average price 2013E

200

* European countries including Turkey except for CIS and Baltics

The Gap is Widening Between European Indigenous Production and Consumption
102 100 98 96 94 92 90 88 86 84 2006
100%

Under current market conditions 2014-2017 estimate for
90,8% 90,4% 90.3 88.3 86.0 91,6% 90.6 90.2 88.5 86.2

%

gas deliveries to Europe is 155-160 bcma,
depending on weather

Actual 2006-12 CERA (2013-07) PIRA (2012-3) PIRA (2013-10) CEDIGAZ - base (2013-6)

CERA (2013-01) CERA (2013-11) PIRA (2013-7) CEDIGAZ - pessimistic (2013-6)

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

22

Export - Investor Day 2014

Hybrid Pricing - Cornerstone of the European Market
Integration of Contract Prices and Hub prices
14 12 10 8 6 4 2 0

• 75% of gas exported to Europe is oil-indexed

USD per mmbtu

• Gas hub prices are not independent from oilindexed contract prices. The correlation coefficient between hub prices and oil prices moving average equals 0.85
• ACER November 2013 Market Monitoring Report states that “Oil prices is still the main determinant of wholesale gas prices in Europe…”(p.180) Gas Hub and Oil-indexed Prices – Still Related
The correlation coefficient prove dependence
NBP from January 2010 to December 2013 versus: Brent 1st month futures Brent 1st month futures - 3 months moving average Brent 1st month futures - 6 months moving average Brent 1st month futures - 9 months moving average TTF from January 2010 to December 2013 versus: Brent 1st month futures Brent 1st month futures - 3 months moving average Brent 1st month futures - 6 months moving average Brent 1st month futures - 9 months moving average r 0.69 0.79 0.84 0.83 r 0.69 0.80 0.86 0.85

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jul-12

Jul-08

Jul-09

Jul-10

Jul-11

BAFA import price, Germany
Sources: BMWi, Bloomberg

TTF (ENDEX), 1st month

Gazprom is a major provider of supply flexibility to Europe
600 500 400 300 200 100 0
Seasonal swing in Russian gas daily deliveries doubled from 1998 to 2013
MCM/d

1998-2005 80-100MCM/d seasonal swing

2005-2013 100-220MCM/d seasonal swing

Source: IEA

23

Jul-13

Export - Investor Day 2014

Part 4. Finance Andrey Kruglov
Deputy Chairman of Gazprom Management Committee Head of the Department for Finance and Economics

24

Gazprom continues to maintain its strong financial position among Oil&Gas majors
Comparative Revenue, EBITDA, Net Income CAGR
14% 12% 10% 8% 6% 4% 2% 0% Revenue EBITDA Net income
CAGR of Gazprom for 2007-2012 (1) CAGR of oil & gas majors on average for 2007-2012
USD bln

Top-5 Oil&Gas Majors by 2013E Net Profit(2)
USD bln

12%
10% 8% 6% 4%

40 35 30

USD/boe

8%

25 20

15
10 5 0

2

3

4

5

Source: Companies websites, Factset, Bloomberg as of February 20, 2014 1. Oil & Gas Majors are the top 10 oil and gas companies by market capitalization as of February 20, 2014 2. Based on companies’ data and broker consensus as of February 20, 2014; for Gazprom 9m2013 LTM

25

Finance - Investor Day 2014

Revenue diversification: new source of growth
Net Sales
USD bln

Gas Condensate Production Sites
Mn tonnes

100

90
80 70 60 50 40 30 20 10 0 2010 Gas transportation

87.3 81.8

91.0

4.7

Yamburg

63.3
0.1 Orenburg Astrahan

5.5

Novy Urengoy

3.7

Tomsk 0.3

Mn tonnes

20 18 16 14 2011 2012 9m2013 LTM 12 10 8 2010
11

Gas Condensate Production(1)
+20%

Electricity and heat

12

13

15

15

17

18

Crude oil and gas condensate
Gas sales to Russia

Refined products

2011

2012

2013E

2014F

2015F

2016F

1. Management estimates; excluding associate companies’ production

26

Finance - Investor Day 2014

Sustainable free cash flow generation
USD bln

Gazprom FCF Generation(1)
55.1 12% 10% 8% 6% 43.6 26.9 43.1 44.3 4% 2% 0% 2008-2009 2010-2011 2012 9m2013 LTM

60

Gazprom vs Russian Oil & Gas Majors Free Cash Flow Yield, 9m2013 LTM/2014(2)
11% 10% 9% 7% 6%

51.9
50 8.3 46.5 3.4 10.8

40
30 20 10 0

36.6
7.7

3%

Cash Capital Expenditures

Free Cash Flow

1. Period averages. 2013LTM = 9m2013+12m2012-9m2012 2. Five Russian oil and gas majors by capitalization as of 31 January 2014: Rosneft less increase in long term prepayments on oil supply agreements, Novatek, Lukoil, Surgutneftegaz, Tatneft

27

Finance - Investor Day 2014

Increase of Mineral Extraction Tax (MET) transparency: transition to gas MET formula
Gas MET = 15% * Price ratio * Complexity ratio + Transportation ratio Condensate MET = 15% * Price ratio * complexity ratio
Gas MET formula effective from July 1, 2014 Benefits • Direct link of tax rates to average realized prices • Smoothening the effects of gas tariffs growth deceleration in Russia • Tax breaks for key greenfields, depleted and complex fields • Higher stability of gas taxation • Transparent rules for gas condensate taxation • • • •
RR

MET Rate Calculation*
700 686

1000
800

1h2014

2h2014

693 602 590

674

717718

600
400 237

556 509

200
0

147

Key MET tax breaks: Greenfields: Yamal and Gydan peninsula, Irkutsk, Krasnoyarsk regions, Far East Depleted fields: depletion ratio over 70% Complex fields: Astrakhan region Deep layers: over 1,700 m deep

2010

2011

2012

2013

2014F

2015F

Natural gas MET, Gazprom (RR/mcm) Gas condensate MET, Gazprom (RR/1 ton)
* Before 2012 MET rates for gas condensate were set at 17.5% of realization price

28

Finance - Investor Day 2014

CAPEX efficiency
USD bln

Capital Expenditures: Gazprom vs Russian oil majors(1)
127% 118% 108% 53.0 124% 140% 120% 100% 44.3 47.0 80%

80 70 60 50 40 30

USD/boe

Capex/hydrocarbon production: Gazprom vs Russian oil majors(1)
16.7 15.5 13.0 13.4 13.7

18 16 14 12

11.5
10.4 8.2

43.1
37.4 29.0 22.1 34.8

10
8 6 4

60%
40% 20% 0%

20
10 0 2006-2008 2009-2011 2012 9m2013 LTM Gazprom Russian oil majors aggregate Gazprom self funding (OpCF/Cash CAPEX)

2

0
2008-2009 2010-2011 2012 2013E Gazprom Russian oil majors

Source: Companies websites, media sources, Factset, Bloomberg as of February 6, 2014 1. Cash CAPEX; Russian oil & gas majors includes Lukoil, Surgutneftegas, Bashneft, Rosneft, TNK-BP, Tatneft and Transneft

29

Finance - Investor Day 2014

Balanced CAPEX
USD bln

Gazprom Group CAPEX (1)
2014 Priorities
43 42-43

50.0 Gas Upstream Gas Midstream Gas Downstream 40.0

35-42

Gas Upstream

Oil
Power Generation 30.0

▼ Bovanenkovo field ▼ Brown fields and Nadym-Pur-Taz region ▼ Field development projects abroad
Gas Midstream

▲Bovanenkovo-Ukhta pipeline ▲GTS Extension – Southern Corridor ▲ Long-term financial investments for the construction of the
South Stream pipeline outside Russia

20.0

▲ The reconstruction of the Petrovsk Pisarevka section of the
Urengoy Novopskov

▲ Other reconstruction and technical re-equipment of the GTS
Gas Downstream

10.0

▲Gas condensate refining
Oil

▲Novoportovskoe and Mesoyahinskoe fields
Power generation

0.0 2012
1. Source: Management Estimates

▲New capacity investments
2013F 2014F

30

Finance - Investor Day 2014

Natural hedging against rouble volatility
Hard currency(1) denominated revenues
Gas sales, Europe Crude exports Gas sales, ex.USSR Domestic oil product sales Gas sales, Russia Electricity and heat Transport Other revenues 0% 20%
33% 15% 8% 10%
Hard currency 66% Roubles 34%

Hard-currency denominated OPEX
22% 7% 8% 2% 15% 3%
Hard currency 43% Roubles 57%

Gas and oil purchased Taxes other than income Transit of gas and oil products 7% Materials 15% Repairs Goods for resale 7% 3% Staff costs Other cash 2% 100% 0%

1%
1%

6%
5% 2% 2% 1% 1% 14% 10%

40%

60%

80%

25%

50%

75%

100%

Hard currency denominated CAPEX
Gas transportation Gas production Liquids production Refining Electricity Gas deliveries Gas storage Others
1. Mainly US Dollars and euro

Debt distribution by currency
EUR 30%

6%

23% 3% 20% 5%

Hard currency 22% Roubles 78%

17% 4% 2% 6% 5% 1% 1% 2% 1% 4%

USD 55%

Roubles 12%
Others 3%

0%

25%

50%

75%

100%

31

Finance - Investor Day 2014

Top Russian borrower
USD bln

Total and Net Debt(1)
1 0.6x 0.7x 0.5x 31% 0.6x 0.5 42% 13% 15%
43.2 47.8 15.7 49.4 14.2 53.4

Debt Maturity Profile(2)
21% 26% 33% 19% 26% 36% 16% 22% 9m2013 More than 5 years

100

80

38% 17%
24% 2011 1-2 years

60

22%
2012 2-5 years

0
17.7

2010 Less than 1 year %

40

14.6

Cost of Debt Financing(2)
6.4% 5.8% 2.7%

20
28.6

-0.5
32.1 35.2 35.7

0 2010 2011 2012 9m2013 Cash&Cash equivalents and restricted cash Net debt Net Debt/Adj.EBITDA LTM

-1

9 7 5 3 1 2008

2009 2010 2011 2012 Weighted average fixed interest rate Weighted average floating interest rate Weighted average interest rate

9m2013

1. Data are converted in USD using exchange rate RR/USD as of the end of the period 30.48 for 2010, 32.2 for 2011, 30.37 for 2012, and 32.35 in 9m2013 2. Excluding promissory notes

32

Finance - Investor Day 2014

Dividend payout
RR / Share

12
9 6 3 0 2010
3.85

Dividend Per Share(1)
8.97
5.99 6-8

8% 6% 4% 2% 0%

Dividend Yields of Major Oil & Gas companies, 2013F(2)
5.3% 4.8% 4.7% 4.7% 4.7%

4.3%

3.4%

2.6%

2011

2012

2013F

Dividend payments’ schedule of OAO Gazprom
according to the amendments to the Federal Law on Joint-Stock Companies that are effective from 01.01.2014
Record date for AGM
(8 March 2014)

AGM
(27June 2014)

Record date for dividends payout
not later than 10 working days
Dividend payments to nominees and trustees, who are registered with the Register of Shareholders

Approval of Record date for dividends payout

not later than 25 working days
Dividend payments to other persons registered in the Register of Shareholders

10 to 20 days after AGM

May

June

July

August

1. Company operating data estimates 2. Dividend yield is defined as approved dividends for the period divided to the share price as of February 14, 2014; Source: Companies data, FactSet

33

Finance - Investor Day 2014

2014 Outlook Value drivers:
 Stellar growth in the European gas market  Improvement of the Russian gas market competitiveness

 Outstanding growth of liquids in the production mix
 Optimization of costs and financing solutions for upcoming projects  Compliance with best corporate governance standards  Robust financial performance

34

Finance - Investor Day 2014

Part 5. Gazprom neft Alexei Yankevich
Member of the Management Board, Deputy CEO for Economics and Finance of Gazprom Neft

35

Investor day summary
 Record Financial & Operating Results

 Large scale deployment of new technologies
 First Arctic Offshore Production  Refinery Quality Program Completion  Conversion Program at FEED Stage  Domestic Retail Efficiency Growth  Investments on Track  Dividends at 25% IFRS Payout  First Ever Interim Dividends  Net Debt / EBITDA not to exceed 1.5X

36

Gazprom neft - Investor Day 2014

Executing Strategic Goals
    
Increased stake in SeverEnergia to 40.2% Expanded presence in Iraq (Halabja block acquisition) Launched production at Prirazlomnoye Signed a memorandum with Shell on development of liquids-rich shale Launched CPF and began deliveries of oil to condensate pipeline at SeverEnergia Entered development phase at Yuzhno-Kinyaminskoye field Launched Yuzhno-Priobskaya gas compressor station Completed quality program at all refineries Expanded G-Drive portfolio to include gasoline 98, planning to expand range of diesel fuels in 2014-2015 Expanded foreign jet fueling network to 125 airports (vs. 88 at Jan 1, 2013) Created a JV with Total to produce polymer-modified bitumen under G-Way Styrelf brand Acquired Russia's largest polymer modified bitumen plant Initiated interim dividend program

   
   
37

Gazprom neft - Investor Day 2014

Targets on hydrocarbon production, refining, and marketing premium sales expected to be main vehicles for growth
Changes in PRMS (SPE) proved reserves, mmtoe
1,400 1,350 1,300 1,250 1,200 1,150 1,100 1,050 1,000

Hydrocarbon Production, mmtoe
120 100 80 57.3 59.7 62.3
CAGR +7%

333% Reserves replacement ratio
91 1,200 61 114

1,343

100.0

60 40 20 0

YE2012

Group Revisions production

Acquisitions(1)

YE2013

2011

2012

2013

2020

Refining, mmt
80 70 60 50 40 30 20 10 0
Optional growth outside Russia

Premium Channel Sales, mmt
45 40 35 30 25 20 15 10 5 0

30.0 40.5 43.3 42.6

22.9 19.5

24.0 40.0

40.0

2011

2012

2013

2020

2011

2012

2013

2020

1. Acquisitions include increase of share in Sever Energia

38

Gazprom neft - Investor Day 2014

Strong record of financial results continued throughout 2013
Revenue, RUB mm
1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 2011 2012 2013 1,031,794 1,232,649 1,267,603

400,000 350,000
300,000 250,000 200,000 150,000 100,000 50,000 0

Adj. EBITDA(1), RUB mm
300,077 323,106 336,752

2011

2012

2013

Net Income, RUB mm
200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0
176,296 160,362 0.60 177,917 0.90

Net Debt / EBITDA
0.70 0.51 0.59

+1%

0.30

0.00 2011 2012 2013 2011 2012 2013

1. EBITDA includes share of EBITDA of associates and joint ventures Note: In accordance with the transition provisions of IFRS 11 Gazprom Neft has applied the new policy for interests in joint operations occurring on or after 1 January 2012. Gazprom Neft has assessed the nature of its joint arrangements and determined them to be joint ventures, except for its investments in Tomksneft and Salym Petroleum Development, which were determined to be joint operations. For purposes of this presentation the metrics Revenue and Net debt/EBITDA for Y2011 were restated to correctly compare data for 2011-2013.

39

Gazprom neft - Investor Day 2014

Operational and financial efficiency backed by industryleading growth
Adj. EBITDA absolute 2013 Y-o-Y Growth, %
4.2 30 25 20 15 1.1 0.0 Gazprom Neft Lukoil Rosneft 10 24.2 19.8 23.1 23.7 18.8 19.6

Adj.EBITDA/boe, USD/boe

5
0 Lukoil Gazprom Neft 2013 2012 Rosneft*

ROACE, %
25 20 15 10 5 0 Gazprom Neft 2013
Source: MD&A of Companies and INFOTEK *includes TNK-BP

OCF/boe, USD/boe
30 25 22.8 25.1 21.6 21.4 14.2

17.4

19.4 15.3 11.7 11.1 12.4

20 15 10 5

18.2

Lukoil 2012

Rosneft

0 Gazprom Neft 2013 Lukoil 2012 Rosneft*

40

Gazprom neft - Investor Day 2014

Combination of New Production and Legacy Fields Driving Growth
Traditional and new production centers in Russia
Arctic Shelf: Prirazlomnoye & Dolginsokye North of YNAO: SeverEnergia, Messoyakha & Novoportovskoye

Orenburg

East Siberia: Chonskiy Project & Kuyumba

41

Gazprom neft - Investor Day 2014

Investment Decisions Reached at New Upstream Projects
Novoport Messoyakha Kuyumba Tsarichanskoye

 Peak: 13 MMToe at 2022-2023  Completed first winter oil shipment

 Peak: 12 MMToe at 2023  Completed first winter oil shipment

 Peak: 12 MMToe at 2029-2030  Drilled 4 horizontal and 1 exploration
well

 C1+C2 reserves: 27 MMtoe  Peak: 2.3 MMToe at 2018

2P reserves (PRMS), MMtoe
160 140 120 100 80 60 40 20 0 40 35 30 25 20 15 10 5 0 2013

Production Profile, MMtoe

141

140

124

Kuyumba

Messoyahkha

Novoport

2015 Kuyumba

2017 Novoport

2019 2021 2023 Messoyahkha Tsarichanskoye

2025

42

Gazprom neft - Investor Day 2014

Upstream Portfolio Expanding
Tomsk region

SeverEnergia
Increased stake to 40.2%

Acquired Yuzhno-Pudinskiy Block
Reserves (C1+C2): 6 MMToe Startup: 2016 Peak: 0.3 MMToe at 2019

Reserves (C1+C2): 1.7 bln toe Startup: 2012 Peak: 42 MMToe at 2020-2021

2013
February March April May June July August September October November December

Iraq

Partnership with Shell (KMPA)
Area of interest

Halabja block acquisition

Recoverable reserves: 79 MMToe Startup: 2016 Peak: 4.5 MMToe at 2024

Signed a memorandum confirming the General Agreement on Partnership in exploration and development of liquids-rich shales

43

Gazprom neft - Investor Day 2014

Production Increase Driven by Orenburg, Muravlenkovskoye, SeverEnergia and Priobskoye
Hydrocarbon production

*Joint operations: proportionally consolidated entities (Tomskneft, SPD). ** Joint Ventures: Equity accounted entities (Slavneft, SeverEnergia)

Kboe/day

Average daily production

44

Gazprom neft - Investor Day 2014

Technological Progress Driving Growth
The share of high-tech wells in total drilling in 2012-2013, increased from 4% to 35%
Horizontal wells drilled
2.7х

Multi-stage well fracking

Multilateral wells drilled

5.1х

4.8х

2011
Length of horizontal part up to 300m 3 stage hydrofracs

2012
Length of horizontal part up to 800m 5-6 stage hydrofracs

2013
Length of horizontal part up to 1,030m 9-10 stage hydrofracs

45

Gazprom neft - Investor Day 2014

First Arctic Offshore Production
Recoverable reserves (C1+C2): 74 MMTonnes Startup: 2013

Peak: 5.5 MMTonnes at 2021
Key events:  Completed necessary audits ahead of platform launch  Drilled first well with flow rate 1,750 tpd  The government granted export duty for the first oil 2014 plans:  The first oil shipment from Prirazlomnoye is expected in 1Q14

Barents Sea Murmansk

Kara Sea

Prirazlomnoye

Naryan-Mar White Sea

Arkhangelsk

Recoverable reserves, MMtonnes

Crude oil production, MMtonnes
5.5

25
С2

4.1 2.7

3.6 2.7 2.1

С1

49

Crude oil, MMTonnes

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

46

Gazprom neft - Investor Day 2014

Refining Throughput Levels Remain High Amidst Investment Program
Refining throughput, MMTonnes
+13% 37.9 2.9
7.2 8.9 10.8 10.7 +7% 40.5 2.4 7.4 +7% 43.3 2.1 9.6 -10% +4% -2% +28% 42.6 2.7 8.6

NIS Slavneft Moscow

33.4 2.4 6.8 5.8

11.1

Omsk

18.4

19.0

19.9

20.9

-3%

20.2

2009

2010

2011

2012

2013

Peer comparison – Refining throughput growth (CAGR) 2013 vs. 2009*
Gazprom Neft Rosneft Lukoil Bashneft

Surgutneftegaz
*Source: Company Reports

47

Gazprom neft - Investor Day 2014

Completion of quality program leads to higher value product mix
Output by products, MMTonnes Gasoline yield

Diesel yield

48

Gazprom neft - Investor Day 2014

Conversion investments will increase light product yields by about 20% between 2013 and 2020
Petroleum product yield structure, %

 Half of conversion investment program expected to come online between 2013 and 2017  As a result, conversion rate is expected to increase by 15 ppts  Light products will count for 80% of total yields by 2020

100

100
Gasoline

100

22 27 2 7
1 8

27
Naphtha Jet f uel Diesel Lubricants Other (Coke, Bitumen, Heating Oil) Fuel Oil

29
12

1 8 31

29 3

38 3 16 14 4 15 2

31

17

320 16

2013
14 61.3 2017

2014

2015

2016

2017
67.1 82.5 36.7

2018

2019

2020
80.6 94.2 37.9

Light Products Yield, % Conversion Rate, % Petroleum Product Output, mmt

79.2 36.5

Omsk
 Hydrocracking  Coking Unit

Moscow
 Hydrocracking  Flexi Coking

YANOS
 Hydrocracking

Units to come online between 2017-2020

49

Gazprom neft - Investor Day 2014

Rebranding pushes annual sales growth
1
Benchmarking Loyalty program

3

2

Accompanying goods and services

Retail metrics

4

1

Benchmarking (Avg. daily sales/site)

2
35%

Non oil sales, 1,000 RUB/sq.m.
21% 10%
16.4

3

Loyalty program, mln members
1,600 27% 1,400 1,200 1,000 800 3.3 600 400 200 -

4
1,600 10.1 1,400 1,200 4.2 181 1,000 800 600 947 400 200 2010
14.2 10.1 202 181

Retail metrics
17.7 14.2
205 202

19.0 17.7
228 205

74% x2.4
1.9 0.8

14.9 12.3

9.1

1,043 947

1,060 1,043

1,111 1,060

19.0 18.0 14.0 10.0 228 6.0 2.0 -2.0 -6.0 -10.0 -14.0 1,111 -18.0 -22.0 -26.0 -30.0

2010

2011

2012

2013

2010

2011

2012

2013

2011 2010

2012 2013 2011 2012 2013 Russia network Russia network CIS network CIS network Av/ Daily sales per site in Russia Av/ Daily sales per site in Russia

18 14 10 6.0 2.0 -2. -6. -10 -14 -18 -22 -26 -30

50

Gazprom neft - Investor Day 2014

Capital Investments support strategic goals
Investments (RUB mln)
32% Y-o-Y growth in brownfield capex due to increase in use of new technologies in legacy fields Active development of Novoport field, Orenburg cluster and offshore projects drove 54% Y-o-Y increase in greenfield capex Refining capex decreased 35% Y-o-Y as quality improvement projects reached completion at all refineries 8% Y-o-Y increase in marketing capex due to continued reconstruction of newly acquired retail sites in Russia and abroad Investment in new projects* increased 58% as a result of active development of new projects (mainly offshore projects and Messoyakha field M&A includes premium channel network expansion and increase in shares of subsidiaries
15.6%

* Projects that are not consolidated under IFRS

51

Gazprom neft - Investor Day 2014

US $2.1** Billion free cash flow generated in 2013
RUB million

Cash Flow Reconciliation FY2013
6 5 4 3.0

FCF/boe 2013, USD/boe
5.6

3
2 1 0 Gazprom Neft Lukoil 0.8

Rosneft*

* Includes TNK-BP

52

Gazprom neft - Investor Day 2014

Diversified debt portfolio
Debt maturity profile at the end of FY2013 and comparison of profile’s structures 2013 vs. 2012
100% 90% 80% 70% 60% 50% 40% 30% 20% 10%
From 31% to 15% 13% in-line Y-o-Y From 31% to 38% From 25% to 34%

Debt structure at the end of FY2013, RUB mln

21,235

Cash and cash equivalents

91,077 98,516
Short-term deposits

Other borrowings 61,583 Bank loans Bonds 132,534 LPN

36,869

185,922

0%
1 year 1 - 2 years 2 - 5 years Over 5 years

Debt

Fin. assets

Net debt

   

Net debt/EBITDA 0.59x vs. target <1.5x Increased average debt maturity from 3.81 years in 4Q12 to 5.15 years in 4Q13 Increased average interest rate from 3.48% at December 31, 2012 to 3.68% at December 31, 2013 Diversified debt portfolio: bank loans, bonds, PXF (pre-export finance facility), LPN (loan participation notes)

53

Gazprom neft - Investor Day 2014

Continued commitment to shareholders via interim dividends
 In 2013, the expected amount of annual dividends is 25% of IFRS Net Income  Launched interim dividend program via payment of 6-month interim dividends

Dividend Yield Benchmarking, %
7% 6% 5% 4% 3% 2% 1% 0% 2009 2010 Gazprom Neft Lukoil 2011 Rosneft 2012

Dividends, 2009-2013, RUB bln

54

Gazprom neft - Investor Day 2014

Appendix: 2014 plans for major upstream developments
Exploration Appraisal Selection Specification Realization Exploration Appraisal Selection Specification Realization

Chonskiy

“North unit”  Complete 3D seismic field work using UniQ technology (400km2) and 3D seismic surveying (200 km2)  Drill 3 exploration wells  Carry out pilot well test - 1 well “South unit”  Complete 3D seismic surveying (300 km2)  Drill 2 exploration wells  Carry out pilot well test - 1 well
Appraisal Selection Specification Realization

Exploration

Appraisal

Selection

Specification

Realization

Kuyumba,
Phase 1 Phase 2 and 3

   

Develop a concept for integrated field infrastructure Carry out 3D seismic surveying (1100 km2) and 2D seismic surveying (600 km) Drill 4 exploration wells Test production – drill 8 horizontal wells with horizontal sections from 500 to 900m, confirm geological hydrodynamic models
Selection Specification Realization

Exploration

Exploration

Appraisal

Dolginskoye

    

Sign the necessary service contracts for exploratory drilling in 2014 (well 3SD) Drill well 3SD and test up to 3 productive zones Revision of the license obligations Search for a partner in the project Preparations for drilling in 2015

Kurdistan (Iraq)

Shakal  Complete 3D seismic field work  Drill 2 exploration wells Garmian  Drill 1 exploration wells Halabja  Complete interpretation of 2D seismic surveys
Appraisal Selection Specification Realization

Exploration

Appraisal

Selection

Specification

Realization

Exploration

Venezuela

   

Step-by-step realization of contractual agreement for supplementary exploration (first stage completion) Continue realization of “Early production” project Pipeline construction as part of “Early production” Continue construction of roads and bridges Base engineering of Upgrader and ground-level infrastructure

Partnership with Shell (KMPA)

 

Built a portfolio of license blocks for KMPA Create a first pass commercial view

55

Gazprom neft - Investor Day 2014

Appendix: 2014 plans for major upstream developments (cont'd)
Exploration Exploration Appraisal Appraisal Selection Selection Specification Specification Realization Realization Exploration Exploration Appraisal Appraisal Selection Selection Specification Specification Realization Realization

Eastern part of Orenburg field

Orenburg
Phase 1-2 Phase 3

  

Commission high-pressure gas compressor and third technological line at CPF Complete well stock metering control project Commission external transport oil pipeline (2.4 MMTonnes/year) and the first start-up complex of CPF (1.5 MMTonnes/year) Begin construction of gas pipeline to Orenburg gas processing plant, booster compressor station and gas compressor station
Selection Selection Specification Specification Realization Realization

SeverEnergia

  

Tsarichanskoye

 
Exploration Appraisal

Drill 62 production wells Implement test production at oil rims (Samburgskoye and Yaro-Yakhinskoye fields) Commission 2 trains of GPF(14 bcm per year total) at Urengoyskoye field; GPF (7 bcm per year) at Yaro-Yakhinskoye; 3d train of GPF (2.3 bcm per year) at Samburgskoye field Implement program to explore oil part of achimovsky deposits at Samburgskiy license area Commission 1st train of CPF at Yaro-Yakhinskoye
Selection Specification Realization

Exploration

Appraisal
Appraisal

Exploration

Novoport
Phase 1 Phase 2

    

Drill 7 wells and carry out exploration wells test program (phases 1-2) Launch CPF (400 MTonnes/year) Complete oil pipeline construction (oil field to CPF) Start summer crude shipments (temporary scheme) Complete phase 1 design and survey work and get approval from the Directorate-General for State Environmental Review for the Arctic Terminal and infrastructure
Selection Selection Specification Realization

Prirazlomnoye

 


 

Complete design and survey work for the 3rd start-up complex Commission off-shore ice-resistant fixed platform “Prirazlomnaya” Commission 3 wells (1 production, 1 injection and 1 absorbing) Begin oil shipments Commission field camp and water-supply facilities

Exploration Exploration

Appraisal Appraisal

Exploration Exploration

Appraisal Appraisal

Selection Selection

Specification Specification

Specification

Realization

Realization Realization

Messoyakha
Phase 1 Phase 2
    

Carry out preliminary work for construction of gasturbine power plant, CPF and pipeline Complete phase 1 design and survey work of the key infrastructure Complete drilling well pads #1,2 and well testing Drill 2 exploration wells 3D seismic survey, Phase 2 West (drill and test 1 exploration well), East (drill well pad #4, 3D seismic – 490 km2, drill 1 exploration well, test 2 objects, model specification)

Badra
1 (infrustructure) 2 (development)

 

   

Complete setting up a field development plan Launch: • Technological line “А” CPF • In-field pipeline • Export oil pipeline • Wells BD4, BD5 Begin construction of Technological line “А” GPF Commission well Р8 Start commercial production Start production drilling (5 drilling rigs)

56

Gazprom neft - Investor Day 2014

Appendix: Gazprom neft balance
Crude, MMTonnes
1.25 MMTonnes
Hydrocarbon production abroad

49.33 MMTonnes

4.74 MMTonnes

Crude oil production in Russia
0.4 MMTonnes Condensate 6.81 MMTonnes Hydrocarbon purchases

Petroleum products purchase

2.75 MMTonnes Refining abroad

14.24 MMTonnes CRUDE OIL SALES**

45.31MMTonnes PRODUCT OUTPUT***

Petroleum products, MMTonnes

7.10 MMTonnes Premium business segments 1.85 MMTonnes
Russian Federation 18.8 MMTonnes Filling stations and tank farms 4.7 MMTonnes 20.6 MMTonnes Other customers Export and state contracts

12.39 MMTonnes
Export sales (CIS, NIS a.d, NoviSad, Gazprom Neft Trading Gmbh)0

57

Gazprom neft - Investor Day 2014

Part 6. Gazprom Energoholding
Denis Fedorov
Head of Gazprom Directorate for Development of Power and Heat Generation CEO of Gazprom Energoholding

58

Russian power generation
Russia is a Top-6 country in terms of installed capacity, 2012, GW
China US EU Japan India Russia 287* 234 223
№6

Key facts about the market
1,220 1,168* 964 Market turnover 2008-2012, $bn
2008 2009 2010 2011 2012 Production
Source: companies’ data

24

16

23

30 16 19

33

23

32

22

Transmission

Thermal Depreciation in the generation sector Hydro Nuclear

26% 22% 65% < 30 years

52% 57%

22% 21% 35%

* Data as of 2011. Source: data of power authorities of the countries, EIA

Russia is a growing competitive market

31-50 years

> 50 years

 

Private investments in the industry exceed $40 bn since 2006 The electricity market is completely liberalized Projects within the Capacity Delivery Agreements (CDA) provide 14% IRR of the players’ investments
The largest generating companies in Russia, GW

Source: GEH analysis

GEH

37.7 37.5 33.5

RusHydro
Inter RAO RosAtom EuroSibEnergo
Source: companies’ data


59

25.2
19.5

Gazprom Energoholding - Investor Day 2014

Electricity consumption in Russia: Dynamics and drivers
Consumption of electricity in Russia has been growing at 1.8% annually in the recent 10 years The Russian GDP growth rate is expected to grow following the recovery of key industries Electricity prices in Russia have potential to grow

Forecast of electricity consumption in Russia, bn kWh
1,200 1,150 1,100 1,050 1,000 1,038 1,134 1,146 6.0%

Russia’s GDP growth rates

Electricity prices for industrial customers, EUR/MWh in 2012
150 120 90 60 30 0
Russia Germany Spain France Poland Italy UK

4.5% 4.4%

3.5% 1.5%

2.9%

3.5% 3.7% 3.9% 3.8%

1,049

1,062

1,076

1,091

1,106

1,121

3.0%
0.0% -3.0% -6.0% -7.8%

2012

2013

2014

2015

2017

2019

2016

2018

2020

-9.0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: EIU forecast 2014 Source: World Bank, EIA, statistical agencies of the countries

Sources: fact 2012 – Energy Forecasting Agency, forecast is evaluated indicatively basing on GDP forecast of MED

Consumption of electricity is expected to grow at 1% annually in 2014-2020

GDP growth rates are expected to recover to 3-4% per year in 2014-2018

Elimination of cross-subsidization may become the growth driver

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Gazprom Energoholding - Investor Day 2014

Gazprom Energoholding assets’ profile
 Gazprom energoholding owns controlling stakes in Mosenergo, TGK-1, OGK-2 and MOEK  GEH is the leading thermal generator in Russia  More than 75% of GEH gas consumption is produced by the subsidiaries of Gazprom
As of 2013 Electricity Heat

Installed capacity
Production

37.7 GW

71.3 th. Gcal/h

159.6 bn kWh 124.8 mm Gcal Electricity Heat 12.3 GW 35,1 th. Gcal/h 58.6 bn kWh 67.6 mm Gcal $0.96 bn(1) 15% Electricity Heat 7.2 GW 14,2 th. Gcal/h 29.3 bn kWh 27.3 mm Gcal $0.70 bn(1) 22.6% Electricity Heat 18.0 GW 4.5 th. Gcal/h 70.7 bn kWh 6.8 mm Gcal 0.77 bn(1) 22.7% Electricity 0.2 GW 1.0 bn kWh Heat 17.5 th. Gcal/h 23.1 mm Gcal

Installed capacity Production

53.5%

MCap Free float

Installed capacity Production

51.8%

MCap Free float

Installed capacity
Production

77.3%

MCap Free float

Installed capacity

98.9%
1. As of February 25, 2014

Production

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The management is focused on value creation
Environment
Prices for power Heat tariff Gas tariff Climate

We do not affect tariffs…

GEH influence area 1  2  3  4  5 
Operational efficiency Guaranteed IRR of investments Availability of debt funds Strategy and M&A, creation of synergies Corporate governance and IR

… but we create value for shareholders via internal optimization

 The industry specifics give less space for price and volume maneuver, therefore the company is focused on efficiency enhancement  The strategic goals of GEH remain the retention of its leading position in the industry, entry into new markets and social responsibility to its personnel

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Performance of management on GEH assets optimization
 In 2013 GEH managed to reduce its expenses and strengthen the financial position of its assets  GEH also executed the acquisition of MOEK which is expected to create significant synergies when integrated with Mosenergo
 Cash flow of TGK-1 will grow following the execution of the investment program: – Completion of CDA projects will allow to increase EBITDA of TGK-1  Program of operational effectiveness improvement: – The overall effect reached RR 1.4 bn of EBITDA in 2012 and RR 881 mm of EBITDA in 2013 – The key initiatives in 2013 are optimization of procurement and reduction of output by ineffective capacities
7.8 EBITDA TGK-1*, RR bn 15.4 11.9 16.5 17.3

2010 * IFRS

2011

2012

2013F 2014F

 The company has executed the program of expense reduction: – Successful operational activities (optimization of load conditions and fuel balance, reduction of worktime for unprofitable units, effect from new capacities)

-51% -13% -15%

Advisory, legal, auditor services(1) Transportation expenses (1) Materials and supplies expenses (1)

– Enhancement of procurement system
– Optimization of organizational structure (personnel down by 795 persons, effect was RR 225 mm)

 Gazprom Energoholding completed its acquisition of MOEK : – MOEK acquisition will allow Mosenergo to eliminate the risk related to the loss of a part of heat loads (due to the merger of MOEK and MTK)  Commissioning of new effective units results in expense reduction: – New CHPPs in TEC-21 and TEC-26 commissioned in recent years reduces the fuel consumption significantly
1. RAS as of December 31, 2013

Fuel rate in electricity production by new CHPPs, g/kWh

256

217

212

209

TEC-21 9m2012

TEC-26 9m2013

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Growth of GEH assets financials
Gazprom Energoholding significantly outperformed the leading European power companies in terms of growth rates
15.0%

EBITDA CAGR 2009-2013F, IFRS

10.0%

Revenue CAGR in 2009-2013 reached 9%, EBITDA CAGR– 9%

*

5.0%

0.0%

-5.0%

-10.0%

-15.0%

-20.0%

35.0% -25.0%
-6% -4% -2% 0% 2% 4% 6% 8% 10% 12%
Source: Bloomberg consensus as of January 27, 2014 * Excluding MOEK The 2013 results exclude the depreciation tests and potential transactions with the assets of “ Khimki Heating Grids”

Revenue CAGR 2009-2013F, IFRS

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Gazprom Energoholding - Investor Day 2014

Expected effect from the drivers of 2013-2014 EBITDA
 Costs optimization programs implemented by GEH are expected to result in EBITDA increase of over RR 4 bn in 2013 and over RR 2 bn in 2014

Expected effect on EBITDA from the costs optimization activities

+1.5
RR bn

+0.8
RR bn

+1.8
RR bn

+0.8
RR bn

+0.8
RR bn

+0.5
RR bn

2013

2014

2013

2014

2013

2014

 Some measures/initiatives will also allow the company to increase its value in the future:


Expected growth drivers

Impact from the MOEK acquisition:  Gas savings due to load switching  Optimization of heat management system  Sale of land  Other*

 

CDA program finalization Improvement of corporate management by means of introducing Fortum representatives to the Board

 

CDA program implementation Execution of cost reduction program

 

CDA program finalization LEAN program

Management reporting data * Other effects include the use of equipment from MOEK boilers subject to be closed at other objects and extra income from the rental or sale of office buildings

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Additional growth opportunities for GEH
 Being a part of Gazprom Group, GEH positions itself as an international player
 Along with the current work on efficiency improvement, the company continues to seek opportunities for added value creation both in Russia and abroad
1
Service business

 GEH acquired a group of power maintenance companies “TeploEnergoRemont” in 2013
 GEH holds the blocking stake of power service company “Tekon-Engineering”  Both companies carry out contracting works for GEH generating subsidiaries, as well as for companies outside the group

Projects in Russia

2

Power fuel stations  Agreement on power fuel stations was signed with the Government of Moscow  Particularly, GEH reached the preliminary agreements concerning the measures for increasing the number of electric vehicles and building the required infrastructure in Moscow

3

Pancevo project  Construction of a 208 MW CHPP in the town of Pancevo together with NIS  Return on investments is guaranteed by long-term agreements on fuel supplies and sales of heat and electricity

Projects abroad

4

Potential foreign projects  GEH is permanently monitoring markets which can be potentially interesting for business development. At the moment the company is evaluating the opportunities in Germany, Serbia and other Balkan countries, as well as in Japan, China and Vietnam

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Appendix: GEH profile
General Information

 Gazprom Energoholding is the largest owner of power generating assets in Russia (controlling stakes in Mosenergo, TGK-1, OGK-2 and MOEK)  GEH unites 81 power stations with installed capacity of ca. 37.7 GW (about 17% of the total installed capacity of the Russian electric power industry), and is one of the Top-10 European power producers
Top-10 European power generating companies by installed capacity, 1H 2013, GW
139.5 97.8

Installed capacity in Russia as of 31.12.2012(1)

17%

83%

Source: System Operator

GEH fuel balance as of 30.09.2013
0.7%

67.7
(2)

52.0 50.7 39.4 37.7 37.4 36.5 33.5

14.9%

Gas Coal Fuel oil

84.5%
Source: company data

1. Source for the total installed capacity in Russia (223 GW) – data of the System Operator 2. GdF Suez installed capacity in Europe

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Gazprom Energoholding - Investor Day 2014

Appendix: Operational and financial results outlook for 2013/2014
Electricity output
+5.6%

166.9

158.6

167,5

Revenue (IFRS)

+5.3%

323.8

336.1

354.0

kWh bn

2012 61.3 27.3 75.2 166.9

2013 58.6 29.3 70.7 158.6
+1,9%

2014F 62.7 30.9 73.9 167.5

Change 7.0% 5.5% 4.5% 5.6%

RR bn

2012 157.1 62.5 104.2 323.8

2013F 156.7 67.5 112.0 336.1
+1.9%

2014F 168.0 73.1 112.9 354.0

Change 7.2% 8.3% 0.8% 5.3%

Mosenergo TGK-1 OGK-2 Total

Mosenergo TGK-1 OGK-2 Total

Heat output

101.1

99.7

101.6

EBITDA (IFRS)

46.3

52.7

53.7

Gcal mm

2012 68.4 24.6 6.3 101.1

2013 67.6 27.3 6.8 99.7

2014F 67.6 27.3 6.7 101.6

Change 0% +7.9% -1.5% 1.9%

RR bn

2012 20.3 15.4 10.6 46.3

2013F 24.7 16.5 11.5 52.7

2014F 24.6 17.3 11.8 53.7

Change -0.4% 4.8% 2.6% 1.9%

Mosenergo TGK-1 OGK-2 Total

Mosenergo TGK-1 OGK-2 Total

Source: Companies’ data Data for Mosenergo and OGK-2 exclude the 2013-2014 depreciation tests. Data for Mosenergo are shown without the potential effects of the transactions with “Khimki Heating Grids” assets

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Gazprom Energoholding - Investor Day 2014

Appendix: Investments of GEH companies guarantee value creation in the future
Upgraded CDA tariff guarantees return on investments

GEH invests into CDA projects, all of which are profitable Share of new capacities reached 15.9% in the 2013 revenue, and is still growing In 2014-2017 the company will continue the CDA program according to the accepted timeline

Basic IRR of investments on the basis of Capacity Delivery Agreements

RR ths. per 1 MW/month

499

4.2x
118 Essential tariff CDA tariff

IRR 13-14%

Share of new capacities in the revenue of GEH
11.1% 15.9%

Share of new capacities in the revenue of the subsidiaries (2013)
21.2% 15.3%

9.4%

14.0%

2011

2012

2013

Mosenergo

TGK-1

OGK-2

Commissioning timeline according to GEH investment program, GW
5.1 3.8 2.3 0.1 0.4

before 2013

2014

2015

2016

2017

In the coming years GEH will continue to execute the CDA program, and will also obtain additional income from the previously commissioned CDA units

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Gazprom Energoholding - Investor Day 2014

Appendix: MOEK acquisition
In 2013 GEH acquired MOEK – a strategic transaction which is expected to create the following synergy effects:

Economy due to the switch of loads from ineffective boiler stations of MOEK to GEH stations (potential effect over RR 10 bn) Up to 3,500 Gcal/h may be switched to combined cycle generation

The measures are expected to result in the reduction of… • heat losses by 1 mm Gcal by the end of 2013 • headcount by 1 thousand employees

 

Potential sale of land plots under the boiler stations to be closed Obtaining the status of a Unified Heat Supplying Company in Moscow and other operational synergies

Upon acquisition of MOEK, GEH will control 93% of heat generation in Moscow The transaction will also allow GEH to control 93% of heat distribution market

Load switch synergies, tons of fuel equivalent

Structure of Moscow power market
Generation Distribution
7% 18% 70% 75% 7% 23%

75 ~300 ~225

Average fuel consumption by MOEK boiler stations

Potential economy

Average fuel consumption of Mosenergo (co-generation)

93%
Mosenergo MOEK

93%
Others

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Gazprom Energoholding - Investor Day 2014

Appendix: Expected effect of tariffs freeze
The so-called “tariffs freeze” became an important event in power sector regulation in 2013
– – The freeze assumes indexation of gas, electricity and capacity tariffs (as well as rail) by 0% in 2014. Further, the Government is planning the indexation of the above tariffs by rates not higher than the previous year’s inflation As only the regulated tariffs, including the gas tariffs, will be frozen, while electricity prices are not fixed on a free market, the effect may not be negative for the electricity industry Markets Wholesale market Regulated agreements Resolution of the Government on the tariff change starting from 01.01.2014 N/A 0% 2014/2013 average growth rate + 6%(1) + 6-7%(2)

Segments Electricity

Competitive capacity outtake
Capacity Regulated agreements CDA Heat Industrial customers Households

0%
0% no resolution yet + 0-4,2% + 4,2%

– 3%
+ 3-4% same level + 0-4,2% + 4,2%

Fuel

Gas
Coal

0%
+ 0-1%(3)

+ 7%
+ 0-1%(3)

* 1. 2. 3.

Company’s expectations based upon the recent public releases about the potential changes in tariffs and prices Market Council forecast In case the change is 0% starting from 01.01.2014 Excluding the Russian Railways tariff

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Contacts for investors

Department for Finance&Economics Corporate Finance Directorate Fax: (007) (495) 719-35-41

Department of Corporate Finance Investor Relations Tel: (007) (812) 385-9548

Section of Investor Relations Tel: (007) (495) 428-47-83

Oleg NAGOVITSYN Deputy Head of Corporate Finance Directorate
Phone: (007) (495) 719-26-25 E-mail: O.Nagovitsyn@adm.gazprom.ru

Alexey KOKOREV Head of Corporate Finance Department
Phone: (007) (812) 648-3117 E-mail: Kokorev.AS@gazprom-neft.ru

Ekaterina PAVLOVA Head of Investor Relations
Phone: (007) (495) 428-47-83 (ext. 4607) E-mail: pavlovaea@gazenergocom.ru

Andrey BARANOV Head of Investor Relations E-mail: ir@gazprom.ru

Anna SIDORKINA Head of Investor Relations
Phone: (007) (812) 385-9548 E-mail: Sidorkina.AV@gazprom-neft.ru

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