Questions and Answers on the Russian Oil and Gas Industry Featuring Dmitry Balandin, Chief Financial Officer, Gazprom Neftekhim Salavat

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1 s and s on the Russian Oil and Gas Industry Featuring Dmitry Balandin, Chief Financial Officer, Gazprom Neftekhim Salavat What is your view of the state of the Russian oil and gas market today? We are living through difficult economic times. Despite this, the market for oil and gas production in Russia remains stable. The main source of this stability is high oil prices, which allows OJSC Gazprom Neftekhim Salavat and other major market participants to achieve positive margins. The domestic market still tends to be influenced by the activities of government and the regulatory authorities. In particular, the measures government takes to reduce domestic fuel prices. During the second half of last year, the government implemented a new export duty system (so called ), which benefits the upstream industry, but is less advantageous for companies within the downstream sector. Thanks to our broad market appeal and high-quality offerings, Gazprom Neftekhim Salavat is finding the export and domestic markets to be profitable. What are the main challenges that process industry companies operating in the oil and gas market need to overcome in the next 12 months? There are challenges that Russian process industry companies operating in the oil and gas market need to overcome in the next 12 months. One key challenge is high volatility of oil prices and crack spreads for oil products. At the same time, the whole sector is under pressure from the necessity to perform major capital expenditure (CAPEX) programs while coping with tight time schedules for making downstream investments. Also, there is still a need to comply with government implemented high technological standards to the quality of oil products and refinery assets inside Russia.

2 s and s on the Russian Oil and Gas Industry How important is energy efficiency in relation to what you wish to achieve domestically and internationally? Is it a priority or is increasing capacity and improving margins more important? Energy efficiency is important in relation to what Gazprom would like to achieve domestically and internationally. However, by modernizing the downstream oil and gas sector, and by implementing new technologies, Russian operators are getting more than one evident benefit. First of all, new technology allows energy costs to be reduced and, as a result, margins to be increased. Also, the quality and ecological properties of products are improving. Therefore, to consider energy efficiency in isolation without considering the synergetic effect on margins would be wrong. Which international markets are priorities for Russian operators at the moment? International markets are a priority for Russian operators. Currently, Europe is the major market for export oriented refineries and petrochemical companies. Oil products are also exported to other regions including South America, the United States and Africa. At the same time, the Russian market becomes more and more important and demanding for both oil and petrochemical products. Describe how process optimization of operations features in the discussion of Russian oil and gas companies today? Process optimization of operations features in the discussion of Russian oil and gas companies today. Professionals working in an optimization role in Russian oil refineries and petrochemicals majors communicate on an informal basis despite the borders of their companies. However, informal discussions with colleagues and peers together with various industry forums organized by AspenTech, a leading provider of process industry software, are of a high value to the professional community and help us to exchange views about the role of technology and modern software in optimizing processes in the Russian oil refinery and petrochemical industry. We see this role and business function increasing as more oil refinery and petrochemical companies realize that without this kind of technology optimization application they would not solve the problems raised by global markets today. The industry forums organized by AspenTech are of a high value to the professional community and help us to exchange views about the role of technology in optimizing processes in the Russian oil refinery and petrochemical industry.

3 s and s on the Russian Oil and Gas Industry Are you starting to see increasing adoption of process software technology across Russian companies in the oil and gas sector? The adoption of process software technology is occurring across Russian companies in the oil and gas sector. Russian companies are trying to achieve innovation by investing in leading-edge software solutions. Typically, as soon as they build new processing units, they start to use modern software to optimize their operations. It is also quite cheap to use this kind of software in a modern facility. However, it is relatively expensive to implement new innovative software into an ageing facility that might be 20, 30 or even 40 years old, for example. Sometimes, it is even relatively cheaper to build a new facility than to implement the new innovative software connected to ageing technology. What is your view of software innovation over the past 30 years? The kinds of software used in the process industries have changed significantly over the past 30 years. Just in the last ten years alone, these changes have been particularly dramatic. Simply look at the way the IT industry has evolved during that time period. We could not have even imagined a decade ago, the possibility of developing an ipad device, for example. My colleagues that are using the AspenTech software say that the applications are changing and improving continuously. They commented that four or five years ago, the software was significantly different. Today, it is higher quality and more flexible. Within another five years, it is likely to change dramatically once again. My colleagues that are using the AspenTech software say that the applications are changing and improving continuously. Today, it is higher quality and more flexible.

4 s and s on the Russian Oil and Gas Industry How would you summarize what AspenTech has achieved and can offer process companies through its aspenone suite of solutions? Process industry software offers Gazprom flexibility. We use process optimization software from AspenTech to calculate margin, to gain clarity on the economics of a particular project, and even to change distribution channels, as and when required. The solutions also help us to drive down energy usage at facilities. We use process optimization software from AspenTech to calculate margin, to gain clarity on the economics of a particular project, and even to change distribution channels... As your business moves forward, in which areas do you think AspenTech solutions will help your business? Aspen Collaborative Demand Management (CDM) will certainly help us streamline distribution through our channels. Aspen Utilities will also be vital. As an example, we have a power plant that is closely linked to our oil refineries and we need high-quality software solutions to manage this process. Aspen Collaborative Demand Management (CDM) will certainly help us streamline distribution through our channels. How important is it to your organization to deal with software provider like AspenTech that have extensive global experience? It is all about people. In the case of AspenTech, the experience and understanding of the products their team can offer is critical to our business planning. They can share their expertise and knowledge of oil refinery and petrochemical business with our team and successfully work collaboratively. The experience and understanding of the products that the AspenTech team offers is critical to our business planning. They can share their expertise and knowledge of oil refinery and petrochemical business with our team and successfully work collaboratively.

5 s and s on the Russian Oil and Gas Industry If you were transported 5 years into the future, what do you think you would see happening in the process industries? Five years into the future, the process industries will be very different. The market is shifting towards complete refinery systems. Large companies that are building refineries today understand that they need petrochemical facilities as well. There is a growing move towards building new combined facilities. What is important for us and for AspenTech, as a company that develops software technology for our industry, is the connection between the petrochemicals and the oil refinery industries. There is the potential to build the software that will unite these two different technological processes into one model, which will in turn support the optimal output of oil and petrochemical products. Are there any other points you would like to discuss? One important area is logistics. Commercial goals are very important. What does the term commercial mean to an oil refinery or petrochemical plant? It relates to the whole chain from the facility right through to the end consumer. Also, logistics has a range of costs that need to be reduced for any oil refinery and petrochemical company as the potential effects on the business can be significant. We need to look at the appropriate software that will help these companies to assess the right distribution channels. The result might be the use of the Aspen CDM application tool together with improving the schemes of the pipeline transportation and tanker delivery by rail or road and, in general, help us to estimate and reconsider if needed the whole delivery chain. We need to look at the appropriate software that will help these companies to assess the right distribution channels. The result might be the use of the Aspen CDM application tool...

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