March, 214 Investor Day 214
Agenda Presentation of gas business Strategy Dmitry Lyugai Member of Gazprom Management Committee Head of the Prospective Development Department Export Alexander Medvedev Deputy Chairman of Gazprom Management Committee CEO of Gazprom Export 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. 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 1 Investor Day 214
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. 2 The following sources are used in the presentation: BP Statistical Review of World Energy 213 (June 213); IEA, World Energy Outlook 213, New Policies Scenario (November 213); CEDIGAZ Statistical Database (August 213); EIA, International Energy Outlook 213, Reference case (July 213); Wood Mackenzie; Platts; FactSet; Bloomberg Calorific value of natural gas = 8,85 kcal/m 3 (2 С )
Part 1. Strategy Dmitry Lyugai Member of Gazprom Management Committee Head of Prospective Development Department 3
World gas demand 23 SHARE OF NATURAL GAS IN WORLD TOTAL PRIMARY ENERGY CONSUMPTION NATURAL GAS CONSUMPTION BY REGION 17% 4% 6% 3% 26% 9% Gas Coal Renewables 212 23 forecast 23% 24% 33% 28% Oil Nuclear 4% 3% 12% 25% 14% 19% 2% 3.6 tcm 4.6 tcm 17% 212 26% 5% 15% 23 forecast 22% 5% 13% North America Central and South America OECD Europe Other Europe and Eurasia Middle East Africa Asia Oceania 4 Strategy - Investor Day 214
bcm net import net export bcm Global gas import/export in 23 12 1 8 6 4 2 North America Central and South America OECD Europe Other Europe and Eurasia NATURAL GAS CONSUMPTION AND PRODUCTION BY REGION IN 212 AND 23 212 actual 23 forecast Middle East Africa Asia Australia North America Consumption Production Central and South America OECD Europe Other Europe and Eurasia Middle East Africa Asia Australia 4 3 2 1-1 -2-3 -4-5 North America Central and South America OECD Europe Other Europe and Eurasia Middle East WORLD NET NATURAL GAS TRADE BY REGION IN 212 AND 23 212 actual 23 forecast Africa Asia Australia North America Central and South America OECD Europe 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 5 Strategy - Investor Day 214
bcm; RR bln RR / 1 cm bcm Gazprom at the Russian domestic market STRUCTURE OF GAZPROM S GAS SALES REVENUE (1), 212 GAS PRODUCTION STRUCTURE IN RUSSIA GAS DELIVERIES TO RUSSIAN CONSUMERS * 9 6 3 2 373 683 51% 29% 2 745 2% 795 288 29 275 Europe 2 961 21 211 212 FSU Countries Russia 815 Domestic Market Volumes (bcm) Revenue (RR bn) Domestic Average Price (RR / 1 cm) 3 5 3 2 5 2 1 5 1 5 1% 8% 6% 4% 2% % Independent gas producers 78 Russian Energy Strategy target 74 74 73 21 215 22 225 23 5 4 35 31 3 2 * - incl. gas purchases from other companies 1 21 215 22 225 23 TOTAL FINAL CONSUMPTION Coal 19% 28 Other 11% 19% 51% Oil Coal 18% 212 Other 11% 19% 52% Oil Coal 19% Energy Strategy of Russia Adopted Other 12% 47% 22% Oil 23 Coal 15% Energy Strategy of Russia Project Other 13% 52% Oil 2% Gas Gas Gas Gas Gas share stabilization in Fuel and Energy Balance Source: Base Prospectus. 1. Not including custom duties 6 Strategy - Investor Day 214
212 213 214 215 216 217 218 219 22 221 222 223 224 225 226 227 228 229 23 bcm bcm Europe: Gazprom s traditional market 8 7 6 5 FORECAST GAS PRODUCTION VS. CONSUMPTION IN EUROPE Consumption 3 2 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 4 3 2 1 Production 27 517 1 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 21 215 22 225 23 GREAT BRITAIN 4* SHALE GAS IN EUROPE AND CIS POLAND 49* UKRAINE * TURKEY 5* GAZPROM S SHARE AT THE EUROPEAN MARKET 212 23 26% 29% 28% Min * - number of wells, end 213 213 23 Production bcm 5-6 bcm JSC "Gazprom" Max Other sources of gas Source: Wood Mackenzie, EIA, Platts, ERI RAS, IEA, IHS, Rystad Energy, BP 7 Strategy - Investor Day 214
bcm % bcm Gazprom: upstream development North of West Siberia and Yamal peninsula Fields Pre-Yamal shelf Pechorskoye Sea shelf Kharasaveiskoye Bovanenkovskoye Pestsovoye Yubileynoye Severo-Kamennomysskoye Kamennomysskoye-sea Urengoiskoye Key Gazprom gas greenfields Field productivity in 214-23 period, bcm/year Urengoyskoye (achimov deposits) 24.7 Pestsovoye (neocomian-jurassic) 2 Yubileynoye (apt-albian, senomanian deposits) 1.75 Bovanenkovskoye 115 Kharasaveiskoye 32 Severo-Kamennomysskoye 16.1 Kamennomysskoye -sea 15.1 Kirinskoye 5.5 Kirinskiy licensed section 14.6 16. Chayandinskoye 25 Kovyktinskoye 35 Gas field Continental shelf area RUSSIA Chayandinskoye Eastern Siberia and Far East Fields Kovyktinskoye «Sakhalin-3» Kirinskoye Kirinskiy licensed section DYNAMICS OF PRODUCTION AND GAS RESERVES INCREMENT PROSPECTIVE SOURCES OF GAZPROM S GAS PRODUCTION 1 8 6 4 2 14% 96% 15% 16% 18% 16% 12% 18% 118% 79% 69% 522 54 545 555 556 549 55 462 59 513 487 16 11 6 1 8 6 4 2 Other new fields East Siberia and Far East fields Yamal Megaproject 22 23 24 25 26 27 28 29 21 211 212 Gas production % of gas reserves replenishment -4 212 22 min 23 min 22 max 23 max Operating fields 8 Strategy - Investor Day 214
2 25 21 215 22 225 23 mln t/year Gazprom LNG projects 8 Forecast of LNG demand in the world Plants under construction Operating plants Consumption consensus forecast Pessimistic consumption forecast Optimistic consumption forecast 6 Baltic LNG Sakhalin-2 Vladivostok LNG 4 2 Operating LNG plant Prospective LNG plant Source: IНS CERA, Wood Mackenzie, Pace Global, CEDIGAZ, Poten Baltic LNG Capacity 1 mln t/year Date of commissioning 219 (1-st line) Project status pre-feasibility stage Targeted markets Spain, Portugal, Great Britain, Latin America, India, small-scale LNG Vladivostok LNG Capacity 1 mln t/year Date of commissioning 218 (1-st line) Project status feasibility study done (February 213) Targeted markets Japan, Korea, China, Taiwan, Singapore, India 9 Strategy - Investor Day 214
Gas infrastructure development in Eastern Siberia and Far East regions Transportation site Date of put into operation (not earlier) Length, km Trunk pipeline Power of Siberia 219 4, Trunk pipeline Power of Siberia Fields Pipelines: existing under construction possible designed Operating lines of LNG plants LNG plants under construction Production sites Date of put into operation (not earlier) Plateau production, bcm /year Chayandinskoye 219 25 Kovyktinskoye (incl. Chikanskoye field) 221 35 1 Strategy - Investor Day 214 CHINA
Mutual interest in gas export contract conclusion RUSSIA CHINA 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 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 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 27 was used in this slide. 11 Strategy - Investor Day 214
Forecast of capital investments GAZPROM DEVELOPMENT PROGRAM FOR A TEN-YEAR PERIOD Structure of CAPEX by gas business segment average annual Up to 96 bn RR p.a. PROCESSING TRANSPORT (incl. UGS 1 ) 8 % 52 % GAZPROM'S INVESTMENT PROGRAM INNOVATIVE DEVELOPMENT PROGRAM TO 22 PRODUCTION 34 % EXPLORATION 6 % 1.UGS is underground gas storage UGSS is unified gas supply system Structure of CAPEX by major project Yamal Megaproject NPRT Yamal South Stream Eastern Program LNG Projects 29% 35% Eastern Siberia and the Far East Reconstruction in Transport NPTR Nadym-Pur-Taz Region 3% 14% 2% Reconstruction s in Production Other projects within UGSS exploration; existing and new production and transport projects, processing and LNG projects 12 Strategy - Investor Day 214
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 NORWAY OSLO SWEDEN STOCKHOLM FINLAND MURMANSK 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 2,78 km Average length of transportation for export 3,43 km ANADYR ESTONIA KALININGRAD RIGA Tallinn LITHUANIA LATVIA VILNIUS PSKOV HELSINKI SAINT PETERSBURG CHEREPOVETS ARKHANGELSK UKHTA SOBOLEVO PETROPAVLOVSK- KAMCHATSKY MINSK BELORUSSIA SMOLENSK TORZHOK KIEV UKRAINE KRASNODAR SUKHUMI ABKHAZIA TBILISI GEORGIA ARMENIA BRYANSK KURSK YELETS TULA OSTROGOZHSK GRYAZOVETC KOTLAS MOSCOW SARATOV ROSTOV-ON- DON ARMAVIR NEFTEKUMSK EREVAN ASTRAKHAN MOZDOK MAKHACHKALA Caspian Sea BAKU AZERBAIJAN RYAZAN ALGASOVO PETROVSK KAZAN SAMARA KIROV UFA ORENBURG ORSK SYKTYVKAR IZHEVSK NIZHNEKAMSK EKATERINBURG TYUMEN CHELYABINSK ASTANA KAZAKHSTAN OMSK URENGOY NIZHNEVARTOVSK NOVOSIBIRSK TOMSK PROSKOKOVO RUSSIA KRASNOYARSK ABAKAN NOVOKUZNETSK BARNAUL BIYSK CHINA GORNO- ALTAYSK BOGUCHANY NIZHNYAYA POIMA BALAGANSK IRKUTSK ULAN-BATOR MONGOLIA CHITA SKOVORODINO CHINA BLAGOVESHCHENSK BIROBIDZHAN NORTH KOREA Sea of Japan KOMSOMOLSK- ON-AMUR KHABAROVSK VLADIVOSTOK KORSAKOV JAPAN 14 Transportation - Investor Day 214
Development of gas transportation system Yamal South Stream BARENTS SEA BOVANENKOVO SWITZERLAND GERMANY AUSTRIA SLOVAKIA UKRAINE SWEDEN NORWAY UKHTA URENGOY NADYM PEREGREBNOYE SURGUT YUGORSK FRANCE ITALY Tarvizio SLOVENIA CROATIA Svobodnica BOSNIA AND HERZEGOVINA Zvornik HUNGARY ROMANIA MOLDOVA Anapa CS Russkaya HELSINKI FINLAND TALLINN ESTONIA VYBORG SAINT PETERSBURG RIGA LATVIA TORZHOK LITHUANIA VILNIUS MINSK BELORUSSIA MOSCOW VOSKRESENSK TULA GRYAZOVETS RUSSIA KAZAN PERM UFA TYUMEN ASTANA KAZAKHSTAN MONTENEGRO ALBANIA SERBIA MACEDONIA GREECE BULGARIA Varna TURKEY South Stream Transport B.V. South Stream pipeline route Russia Bulgaria Serbia Hungary Slovenia Italy Branches To Croatia from Serbia To Republic of Srpska from Serbia Bovanenkovo Ukhta pipeline length 1,1 km design capacity 115 bcm p.a. Offshore part of South Stream length 925 km design capacity 63 bcm p.a. RUSSIA CS Pochinki CS Mokshanskaya CS Petrovsk first string 212 second string 217 (plan) first gas supplies are scheduled for the end of 215 CS Zhirnovskaya CS Pisarevka Ukhta Torzhok pipeline Onshore part of South Stream Ukraine CS Shashtinskaya CS Volgogradskaya length 1,3 km design capacity 81.5 bcm p.a. first string launching is scheduled for 215 length 2,56 km project to be finalized in 218 1 compressor stations with a total capacity of 1,516 МW Sea of Azov CS Korenovskaya CS Kazachya CS Russkaya Black Sea CS Salskaya CS Kubanskaya Projected CS Existing CS 15 Transportation - Investor Day 214
Development of gas transportation systems in Eastern Siberia and the Far East URENGOY 1 2 Gas production centers Krasnoyarskiy Irkutskiy 3 Yakutskiy TYUMEN OMSK NIZHNEVARTOVSK NOVOSIBIRSK TOMSK Yurubcheno- Tokhomskoye PROSKOKOVO KRASNOYARSK 1 Sobinsko- Paiginskoye BOGUCHANY 2 3 Kovyktinskoye Chayandinskoye SKOVORODINO Malositinskoye UGS BLAGOVESHCHENSK OKHA BIROBIDZHAN 4 KOMSOMOLSK- ON-AMUR KHABAROVSK SAKHALIN 4 Sakhalin Planned GPP and Gas Chemical Complex Fields KORSAKOV JAPAN BARNAUL NOVOKUZNETSK ABAKAN BALAGANSK IRKUSTK CHINA KAZAKHSTAN BIYSK GORNO-ALTAYSK VLADIVOSTOK MONGOLIA CHINA NORTH KOREA Sakhalin Khabarovsk Vladivostok Power of Siberia Length >1,8 km (1 st section 135) 4, km Capacity 3 bcm p.a. (1 st section 6) 61 bcm p.a. Date of coming on stream 1 st section - 211 1 st section late 219 16 Transportation - Investor Day 214
Underground gas storage Gas storage of Gazprom (1) Kaliningrad Saint Petersburg Arkhangelsk BELORUSSIA Minsk Moscow Kazan Izhevsk Ukhta RUSSIA Tyumen Surgut Urengoy Khabarovsk 745.8 585.8 69.94 853.6 811.8 657.6 616 73.22 74.78 Volgograd Saratov Tomsk Orenburg Novosibirsk Irkutsk Current underground gas storage facilities Under-construction and planned facilities of underground gas storage Areas under exploration for underground gas storage facilities Underground gas storage in Europe 213F 214F 218F Active volume, bcm 2.29 4.29 4.54 Daily capacity, mmcm per day 23.5 55.6 8.5 213/214F 214/215F 215/216F 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 214
Gazprom energy efficiency improvement Fuel and Energy resources saving Reduction in specific gas consumption for own process needs and losses Greenhouse gas emissions reduction Target savings for the period till 22 28.2 mln toe Target reduction for the period till 22 11.4% Target reduction for the period till 22 48.6 mln t 7,3 17,6 7,96 Actually achieved savings in 211-213 7.3 mln toe Actually achieved reduction in 211-213 7.96% Actually achieved reduction in 211-213 17.6 mln t 18 Transportation - Investor Day 214
Gas transportation system efficiency improvement Implementation of innovative technologies Specific gas consumption for process needs 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) 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 cm/mmcm/km 35 31.7 3 25 2 % 1,5 3.9 3.5 29.6 29.4 25.4 27.6 27.9 25.5 25.3 24 25 26 27 28 29 21 211 212 213F Technological losses as a percentage of the transported gas volume.86.7.51.47.46 29 21 211 212 213F 19 Transportation - Investor Day 214
Part 3. Export Alexander Medvedev Deputy Chairman of Gazprom Management Committee CEO of Gazprom export 2
European Natural Gas Market Dynamics bcm 8 6 4 2 Balance of European Gas Consumption 565.2 69.8 258.2 298.2 556. 546.7 541. 267.6 254.5 253. 37. 311.6 288.4 292.3 288.1 Share of Gazprom Deliveries in European Consumption increased from 25.6% in 212 to 3% in 213 25.6% 3.% bcm 3 25 2 15 1 5 29 21 211 212 213E Domestic production Consumption Import Deliveries by Sources 25.9 252.7 14.4 13.6 6.7 31.3-2.9 24.8 6.2 12.1 37.9 7.5 46.5 139.9 +22.9 Imports (+balance of storage) 162.7 212 213 Gazprom Algeria, incl. LNG Qatar, LNG Nigeria, LNG Libya, incl. LNG Other import deliveries Source: IEA, Eurostat, Lloyds, GIE, Gazprom Export analysis, Gas calorific value: 1cm = 37 MJ bcm 25 2 15 1 5 212 213 Deliveries by Major European Producers -2.9 43.8 4.9 +8.9 72.6 81.5-6. 121.4 115.4 212 213 Norway Netherlands UK 21 Export - Investor Day 214
% Gazprom Sales to European and CIS Markets bcm 18 12 6 12 1 98 96 94 92 9 88 86 84 148.1 9.5 Gazprom Gas Deliveries to Europe* 6.6 11.1 138.6 15. 383 385 387 139.9 162.7 32 156.6 151. 1% 173.7 11. 21 211 212 213E Actual 26-12 CERA (213-1) CERA (213-7) CERA (213-11) PIRA (212-3) PIRA (213-7) PIRA (213-1) CEDIGAZ - pessimistic (213-6) CEDIGAZ - base (213-6) $/mcm 5 Export volumes Other deliveries Average export price * European countries including Turkey except for CIS and Baltics 9,4% 9,8% 91,6% 9,3 9,2 88,3 88,5 86, 86,2 26 27 28 29 21 211 212 213 214 215 216 45 4 35 3 25 bcm 8 Gazprom Gas Deliveries to CIS and Baltics 68. 71.1 The Gap is Widening Between European Indigenous Production and Consumption 22 Export - Investor Day 214 6 4 2 235 9,6 64.4 298 38 56.1 21 211 212 213E Volumes Average price Under current market conditions 214-217 estimate for 274 $/mcm 4 gas deliveries to Europe is 155-16 bcma, depending on weather 35 3 25 2
Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 USD per mmbtu Hybrid Pricing - Cornerstone of the European Market 14 12 1 8 6 4 2 Integration of Contract Prices and Hub prices 75% of gas exported to Europe is oil-indexed Gas hub prices are not independent from oilindexed contract prices. The correlation coefficient between hub prices and oil prices moving average equals.85 ACER November 213 Market Monitoring Report states that Oil prices is still the main determinant of wholesale gas prices in Europe (p.18) Sources: BMWi, Bloomberg 6 5 4 3 2 1 MCM/d BAFA import price, Germany 1998-25 8-1MCM/d seasonal swing TTF (ENDEX), 1st month Gazprom is a major provider of supply flexibility to Europe Seasonal swing in Russian gas daily deliveries doubled from 1998 to 213 25-213 1-22MCM/d seasonal swing Gas Hub and Oil-indexed Prices Still Related The correlation coefficient prove dependence NBP from January 21 to December 213 versus: r Brent 1st month futures.69 Brent 1st month futures - 3 months moving average.79 Brent 1st month futures - 6 months moving average.84 Brent 1st month futures - 9 months moving average.83 TTF from January 21 to December 213 versus: r Brent 1st month futures.69 Brent 1st month futures - 3 months moving average.8 Brent 1st month futures - 6 months moving average.86 Brent 1st month futures - 9 months moving average.85 Source: IEA 23 Export - Investor Day 214
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 Top-5 Oil&Gas Majors by 213E Net Profit (2) USD bln 14% 12% 1% 8% 6% 4% 2% % 12% 1% 8% 8% 6% 4% Revenue EBITDA Net income CAGR of Gazprom for 27-212 CAGR of oil & gas majors on average for 27-212 (1) USD bln USD/boe 4 35 3 25 2 15 1 5 2 3 4 5 Source: Companies websites, Factset, Bloomberg as of February 2, 214 1. Oil & Gas Majors are the top 1 oil and gas companies by market capitalization as of February 2, 214 2. Based on companies data and broker consensus as of February 2, 214; for Gazprom 9m213 LTM 25 Finance - Investor Day 214
Revenue diversification: new source of growth USD bln 1 9 8 7 63.3 Net Sales 81.8 87.3 91. Mn tonnes Gas Condensate Production Sites 4.7 Yamburg Novy Urengoy 5.5 6 5.1 Orenburg Astrahan 3.7.3 Tomsk 4 3 2 1 21 211 212 9m213 LTM Gas transportation Electricity and heat Crude oil and gas condensate Refined products Gas sales to Russia Mn tonnes 2 18 16 14 12 1 8 Gas Condensate Production (1) +2% 18 17 15 15 11 12 13 21 211 212 213E 214F 215F 216F 1. Management estimates; excluding associate companies production 26 Finance - Investor Day 214
Sustainable free cash flow generation USD bln 6 5 Gazprom FCF Generation (1) 51.9 8.3 46.5 3.4 55.1 1.8 12% 1% Gazprom vs Russian Oil & Gas Majors Free Cash Flow Yield, 9m213 LTM/214 (2) 11% 1% 9% 4 36.6 8% 7% 3 7.7 6% 6% 2 1 26.9 43.6 43.1 44.3 4% 2% 3% 28-29 21-211 212 9m213 LTM % Cash Capital Expenditures Free Cash Flow 1. Period averages. 213LTM = 9m213+12m212-9m212 2. Five Russian oil and gas majors by capitalization as of 31 January 214: Rosneft less increase in long term prepayments on oil supply agreements, Novatek, Lukoil, Surgutneftegaz, Tatneft 27 Finance - Investor Day 214
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, 214 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 Key MET tax breaks: Greenfields: Yamal and Gydan peninsula, Irkutsk, Krasnoyarsk regions, Far East Depleted fields: depletion ratio over 7% Complex fields: Astrakhan region Deep layers: over 1,7 m deep RR 1 8 MET Rate Calculation* 7 686 1h214 2h214 6 556 59 4 237 2 147 693 717718 62 674 59 21 211 212 213 214F 215F Natural gas MET, Gazprom (RR/mcm) Gas condensate MET, Gazprom (RR/1 ton) * Before 212 MET rates for gas condensate were set at 17.5% of realization price 28 Finance - Investor Day 214
CAPEX efficiency USD bln 8 7 6 5 4 3 2 1 127% 22,1 29, Capital Expenditures: Gazprom vs Russian oil majors (1) 118% 37,4 34,8 18% 124% 53, 47, 43,1 44,3 14% 12% 1% 8% 6% 4% 2% USD/boe 18 16 14 12 1 8 6 4 2 8,2 Capex/hydrocarbon production: Gazprom vs Russian oil majors (1) 1,4 13, 11,5 16,7 13,4 13,7 15,5 26-28 29-211 212 9m213 LTM Gazprom Russian oil majors aggregate Gazprom self funding (OpCF/Cash CAPEX) % 28-29 21-211 212 213E Gazprom Russian oil majors Source: Companies websites, media sources, Factset, Bloomberg as of February 6, 214 1. Cash CAPEX; Russian oil & gas majors includes Lukoil, Surgutneftegas, Bashneft, Rosneft, TNK-BP, Tatneft and Transneft 29 Finance - Investor Day 214
Balanced CAPEX USD bln 5, Gazprom Group CAPEX (1) 214 Priorities Gas Upstream Gas Midstream Gas Downstream Oil Power Generation 4, 3, 43 42-43 35-42 Gas Upstream 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 2, The reconstruction of the Petrovsk Pisarevka section of the Urengoy Novopskov Other reconstruction and technical re-equipment of the GTS Gas Downstream 1,, 212 213F 214F Oil Gas condensate refining Novoportovskoe and Mesoyahinskoe fields Power generation New capacity investments 1. Source: Management Estimates 3 Finance - Investor Day 214
Gas sales, Europe Crude exports Gas sales, ex.ussr Domestic oil product sales Gas sales, Russia Electricity and heat Transport Other revenues Natural hedging against rouble volatility Hard currency (1) denominated revenues 33% 15% 1% 8% Hard currency 66% Roubles 34% 7% 15% 7% 3% 2% % 2% 4% 6% 8% 1% Hard-currency denominated OPEX 22% Gas and oil purchased 2% Hard currency 43% Taxes other than income Transit of gas and oil products Materials Repairs Goods for resale Staff costs Other cash 7% 8% 15% 3% 1% 1% 2% Roubles 57% 6% 1% 5% 2% 1% 14% % 25% 5% 75% 1% 1% Gas transportation Gas production Liquids production Refining Electricity Gas deliveries Gas storage Others 1. Mainly US Dollars and euro Hard currency denominated CAPEX 6% 23% 3% 2% 5% Hard currency 22% Roubles 78% 17% 4% 2% 6% 1% 1% 5% 1% 2% 4% % 25% 5% 75% 1% USD 55% Debt distribution by currency EUR 3% Roubles 12% Others 3% 31 Finance - Investor Day 214
Top Russian borrower USD bln 1 8 6 4.6x 43.2 14.6 Total and Net Debt (1).5x 47.8 15.7.7x 49.4 14.2.6x 53.4 17.7 1,5 % 31% 42% 13% 15% Debt Maturity Profile (2) 21% 26% 26% 38% 33% 36% 17% 19% 16% 24% 22% 22% 21 211 212 9m213 Less than 1 year 1-2 years 2-5 years More than 5 years Cost of Debt Financing (2) 2 28.6 32.1 35.2 35.7 21 211 212 9m213 Total debt Cash&Cash equivalents and restricted cash Net Debt/Adj.EBITDA LTM -,5-1 9 7 6.4% 5 5.8% 3 1 2.7% 28 29 21 211 212 9m213 Weighted average fixed interest rate Weighted average floating interest rate Weighted average interest rate 1. Data are converted in USD using exchange rate RR/USD as of the end of the period 3.48 for 21, 32.2 for 211, 3.37 for 212, and 32.35 in 9m213 2. Excluding promissory notes 32 Finance - Investor Day 214
Dividend payout RR / Share 12 Dividend Per Share (1) 8% Dividend Yields of Major Oil & Gas companies, 213F (2) 9 6 3.85 8.97 5.99 6-8 6% 4% 5.3% 4.8% 4.7% 4.7% 4.7% 4.3% 3.4% 2.6% 3 2% 21 211 212 213F % Dividend payments schedule of OAO Gazprom according to the amendments to the Federal Law on Joint-Stock Companies that are effective from 1.1.214 Record date for AGM (8 March 214) AGM (27June 214) Approval of Record date for dividends payout Record date for dividends payout not later than 1 working days not later than 25 working days May June 1 to 2 days after AGM Dividend payments to nominees and trustees, who are registered with the Register of Shareholders 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, 214; Source: Companies data, FactSet July Dividend payments to other persons registered in the Register of Shareholders August 33 Finance - Investor Day 214
214 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 214
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 214
Executing Strategic Goals Increased stake in SeverEnergia to 4.2% 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 214-215 Expanded foreign jet fueling network to 125 airports (vs. 88 at Jan 1, 213) 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 214
Targets on hydrocarbon production, refining, and marketing premium sales expected to be main vehicles for growth Changes in PRMS (SPE) proved reserves, mmtoe Hydrocarbon Production, mmtoe 1 4 1 35 1 3 1 25 1 2 1 15 1 1 1 5 1 2 333% Reserves replacement ratio 61 114 91 1 343 12 1 8 6 4 2 57,3 59,7 62,3 CAGR +7% 1, 1 YE212 Group production Revisions Acquisitions(1) YE213 211 212 213 22 Refining, mmt Premium Channel Sales, mmt 8 7 6 5 4 3 2 1 4,5 43,3 42,6 Optional growth outside Russia 3, 4, 211 212 213 22 45 4 35 3 25 2 15 1 5 22,9 24, 19,5 4, 211 212 213 22 1. Acquisitions include increase of share in Sever Energia 38 Gazprom neft - Investor Day 214
Strong record of financial results continued throughout 213 1 4 1 2 1 8 6 4 2 Revenue, RUB mm 1 232 649 1 31 794 1 267 63 4 35 3 25 2 15 1 5 Adj. EBITDA (1), RUB mm 323 16 3 77 336 752 211 212 213 211 212 213 2 18 16 14 12 1 8 6 4 2 Net Income, RUB mm 176 296 177 917 16 362 +1% 211 212 213,9,6,3, Net Debt / EBITDA,7,51,59 211 212 213 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 212. 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 Y211 were restated to correctly compare data for 211-213. 39 Gazprom neft - Investor Day 214
Operational and financial efficiency backed by industryleading growth Adj. EBITDA absolute 213 Y-o-Y Growth, % 4.2 3 25 2 Adj.EBITDA/boe, USD/boe 24,2 23,1 23,7 19,8 18,8 19,6 15 1.1 1. Gazprom Neft Lukoil Rosneft ROACE, % 5 Lukoil Gazprom Neft Rosneft* 213 212 OCF/boe, USD/boe 25 2 15 1 5 17,4 19,4 15,3 11,7 11,1 12,4 3 25 2 15 1 5 22,8 21,6 21,4 25,1 14,2 18,2 Gazprom Neft Lukoil Rosneft 213 212 Source: MD&A of Companies and INFOTEK *includes TNK-BP 4 Gazprom neft - Investor Day 214 Gazprom Neft Lukoil Rosneft* 213 212
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 214
Investment Decisions Reached at New Upstream Projects Novoport Messoyakha Kuyumba Tsarichanskoye Peak: 13 MMToe at 222-223 Completed first winter oil shipment Peak: 12 MMToe at 223 Completed first winter oil shipment Peak: 12 MMToe at 229-23 Drilled 4 horizontal and 1 exploration well C1+C2 reserves: 27 MMtoe Peak: 2.3 MMToe at 218 16 14 12 1 8 6 4 2 2P reserves (PRMS), MMtoe 141 14 124 Kuyumba Messoyahkha Novoport Production Profile, MMtoe 4 35 3 25 2 15 1 5 213 215 217 219 221 223 225 Kuyumba Novoport Messoyahkha Tsarichanskoye 42 Gazprom neft - Investor Day 214
Upstream Portfolio Expanding Tomsk region Acquired Yuzhno-Pudinskiy Block SeverEnergia Increased stake to 4.2% Reserves (C1+C2): 6 MMToe Startup: 216 Peak:.3 MMToe at 219 Reserves (C1+C2): 1.7 bln toe Startup: 212 Peak: 42 MMToe at 22-221 213 February March April May June July August September October November December Iraq Halabja block acquisition Recoverable reserves: 79 MMToe Startup: 216 Peak: 4.5 MMToe at 224 Area of interest Partnership with Shell (KMPA) Signed a memorandum confirming the General Agreement on Partnership in exploration and development of liquids-rich shales 43 Gazprom neft - Investor Day 214
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 214
Technological Progress Driving Growth The share of high-tech wells in total drilling in 212-213, increased from 4% to 35% Horizontal wells drilled Multi-stage well fracking Multilateral wells drilled 2.7х 5.1х 4.8х 211 212 213 Length of horizontal part up to 3m 3 stage hydrofracs Length of horizontal part up to 8m 5-6 stage hydrofracs Length of horizontal part up to 1,3m 9-1 stage hydrofracs 45 Gazprom neft - Investor Day 214
First Arctic Offshore Production Recoverable reserves (C1+C2): 74 MMTonnes Startup: 213 Peak: 5.5 MMTonnes at 221 Murmansk Barents Sea Kara Sea Prirazlomnoye Key events: Completed necessary audits ahead of platform launch Drilled first well with flow rate 1,75 tpd The government granted export duty for the first oil White Sea Naryan-Mar 214 plans: The first oil shipment from Prirazlomnoye is expected in 1Q14 Arkhangelsk Recoverable reserves, MMtonnes Crude oil production, MMtonnes 5,5 С2 С1 25 49 2,7 4,1 3,6 2,7 2,1 Crude oil, MMTonnes 212 214 216 218 22 222 224 226 228 23 46 Gazprom neft - Investor Day 214
Refining Throughput Levels Remain High Amidst Investment Program Refining throughput, MMTonnes NIS Slavneft Moscow 33.4 2.4 6.8 5.8 +13% 37.9 2.9 7.2 8.9 +7% 43.3 +7% -2% 42.6 4.5 2.1 +28% 2.7 2.4 9.6 7.4 8.6-1% 1.8 1.7 +4% 11.1 Omsk 18.4 19. 19.9 2.9-3% 2.2 29 21 211 212 213 Gazprom Neft Peer comparison Refining throughput growth (CAGR) 213 vs. 29* Rosneft Lukoil Bashneft Surgutneftegaz *Source: Company Reports 47 Gazprom neft - Investor Day 214
Completion of quality program leads to higher value product mix Output by products, MMTonnes Gasoline yield Diesel yield 48 Gazprom neft - Investor Day 214
Conversion investments will increase light product yields by about 2% between 213 and 22 Half of conversion investment program expected to come online between 213 and 217 As a result, conversion rate is expected to increase by 15 ppts Light products will count for 8% of total yields by 22 1 27 22 2 7 1 8 29 3 31 17 32 16 213 214 215 216 217 218 219 22 14 61.3 79.2 217 36.5 Omsk Petroleum product yield structure, % Gasoline Naphtha Jet fuel Diesel Lubricants Other (Coke, Bitumen, Heating Oil) Fuel Oil Light Products Yield, % Conversion Rate, % Petroleum Product Output, mmt Hydrocracking Coking Unit Moscow Hydrocracking Flexi Coking 1 27 1 8 31 3 16 14 67.1 82.5 36.7 YANOS Hydrocracking 1 29 12 38 4 15 2 8.6 94.2 37.9 Units to come online between 217-22 49 Gazprom neft - Investor Day 214
1 Benchmarking Rebranding pushes annual sales growth Loyalty program 3 2 Accompanying goods and services Retail metrics 4 1 Benchmarking (Avg. daily sales/site) 2 3 4 35% 9.1 Non oil sales, 1, RUB/sq.m. 21% 12.3 14.9 1% 16.4 21 211 212 213 Loyalty program, mln Retail metrics members 17.7 19. 1,6 14.2 17.7 19. 27% 1,6 14.2 1.1 18. 1,4 1.1 1,4 74% 22 25 228 6. 1. 14. 1,2 1,2 4.2 181 22 25 228 1, 2. 1, 181-2. x2.4 3.3 8 8-6. 6-1. 6 947 1,43 1,6 1,111-14. 1.9 4 947 1,43 1,6 1,111 4-18. 2-22. 2-26..8 - - -3. 21 211 212 213 21 211 212 213 21 211 212 213 Russia network Russia network CIS networkcis network Av/ Daily sales Av/ Daily per site sales in Russia per site in Russia 18 14 1 6. 2. -2. -6. -1-14 -18-22 -26-3 5 Gazprom neft - Investor Day 214
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 15.6% 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 * Projects that are not consolidated under IFRS 51 Gazprom neft - Investor Day 214
US $2.1** Billion free cash flow generated in 213 RUB million Cash Flow Reconciliation FY213 6 5 5,6 FCF/boe 213, USD/boe 4 3 3, 2 1 Gazprom Neft Lukoil Rosneft*,8 * Includes TNK-BP 52 Gazprom neft - Investor Day 214
1% 9% 8% 7% 6% 5% 4% 3% 2% 1% Debt maturity profile at the end of FY213 and comparison of profile s structures 213 vs. 212 From 31% to 15% Diversified debt portfolio 13% in-line Y-o-Y From 31% to 38% From 25% to 34% Other borrowings Bank loans Bonds LPN Debt structure at the end of FY213, RUB mln 21 235 98 516 61 583 132 534 Cash and cash equivalents 91 77 Short-term deposits 36 869 185 922 % 1 year 1-2 years 2-5 years Over 5 years Debt Fin. assets Net debt Net debt/ebitda.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, 212 to 3.68% at December 31, 213 Diversified debt portfolio: bank loans, bonds, PXF (pre-export finance facility), LPN (loan participation notes) 53 Gazprom neft - Investor Day 214
Continued commitment to shareholders via interim dividends In 213, 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, % Dividends, 29-213, RUB bln 7% 6% 5% 4% 3% 2% 1% % 29 21 211 212 Gazprom Neft Lukoil Rosneft 54 Gazprom neft - Investor Day 214
Chonskiy Appendix: 214 plans for major upstream developments Exploration Appraisal Selection Specification Realization Exploration Appraisal Selection Specification North unit Complete 3D seismic field work using UniQ technology (4km 2 ) and 3D seismic surveying (2 km 2 ) Drill 3 exploration wells Carry out pilot well test - 1 well South unit Complete 3D seismic surveying (3 km 2 ) Drill 2 exploration wells Carry out pilot well test - 1 well Exploration Kuyumba, Phase 1 Phase 2 and 3 Appraisal Selection Specification Realization Realization Develop a concept for integrated field infrastructure Carry out 3D seismic surveying (11 km 2 ) and 2D seismic surveying (6 km) Drill 4 exploration wells Test production drill 8 horizontal wells with horizontal sections from 5 to 9m, confirm geological hydrodynamic models Exploration Appraisal Selection Specification Realization Exploration Appraisal Selection Specification Realization Dolginskoye Sign the necessary service contracts for exploratory drilling in 214 (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 215 Kurdistan (Iraq) Shakal Complete 3D seismic field work Drill 2 exploration wells Garmian Drill 1 exploration wells Halabja Complete interpretation of 2D seismic surveys Exploration Appraisal Selection Specification Realization Exploration Appraisal Selection Specification Realization 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 214
Appendix: 214 plans for major upstream developments (cont'd) Exploration Exploration Orenburg Phase 1-2 Phase 3 Exploration Exploration Novoport Phase 1 Phase 2 Appraisal Appraisal Appraisal Appraisal Selection Selection Selection Selection Specification Specification Eastern part of Orenburg field Specification Specification Realization Realization Commission high-pressure gas compressor and third technological line at CPF Complete well stock metering control project Tsarichanskoye 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 Realization Realization Drill 7 wells and carry out exploration wells test program (phases 1-2) Launch CPF (4 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 Exploration Appraisal Exploration Appraisal SeverEnergia Exploration Appraisal Prirazlomnoye Selection Selection Selection Specification Specification Specification Realization Realization 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; 3 d 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 Realization 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 Appraisal Selection Specification Realization Exploration Appraisal Selection Specification Realization Exploration Appraisal Selection Specification Realization Exploration Appraisal Selection Specification Realization Messoyakha Carry out preliminary work for construction of gasturbine power plant, CPF and pipeline Badra Launch: Complete setting up a field development plan Phase 1 Complete phase 1 design and survey work of the 1 (infrustructure) Technological line А CPF Phase 2 key infrastructure 2 (development) In-field pipeline Complete drilling well pads #1,2 and well testing Export oil pipeline Drill 2 exploration wells Wells BD4, BD5 3D seismic survey, Begin construction of Technological line А GPF Phase 2 West (drill and test 1 exploration well), East Commission well Р8 (drill well pad #4, 3D seismic 49 km 2, drill 1 Start commercial production exploration well, test 2 objects, model specification) Start production drilling (5 drilling rigs) 56 Gazprom neft - Investor Day 214
1.25 MMTonnes Hydrocarbon production abroad 49.33 MMTonnes Crude oil production in Russia.4 MMTonnes Condensate 6.81 MMTonnes Appendix: Gazprom neft balance 4.74 MMTonnes Petroleum products purchase Crude, MMTonnes Hydrocarbon purchases 2.75 MMTonnes Refining abroad 14.24 MMTonnes CRUDE OIL SALES** 45.31MMTonnes PRODUCT OUTPUT*** Petroleum products, MMTonnes 1.85 MMTonnes Russian Federation 12.39 MMTonnes Export sales (CIS, NIS a.d, NoviSad, Gazprom Neft Trading Gmbh) 7.1 MMTonnes Premium business segments 18.8 MMTonnes Filling stations and tank farms 4.7 MMTonnes Other customers and state contracts 2.6 MMTonnes Export 57 Gazprom neft - Investor Day 214
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, 212, GW China US EU Japan India Russia is a growing competitive market 234 287* Russia 223 6 * Data as of 211. Source: data of power authorities of the countries, EIA 964 Private investments in the industry exceed $4 bn since 26 1 22 1,168* The electricity market is completely liberalized Projects within the Capacity Delivery Agreements (CDA) provide 14% IRR of the players investments Key facts about the market Market turnover 28-212, $bn Depreciation in the generation sector The largest generating companies in Russia, GW 3 33 32 24 23 16 16 19 23 22 28 29 21 211 212 Source: companies data Thermal Hydro Nuclear GEH RusHydro Inter RAO RosAtom EuroSibEnergo Production 26% 22% Source: GEH analysis Source: companies data 65% Transmission 52% 57% 19,5 35% 25,2 22% 21% < 3 years 31-5 years > 5 years 33,5 37,7 37,5 59 Gazprom Energoholding - Investor Day 214
212 213 214 215 216 217 218 219 22 Electricity consumption in Russia: Dynamics and drivers Consumption of electricity in Russia has been growing at 1.8% annually in the recent 1 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 Russia s GDP growth rates Electricity prices for industrial customers, EUR/MWh in 212 1 2 1 15 1 1 1 5 1 146 1 134 1 121 1 91 1 16 1 76 1 62 1 49 1 38 6,% 3,%,% -3,% 4,5% 4,4% 3,5% 2,9% 3,5% 3,7% 3,9% 3,8% 1,5% 15 12 9 6 3 1-6,% -9,% -7,8% 29 21 211 212 213 214 215 216 217 218 Russia Germany Spain France Poland Italy UK Sources: fact 212 Energy Forecasting Agency, forecast is evaluated indicatively basing on GDP forecast of MED Source: EIU forecast 214 Source: World Bank, EIA, statistical agencies of the countries Consumption of electricity is expected to grow at 1% annually in 214-22 GDP growth rates are expected to recover to 3-4% per year in 214-218 Elimination of cross-subsidization may become the growth driver 6 Gazprom Energoholding - Investor Day 214
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 53.5% 51.8% 77.3% As of 213 Electricity Heat Installed capacity 37.7 GW 71.3 th. Gcal/h Production 159.6 bn kwh 124.8 mm Gcal Electricity Heat Installed capacity 12.3 GW 35,1 th. Gcal/h Production 58.6 bn kwh 67.6 mm Gcal MCap $.96 bn (1) Free float 15% Electricity Heat Installed capacity 7.2 GW 14,2 th. Gcal/h Production 29.3 bn kwh 27.3 mm Gcal MCap $.7 bn (1) Free float 22.6% Electricity Heat Installed capacity 18. GW 4.5 th. Gcal/h Production 7.7 bn kwh 6.8 mm Gcal MCap.77 bn (1) Free float 22.7% 1. As of February 25, 214 98.9% Electricity Heat Installed capacity.2 GW 17.5 th. Gcal/h Production 1. bn kwh 23.1 mm Gcal 61 Gazprom Energoholding - Investor Day 214
The management is focused on value creation Prices for power Heat tariff Environment Gas tariff Climate We do not affect tariffs 1 2 3 4 5 GEH influence area 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 62 Gazprom Energoholding - Investor Day 214
Performance of management on GEH assets optimization In 213 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 212 and RR 881 mm of EBITDA in 213 The key initiatives in 213 are optimization of procurement and reduction of output by ineffective capacities EBITDA TGK-1*, RR bn 15,4 16,5 17,3 11,9 7,8 21 211 212 213F 214F * IFRS 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) Enhancement of procurement system Optimization of organizational structure (personnel down by 795 persons, effect was RR 225 mm) -51% -13% -15% Advisory, legal, auditor services (1) Transportation expenses (1) Materials and supplies expenses (1) 1. RAS as of December 31, 213 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 Fuel rate in electricity production by new CHPPs, g/kwh 256 217 212 29 TEC-21 9m212 TEC-26 9m213 63 Gazprom Energoholding - Investor Day 214
Growth of GEH assets financials Gazprom Energoholding significantly outperformed the leading European power companies in terms of growth rates 15.% 1.% EBITDA CAGR 29-213F, IFRS Revenue CAGR in 29-213 reached 9%, EBITDA CAGR 9% * 5.%.% -5.% -1.% -15.% -2.% -25.% 35.% -6% -4% -2% % 2% 4% 6% 8% 1% 12% Source: Bloomberg consensus as of January 27, 214 * Excluding MOEK The 213 results exclude the depreciation tests and potential transactions with the assets of Khimki Heating Grids Revenue CAGR 29-213F, IFRS 64 Gazprom Energoholding - Investor Day 214
Expected effect from the drivers of 213-214 EBITDA Costs optimization programs implemented by GEH are expected to result in EBITDA increase of over RR 4 bn in 213 and over RR 2 bn in 214 Expected effect on EBITDA from the costs optimization activities +1.5 RR bn +.8 RR bn +1.8 RR bn +.8 RR bn +.8 +.5 213 214 213 214 213 214 RR bn RR bn 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 LEAN program CDA program finalization Improvement of corporate management by means of introducing Fortum representatives to the Board 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 CDA program implementation Execution of cost reduction program 65 Gazprom Energoholding - Investor Day 214
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 Projects in Russia 1 2 Service business GEH acquired a group of power maintenance companies TeploEnergoRemont in 213 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 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 Projects abroad 3 4 Pancevo project Construction of a 28 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 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 66 Gazprom Energoholding - Investor Day 214
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-1 European power producers Top-1 European power generating companies by installed capacity, 1H 213, GW (2) 52, 5,7 39,4 37,7 37,4 36,5 33,5 67,7 97,8 1. Source for the total installed capacity in Russia (223 GW) data of the System Operator 2. GdF Suez installed capacity in Europe 139,5 Installed capacity in Russia as of 31.12.212 (1) 83% Source: System Operator 17% GEH fuel balance as of 3.9.213 14,9% Source: company data,7% 84,5% Gas Coal Fuel oil 67 Gazprom Energoholding - Investor Day 214
Appendix: Operational and financial results outlook for 213/214 Electricity output +5.6% 166,9 158,6 167,5 Revenue (IFRS) +5.3% 323,8 336,1 354, kwh bn 212 213 214F Change Mosenergo 61.3 58.6 62.7 7.% TGK-1 27.3 29.3 3.9 5.5% OGK-2 75.2 7.7 73.9 4.5% Total 166.9 158.6 167.5 5.6% RR bn 212 213F 214F Change Mosenergo 157.1 156.7 168. 7.2% TGK-1 62.5 67.5 73.1 8.3% OGK-2 14.2 112. 112.9.8% Total 323.8 336.1 354. 5.3% Heat output +1,9% 11,1 99,7 11,6 EBITDA (IFRS) +1.9% 46,3 52,7 53,7 Gcal mm 212 213 214F Change Mosenergo 68.4 67.6 67.6 % TGK-1 24.6 27.3 27.3 +7.9% OGK-2 6.3 6.8 6.7-1.5% Total 11.1 99.7 11.6 1.9% RR bn 212 213F 214F Change Mosenergo 2.3 24.7 24.6 -.4% TGK-1 15.4 16.5 17.3 4.8% OGK-2 1.6 11.5 11.8 2.6% Total 46.3 52.7 53.7 1.9% Source: Companies data Data for Mosenergo and OGK-2 exclude the 213-214 depreciation tests. Data for Mosenergo are shown without the potential effects of the transactions with Khimki Heating Grids assets 68 Gazprom Energoholding - Investor Day 214
Appendix: Investments of GEH companies guarantee value creation in the future GEH invests into CDA projects, all of which are profitable Upgraded CDA tariff guarantees return on investments RR ths. per 1 MW/month 499 4.2x 118 Essential tariff CDA tariff Basic IRR of investments on the basis of Capacity Delivery Agreements IRR 13-14% Share of new capacities reached 15.9% in the 213 revenue, and is still growing 9,4% Share of new capacities in the revenue of GEH 11,1% 15,9% 211 212 213 Share of new capacities in the revenue of the subsidiaries (213) 14,% 21,2% 15,3% Mosenergo TGK-1 OGK-2 In 214-217 the company will continue the CDA program according to the accepted timeline Commissioning timeline according to GEH investment program, GW 5,1 2,3 3,8,1,4 before 213 214 215 216 217 In the coming years GEH will continue to execute the CDA program, and will also obtain additional income from the previously commissioned CDA units 69 Gazprom Energoholding - Investor Day 214
Appendix: MOEK acquisition In 213 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 1 bn) Up to 3,5 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 213 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 75 23% 7% 7% 18% ~3 ~225 7% 75% Average fuel consumption by MOEK boiler stations Potential economy Average fuel consumption of Mosenergo (co-generation) 93% 93% Mosenergo MOEK Others 7 Gazprom Energoholding - Investor Day 214
Appendix: Expected effect of tariffs freeze The so-called tariffs freeze became an important event in power sector regulation in 213 The freeze assumes indexation of gas, electricity and capacity tariffs (as well as rail) by % in 214. 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 Segments Markets Resolution of the Government on the tariff change starting from 1.1.214 214/213 average growth rate Electricity Wholesale market N/A + 6% (1) Regulated agreements % + 6-7% (2) Competitive capacity outtake % 3% Capacity Regulated agreements % + 3-4% CDA no resolution yet same level Heat Fuel Industrial customers + -4,2% + -4,2% Households + 4,2% + 4,2% Gas % + 7% Coal + -1% (3) + -1% (3) * Company s expectations based upon the recent public releases about the potential changes in tariffs and prices 1. Market Council forecast 2. In case the change is % starting from 1.1.214 3. Excluding the Russian Railways tariff 71 Gazprom Energoholding - Investor Day 214
Contacts for investors Department for Finance&Economics Corporate Finance Directorate Fax: (7) (495) 719-35-41 Department of Corporate Finance Investor Relations Tel: (7) (812) 385-9548 Section of Investor Relations Tel: (7) (495) 428-47-83 Oleg NAGOVITSYN Deputy Head of Corporate Finance Directorate Phone: (7) (495) 719-26-25 E-mail: O.Nagovitsyn@adm.gazprom.ru Andrey BARANOV Head of Investor Relations E-mail: ir@gazprom.ru Alexey KOKOREV Head of Corporate Finance Department Phone: (7) (812) 648-3117 E-mail: Kokorev.AS@gazprom-neft.ru Anna SIDORKINA Head of Investor Relations Phone: (7) (812) 385-9548 E-mail: Sidorkina.AV@gazprom-neft.ru Ekaterina PAVLOVA Head of Investor Relations Phone: (7) (495) 428-47-83 (ext. 467) E-mail: pavlovaea@gazenergocom.ru 72 Gazprom neft - Investor Day 214