The Gazprom Board of Directors reviewed the efficiency of Gazprom's oil business and addressed the proposals on boosting oil production volumes.

The Board of Directors approved the work done within Gazprom's Oil Business Strategy, with Gazprom Neft being primarily responsible for this sector. It was highlighted that Gazprom was among the domestic oil industry leaders. Between 2006 and 2011 the annual oil production by Gazprom Group (accounting the oil volume produced by affiliates and joint ventures, in proportion to the ownership stake) has increased by 18 per cent – from 45.6 to 53.9 million tons. Such growth in volumes has been achieved through development of the existing oil assets and acquisition of stakes in the new ones.

As compared to 2010, in 2011 the refining volumes of Gazprom Neft increased by almost 7 per cent to 40.5 million tons and the sales via the premium segments increased by more than 37 per cent – to 19.55 million tons.

The Company's high performance in 2011 together with the managers' efforts aimed at maximizing the profit and reducing the costs allowed Gazprom Neft to reach a record EBITDA (earnings before interest, taxes, depreciation, and amortization) value – USD 10.16 billion – therefore being on top of other Russian oil companies in terms of EBITDA growth, which made up 40 per cent versus 2010.

Gazprom Group is planning to increase the annual oil production volumes to 80 million tons by 2020 that is 48.4 per cent higher as compared with 2011. The increase will be secured through development of the available reserves and implementation of new projects.

Background

In September 2006 the Board of Directors approved the Company's Oil Business Strategy. The document defines that one of the major tasks for Gazprom Group is to reach the leading positions in the Russian and global oil industry.

The aggregate À+Â+Ñ1+Ñ2 oil reserves of Gazprom Group exceed 3 billion tons as of January 1, 2012.

Gazprom Neft, a subsidiary of Gazprom, is focused on oil and gas exploration, development, recovery and marketing as well as petrochemicals production and sales. The company operates in Russia's largest oil and gas bearing regions, namely, the Khanty-Mansiysk and Yamal-Nenets Autonomous Okrugs, the Tomsk, Omsk and Orenburg Oblasts. The main oil refining facilities of Gazprom Neft are located in the Omsk, Moscow and Yaroslavl Oblasts and Serbia. The company owns a network of almost 1.7 thousand filling stations in Russia and abroad.