Bashneft has released its preliminary operating results for the fourth quarter and the twelve months of 2015. In 2015:

• Oil production grew by 11.9% to 19,919 thousand tonnes
• Production at brownfields in Bashkortostan added 2.8%
• New assets in Timan-Pechora and Western Siberia accounted for 16.1% of oil production
• At year end, daily production exceeded 58 thousand tonnes
• Oil refining declined by 11.7% to 19,134 thousand tonnes
• The share of light products reached 68.0%, while refining depth reached 85.8%
• According to preliminary data, the Nelson Index increased to 9.1 as against 8.93 in 2014
• 95.7% of motor gasoline and almost 100% of diesel fuel meet the Euro 5 standard

«In 2015 Bashneft remained a leader among Russian oil companies in terms of production growth, as it accounted for about 29% of the total increase in Russia’s oil production,' commented Alexander Korsik, Bashneft’s President. 'The main contributors to this achievement included new assets in Timan-Pechora and Western Siberia; at the same time, the Company boosted production at brownfields in Bashkortostan once again. Consistent implementation of our refinery upgrade programme has enabled us to boost the share of light products considerably and to ensure that over 98% of engine fuel that we produce meets the Euro 5 standard. »

In 2015 the contribution of LLC Bashneft-Polyus and LLC Burneftegaz to the Company’s total oil production increased to 16.1% as against 8.4% in 2014, with LLC Bashneft-Polyus increasing production by 69.1% year on year to 1,400 thousand tonnes and LLC Burneftegaz boosting production by 171% (to 1,804 thousand tonnes). In 2015 production growth at brownfields totalled 2.5% and was driven mainly by highly efficient geological and engineering operations, primarily hydraulic fracturing and commissioning of new wells.

In the fourth quarter of 2015, Bashneft produced 5,246 thousand tonnes of oil, which is 11.1% more than in the fourth quarter of 2014. In the fourth quarter of 2015, average daily production reached 57.0 thousand tonnes as against 51.3 thousand tonnes in the fourth quarter of 2014.

In 2015 the Company’s refining complex processed 19,134 thousand tonnes of oil, which is 11.7% less than in 2014. In the fourth quarter of 2015, refining declined by 9.7% year on year to 4,821 thousand tonnes. In 2015 this level of refining enabled the Company to maximize the value of its product mix despite an unfavourable macroeconomic environment and a new tax regime by increasing the output of light products.

According to preliminary data, in 2015 the Nelson Index, which is a measure of complexity of the Company’s refining complex, increased to 9.1 compared to 8.93 in 2014. This was achieved through further upgrades and decommissioning of cost-ineffective crude oil distillation capacities; as a result, the total capacity of Bashneft’s refining complex amounted to 23.2 million tonnes.

Due to planned reduction in refining, in 2015 the output of commercial products decreased by 11.1% year on year to 17,713 thousand tonnes. In the fourth quarter of 2015, the Company produced 4,510 thousand tonnes of commercial products, which is 8.3% less than in the same period in 2014. The reduction in the output of engine fuel in the fourth quarter of 2015 was caused by scheduled repairs at process units, including a catalytic cracker at the Bashneft-Ufaneftekhim branch.

Following the completion of a number of refinery upgrade projects and reduction in refining to an optimal level, in 2015 Bashneft improved its product mix considerably, as the share of light products increased to 68.0% compared to 61.1% in 2014.

As a result, despite an 11.7% decline in refining in 2015, the output of main types of light products remained almost unchanged compared to 2014: gasoline production totalled 4,953 thousand tonnes, while the output of diesel fuel amounted to 7,426 thousand tonnes. Furthermore, in 2015, 95.7% of motor gasoline and almost 100% of diesel fuel produced by the Company met the Euro 5 standard, compared to 90.7% and 36.0% respectively in 2014.

At the same time, in 2015 Bashneft continued to reduce the output of low-margin heavy petroleum products: the output of vacuum gas oil fell by 88.4% year on year (to 191 thousand tonnes), while the output of fuel oil decreased by 17.6% (to 2,516 thousand tonnes).

PRELIMINARY OPERATING RESULTS FOR THE FOURTH QUARTER AND THE TWELVE MONTHS OF 2015

*- LLC Burneftegaz as from March 27, 2014

OIL PRODUCTION BY OIL AND GAS PROVINCE

*- LLC Bashneft-Dobycha;
**- LLC Bashneft-Polyus;
***- LLC Bashneft-Dobycha and LLC Burneftegaz