Moscow, 21 April 2006. OAO NOVATEK today announced record net earnings and earnings per share in its 2005 consolidated financial results prepared in accordance with International Financial Reporting Standards (“IFRS”) and audited by PricewaterhouseCoopers.

Net profit attributable to NOVATEK for the twelve months ended 31 December 2005 rose 141% to RR 13,697 million, or RR 4,511 per share (basic and diluted), compared to RR 5,694 million, or RR 2,510 per share (basic and diluted) for the same period in 2004.

Total revenues and other income grew by 71% year-on-year to RR 42,187 million for the twelve months ended 31 December 2005 from RR 24,727 million in the corresponding period of 2004.

The record financial performance during 2005 was attributable to increases in production volumes from core fields, favorable pricing environment, asset consolidations and net gain on disposals of investments. Excluding the net gain on disposals and other income, total revenues from core activities increased by 60% year-on-year to RR 38,523 million from RR 24,144 million in 2004.

“We are extremely pleased with the strong operational and financial performance we achieved in 2005. Our performance was underpinned by the commissioning of the Purovsky processing plant and replacement of 311% of our proved reserves combined with favorable commodity prices throughout the year. These events made 2005 the most successful year in our corporate history” stated Leonid Mikhelson, Chief Executive Officer and Chairman of the Management Board.  “We are uniquely positioned to deliver strong long term production and reserve growth to meet the continually growing demand for hydrocarbons in Russia and abroad”.

During 2005, total revenues from the sale of natural gas increased by 76% to RR 22,729 million from RR 12,943 million in 2004. Total revenues from the sale of liquids (crude oil, stable gas condensate, liquefied petroleum gas and oil products) increased from RR 8,075 million in 2004 to RR 14,517 million, or 80%, during the period.

Natural gas sales volumes for the full year rose by 58% from 17,277 million cubic meters in 2004 to 27,329 million cubic meters in 2005. Net liquid sales volumes grew by 18%, from 2,112 thousand tons in 2004 to 2,460 thousand tons in 2005.

Net cash provided by operating activities in 2005 increased to RR 10,246 million, a 113% increase over 2004. During 2005, the Company disposed of non-core oil and gas investments and other ancillary services generating RR 5,565 million in additional cash.  These additional sources of cash, together with the repayment of loans provided allowed the Company to fund capital investment programs and repay outstanding debt.   At 31 December 2005, the Company’s cash and cash equivalents totaled RR 2,956 million.

During 2005, the Company significantly reduced its overall debt portfolio by RR 14,906 million. Long-term debt decreased by 93% to RR 892 million at 31 December 2005 from RR 13,232 million in 2004.   At 31 December 2005, net debt to total capitalization was 8%.

“Our financial performance over the past year was stellar.   We continued to demonstrate sustainable production growth at attractive returns on average capital employed while exercising prudent cost controls along all of our business segments,” commented Mark A. Gyetvay, Chief Financial Officer. “During 2005, we significantly strengthened our balance sheet by retiring a large portion of our existing debt, which resulted in lower average borrowing cost for the Company.”        

Novatek continued to invest in upstream development projects and downstream processing facilities during the year. During 2005, capital expenditures amounted to approximately RR 6.5 billion.

                             IFRS Financial and Operational Highlights

                        for the years ended 31 December 2005 and 2004

                                               Selected Operating Data

                      Selected Balance Sheet Items (in millions of Russian roubles)

The full set of consolidated IFRS financial statements and notes thereto will be available on the Company’s web site (www.novatek.ru) on 28 April 2006.

Certain statements in this press release are not historical facts and are “forward looking” within the meaning of Section 27A of the Securities Act and Section 21E of the US Securities Exchange Act of 1934 (hereinafter, the Exchange Act). Forward looking statements include statements concerning our plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, our competitive strengths and weaknesses, plans or goals relating to forecasted production, reserves, financial position and future operations and development, our business strategy and the trends we anticipate in the industries and the political and legal environment in which we operate and other information that is not historical information.  By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward looking statements will not be achieved.

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OAO NOVATEK is Russia’s largest independent gas producer and the second-largest natural gas producer in Russia. Founded in 1994, the Company is engaged in the exploration, production, processing and marketing of natural gas and liquid hydrocarbons. The Company’s upstream activities are concentrated in the prolific Yamal-Nenets Region, which is the world's largest natural gas producing area and accounts for over 90% of Russia's natural gas production and 20% of the world’s gas production. NOVATEK is an open joint stock company established under the laws of the Russian Federation. The Company’s shares are listed on the Russian Trading System (RTS) and as Global Depository Receipts (GDR) on the London Stock Exchange (LSE) under the ‘NVTK’ ticker symbol and on the NASDAQ PORTAL System as Rule 144A Depository Receipts under the ticker symbol “NVATY”.