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Rosneft Oil Company

October 5, 2006

Liquidation of Rosneft subsidiaries undergoing consolidation

On October 1, as a result of its consolidation program, the operations of 12 subsidiaries participating in the consolidation have ceased. These subsidiaries include Rosneft-Krasnodarneftegaz, Rosneft-Purneftegaz, Rosneft-Sakhalinmorneftegaz, Rosneft-Stavropolneftegaz, Yuganskneftegaz, Severnaya Neft, Selkupneftegaz, Rosneft-Komsomolsk Refinery, Rosneft-Tuapse Refinery, Rosneft-Arkhangelsknefteprodukt, Rosneft-Nakhodkanefteprodukt and Rosneft-Tuapsenefteprodukt.

This step completes the process of consolidating the subsidiaries, which was carried out in order to create an optimal organization and management structure for the Company. As of October 1, all shareholders in the consolidated subsidiaries of Rosneft are shareholders in a single company and owners of highly liquid stock traded on the country’s leading exchanges.

After the completion of the consolidation program, the Company’s charter capital stands at RUR 105981778,10 (10,598,177,810 common shares with a nominal value of RUR 0.01).

A 75.16% stake in the Company’s charter capital is held by the Russian government via Rosneftegaz, with the remaining share widely distributed among strategic, institutional and individual shareholders.

Rosneft’s consolidation has resulted in the formation of a vertically integrated corporate structure with a single profit and management center. This will allow increased effectiveness of capital investments, improved operational results and the abandonment of practices such as intra-group sales and transfer pricing, which will in turn minimize legal, tax and other risks associated with the Company’s operations. The consolidation process will also facilitate Rosneft’s access to the capital markets, which is essential for financing capital intensive projects, simplify loan structuring, thus improving the financing terms available to the Company.

The single company will retain the scale and quality of its regional operations, including the complete fulfillment of obligations regarding payment of regional taxes at all levels, the continuation of all social programs at both the subsidiaries and in the regions where they operate.

By converting their shares, minority shareholders in the subsidiaries have gained ownership in Russia’s second largest oil producer and are now able to share in the success of a unified Company.




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