At a meeting on December 22, Rosneft’s Board of Directors reviewed the Company’s preliminary results for 2006 and approved its business plan for 2007.

In 2006, Rosneft (the Company) has demonstrated industry-leading growth rates in its operational indicators. According to preliminary data, production of oil and gas condensate will reach 80.6 million tonnes (including 100% of Udmurtneft’s production for December 2006), which is 8.2% higher than the level in 2005 (74.6 million tonnes). Production growth was achieved largely through the commissioning of new wells at Yuganskneftegaz, Severnaya Neft, Sakhalinmorneftegaz and Krasnodarneftegaz, workover operations at Yuganskneftegaz, Severnaya Neft and Stavropolneftegaz, as well as increased oil production at Sakhalin-1 and the acquisition of Udmurtneft.

According to preliminary data for 2006, gas production will reach 13.625 billion cubic meters, which is a 4.2% increase over 2005 (13.078 billion cubic meters). Growth in gas production was enabled by the complex gas treatment plant at Purneftegaz’s Tarasovskoye field, which became fully operational, as well as through increased production at Krasnodarneftegaz and Sakhalin-1.

In 2006, the Company drilled 411 new wells, which is 26.1% more than in 2005. Workover operations resulted in an additional 10.9 million tonnes of oil production, versus 8.3 million tonnes in 2005. The operating well stock will comprise 21,239 units as of January 1, 2007, which is an increase of 4,020 units, mainly due to the acquisition of Udmurtneft.

It is expected that the level of exploratory drilling will reach 62,700 meters (57,100 meters in 2005). 2D seismic survey work amounting to 3,900 linear kilometers will have been carried out (1,200 linear kilometers in 2005), and 3D seismic survey work will reach 1,200 square kilometers (1,300 square kilometers in 2005). Geological exploration in 2006 led to growth in reserves by 117,6 million tonnes. Most of the reserves growth was seen at the Vankor field and at the licensed sectors of Yuganskneftegaz. The presence of large prospective structures was established within the Krutogorovsky and Sukhanovsky sectors on the West Kamchatka shelf, and the presence of hydrocarbons was verified in the lower Nutovo layers at the group of Aiyashsky structures at Sakhalin-3. At the Temryuksko-Akhtarskiy area on the Sea of Azov shelf, the Novaya prospective structure has been prepared for drilling. The discovery of the UMG field in the Krasnodar Territory was a significant exploration achievement in 2006.

In 2006, the Company increased its resource base not only through geological surveys, but also through acquisitions. At auctions in 2006, Rosneft obtained licenses for geological study, exploration, and hydrocarbon production at the following sectors: East Sugdinsky, Mogdinsky, Sanarsky and Danilovsky (Irkutsk Region); Vadinsky, Tukolandsky and Kulindinsky (Krasnoyarsk Territory); Pendomayakhsky and Severo-Charsky (Taimyr Autonomous District); Osoveisky (Nenets Autonomous District), as well as the Lebedinsky sector and the western part of the Kaurunaninsky area (Sakhalin Region).

Refining of Rosneft oil at Russian plants is expected to reach 24.025 million tonnes of oil in 2006 (including 126,000 tonnes of third-party oil), which is 8.1% higher than in 2005 (22.2 million tonnes). At the Company’s own refineries, 10.808 million tonnes of oil will have been refined, an increase of 3.0% over 2005 (10.493 million tonnes). The total volume of oil products produced is expected to reach 22.8 million tonnes.

At the Komsomolsk Refinery, 6.517 million tonnes of oil will have been refined, which is 1.3% more than in 2005 (6.436 million tonnes). Oil refining depth has reached 60.7%, which is due to the increased output of light oil products in connection with the growth of refining oil from the Sakhalin-1 project, which is characterized by its high potential for light fractions. Since April 2006, the first section of the deep refining complex at the Komsomolsk Refinery has been operational. Output of hydrotreated diesel fuel will reach 309,000 tonnes. In accordance with the investment program, reconstruction of the ELOU-AVT-3 installation was completed, which has allowed the primary oil refining capacity to be increased to 7 million tonnes per year.

Oil refining will reach 4.291 million tonnes at the Tuapse Refinery, which is 5.8% more than in 2005 (4.057 million tonnes). Refining depth will reach 56.5%, an increase of 1.3%.

At the Moscow Nefteprodukt refinery, production will reach 4,750 tonnes in 2006, which is 29.1% more than planned.

According to preliminary data, Rosneft’s enterprises will sell 1.17 million tonnes of oil products though the Company’s network of service stations, an increase over 2005. Wholesale sales will reach 4.9 million tonnes, which is 5.1% more than in the previous year.

As part of the investment program at Arkhangelsknefteprodukt, the reconstruction of the railway overpass for unloading light oil products was completed. A railway pass for unloading light products with a capacity of 5 million tonnes was brought into operation at Tuapsenefteprodukt. An overpass with a capacity of 3 million tonnes of dark products is being finished. At Nakhodkanefteprodukt, work is continuing on the reconstruction of a railway overpass, as well as industrial pipelines.

While reviewing the results of the Company’s operations for 2006, the Board of Directors also noted that according to preliminary data, approximately 21,000 employees had received training in accordance with the current program to increase specialists’ qualification. It was also noted that the level of investments in environmental protection measures in 2006 increased over the previous year by 35%.

The business plan for 2007, as specified by the Board of Directors, envisions significant growth in primary operating and financial indicators and is aimed at further strengthening Rosneft’s position as one of the world’s leading oil companies.

In 2007, overall production of oil and gas condensate (including 100% of production at Udmurtneft and Polar Lights) is expected to increase to 90 million tonnes over the 80.6 million tonnes produced in 2006. Yuganskneftegaz and Sakhalin-1 will be the main sources of growth.  Bringing proved oil reserves at existing assets onstream by drilling 639 new wells and carrying out hydraulic fracturing operations at 440 wells will allow for this production increase.

Gas production is expected to increase to 15.2 billion cubic meters (1.6 billion cubic meters more than in 2006). Growth will be achieved primarily at Purneftegaz fields, in particular now that the Tarasovskoye complex gas treatment plant has become fully operational.

In order to replenish the resource base in 2007, provisions have been made for increased geological exploration work. 2D and 3D seismic survey work will reach 575 linear kilometers and 1,830 square kilometers, respectively. Exploratory work will generally be concentrated on the Vankor group of fields, fields at Yuganskneftegaz and on the Sakhalin shelf.

The total volume of primary oil refining, including the use of third-party refineries, will reach 27.825 million tonnes in 2007, a 15.8% increase over 2006. Refining volumes at the Company’s own plants will increase by 11% over 2006 and reach 12 million tonnes. The Tuapse Refinery plans to refine 5 million tonnes of oil, which is 16.5% higher than the level in 2006. Refining at the Komsomolsk Refinery will increase by 7.4% over 2006 and will reach 7 million tonnes. This increase is due to the reconstruction of the primary refining installation in 2006. The total production of oil products, including at third-party refineries, will reach 26.3 million tonnes.

In 2007, the Company plans to decrease the total volume of wholesale and retail sales through its marketing network to 5.848 million tonnes (by 244,600 tonnes, or 4%) over 2006. This decrease will be due to the reduction of transit deliveries during a simultaneous increase in retail sales volumes of 192,000 tonnes (16.4%).  In the period up to 2011, the Company plans to carry out wide-scale measures with regard to redesigning and reconstructing existing facilities, building and acquiring new service stations and developing associated businesses at existing service stations. The number of active service stations in 2007 will increase by 77 to a total of 743 units.

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Moreover, the Board of Directors also made a decision to invest RUR 3 million in the charter capital of the Burgas-Alexandroupolis pipeline consortium, of which it is a co-founder along with Transneft and Gazprom Neft.