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Rosneft Oil Company

July 13, 2007

Rosneft’s Board of Directors examines the Company’s preliminary results for 1H 2007

On July 13, at its regular meeting, Rosneft’s Board of Directors approved the Company’s preliminary operational results for the first half of 2007 and noted a number of significant events that have taken place over this period.

At the end of the first half of 2007, Rosneft successfully held its first general annual meeting of shareholders as a publicly traded company. During the accounting period, Rosneft became the top-ranked public oil and gas company by proved liquid hydrocarbon reserves (according to an audit performed by DeGolyer and MacNaughton). Daily oil production at the Sakhalin-1 project reached the planned level. Regarding the processing of associated gas and sales of resulting production, a memorandum of mutual cooperation was signed with SIBUR. The Belokamenka floating oil tanker transshipped its 10 millionth tonne of oil, while Tuapsenefteprodukt commissioned a complex capable of transshipping 3 million tonnes of fuel oil per year from rail to marine transport vessels. At the Komsomolsk Refinery, the reconstruction of a primary oil refining installation was completed, which guarantees refining capacity of 7 million tonnes per year with a potential increase to 8-8.5 million tonnes per year. A shareholding and operating agreement was signed with the Chinese Petroleum and Chemical Company (Sinopec), which concerns joint exploration and development at the Veninsky block of the Sakhalin-3 project. A declaration of intentions was signed on constructing the endpoint of the East Siberia — Pacific Ocean pipeline. Finally, the largest rating agencies — Moody’s, Fitch and S&P — increased the Company’s ratings (and forecasts), respectively, to Baa1 (forecast — stable), BBB- (positive) and BB+ (positive).

In the first half of 2007, the Company took out a USD 22 billion bridge loan at the lowest interest rate ever obtained by a Russian borrower. The Company used the loan for activities at various producing, refining and marketing assets, the number of which increased from 102 to 230. Now all Company’s assets are located in 45 regions across Russia. Especially noteworthy was the Company’s acquisition of five large oil refineries and more than 1,000 service stations. The total number of Rosneft employees increased from 81,000 to 132,000.

During the first six months of the year, Rosneft held the leading positions among Russian oil and gas companies in terms of market capitalization, level of reserves and oil production. According to preliminary figures, the Company achieved the results outlined in its business plan, which was brought about by increased effectiveness in all areas of operation, as well as by a favorable pricing situation on the global oil market.

In comparison to the same period of 2006, preliminary data (according to Russian Accounting Standards) indicate that Rosneft increased oil and gas condensate production by 14.6% to 44.5 million tonnes (including 100% of Polar Lights and Udmurtneft). Taking into account the assets recently acquired in 2007, this figure stands at 19%. Gas production, according to preliminary data, increased by 10.6% to 7.5 billion cubic meters (by 13% including newly acquired assets). Rosneft’s share of total Russian oil production stood at 19%, as opposed to 16.4% in the same period of 2006.

Organic growth in oil production was achieved by the drilling and commissioning of new wells at Yuganskneftegaz, Purneftegaz, Severnaya Neft and Sakhalinmorneftegaz, as well as by completing workover programs at Yuganskneftegaz, Purneftegaz, Severnaya Neft, Udmurtneft and Krasnodarneftegaz. Increased oil production from these measures was obtained chiefly at Purneftegaz and Krasnodarneftegaz.

In the first half of 2007, preliminary data indicate that the Company refined 15.2 million tonnes of oil, which is a 29.1% increase over the same period in 2006. Excluding new acquisitions, oil refining reached 13.5 million tonnes, which is 14.8% more than in the first half of 2006. Total output of oil products was 14.4 million tonnes (12.8 million tonnes, excluding new assets). Oil refining depth (including new assets) increased to 62.3%, as opposed to 58.3% last year.

Total oil product sales in the first half of 2007, according to preliminary results, were 14.8 million tonnes, which is 11% above the planned level and a 28.2% increase over 2006. Preliminary results show that 7.42 million tonnes of oil products were exported (109.9% of the level exported in the first half of 2006 and 102.2% of the planned level). The same volume of oil products were sold on the domestic market (153.8% of the same period in 2006 and 121.4% of the planned level). The Company sold 3.7 million tonnes of oil products through its marketing subsidiaries.

In addition to examining the Company’s preliminary results for the first half of the year, the Board of Directors also approved Rosneft’s obtainment of a RUB 8.4 billion line of credit from VTB, as well as a five-year loan of USD 3.25 billion from a syndicate of Western banks.




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