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Rosneft Oil Company

July 17, 2008

Rosneft prepares final repayment of USD 22 bln bridge facility

Rosneft has completed preparations to repay the final tranche of its USD 22 bln. bridge facility which was drawn in 2007 to finance the acquisition of production, refining, marketing and service assets in Russia. Through a combination of leading production growth, cost control, growing profitability and strong free cash flow generation, Rosneft has reduced its debt by more than 1/3 from its peak of USD 36 bln. in June 2007.

In the past two weeks, Rosneft has completed early repayment of more than USD 5 bln. of outstanding debt, including USD 4.2 bln. of the bridge facility and USD 1 bln. to retire facilities from Sberbank and VTB. The remaining USD 2.3 bln. of the bridge facility will be paid from the company’s cash balances upon maturity in September.

Recent refinancing transactions completed include a USD 2.35 bln. REPO agreement and a USD 2.85 bln. syndicated loan. The REPO agreement was signed by RN-Razvitie on June 17, 2008, and is secured by a portion of Rosneft shares acquired at an auction in 2007. Funds were provided at an interest rate of 5.75% for one year by a bank syndicate comprising Barclays Bank plc (lead arranger), BNP Paribas, Credit Suisse Securities (Europe) Limited, J. P. Morgan Securities LTD, Morgan Stanley & Co. International plc, Nexgen Capital Limited, Societe Generale, and Royal Bank of Scotland plc.

The syndicated loan was provided to Rosneft at LIBOR + 1.25% for 5 years by Deutsche Bank (coordinator and lender) as well as by Banco Santander, Bayerische Hypo-und Vereinsbank AG, BNP Paribas, Commerzbank Aktiengesellschaft, HSH Nordbank AG, ING Bank  N. V., OJSC Orgresbank (Nordea group), Sumitomo Mitsui Finance Dublin Ltd. and offtakers BP Oil International, Royal Bank of Scotland plc, Shell International Trading and Shipping Ltd. and Vitol  S. A. The banks and the offtakers acted as the Mandated Lead Arrangers. The syndicate also comprised Banca Intesa Sanpaolo, Natixis, and Lloyd’s. The facility is secured by oil export contracts.

Rosneft President Sergey Bogdanchikov said, “We are pleased with both our debt reduction and refinancing, particularly in light of difficult financial market conditions over the past 12 months. Both the amount of debt and price at which we have managed to refinance, together with rating upgrades to investment grade from all 3 leading rating agencies, reflect the strength of Rosneft’s business model and investment story. We will continue to focus on growing production, efficiency and profitability and achieving our leverage target of 1x Debt/EBITDA.”




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