The Company’s annual report, balance sheet, profit and loss account were presented to and approved by the shareholders, taking into consideration the conclusion of the Auditing Commission and the Independent Auditor as well as distribution of 2002 revenues.

According to the facts and figures presented in the annual report the Company’s investments totaled RUR 41.3 bn. It allowed the Company to commission new production facilities, raise efficiency of operation and reach over twofold increase in production growth rate. Hydrocarbon production rose by 14% including oil and gas production growth of 12% and 20% respectively.

The Company’s refinery processed 15.2 mn tons of oil stock with light oil products yield enhanced by 5% and petrochemicals output increased by 11%.

The refinery launched production of three new types of fuel that are more environment-friendly and comply with international standards.

On marketing side, the Company kept on upgrading and expanding its petrol filling stations network. Over the last year, we built and modernized 22 petrol filling complexes, as well as significantly widened the range of services rendered to our clients.

Reserves additions via prospecting and exploration and via acquisition of new license areas amounted to 42 mn tons and 19 mn tons of oil, respectively, which covered 125% of the annual oil production.

Due to comprehensive application of state-of-the-art EOR technologies, the Company produced 5.5 mn tons of oil. Taking into account the effect of operations performed in the past years, advanced technologies account for 39% of oil produced last year.

However, according to the report of Director General of OJSC “Surgutneftegas” Vladimir Bogdanov, in spite of the growth of almost all key performance indicators, the Company’s 2002 financial performance was to a great extent driven by major changes in the tax law, worsening of domestic oil market conditions, and inflation.

Costs of sales were increased primarily due to external factors such as higher taxes and tariffs for electricity and carriage of oil inside Russia.

The speaker also noted that owing to the cost control program Surgutneftegas managed to limit the growth of costs. The program included resource-saving measures, steps to cut expenses and efforts to improve the Company’s organizational structure. The implementation of the cost control program in 2002 resulted in the greatest over the past few years savings of RUR 2 bn, i.e. almost RUR 16 per ton of oil produced.

The 2002 US GAAP financial statements proved the Company’s strategy to be effective. The production costs in 2001 totaled an auditor-estimated USD 2.5 per barrel. Operational competitiveness of Surgutneftegas remains at a high level as evidenced by the fact that the actual costs have not changed year on year.

The Company’s sales proceeds increased by 26% to amount to RUR 185.8 bn, while the annual operating profit decreased against last year by 4% to RUR 49.5 bn.

In 2003, the Company is intended to invest around RUR 44 bn. The Company’s investment program will more than triple cash injections into the downstream sector while the marketing sector will enjoy a 10% increase in investments.

The Company is planning to produce 54 mn tons of oil, 13.6 bcm of gas, the gas processing will amount to 3.5 bcm, a 25% growth.

Speaking about growth prospects, Vladimir Bogdanov stressed that they would be determined by economic and political climate which shouldn’t be ignored.

The Shareholders’ Meeting adopted a resolution determining the size of dividends for 2002: 9.6 kopecks per a preferred share and 3.2 kopecks per an ordinary share.

The participants of the Meeting confirmed “Rosekspertiza” Ltd. in the position of the Company’s Auditor, formed an auditing commission, and a nine-strong Board of Directors consisting of the following persons: Sergei Ananyev, Yuri Anziryayev, Vladimir Bogdanov, Alexander Bulanov, Nikolai Matveev, Nikolai Medvedev, Baizet Mugu, Alexander Usoltsev and Sergei Fedorov.

The Board of Directors’ meeting held after the Shareholders’ Meeting confirmed Alexander Usoltsev in the position of Chairman of the Board of Directors.

Press-service of OJSC “Surgutneftegas”