Gazprom s Financial and Economic Policy Press Conference. 0 Moscow

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1 Gazprom s Financial and Economic Policy Press Conference 0 Moscow

Gazprom World s Largest Energy Company billion boe Gazprom is leader among public oil and gas companies Top 10 public oil and gas

billion Gazprom among 10 largest global public companies by EBITDA and net profit 3 rd among global companies by net profit as of

s data on companies-owned proven and probable reserves, companies websites, FactSet, Bloomberg. 1.

12; Wood Mackenzie data as at June 19, 20

2 Gazprom World s Largest Energy Company billion boe Gazprom is leader among public oil and gas companies Top 10 public oil and gas companies by proven and probable reserves (2013) (1) million boe/d Top 10 public oil and gas companies by production (2012) USD billion Gazprom among 10 largest global public companies by EBITDA and net profit 3 rd among global companies by net profit as of year-end 2012 (3) 5 th among global companies by EBITDA as of year-end 2012 (2) USD billion Source: Gazprom s data, Wood Mackenzie s data on companies-owned proven and probable reserves, companies websites, FactSet, Bloomberg. 1. Gazprom data as at December 31, 2012; Wood Mackenzie data as at June 19, Gazprom s adjusted EBITDA is calculated as operating profit before amortization and provisions for impairment (provisions for impairment of accounts receivable, prepayments, work in progress, investments and other long-term assets, reserves). 3. Net profit for shareholders. 4. Consolidated data for Rosneft and TNK-BP. 5. Data as at December 31,

Stable Financial Results High income and stable operating cash flow are basis for dividend payouts Comparative CAGR for 5 years from 2007 to 2012 Approved strategic targets ST 2010 2011 2012

1 Reserves replenishment rate 100% 124% 149% 124% Total natural gas production, billion m 3 509 513 487 Operating cash flow Financial results RUB billion 2010 2011 2012 Total proceeds from sales (2),

3 Stable Financial Results High income and stable operating cash flow are basis for dividend payouts Comparative CAGR for 5 years from 2007 to 2012 Approved strategic targets ST Debt-to-equity ratio 40% 20% 17% 17% Total reserves, trillion m Reserves replenishment rate 100% 124% 149% 124% Total natural gas production, billion m Operating cash flow Financial results RUB billion Total proceeds from sales (2), RUB billion 3,597 4,637 4,764 Adj. EBITDA, RUB billion 1,364 1,931 1,573 Profitability of adj. EBITDA 38% 42% 33% Net profit, RUB billion 969 1,307 1,183 Total debt, RUB billion 1,315 1,540 1,505 Total debt to adj. EBITDA ratio 1.0x 0.8x 1x Free cash flow (3), RUB billion Including oil and gas companies with largest market capitalization as at June 19, 2013 (excluding Gazprom). 2. Excluding customs duties and VAT. 3. Excluding capitalized interest. 2

Gazprom s Sources of Additional Proceeds Russian gas market liberalization accompanied by sales growth are required for higher Gazprom s proceeds in domestic market Russian gas market liberalization

4 Gazprom s Sources of Additional Proceeds Russian gas market liberalization accompanied by sales growth are required for higher Gazprom s proceeds in domestic market Russian gas market liberalization Proceeds from sale of liquid hydrocarbons, electricity and gas transmission USD/1,000 m 3 RUB billion % 3% 7% Factors causing fluctuations of domestic gas sales by Gazprom Group 3-5% annual growth of Russian economics. Connecting new consumers, inter alia, as part of Russian Regions Gasification Program of Gazprom. Gas industry development in Eastern Siberia and Far East. Promotion of gas as motor fuel. (1) % 2% 29% 2% 4% 26% 2% 6% 24% 3% 8% 25% 7% 26% 31% жидкие Liquid hydrocarbons углеводороды электроэнергия Electricity транспортировка Gas transmissionгаза Source: Corporate data 1. According to the forecasted socioeconomic development of the Russian Federation in 2014 and planned period of , taken as a basis by the Russian Government on May 16, 2013 (protocol No.15). 3

5 Gas Prices in Russia, USA and Europe Gas prices in Russia are lowest among leading developed countries and those with economy in transition Average gas prices for domestic consumers in Russia, Europe and USA (1) USD/1,000 m Japan LNG NBP Henry Hub Average gas prices for industrial consumers in Russia, Europe and USA (1) USD/1,000 m 3 Japan LNG NBP Henry Hub Source: CERA, IEA, EIA, FTS, Mosoblgaz. 1. Data for 6 months of Gazprom continues supporting the Russian economic development by supplying gas to the domestic market at regulated prices. At the same time, gas prices for Russian domestic and industrial consumers are the lowest among the leading developed countries and those with economy in transition. Average gas prices for domestic and industrial consumers in the USA and Europe are much higher than in major hubs. In Europe these prices also surpass Gazprom s selling prices significantly. Sharp decrease in gas prices at Henry Hub, the largest US trading point, caused by the shale gas boom and lack of export opportunities, did not result in retail prices reduction to the comparable level.

Cost Management Efficient cost management policy Effect of measures taken in 2012: RUB 31.3 billion (RUB 19.3 billion planned): Operating activities: - Current costs RUB 6.8 billion (RUB 5.

2 billion planned) due to competitive purchases of goods, works/services, materials and equipment.

6 Cost Management Efficient cost management policy Effect of measures taken in 2012: RUB 31.3 billion (RUB 19.3 billion planned): Operating activities: - Current costs RUB 6.8 billion (RUB 5.0 billion planned); - Financial costs RUB 1.1 billion (RUB 1.1 billion planned). Investment activities RUB 23.4 billion (RUB 13.2 billion planned) due to competitive purchases of goods, works/services, materials and equipment. Financial activities cost reduction in bonds placement through low-cost standard procedures under EMTN and ЕСР programs. Cost Optimization (Reduction) Program for RUB billion of total cost reduction is planned for 2013: Operating activities by RUB 6.2 billion mainly through: - Reducing current costs of subsidiaries and gas transmission sector by RUB 5.5 billion; - Reducing current costs of Gazprom (excluding affiliates and representative offices) by RUB 0.6 billion; - Reducing financial costs by RUB 0.1 billion. Investment activities RUB 8.2 billion. RUB/1,000 m Prime costs of gas production (1) Prime costs of gas transmission (2) RUB/1,000 m 3 *100 km 1,216 1, Prime cost of the Gas Production business means costs on 1,000 m 3 of commercial gas production by 7 major gas producing subsidiaries of Gazprom. Gazprom s costs are not included in the parameter. 2. Prime costs of the Gas Production business means costs on 1,000 m 3 of gas transmission per 100 km by Gazprom s gas transmission subsidiaries. Gazprom s costs are not included in the parameter. 5

7 Cost Optimization in Vital Materials and Equipment Pricing in 2012 Notional savings in vital materials and equipment procurement amounted to RUB 19.6 billion Notional savings from reduction of suppliers offer prices for vital materials and equipment Formula-based results from December 2011 to April 2013 RUB billion 100% 98% -3.85% -5.5% 96% 94% 92% 90% Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 Расчетная Formula-based цена по price формуле Цена, Monthly рассчитанная calculated price помесячно While determining economically expedient price level for vital materials and equipment Gazprom primarily seeks to meet its economic interest through the conformity of prices to quality and performances of products, as well as compliance with the Company s efficiency parameters. Application of pricing formula for pipes enabled to restrict the pipe price growth rates in the 1 st quarter of 2012, as well as to reduce prices in the 2 nd half of 2012 below those forecasted by the Russian Ministry of Economic Development. 6

Gazprom Group Tax Burden Fluctuation Oil and gas companies are major tax payers in Russia Severance tax rates for gas applied to Gazprom and independent producers RUB/1,000 m 3 RUB trillion Gazprom

The severance tax growth rates will be 1.8 times higher for Gazprom versus independent producers. Oil and gas companies are major tax payers in Russia.

8 Gazprom Group Tax Burden Fluctuation Oil and gas companies are major tax payers in Russia Severance tax rates for gas applied to Gazprom and independent producers RUB/1,000 m 3 RUB trillion Gazprom Group tax payments fluctuation 4.1x In the average annual rate of gas severance tax will grow 4.1 times for Gazprom and only 2.3 times for independent gas producers. The severance tax growth rates will be 1.8 times higher for Gazprom versus independent producers. Oil and gas companies are major tax payers in Russia. Taxes actually paid by Gazprom Group exceeded RUB 1.9 trillion in During the severance tax paid by Gazprom rose by over RUB 262 billion or nearly 3 times. The total tax payments rose by over 71% mainly due to the gas severance tax growth. 1. Design value may differ due to tax payment values rounding. 7

9 Severance Tax Rate Differentiation New severance tax formula is expected to be introduced on January 1, 2014 Gas severance tax (1,000 m 3 ) = 35*Е УТ *К С + Т Г Severance tax for condensate (1 ton) = 42*Е УТ *К С Е УТ - Basic value of reference fuel unit; К С - Production complexity ratio (severance tax differentiation); accounts for economic and geographic factor (Кр ), productive reservoir depth (Квг) and depletion factor (Кгз); Т Г - Transmission = 0 before January 1, 2015 Since January 1, 2015 gas severance tax formula will include transmission component Т Г - Transmission component is annually calculated by tax payer according to following formula: Т Г = 0.5 * Т P * (Р Г /100) * (1/О Г ), where Т Р Р Г О Г - Difference between actual average gas transmission tariff for independent gas producers, expressed in RUB per 1,000 m 3 per 100 km in a year preceding tax year, and design average gas transmission tariff calculated based on actual tariff in 2013 and accrued consumer price index from 2013 and up to a year preceding tax year; - Average gas transmission distance for independent gas producers (km); - Ratio of gas (excluding associated gas) produced by UGSS owners to gas produced by other tax payers (excluding associated gas) in a year preceding tax year; Ог = 1 for independent gas producers. 8

10 Transmission Component Increases Severance Tax Rate for Gazprom Gazprom stands against inclusion of transmission component into severance tax formula Т Г Accounts for extra costs of independent gas suppliers when growth rate of gas transmission tariff for preceding year versus 2013 tariff exceeds accrued (since 2013) index of consumer prices. Introduction of transmission component: 1. Contradicts economic substance of severance tax that represents royalty payment. 2. Will reduce (due to transmission tariff rise) severance tax rate for independent gas suppliers and increase severance tax rate for Gazprom by the same value. Lack of budget receipts due to reduced severance tax for independent producers will be reimbursed through severance tax increase for Gazprom. 3. Does not correspond to basic provisions of tax law and provides extra competitive advantages for certain market players (independent gas producers) at cost of other ones. 9

Incentives for Offshore Fields. Executing Gazprom s Offshore Projects Incentives for offshore fields starting from hydrocarbon production launch on January 1, 2016 (Russian Government Decree No.

Introduction of ad valorem rates for hydrocarbons severance tax (as percentage of selling price) with rate differentiation as per project complexity. Property tax exemption.

Incentives enabling to raise internal rate of return (IRR) of Gazprom s pilot offshore projects that will start production before 2016 Prirazlomnoye oil field Kirinskoye gas and condensate field

11 Incentives for Offshore Fields. Executing Gazprom s Offshore Projects Incentives for offshore fields starting from hydrocarbon production launch on January 1, 2016 (Russian Government Decree No.443-r of April 12, 2012) Export duty exemption for hydrocarbons produced offshore. Introduction of ad valorem rates for hydrocarbons severance tax (as percentage of selling price) with rate differentiation as per project complexity. Property tax exemption. Tax rates invariance since hydrocarbons commercial production launch. Exemption of import duties and VAT on imported process equipment. Incentives enabling to raise internal rate of return (IRR) of Gazprom s pilot offshore projects that will start production before 2016 Prirazlomnoye oil field Kirinskoye gas and condensate field Introduction of zero rate for liquid hydrocarbons export duty during 25 years. Prolongation of zero rate validity for oil severance tax (sub-clause 10, Clause 1, Article 342 of Russian Tax Code) up to Introduction of regional differentiated discount rate while calculating severance tax since Introduction of property tax allowance for offshore production facilities (zero rate) 10

Investment Program Providing capital investments through operating cash flow Capital investments (1) and self-financing 140% RUB billion 113% 105% 108% Main gas projects in 2013 Transmission, RUB

42 Construction of Kirinskoye field OPF Sakhalin MCS gas pipeline 21.22 11.87 Gas transmission network extension to feed South Stream gas pipeline 10.20 90.

21 1. Including VAT 11. Self-financing (Operating cash flow/capital investments) Production, RUB billion 2012 2013 Bovanenkovo field pre-development 88.78 60.

12 Investment Program Providing capital investments through operating cash flow Capital investments (1) and self-financing 140% RUB billion 113% 105% 108% Main gas projects in 2013 Transmission, RUB billion Bovanenkovo Ukhta gas pipeline construction Ukhta Torzhok gas pipeline construction Gryazovets Vyborg gas pipeline construction Construction of Kirinskoye field OPF Sakhalin MCS gas pipeline Gas transmission network extension to feed South Stream gas pipeline Participation in South Stream gas pipeline construction beyond Russian Federation Nord Stream gas pipeline construction 3.99 Sakhalin Khabarovsk Vladivostok gas pipeline construction Including VAT 11. Self-financing (Operating cash flow/capital investments) Production, RUB billion Bovanenkovo field pre-development Maintaining current output at three largest fields Medvezhye, Urengoyskoye and Yamburgskoye Kirinskoye field pre-development Zapolyarnoye field pre-development Yubileynoye field pre-development Long-term investments into projects for hydrocarbon development abroad

13 Debt and Liquidity Management Maintaining comfortable level of debt load RUB billion Total and net debt Relative debt ratios max. level 1.6 S&P, Fitch Moody s Gazprom s credit ratings % Cost of debt financing AAA- BBB+ BBB BBB- BB+ BB BB- B+ A3 Baa1 Baa2 Baa3 Ba1 Ba2 Ba3 B1 7.0% 6.3% 3.0% 02/ / / / / / / / / / / /2013 S&P Moody's Fitch Investment grade level 12

14 Successful Activity in Global Capital Markets Date of issue: March 13, 2013 January 30, 2013 July 26, 2012 July 11, 2012 Total value: EUR 1,000 mln EUR 500 mln USD 800 mln USD 900 mln EUR 650 mln (additional issue) EUR 750 mln USD 1,000 mln Coupon: 3.389% 4.364% 3.850% 4.950% 3.755% 3.755% 4.950% Redemption yield: 3.389% 4.364% 3.850% 4.950% 3.500% 3.759% 4.950% Circulation period: 7 years 12 years 7 years 15 years 5 years 5 years 10 years Achievements: Longest circulation period of euro issue among Russian issuers Lowest fixed coupon rate in euro among Russian securities with circulation period exceeding 5 years Price level within yield curve of Gazprom Eurobonds secondary market Lowest fixed coupon rate in USD among Russian securities with circulation period exceeding 5 years Lowest fixed coupon rate in USD among Russian securities with circulation period exceeding 10 years Price level within yield curve of secondary market in USD Most extended issue in euro by Russian and CIS issuer First issue in euro by Russian and CIS issuer since 2009 Lowest fixed coupon rate in euro among Russian corporate securities Lowest fixed coupon rate in USD among Gazprom, Russian corporate borrowers and bank securities Top 3 MOST SUCCESSFUL CORPORATE BORROWER AT DEVELOPING MARKETS IN

15 Record Breaker of Local Market. Efficient Management of Ruble Borrowings Date of issue: February 21, 2013 November 10, 2011 Total value: RUB 5 bln RUB 10 bln RUB 15 bln RUB 15 bln Coupon: 7.55% 7.55% 7.50% 7.50% Redemption yield: 7.69% 7.69% 7.64% 7.64% Circulation period: 5 years 4 years 3 years 1 year Achievements: One of largest deals in local market in For first time in domestic capital market simultaneous marketing of 3 issues featuring different terms and values. Lowest coupon rates (for respective borrowing terms) for corporate borrower in more than year and a half Aggregated demand about RUB 50 billion. No premium for 4 and 5 years of circulation. Successful deal despite negative market conditions Aggregate demand exceeding RUB 20 billion Early redemption in late 2012 In 2013 Effectively issued redemption bonds. Doubled total bonded sum. Extended local borrowings term. Reached minimum spread between 3 and 5 years, i.e. 5 basis points. 14

Debt and Liquidity Management Developing centralized liquidity management system of Gazprom Group Establishing system of virtual money pools in rubles, USD and euro based on Gazprombank that

16 Debt and Liquidity Management Developing centralized liquidity management system of Gazprom Group Establishing system of virtual money pools in rubles, USD and euro based on Gazprombank that consolidates accounts of 85 Russian subsidiaries and standalone subdivisions Establishing a number of cross-border multicurrency money pools in cooperation with Gazprom Group s subsidiaries located abroad Operational control over cash flows within accounts of subsidiaries involved in pools Considerable growth of efficiency of temporary free cash flow management: 2012 income more than 11 times exceeds respective 2009 figure Enhancing financial discipline at subsidiaries Expanding possibility for attraction of preferential short-term loans up to RUB 120 billion by Gazprom Expanding centralized liquidity management system to Group level Optimizing intragroup liquidity centralized management system Introducing unified concepts of Gazprom Group cash flow management Ensuring promptness of managerial decision-making Mobilizing Gazprom intragroup finances

17 Gazprom Informatization Strategy Business efficiency management Core efficiency indicators reporting system for Chairman of Management Committee (workstation) 16

18 Corporate Governance of Gazprom Continuous activity aimed at improving corporate governance is in progress at Gazprom Gazprom s Corporate Ethics Code was approved. Period for submitting Shareholders Meeting documentation was extended from 20 to 30 days. Business Ethics Codes based on Gazprom s Corporate Ethics Code is being adopted at companies with Gazprom s shareholding (above 100 companies). Gazprom approved Regulation on Access to Insider Information and its Protection. Company determined subdivision to control observance of regulatory requirements in prevention of insider s data illegal use and market manipulation with due consideration for specific activities of subsidiaries and Company s interest in their authorized capital. Work is underway to minimize risk of Register of Shareholders data misrepresentation in order to prevent share fraud. Efforts are underway to justify Remuneration for Members of Company s Board of Directors to shareholders. Company s corporate governance practice is being audited for its further enhancement and national corporate governance ranking. Improvement of investors communications with independent directors is in progress. 17

Dividend Policy Board of Directors proposed that annual General Shareholders Meeting approve dividend

8 billion or above 25% of Gazprom s net profit according to Russian Accounting Standards Switch to dividend

Dividend yield (2) RUB Dividend payout per one share (1) Dividend yield of major oil and gas companies,

19 Dividend Policy Board of Directors proposed that annual General Shareholders Meeting approve dividend payouts based on 2012 results in amount of RUB billion or above 25% of Gazprom s net profit according to Russian Accounting Standards Switch to dividend payout based on consolidated net profit according to 2014 results in line with IFRS is under consideration Dividend yield (2) RUB Dividend payout per one share (1) Dividend yield of major oil and gas companies, 2012 (1) 1. Calculated as relationship between announced dividends for a period and share value as of last day of the relevant period. 2. Calculated as at June 19,

Focusing on Sustainable Development 18% of global gas reserves 72% of domestic gas reserves 124% - hydrocarbon reserves replenishment ratio 14% of global gas production 74% of domestic gas production

European gas market Diversifying export markets and products supplied is a key factor of Company s further development Main target creating shareholder s value Efficient dividend policy Improvement

20 Focusing on Sustainable Development 18% of global gas reserves 72% of domestic gas reserves 124% - hydrocarbon reserves replenishment ratio 14% of global gas production 74% of domestic gas production Unique core indicators Sustainable development strategy Growth of global energy consumption and natural gas share Gazprom is one of largest energy companies: Above 70% of domestic gas market 25% of European gas market Diversifying export markets and products supplied is a key factor of Company s further development Main target creating shareholder s value Efficient dividend policy Improvement of corporate government regulation Improving corporate governance Conservative financial policy High profitability Flexible management of capital investments Efficient management of operating costs Comfortable level of debt load 19

Gazprom s Financial and Economic Policy Press Conference. 0 Moscow

Gazprom s Financial and Economic Policy Press Conference Moscow Limitation of Liability This presentation is prepared by Gazprom (hereafter the Company) and contains corporate information for investors.