ENERGY FOR PEOPLE - JSC Gazprom Neft

JSC GAZPROM NEFTANNUAL REPORT2009Group has invested a total of 1057 mln.pounds (approximately 53 bln rub) intothe acquisition of 55% of voting sharesin Sibir Energy. This acquisition ensuredthe Company’s direct control overSibir Energy and indirect control overMoscow Oil Refinery, thus increasingthe share of effective ownership of therefinery from 38,63% to 59,75%.Sibir Energy — is a vertically integratedcompany, with its production assetslocated in Western Siberia and itsdistribution assets located in Moscowand Moscow region. Core distributionassets include OJSC Oil CompanyMagma assets (Sibir Energy holdinga 95% interest) and 50% in joint venturewith Royal Dutch Shell, Salym PetroleumDevelopment (SPD). Sibir Energy’scurrent oil production level is over 80000 barrels per day. Apart from that,Sibir Energy holds a 38,63% interestin Moscow refinery, that is under jointmanagement by Sibir Energy and JSCGazprom Neft, and owns a network of134 retail filling stations in Moscow andMoscow region, operating under thebrands MTK and Nefto.In December 2009 JSC GazpromNeft approved and in January 2010signed a services contract for Badraoil field in Iraq as part of the second oillicensing round. In the Badra oil fielddevelopment project, JSC GazpromNeft is acting as an operator of theconsortium. Other members of theconsortium are Kogas (Korea), Petronas(Malaysia) and TPAO (Turkey). The IraqiGovernment holds a 25% interest. Inorder to start working on the project thisyear, the partners plan to invest a totalof more than 200 mln. USD, includingthe signature bonus pay-up.In 2009 JSC Gazprom Neft startedworking on increasing its presenceabroad in the area of productionthrough its participation in projects inIraq, Libya, Equatorial Guinea, Cuba. In2010 Gazprom Neft intends to continueexpansion in this direction.In June 2009 Gazprom Neft becameparty to the National Oil ConsortiumLLC. All the members of the RussianNational Oil Consortium (apart fromGazprom Neft, members includeOJSC Oil Company Rosneft, OJSCLukoil, OJSC TNK-BP Holding andOJSC Surgutneftegaz), that share thecommon goal of the exploration ofVenezuelan oil fields together with thestate company of Venezuela, hope forthe prompt signing of the agreementestablishing a joint venture withPDVSA.In February 2010 Gazprom Neft Grouppurchased a 100% interest in STS-Service LLC from Swedish companyMalka Oil. STS-Service LLC holdsthe license for West-Luginetskoye,Nizhneluginetskoye and a part of theShinginskoye fields, the total reservesof which in categories С1+С2 amountto 11,5 mln. tons. One of the keyfactors that determined the asset’sattractiveness for Gazprom Neft is STS-Service’s location in close proximityto the area of Shinginskoye oil field,developed by Gazprom Neft-Vostok.Expanding Gazprom Neft-Vostokwill create a new impetus to thedevelopment of the enterprise andwill enable the level of production tobe maintained despite the fall due tonatural reasons — depletion of thispart of the oilfield. Supplementaryexploration will also enable an increaseof the reserves of the subsidiary, as wellas consolidating the reserves of theCompany.In 2009 the Company started workingon the acquisition of oil fields of JSCGazprom, coordinated and approvedthe transfer plan for Novoportovskoyeand Orenburgskoye oil fields, beganthe relevant corporate coordination andapproval procedures.147