Position in the Industry

Oil and gas production

According to the 2010 results, Gazprom Neft is the fifth-largest company in terms of volume of oil production among oil companies in Russia.

In 2010, oil production in Russia increased by 2.2 % and totalled 505.1 mnt. Additionally, in the course of the year, the daily production rate increased to a record figure for the post-Soviet period: 10.1 mn bbl. This allowed Russia to remain the leader in global oil production. In 2010, production growth was achieved due to developing new fields, and mainly through production growth at Vankorfield.

Among Russian vertically integrated oil companies (VIOC), Rosneft, Gazprom Neft and TNK-BP demonstrated the largest growth of oil production: +6 %, +4 %, and +2 % respectively. Bashneft increased oil production volume by 16 % at old fields. The largest decline of equity production in Russia was demonstrated by Slavneft (-3 %), Tomskneft (-2 %) and LUKOIL (-2 %).

In 2010, total oil production of Gazprom Neft (accounting for share in equity investees) increased by 4 % to 49.6 mn t. This was mainly due to integrating assets acquired in the middle of 2009 (NIS and Sibir Energy) as well as further modernisation of the system for developing own fields.

In 2010, the volume of gas production in Russia also increased significantly. The growth was mainly stipulated by increasing Gazprom production by 10 %. The growth of production volumes resulted from starting the recovery process in the European gas market as well as profitability of gas deliveries to markets of CIS countries approaching that of gas deliveries to Europe. In Russia, total gas production increased by 12 % to 665 bn m³.

Oil and gas production in the Russian Federation in 2010 by oil and gas companies (excluding gas production by Gazprom and NOVATEK)

Oil and gas production of oil and gas companies in Russia

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• * 2010 production was adjusted to include Tomskneft’s share
• ** 2010 production was adjusted to include Slavneft’s share
• *** Including share of Slavneft’s, Tomskneft’s, Salym Petroleum’s production, excl. production abroad (NIS)

The dynamics of gas production (natural and associated) by the largest Russian oil and gas companies mostly grew in 2010.

In 2010 in Russia, Gazprom Neft's marketable gas production grew by 23 %, compared to the same period in the previous year, and totaled 3.6 bn m3. The growth was stipulated by starting natural gas production at Cenomanian deposits of Muravlenko and Novogodny fields in quarter 4 of 2010.

In 2010 in Russia, Gazprom Neft's total oil production grew by 4.6 % to 51.5 mn TOE. Accounting for NIS production, Gazprom Neft's total consolidated production of hydrocarbons totaled 52.8 mn TOE in 2010.

Refining

Refining in Russia has grown stably over recent years. According to data from Minenergo, in 2010 in Russia the volume of refining grew by 5.5 % compared to 2009 and totaled 249 mn t. The growth of refining volumes was mainly due to fiscal policy in Russia, which stimulates this direction of business, making it more efficient than crude oil export for Russian vertically integrated oil companies.

In 2010, the volume of diesel fuel production increased by 4.3 % and totalled 70.2 mnt, residual oil - 69.9 mn t (8.6 % growth) and petrol - 35.9 mn t (0.5 % growth). Furthermore, utilisation of main refining facilities in Russia totalled 92.1 %, and increased by 41 percentage points compared to 2009.

According to the results of 2010, Gazprom Neft increased its own share in total volume of oil refining in Russia from 13.2 %to 14.2 %. It also confirmed its third position among Russian oil companies. This was mainly due to fully consolidating the Moscow Refinery after acquiring Sibir Energy.

Beyond Russia, from February 2009, the refining volumes of Serbian NIS began to be included in the Gazprom Neft consolidation. Throughout 2010 in Russia and beyond, the company's consolidated refining totalled 37.9 mn t. This is more than 13 % of the indicator for the previous year. The production volume of high-octane petrol increased by 13 %, in connection with optimising the product range and increasing demand for high-octane petrol; kerosene production increased by 16 % and the volume of diesel fuel production increased by 15 %. This was due to implementing a modernisation program at the refinery.

The company ranks third as per oil refining volumes and oil product delivery on the Russian market. The rate of growth of sales of light oils and retail sales is outstripping market growth.

Oil Refining in Russia in 2010

Oil Refining in Russia

Oil refining in Russia

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• * Including share of Slavneft’s and Moscow Refinery's refining, excl. refining abroad (NIS)
• ** Including share of Slavneft’s refining

Exports

In 2010, volumes of oil export declined by 0.5 % to 250 mn t. This is due to the decline of raw material export to Belarus. At the same time, export to non-CIS countries grew by approximately 5 %. Last year, 213 mn t of Russian raw materials was exported to non-CIS counties via Transneft. Without Transneft, 37 mn t of oil and gas-condensate was delivered by rail, including 3.33 mn t from refineries.

In 2010, Russia reduced the volume of export to CIS countries by 29.8 % to 26.3 mn t. In the same year, oil export to Belarus reduced by 40 % to 12.88 mn t, compared to the same indicator for 2009. The volume of export to Ukraine reduced by 5.8 %, compared to 2009, and totalled 5.95 mn t. Russian raw material export to Kazakhstan grew by 17.19 % and totalled 7.43 mn t.

During 2010, Rosneft oil company exported 54.4 mn t of crude oil to non-CIS countries via the Transneft system, LUKOIL - 27.9 mn t, Surgutneftegas - 25.5 mn t, TNK-BP - 31.5 mn t, Tatneft- 16.3 mnt and Gazprom Neft- 14.6 mnt.

Compared to 2009, in 2010, the total share of Gazprom Neft oil export in Russian oil export to non-CIS countries changed slightly (a decrease of 0.2 percentage points). This was mainly due to high netback of refining compared to crude oil export netback.

Crude exports by Russian Companies via the Transneft System in 2010

Crude exports by Russian companies via the Transneft System

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• * Crude oil export via Transneft system