Message from the Chairman of the Board of Directors

Alexey Miller

Dear Shareholders and Investors,

Last year was a rather difficult one — a significant decline in global hydrocarbon prices could not help but impact the oil and gas sector. However, the internal potential of business reveals itself amidst challenging external conditions, and on behalf of the Company’s Board of Directors I would like to note that the operating results of Gazprom Neft clearly demonstrate this.

Operational performance

The year 2014 was marked by significant achievements of Gazprom Neft in operating activities: the Company is the industry leader in terms of production growth dynamics and average daily sales of petroleum products via filling stations and it also holds leading positions on the market for innovative bituminous materials. A pioneer in the development of the Russian shelf, last year Gazprom Neft became the first company to introduce an Arctic blend of oil to the market that was produced at the Prirazlomnoye field in the Pechora Sea.

I am proud to note that today Gazprom Neft is the only oil company in Russia that has achieved growth in production at mature fields in Western Siberia. In just the last five years, production by Gazprom Neft has increased by more than a quarter, reaching 66.25 mn TOE last year. The Company is on track to meet the goal specified by the long-term development strategy — to produce 100 mn TOE per year.

The quantitative growth in the oil refining segment — the Company increased the volume of crude refined at oil refineries by 2% in 2014 — was accompanied by qualitative growth as well: Gazprom Neft refineries are already producing Euro-5 standard fuel for Russian consumers. In 2014, active preparations were made to implement large-scale projects for the next phase of the oil refinery modernisation programme, which aims to increase refinery yield indicators and the output of light petroleum products. I am certain that over the next few years Gazprom Neft refineries will be highly competitive with the world’s best oil refining enterprises in terms of technological equipment.

Effective Management

The Company continued to improve corporate governance principles: last year Gazprom Neft paid shareholders interim dividends amounting to 25% of the Company’s net profit under IFRS. In 2014, Gazprom Neft maintained leading positions in the industry in terms of efficiency and ranked first among Russian companies in terms of return on invested capital, an indicator that is important to us.

The contribution by the Gazprom Neft team to the Company’s financial results deserves high praise. Despite the change in economic conditions, which was bound to affect the results of the Company’s operations in 2014, Gazprom Neft ensured a 12.4% increase in sales to more than 1.69 bn RUB. Adjusted for the loss from foreign exchange rate differences, the Company’s net profit also increased by 3.7% and totalled RUB 188 bn.

All these achievements are primarily the result of work performed by the professional Gazprom Neft team, which always ensures the highest efficiency and aims for the best results. The Company is demonstrating its readiness to face any challenges and solve problems of any complexity on the way to achieving its strategic goals.

Alexey Miller sign

Alexey Miller

Chairman of The Board Of Directors of OJSC Gazprom Neft