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Overview / Addresses / Address by the Chairman of the Board of Directors
Alexey Miller
Alexey MILLER
Chairman of the Board of Directors
OJSC Gazprom Neft
Alexey Miller

Dear shareholders, investors & colleagues

Last year Gazprom Neft once again demonstrated a high level of efficiency. The Company developed all business segments, achieving new records and moving closer to the targets set out in Gazprom Neft’s development strategy through 2020.

The growing scale of our operations and the conscious efforts made by management to focus on higher Company efficiency had a positive impact on Gazprom Neft’s financial performance. Year-end revenue in 2012 grew by 20% (to RUB 1.2 tn), operating income by 8% and, net income by 10%. At the same time, the growth rate of our unit production costs remains among the lowest in the industry. Along with a large-scale investment program, enabling the Company to create a solid basis for further business development, Gazprom Neft has also delivered annual growth in dividend payouts. On the basis of our 2012 results the Company will for the first time pay out to its shareholders 25% of its net income under IFRS, or in absolute figures – nearly one third more than the previous year.

In 2012 the Company focused heavily on implementing large-scale projects in the production sector, including the development of oil fields received from OJSC Gazprom. The Company is making progress in new promising regions, such as the northern part of the Yamal-Nenets Autonomous District, Eastern Siberia, as well as outside Russia, where Gazprom Neft is actively expanding its presence and exploring possibilities for further growth. Through the use of new drilling technologies and approaches, in 2012 the Company became Russia’s leading oil company in terms of hydrocarbon production growth rates.

In 2012 Gazprom Neft considerably increased its share in the motor fuel retail market. The Company is already benefiting from the success of its rebranding program and is now the market leader (by volume) for fuel sold through filling stations.

Gazprom Neft is also actively developing its refining assets: as early as 2013 it will produce only Euro-5 gasoline and diesel fuel , two years ahead of the regulatory deadline. With the production of low emission fuels already underway, Gazprom Neft is entering the next important phase of its modernization plans: the implementation of a program aimed at increasing its refining capabilities in order to boost production of light petroleum products and improve the efficiency of its refinery operations.

The further expansion of premium distribution channels including fuel sales through its own filling station network, ship bunkering and aircraft refueling is an important development. In 2012 Gazprom Neft increased its share in the motor oil retail market to become the largest supplier of light petroleum products in the Russian market. In 2012 Gazprom Neft considerably increased its share in the motor fuel retail market. The Company is already benefiting from the success of its rebranding program and is now the market leader (by volume) for fuel sold through filling stations.

Looking to 2013, Gazprom Neft will continue to increase production and control its costs closely. Our company's goal is to continue to create value for its shareholders through the implementation of our long-term development strategy.

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