2016 IFRS RESULTS APRIL 27, 2017 1 2016 IFRS RESULTS Alexander - - PowerPoint PPT Presentation

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2016 IFRS RESULTS

2016 IFRS RESULTS

APRIL 27, 2017

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2016 IFRS RESULTS

Alexander Ivannikov

Head of Department

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2016 IFRS RESULTS

DISCLAIMERS

This presentation has been prepared by PJSC Gazprom (the “Company”) and comprises the slides for a presentation to investors concerning the Company. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares or other securities representing shares in the Company, nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision. Any viewer of this presentation considering a purchase of such securities is hereby reminded that any such purchase should be made solely on the basis of the information contained in the prospectus or other offering document prepared in relation thereto and will be subject to the selling restrictions set out therein. The information in this presentation should not be treated as investment advice. Care has been taken to ensure that the facts stated in this presentation are accurate, and that the opinions expressed are fair and

• reasonable. However, the contents of this presentation have not been verified by the Company. Accordingly, no representation or

warranty, express or implied, is made or given by or on behalf of the Company or any of its members, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in or discussed at this

• presentation. None of the Company or any of their respective members, directors, officers or employees nor any other person accepts

any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. The information in this presentation includes forward-looking statements, such statements may also occur during the Q&A session. These forward-looking statements include all matters that are not historical facts, statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which the Company operates. By their nature, forward-looking statements involve risks and uncertainties, including, without limitation, the risks and uncertainties to be set forth in the prospectus, because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward- looking statements contained in this presentation. In addition, even if the Company’s results of operations, financial condition and liquidity and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. The information and opinions contained in this presentation are provided as at the date of this presentation and are subject to change without notice. No person is under any obligation to update or keep current the information contained herein. By attending the presentation you agree to be bound by the foregoing limitations.

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2016 IFRS RESULTS

MAJOR 2016 AND RECENT EVENTS

2016 2016 major

• r events

nts

• Record high gas exports to Europe – 179.3 bcm (+12.5% YoY)
• Oil production growth by 7%
• Corporate governance improvement
• Acquisition of 3.59% of Gazprom shares from VEB
• Increase of gas mineral extraction tax burden in 2016 and 2017

Jan. . 2017

• High quality of Gazprom’s corporate governance confirmed by Moscow Exchange

Mar. . 2017

• Strong gas export volumes in 1Q17 (+13% YoY).
• Progress in approaching solution of EU antitrust case
• S&P changed Gazprom‘s rating outlook from ‘Stable’ to ‘Positive’
• Gazprom placed $ 750 mm Eurobonds. First dollar-denominated issue in the last 3 years
• Gazprom placed GBP 850 mm Eurobonds
• EUR 700 mm loan from Credit Agricole CIB

Apr. . 2017

• Nord Stream 2 pipeline financing agreements signed with ENGIE, OMV, Shell, Uniper and Wintershall
• Gazprom’s Management Committee proposed RUB 7.89 per share dividend for 2016
• Belarus fully paid off its overdue debt of $726.2 mln for the Russian gas supplied by Gazprom in 2016–2017

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2016 IFRS RESULTS

SUMMARY OF 2016 IFRS FINANCIAL RESULTS

6 111 1 322 952 1 369 202 1 933

1000 2000 3000 4000 5000 6000 7000

Total net sales Adjusted EBITDA Net profit Cash Capex Free CF Net debt

1 2 3 4

1 EBITDA adjusted for changes in impairment provisions 2 Profit for the period attributed to shareholders of PJSC Gazprom 3 Free cash flow is calculated as Net cash provided by operating activities less Capital expenditures 4 Compared to Net debt as of December 31, 2015

RUB bn +1% (29%) 2015 vs 2016 RUB bn +21% (17%) (48%) (7%)

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2016 IFRS RESULTS

+7% +7% +13% +13% +2% 2% 419,5 420,1 129,0 134,1 0,0 200,0 400,0 600,0 2015 2016 4q15 4q16

Natural gas Crude oil Gas condensate

Gazprom Group’s volumes produced in Russia Calculations may diverge due to rounding.

PRODUCTION

bcm mln ton mln ton +0% +0% +4% 15,3 15,9 4,1 4,2 0,0 10,0 20,0 30,0 2015 2016 4q15 4q16 44,0 47,2 11,0 12,5 0,0 20,0 40,0 60,0 2015 2016 4q15 4q16

Electricity Heat

bn kWh mln Gcal 147,4 156,7 41,4 45,7 30 60 90 120 150 180 2015 2016 4q15 4q16 117,0 124,7 40,4 45,9 0,0 30,0 60,0 90,0 120,0 2015 2016 4q15 4q16 +3% +6% +10% +10% +7% +14% +14%

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2016 IFRS RESULTS

806 820 267 289 400 800 1200 1600 2000 2015 2016 4q15 4q16 NET SALES TO RUSSIA +2% +8% 184 228 59 67 246 176 229 178 100 200 300 100 200 300 2015 2016 4q15 4q16 VOLUMES AVERAGE PRICE IN EUROPE & OC

GAS SALES

221 215 71 75 3,641 3,816 3,779 3,848 1000 2000 3000 4000 100 200 300 400 2015 2016 4q15 4q16 VOLUMES AVERAGE PRICE IN RUSSIA RR/mcm bcm RR bn

Calculations may diverge due to rounding.

1 Net of value added tax (VAT) 2 OC - Other countries: include LNG sales 3 VAT is not charged on sales 4 Net of custom duties and excise tax

2,166 2,140 735 593 400 800 1200 1600 2000 2015 2016 4q15 4q16 NET SALES TO EUROPE & OC RR bn bcm 40 33 13 11 194 154 182 152 100 200 300 20 40 60 80 100 2015 2016 4q15 4q16 VOLUMES AVERAGE PRICE IN FSU 430 310 138 95 400 800 1200 1600 2000 2015 2016 4q15 4q16 NET SALES TO FSU bcm USD/mcm USD/mcm

1

Russia Europe & OC2 FSU

3,4 3,4

RR bn (1%) (19%) (28%) (31%)

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2016 IFRS RESULTS

OTHER SALES

76 140 50 100 150 200 4q2015 4q2016

Crude oil and gas condensate Electric and heat energy

133 159 30 60 90 120 150 180 4q2015 4q2016

RR bn Calculations may diverge due to rounding.

1 Net of value added tax (VAT), excise tax and custom duties.

Net Sales1

+85% 85% +19% +19% 1,619 1,556 1,498 209 261 412 427 425 482 173 194 199 176 211 218 500 1000 1500 2000 2500 3000 2014 2015 2016 OTHER GAS TRANSPORTATION ELECTRICITY AND HEAT CRUDE OIL AND GAS CONDENSATE REFINED PRODUCTS

RR bn RR bn

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2016 IFRS RESULTS

1,397 1,262 1,641 1,369 475 300 400 800 1200 1600 2000 2013 2014 2015 2016 4q15 4q16

Cash capex

1 Capex breakdown as provided in Management Report

CAPITAL EXPENDITURES

(10 10%) 30 30% (37%) 30% 17% 24% 14% 5% 10% TRANSPORT PRODUCTION OF NATURAL GAS PRODUCTION OF CRUDE OIL AND GAS CONDENSATE REFINING ELECTRICITY AND HEAT OTHER CAPEX

The Group’s 2016 capex breakdown1

43,9 33,2 27,1 20,5 7,4 4,8 10 20 30 40 50 2013 2014 2015 2016 4q15 4q16

USD bn

(24 24%) (19%) (35% 5%)

RUB bn

(17%) (24%)

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2016 IFRS RESULTS

1,397 1,262 1,641 1,369 345 654 390 202 1,742 1,916 2,031 1,571 500 1000 1500 2000 2500 2013 2014 2015 2016 Cash Capital Expenditures Free Cash Flow Operating Cash Flow

FREE CASH FLOW GENERATION

Free Cash Flow generation1 Gazprom self funding2

1 Free Cash Flow = Net Cash from operating activities – Cash CAPEX 2 Net Cash from operating activities /Cash CAPEX

125% 152% 124% 115% 134% 132% 80% 100% 120% 140% 160% 2013 2014 2015 2016 4q15 4q16 100% 1,571 RUB bn

Conse servativ ive financi ancial l polic icy: : 11 year ars s of posit itiv ive e FCF

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2016 IFRS RESULTS 0,36 2,39 3,85 8,97 5,99 7,2 7,2 7,89 7,89 2 4 6 8 10 12 14

2008 2009 2010 2011 2012 2013 2014 2015 2016

RUB/ Share

DIVIDEND PAYOUT

Dividend per share

1 As proposed by the Management Committee 1

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2016 IFRS RESULTS

18% 17% 19% 16% 13% 15% 14% 25% 36% 36% 42% 34% 33% 32% 25% 25% 2013 2014 2015 2016 LESS THAN 1 YEAR 1-2 YEARS 2-5 YEARS MORE THAN 5 YEARS

KEY DEBT METRICS

Debt maturity profile2 Debt breakdown by currency Total and Net Debt Cash & equivalents breakdown by currency

1 Calculated using dollar values of Net debt and EBITDA 2 Excluding promissory notes

RUB 17% USD 46% EUR 34% Other 3% RUB 60% USD 28% EUR 10% Other 2%

1,113 1,651 2,083 1,933 689 1,038 1,359 897 1000 2000 3000 4000 5000 2013 2014 2015 2016 NET DEBT CASH&CASH EQUIVALENTS RUB bn

0,5 0,6 0,9 1,6

0,0 0,3 0,6 0,9 1,2 1,5 NET DEBT/ADJ.EBITDA

1

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2016 IFRS RESULTS

Uniq ique e fundam amentals tals Gas export t grow

• wth

th Diver ersified ified resour urce e base and consumer er pool l Pruden ent t financ ancial ial polic icy, , balanc anced ed divid viden end d polic icy Natura urall lly hedge ged d agains inst t adver verse price e chang nges es by RU RUB exchange ange rate

GAZPROM STRONG FOOTHOLD IN CURRENT MARKET ENVIRONMENT INVESTMENT CASE

Low

• w cost base

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2016 IFRS RESULTS

ADDITIONAL INFORMATION

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2016 IFRS RESULTS

15 RUSSIAN NATURAL GAS BALANCE

Bcm 2015 2015 2016 2016 4Q2015 15 4Q2016 16 Natura tural gas s resou sources rces 694.4 .45 718.2 .20 19 199.2 .20 219.7 .75 Domestic gas production 634.90 640.40 185.68 190.99 Other sources including Central Asian and Azerbaijani gas 25.84 22.97 6.21 6.66 Gas withdrawn from underground storage in Russia, Latvia and Europe 29.62 50.98 6.32 21.23 Decrease in the amount of gas within the gas transportation system 4.10 3.85 0.99 0.87 Natura tural l gas s distrib stribution tion 694.4 .45 718.2 .20 19 199.2 .20 219.7 .75 Domestic consumption 443.67 456.68 134.75 147.19 including needs of the gas transportation system and underground storages 32.28 32.29 11.26 11.22 Gas pumped into underground storages 31.54 28.54 2.73 2.06 Gas for LNG production 14.54 14.70 3.91 4.24 Foreign supplies 163.00 181.68 44.48 53.64 including Baltic states 3.56 2.34 1.15 1.11 FSU supplies 37.58 32.11 12.28 10.81 Increase in the amount of gas within the gas transportation system 4.12 4.49 1.05 1.82

Source: Company Operating Data

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2016 IFRS RESULTS

THANK YOU!