2Q2017 IFRS RESULTS AUGUST 30, 2017 1 2Q2017 IFRS RESULTS - - PowerPoint PPT Presentation

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2Q2017 IFRS RESULTS

2Q2017 IFRS RESULTS

AUGUST 30, 2017

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2Q2017 IFRS RESULTS

Alexander Ivannikov

Head of Department

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2Q2017 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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2Q2017 IFRS RESULTS

45.6 49.8 43.8 48.8 20 40 60 2q16 2q17 BRENT URALS

HIGHLIGHTS

Source: Company data, Bloomberg, Bank of Russia website

1 OC - Other countries: including LNG sales

65.9 57.1 64.3 59.1 20 40 60 80 2q16 2q17 USD/RUB AVERAGE RATE USD/RUB AS OF THE END OF PERIOD USD/RUB USD/bbl

Market environment in 2q16 vs 2q17

Apr. . 2017 2017

• Nord Stream 2 financing agreements signed with ENGIE, OMV,

Shell, Uniper and Wintershall

• Gazprom placed GBP 850 mn Eurobonds

May y 2017 2017

• Construction of TurkStream’s offshore section commenced

Jun. . 2017 2017

• Pipe-laying of TurkStream gas pipeline in deep water commenced
• AGM approves RUB 8.0397 dividends per share (+2% YoY)

Jul. 2017 2017

• Supplementary Agreement signed with China to supply gas via

Power of Siberia starting December 20, 2019

• Gazprom placed CHF 500 mn Eurobonds

Aug. 2017 2017

• First foundation laid for Amur GPP
• +40% to access of OPAL pipeline
• Strong gas export volumes to Europe – 118 bcm from 1 Jan to

15 Aug (+12% YoY)

• Daily record of August gas transportation volumes to Europe

(590 mncm per day)

USD/mcm 172.6 192.4 50 100 150 200 2q16 2q17 AVERAGE GAZPROM GAS SALES PRICE IN EUROPE & OC 3,739 3,646 1,000 2,000 3,000 4,000 2q16 2q17 AVERAGE PRICE IN RUSSIA RUB/mcm

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2Q2017 IFRS RESULTS 1,395 349 349 48 48 330 330 341 341 11 11 2,292

• 300

300 600 900 1,200 1,500 1,800 2,100 2,400

Total net sales

• Adj. EBITDA

Net profit Capex Operating CF FCF Net debt

1 2 3 +138% +138% 4

1 EBITDA adjusted for changes in impairment provisions 2 Profit for the period attributed to shareholders of PJSC Gazprom 3 Cash capital expenditures 4 Compared to Net debt as of December 31, 2016

SUMMARY OF 2Q17 IFRS FINANCIAL RESULTS

+5% +33% +33% +19% 19% +40 40% 2q16 vs 2q17 RUB bn

RUB bn

(80%) +15% +15%

*In order to reflect the effects of the bank deposits (reported as part of Other current and non-current assets)

Adjustments needed for analytical purposes*

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2Q2017 IFRS RESULTS

11.3 12.1 12.5 11.9 12.1 0.0 5.0 10.0 2q16 3q16 4q16 1q17 2q17 3.7 3.7 4.2 4.1 3.9 0.0 1.0 2.0 3.0 4.0 5.0 2q16 3q16 4q16 1q17 2q17

Crude oil Gas condensate

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

mt mt +4 +4% +8%

PRODUCTION

33.7 35.2 45.7 44.8 35.2 10 20 30 40 50 2q16 3q16 4q16 1q17 2q17 17.7 10.6 45.9 49.5 21.5 20 40 60 2q16 3q16 4q16 1q17 2q17

Electricity Heat

bn kWh mn Gcal +5% +21 +21% 83.9 89.0 134.1 127.2 106.1 0.0 50.0 100.0 150.0 2q16 3q16 4q16 1q17 2q17

Natural gas

bcm +26 +26%

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2Q2017 IFRS RESULTS

34 30 75 82 42 3,739 3,677 3,848 3,820 3,646 1,000 2,000 3,000 4,000 25 50 75 100 2q16 3q16 4q16 1q17 2q17 VOLUMES AVERAGE PRICE IN RUSSIA 51 52 67 66 54 173 159 178 191 192 50 100 150 200 20 40 60 80 2q16 3q16 4q16 1q17 2q17 VOLUMES AVERAGE PRICE IN EUROPE & OC

GAS SALES

129 110 289 312 154 100 200 300 2q16 3q16 4q16 1q17 2q17 NET SALES TO RUSSIA RUB/mcm bcm RUB bn

Calculations may differ due to rounding.

1 Net of value added tax (VAT) 2 OC - other countries: including LNG sales 3 VAT is not charged on export sales 4 Net of custom duties and excise tax on gas exports

465 418 593 594 460 200 400 600 2q16 3q16 4q16 1q17 2q17 NET SALES TO EUROPE & OC RUB bn bcm 6 6 11 13 6 151 141 152 155 160 50 100 150 5 10 15 2q16 3q16 4q16 1q17 2q17 VOLUMES AVERAGE PRICE IN FSU 50 48 95 102 49 50 100 2q16 3q16 4q16 1q17 2q17 NET SALES TO FSU bcm USD/mcm USD/mcm

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Russia Europe & OC2 FSU

3,4 3,4

RUB bn +19 19% (1%) (2%) %)

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2Q2017 IFRS RESULTS

34% 59% 7%

OIL AND ENERGY BUSINESS

Calculations may differ due to rounding.

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

Net Sales1

457 498 542 533 522 200 400 600 2q16 3q16 4q16 1q17 2q17 89 86 159 160 103 50 100 150 200 2q16 3q16 4q16 1q17 2q17 RUB bn +16% 16%

2Q16 16 2Q17

+14% 14%

Electricity and heat Crude oil and gas condensate; refined products

37% 56% 7%

CRUDE OIL AND GAS CONDENSATE; REFINED PRODUCTS GAS BUSINESS AND OTHER REVENUES ELECTRICITY AND HEAT RUB bn

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2Q2017 IFRS RESULTS

1,262 1,641 1,369 724 652 400 800 1200 1600 2014 2015 2016 6M16 6M17

Cash Capex

1 CapEx breakdown as provided in Management Report

CAPITAL EXPENDITURES

+30% (17%) (10% 10%) RUB bn 32% 32% 13% 18% 3% 2% TRANSPORT PRODUCTION OF CRUDE OIL AND GAS CONDENSATE PRODUCTION, DISTRIBUTION AND STORAGE OF NATURAL GAS REFINING ELECTRICITY AND HEAT OTHER CAPEX

The Group’s 1H17 Capex breakdown1

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2Q2017 IFRS RESULTS

According to Gazprom 2q17 IFRS report1:

BANK DEPOSITS

Key feat atur ures es of bank k deposit its2:

• Early withdrawal clause
• Deposit term of over 3 months
• Are NOT included in Сash and cash equivalents

Impac act of substan anti tial al increas rease e in bank depos

• sit

its:

• Decrease in Cash and cash equivalents
• Increase in Net Debt and Net Debt/EBITDA
• Reduction in Cash flows from operating activities3

(changes in working capital)

• Decrease in Free cash flow3

127 127 144 144 472 472 503 503 5 42 42 41 41 1 200 400 600

2015 2016 1q17 2q17

LT DEPOSITS ST DEPOSITS RUB bn

513 513 186 186 132 132

1 Source: Gazprom 2Q17 IFRS report, page 18 2 Reported as a part of Other current assets and Other non-current assets

In 2q17 Gaz azprom

• m substant

tantia ially lly increase ased d bank deposit

• sits

s volum lumes es Increase in LT and ST bank deposits is aimed at improving the efficiency of liquidity management

3 Affected by ST deposits

504 04

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2Q2017 IFRS RESULTS

KEY DEBT METRICS

2Q2017 adjusted Net Debt structure2 Total Debt breakdown by currency Total Debt and Net Debt Cash & equivalents breakdown by currency

1,113 1,651 2,083 1,933 2,292 689 1,038 1,359 897 780 0.5 0.6 0.9 1.6 1.6 0.0 0.5 1.0 1.5 2,000 4,000 6,000 2013 2014 2015 2016 2q17 NET DEBT CASH & EQUIVALENTS NET DEBT/ADJ.EBITDA LTM RUB bn

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1 Calculated using dollar values of Net debt and EBITDA 2 Net Debt adjusted for the bank deposits reported as a part of Other current and non-current assets

RUB 18% USD 42% EUR 37% Other 3% RUB 40% USD 31% EUR 21% Other 8%

3,072

• 780

2,292

• 503
• 1

1,788 1.6 1.3 0.5 1 1.5 500 1,000 1,500 2,000 2,500 3,000 3,500 Total Debt Cash & equivalents Net Debt reported ST deposits LT deposits Net Debt adjusted Adj.Net Debt/Adj.EBITDA LTM RUB bn x

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2Q2017 IFRS RESULTS

ADDITIONAL INFORMATION

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2Q2017 IFRS RESULTS

13 RUSSIAN NATURAL GAS BALANCE

Bcm 2Q2016 2Q2017 1H2016 1H2017

Natur ural gas resou

• urces

es 146 146.3 169.8 .8 349.3 .3 387.1 .1 Domestic gas production 138.3 160.4 308.0 342.6 Other sources. including gas from Central Asia and Azerbaijan 5.3 6.1 11.0 12.4 Gas from underground storage facilities in Russia, Latvia and Europe 1.7 2.2 28.4 30.1 Decrease in gas volumes of within the gas transportation system 1.0 1.1 2.0 1.9 Natur ural gas distr istrib ibution ution 146.3 .3 169.8 .8 349.3 .3 387.1 .1 Domestic consumption 85.4 94.4 228.4 243.3 including needs of the gas transportation system and underground storage facilities 5.6 7.5 14.4 18.0 Gas pumped into underground storage facilities 10.0 19.8 10.0 20.0 Gas for LNG production 3.5 3.6 7.1 7.8 Foreign supplies 41.1 45.2 86.1 97.5 FSU supplies 5.5 5.8 15.8 16.8 Increase in gas volumes of within the gas transportation system 0.8 1.0 1.9 1.7

Source: Company Operating Data

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2Q2017 IFRS RESULTS

THANK YOU!