Results April 28 th 2011 0 Disclaimers This presentation has been - - PowerPoint PPT Presentation

2010 IFRS Consolidated Financial Results April 28th 2011

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Disclaimers

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• 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. 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

• perations, 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

• perates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of

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Andrey Kruglov

Deputy Chairman of Gazprom Management Committee Head of the Department for Finance and Economics

Elena Vasilieva

Deputy Chairman of Gazprom Management Committee Chief Accountant

Today’s Speakers

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2010 Highlights

• Profit for the period(1)

–

RR 969 bn in 2010 up 24 % compared to RR 780 bn in 2009

–

RR 315 bn in 4Q2010 up 2% compared to RR 309 bn in 4Q2009

• Continued free cash flow(2) generation

–

RR 417 bn in 2010 compared to RR 102 bn in 2009

–

RR 47 bn free cash flow positive in 4Q2010

• Stable operating cash flow generation

–

RR 1,460 bn in 2010 up 63 % compared to RR 897 bn in 2009

–

RR 442 bn in 4Q2010 up 42 % compared to RR 310 bn in 4Q2009

• Leverage easing
• Net Debt decreased by 37% as of the end of 2010 due to decrease in short-term loans, as well as in result of deconsolidation of banking subsidiaries of

the Group in 2010 and an increase in cash and cash equivalents

• Net Debt/Adj.EBITDA LTM dropped to 0.64 x as of the end of 2010 compared to 1.26 x as of the end of 2009

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2010 IFRS Consolidated Financial Results

• 1. Profit for the period attributed to owners of OAO Gazprom
• 2. Free cash flow is calculated as Net cash provided by operating activities minus Capital expenditures (except capitalised interest)

4

9,0

7,8 8,3

9,4

8,5

8,7 5,7 5,4 5,6 6,0 5,9 5,9 122,6 122,5 122,5 124,9 129,0 132,5

160,8 208,6 230,3 230,1 241,4 269,6

50 100 150 200 250 300 0,0 50,0 100,0 150,0 200,0 250,0

• Dec. 31, 2005
• Dec. 31, 2006
• Dec. 31, 2007
• Dec. 31, 2008
• Dec. 31, 2009
• Dec. 31, 2010

$ bn bboe Natural Gas Gas Condensate Crude Oil Combined Reserves Present Value, $ bn

Proved + Probable Reserves(1) Dynamics

2010 IFRS Consolidated Financial Results

• 1. Gazprom Group Proved and Probable reserves evaluated in accordance with PRMS (formerly SPE) standards

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Hydrocarbon Production

143 144 118 104 143

50 100 150

4Q2009 1Q2010 2Q2010 3Q2010 4Q2010 8.0 7.8 8.0 8.2 8.0 5 10 15 4Q2009 1Q2010 2Q2010 3Q2010 4Q2010 2.7 2.8 2.8 2.8 2.9 2 4 4Q2009 1Q2010 2Q2010 3Q2010 4Q2010

0%

Natural Gas Crude Oil Gas Condensate

bcm mn ton mn ton

+37.5%

• 2.4%

0% +7.4% +3.6%

2010 IFRS Consolidated Financial Results

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Russia Natural Gas Balance

bcm 2010 2009 4Q2010 4Q2009

Natural gas resources

733.6 654.2 207.8 203.7

Indigenous gas production

650.8 582.9 181.8 177.3

Other sources including Central Asian and Azerbaijani gas

39.5 38.1 10.7 6.3

Gas withdrawn from underground storage in Russia, Latvia and Europe

43.2 33.1 15.3 20.1

Decrease in the amount of gas within the gas transportation system

0.2

Natural gas distribution

733.6 654.2 207.8 203.7

Domestic consumption

460.3 432.2 138.4 134.3

including needs of the gas transportation system and UGS

43.9 36.3 12.9 12.8

Gas pumped into UGS in Russia, Latvia and Europe

52.4 18.7 3.3 3.3

Gas for LNG production (Sakhalin-2)

13.5 7.2 3.5 2.9

FSU supplies (incl. North Osetia and Georgia)

64.4 50.7 21.4 18.3

Foreign supplies

142.9 145.0 41.1 44.6

including Baltic states

4.3 4.3 1.6 1.6

Increase in the amount of gas within the gas transportation system

0.3 0.3

2010 IFRS Consolidated Financial Results

Source: Operating data

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20 17 15 15 23 183 233 222 229 238 100 200 300 25 50 75

4Q2009 1Q2010 2Q2010 3Q2010 4Q2010 Sales Volume Average Price

90 103 48 41 86 2,324 1,972 2,272 2,296 2,304 600 1 200 1 800 2 400 60 120 180 240

4Q2009 1Q2010 2Q2010 3Q2010 4Q2010

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Gas Sales

Net Sales Y-o-Y

177 233 111 94 199

50 100 150 200 250 4Q2009 1Q2010 2Q2010 3Q2010 4Q2010

RR bn

326 280 286 240 246

100 200 300 4Q2009 1Q2010 2Q2010 3Q2010 4Q2010

84 94 94 102 160

25 50 75 100 4Q2009 1Q2010 2Q2010 3Q2010 4Q2010

Russia Europe and Other Countries(1) FSU

RR bn RR bn

90 % 12 % 16 %

Calculations may diverge due to rounding.

• 1. Other countries include LNG sales to Japan, Korea, India, Taiwan and China

Russia

bcm RR/mcm

40 45 43 34 31 326 275 287 285 310

100 200 300 30 60 90 120 4Q2009 1Q2010 2Q2010 3Q2010 4Q2010

bcm bcm $/mcm $/mcm

FSU

• 4 %

15 %

• 11%

Volumes and Prices Y-o-Y

Europe and Other Countries(1)

2010 IFRS Consolidated Financial Results

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31% 5% 5% 52% 7%

Belarus Moldova Kazakhstan Ukraine Others

29% 7% 7% 2% 19% 15% 20%

Power generation Metallurgy Agro chemistry Cement industry Households Utility sector Other

Source: Company data

Structure of Gazprom Group Gas Sales by Markets

2010 IFRS Consolidated Financial Results

Europe and other countries Gas Sales FSU Gas Sales Domestic Gas Sales

24% 7% 6% 12% 8% 9% 34%

Germany UK France Turkey Poland Italy Others

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267 (+14%) 169 (+31%)

20 (+11%)

96 (+50%)

27 (+41%) 27 (+28%)

Changes in Sales and Net Gain from Trading Activity

4.2 6 .3

2009 2010

Increase in Net gain from trading activity Factors of Net Sales Growth

RR bn (%) RR bn

+50%

Net Sales of Gas

Increase in Net sales of Gas was driven mostly by RR 134 bn increase in sales to Russia (due to price increase) and RR 140 bn increase in sales to FSU (due to increase in volumes).

Sales of refined products

Increase in sales of Refined products was driven mostly by growth in the world prices and volumes

• f refined products sold, and by Gazprom Neft’s

acquisition of new assets in 2009 .

Sales of crude oil and gas condensate

Sales of Crude oil and gas condensate grew mostly as a result of increase in oil and condensate prices and, as well as increase in gas condensate volumes sold in 2010.

Gas transportation sales Total gas transportation sales grew due to increase in volumes of gas transported for independent producers in 2010. Electric and heat energy sales

Electric and heat energy sales grew in 2010 mainly because of TGC-1 consolidation and increase in sales of other energy companies of the Group .

2010 IFRS Consolidated Financial Results

Total increase 606 (+20%)

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• 9%

9% 10% 15% 18% 18% 31% 34% 34% 39% 129%

• 15%

5% 25% 45% 65% 85% 105% 125%

Purchased gas The rest of the OpEx Depreciation Repairs and maintenance Transit of gas, oil and refined products Taxes other than income Purchased oil Staff costs Cost of goods for resale, including refined products Electricity and heating expenses Exchange rate differences on operating items

Operating Expenses

The growth in prices for oil and oil products Mostly the increase reflects pension expense, consolidation of TGC-1 and acquisition of new subsidiaries by Gazprom neft Group, as well as salary indexation The increase relates to the production of crude oil and increase of average world oil prices, that resulted to increase of tax rate The increase primary relates to the growth in the fixed asset base Due to increase in world oil prices Is mainly explained by decrease of prices and volume of gas purchased out

• f Russian Federation

The change was primarily driven by depreciation of RUR against USD by 1% and appreciation of RUR against EUR by 7% in 2010 comparing to depreciation of RUR against USD and EUR by 3% and 5% in 2009 respectively

Was caused by the increase of volume of repair services rendered by third parties to the Group The growth relates to increased costs of gas transportation through the territory of Ukraine The increase mainly resulted from the increase of electricity consumption and increase of tariffs. The increase also reflects the consolidation of TGC-1

The rest of the OpEx include Materials, Transportation services, Social expenses, Research and development expenses, Rental expenses, Insurance expenses , Processing services and Other.

2010 IFRS Consolidated Financial Results

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Financial Effect from One-off and Other Items

77 3 77 3

• 20

20 60 100

Total positive effect

• f

RR 160 bn Total positive effect

• f

RR 123 bn

Effect on Profit for the Period in 2010 Effect on Profit for the Period in 2009

Purchase of stake in Gazprom Neft Gain from swap of assets transaction Net financial income Share of net income of associated companies Gains on disposal of available for sale financial assets Gain from disposal of stake in NOVATEK

14 105

• 66

63 6

• 70
• 30

10 50 90 130

Purchase of stake in Gazprom Neft Gain from disposal of stake in NOVATEK Gain from swap of assets transaction Net financial expense Share of net income of associated companies Gains on disposal of available for sale financial assets

RR bn RR bn

2010 IFRS Consolidated Financial Results

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Gazprom’s Profitability Vs Oil&Gas Majors

2010 EBITDA and Margin

• 1%

10% 13% 16% 20% 20% 21% 28% 38% 54%

• 20%

0% 20% 40% 60%

• 5

10 25 40 55 70 EBITDA EBITDA Margin

• 1%

5% 6% 8% 9% 10% 10% 16% 28% 30%

• 20%

0% 20% 40%

• 5

10 25 40 55 70 Net Profit Net Profit Margin

2010 Net Profit and Margin

Sales EBITDA(2) Net Profit(3) Gazprom 5Y CAGR 11% 6% 9% Oil&Gas Majors(1) Average 5Y CAGR 8% 3% 3%

• 0,2x

0,7x 0,8x 0,8x 0,9x 1,1x 1,2x 1,4x 1,4x 2,1x

Comparative Net Profit dynamics from 2006 through 2010 Comparative 5Y CAGR from 2006 through 2010

Source: Gazprom data, Bloomberg 1. Oil&Gas Majors are top 10 companies on market capitalization as of April 26th ,2011. 2. For Gazprom adjusted EBITDA is defined as operating profit before depreciation and changes in assets impairment provision (impairment of accounts receivable and prepayments, assets under construction, investments and other long-term assets, inventory) 3. Net Profit attributedto shareholders

$ bn $ bn 2010 IFRS Consolidated Financial Results

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34% 32% 26% 14% 13% 13% 10% 13% 19% 20% 33% 42% 35% 35% 31% 31% 2007 2008 2009 2010

Less that 1 year 1-2 years 2-5 years More that 5 years

1.7 0.9 1.5 0.97 1.4 0.7 1.3 0.64 2007 2008 2009 2010

Total Debt / Adj. EBITDA Net Debt / Adj. EBITDA

1,229 1,018 1,372 871 282 347 254 444 2007 2008 2009 2010

Net Debt Cash&Cash equivalents and certain restricted cash

Debt Overview

RR bn

Total Debt (1) Credit metrics

1.6x

1. Total debt: short-term borrowings and current portion of long-term borrowings, short-term promissory notes payable, long-term borrowings, long-term promissory notes payable and restructured tax liabilities 2. Excluding promissory notes.

2010 IFRS Consolidated Financial Results

1,315 1,626 1,366 1,511

Debt maturity profile (2)

1 3 5 7 9 2003 2004 2005 2006 2007 2008 2009 2010

Weighted average fixed interest rate Weighted average floating interest rate Weighted average interest rate

Cost of debt financing(2),%

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Inflow Outflow Net cash provided by operating activities Capital expenditures Interest received Interest paid Proceeds from associated undertakings Acquisitions and investments in AFS Increase in borrowings Repayment of borrowings Dividends paid Other

Inflow Outflow

Net cash provided by operating activities Capital expenditures Interest received Interest paid Proceeds from sale of interest in susidiaries Acquisitions and investments in AFS Proceeds from associated undertakings Repayment of borrowings Increase in borrowings Dividends paid

1,460 92 94 1,043 96 107 347 55 897 77 573 796 104 250 499 17

2010 2009

RR 1,883 bn RR 1,692 bn RR 1,680 bn RR 1,774 bn RR 191 bn RR 94 bn

Cash Inflow and Outflow

2010 IFRS Consolidated Financial Results

224 32

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1Q2011 Gas Sales and Production Dynamics

[…]

Gas sales volumes to Western Europe Gas sales volumes to FSU Gas sales volumes to Russia Gas Production

bcm bcm bcm bcm

2010 IFRS Consolidated Financial Results

4 8 12

Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11

Monthly Gas Exports to FSU 4 year average 4 8 12 16 20

Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11

Monthly Gas Exports to Western Europe 4 year average 8 16 24 32 40 48

Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11

Monthly Gas Sales in Russia 4 year average 8 16 24 32 40 48

Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11

Gazprom Monthly Gas Production 4 year average

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Summary



Recovery of Gazprom Group gas production



Increase of Gazprom Group crude oil production and electric&heat generation



Rebound of our sales volumes and prices



Growth of our revenue and EBITDA



Debt burden decrease



Significant free cash flow generation

Strong growth of Russian economy in 2010 Company shows strong financial results in 4Q2010 2010 IFRS Consolidated Financial Results