OJSC Severneftegazprom Balance Sheet 2010 (English) by OJSC Severneftegazprom

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

The following text in English is a translation from the Russian original version. While every effort is made to ensure that the translation is accurate, there may nevertheless be differences of meaning between this and the original Russian version. Therefore, please, note that the following translation is provided for information only and is not intended for any other use.

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

ACCOUNTING BALANCE SHEET as of 31.12.2010 Codes Form â&#x201E;&#x2013;1 as per OKUD

Company:

Severneftegazprom

0710001

Date (year, month, date)

2010 12 31

As per OKPO

48 731 500

Identification Taxpayer number

INN

8912 001 990

Type of activity Natural Gas and Gas Condensate Production

As per OKVED

11.10.20

Form of incorporation / form of property Open Joint-Stock Company/joint private

As per OKOPF/OKFS

Unit of measurement: thous. RUB

As per OKEI

47/34 384

Location (address) RF, 629380, Tyumen region, Yamalo Nenetsky autohomous district, settlement Krasnoselkup, Lenina street, 22 ASSETS

Indicator code

As of reporting year beginning

As of reporting period end

I. Non-current assets Intangible assets

110

39,948

9,286

111

organizational expenses

112

goodwill

113

Fixed assets

120

27,004,275

59,613,193

land plots and land use facilities

121

buildings, structures, machinery and equipment

including: Patents, licenses, trademarks (service trademarks) or other rights and assets similar thereto

including:

122

26,835,097

59,458,816

Construction in progress

130

35,545,807

1,591,376

Income-bearing placements in inventory items

135

Long-term financial investments

140

investments in subsidiaries

141

investments in affiliated companies

142

investments in other entities

including:

143

loans extended to entities for a period exceeding 12 months

144

Deferred tax assets

145

2,274,797

1,148,650

Other non-current assets

150

1,118,681

1,141,433

VAT on purchased values

151

Total for Section I

190

65,983,508

63,503,938

including:

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

II. Current assets Inventory stocks

210

1,269,837

1,395,678

feedstock, materials and other similar values

211

1,144,759

1,079,128

rearers and fatteners

212

construction in progress costs

213

finished products and goods for resale

214

4,729

5,088

dispatched goods

215

deferred expenses

216

120,349

311,462

other stocks and costs

217

VAT on purchased values

220

33,243

5,926

Accounts receivable (payments expected in more than 12 months after the reporting date)

230

570,114

buyers and customers

231

bills receivable

232

prepayments made

234

other accounts receivable

235

570,114

240

5,374,368

6,907,017

241

2,124,464

5,634,799

242

244

prepayments made

245

1,225,744

247,339

other accounts receivable

246

2,024,160

1,024,879

Short-term financial investment

250

13,571,828

17,137,220

loans extended to entities for a period of less than 12 months

251

Cash assets

260

14,303

190,585

cash in hand

261

current accounts

262

13,497

8,050

foreign currency accounts

263

743

182,472

other cash assets

264

Other current assets

270

1,630

1,625

including:

Accounts receivable (payments expected within 12 months after the reporting date) including: buyers and customers bills receivable foundersâ&#x20AC;&#x; outstanding authorized capital

contributions

the

including:

Total for Section II

290

20,265,209

26,208,165

BALANCE

300

86,248,717

89,712,103

LIABILITIES

Indicator code

As of reporting year beginning

As of reporting period end

III. Capital and reserves Authorized capital

410

Own shares bought from shareholders

411

Additional capital

420

25,185,521

Translation Note

667

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

Reserve capital

430

reserves set up under applicable laws

431

reserves set up under foundation documents

432

Retained profits (uncovered loss)

470

( 2,069,525)

17,284,193

State-backed social fund

480

Total for Section III

490

23,116,663

42,470,414

Loans and credits

510

bank credits to be repaid in more than 12 months after the reporting date

511

loans to be repaid in more than 12 months after the reporting date

512

Deferred tax liabilities

515

1,940,440

3,738,715

Other long-term liabilities

520

bills payable

522

outstanding investment contribution

523

Total for Section IV

590

1,940,440

3,738,715

Loans and credits

610

59,590,301

40,849,518

bank credits to be repaid within 12 months of the reporting date

611

41,233,713

40,849,518

loans to be repaid within 12 months of the reporting date

612

613

18,356,588

620

1,601,313

2,653,456

buyers and customers

621

469,140

362,203

outstanding payroll payments

622

28,265

1,041

623

732

outstanding Đž taxes and dues

624

1,039,843

2,277,179

other payables, including:

625

63,333

13,033

bills payable

626

prepayments received

627

other payables

628

63,333

13,033

Income payable to members (founders)

630

Deferred revenue

640

Expenses and provisions

650

Other short-term liabilities

660

690

61,191,614

43,502,974

700

86,248,717

89,712,103

including:

IV. Long-term liabilities

including:

V. Short-term liabilities

current portion of long-term loans and credits Accounts payable including:

outstanding payments to public extrabudgetary funds

Total for Section V BALANCE

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

INFORMATION NOTE ON VALUABLES BOOKED ON OFF-BALANCE ACCOUNT

Indicator name

Indicator code

As of reporting year beginning

As of reporting period end

Leased fixed assets

910

85,202

261,448

including leasing

911

Abandoned wells at license areas

915

Goods and materials accepted for custody

920

4,854

Materials accepted for processing

921

Goods accepted for commission

930

Equipment accepted for installation

931

Indebtedness of insolvent debtors written off to losses

940

517

563

Expenses under construction contracts as of commencement of the contract performance

946

Securities received for obligations and payments

950

Securities given for obligations and payments

960

Housing stock depreciation

970

Land improvement and other similar facilities depreciation

980

Non-material assets granted for use

990

Pledged sale proceeds cost under export contracts

999

Acting General Director [Signature]

A.A. Dorofeev

(Signature)

Chief Accountant

[Signature]

T.M. Rasko

(Signature)

/Seal/: RUSSIAN FEDERATION, TYUMEN REGION THE SETTLEMENT OF KRASNOSELKUP OPEN JOINT-STOCK COMPANY â&#x20AC;&#x153;SEVERNEFTEGAZPROMâ&#x20AC;? OGRN 1028900699035

March 3, 2011

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

PROFIT AND LOSS STATEMENTS for 2010 Codes Form â&#x201E;&#x2013;2 as per OKUD

0710002

Date (year, month, date) Company:

Severneftegazprom

2010 12 31

As per OKPO

48 731 500

Identification Taxpayer number

INN

8912 001 990

Type of activity Natural Gas and Gas Condensate Production

As per OKVED

11.10.20

Form of incorporation / form of property Open Joint-Stock Company/joint private

As per OKOPF/OKFS

Unit of measurement: thous. RUB

As per OKEI

47/34 384

Indicator For reporting period

For corresponding period of previous

010

36,901,899

16,890,504

011

36,901,899

16,890,504

012

013

014

015

016

017

other

018

Cost of sold goods, products, works and services

020

( 11,049,992)

( 9,432,404)

gas

021

( 11,049,992)

( 9,432,404)

gas condensate

022

023

024

025

026

027

other

028

Gross profit

029

25,851,907

7,458,100

Business expenses

030

Administrative expenses

040

( 957,540)

( 717,142)

Sales profit (loss)

050

24,894,367

6,740,958

060

651,297

1,026,230

Description

Code

1 Profit and loss in ordinary activities Proceeds (net) from sales of goods, products, works, services (less VAT), excises and similar compulsory payments including proceeds from sales of: gas

including sold:

Other income and expenditure Interest receivable

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

Interest payable

070

( 1,626,896)

( 2,381,592)

Participation capital

080

Reorganization expenses

085

Other income

105

19,375,067

42,412,503

Other expenses

110

( 18, 964,051)

( 45,912,266)

Profit (loss) before tax

140

24,329,784

1,885,833

Deferred tax assets

141

( 1,027,039)

( 334,827)

Deferred tax liabilities

142

( 1,798,763)

( 109,112)

Current profit tax

150

( 2,051,544)

Previous profit tax

153

Other profit cost

156

( 98,687)

( 18,141)

Net profit (loss) of the reporting period

190

19,353,751

1,423,753

Constant tax liabilities (assets)

200

11,389

66,772

Basic earnings (loss) per share

201

Diluted profit (loss) per share

202

FOR REFERENCE ONLY

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

SPECIFICATION OF SOME PROFITS AND LOSSES For correspo nding period of previous

For reporting period

Indicator

Description

Code

Profit

Loss

Profit

Loss

Fees, fines and forfeits admitted or determined by a court decision (arbitration court) on their recovery

210

205

Profit (loss) of the retained periods

220

277,540

2,667

2,742

1,697

Compensation for damages caused by failure or improper fulfillment of obligations

230

474

7,623

240 Foreign currency exchange rate difference

7,751,578 5,328,502

1,477,447

118

17,199,22 20,026,20 9 9

Withholdings on Revaluation reserves

250

Write-off of accounts receivable and accounts payable with expired period of limitations

260

190

100

115

Restoration of Revaluation reserves

270

Acting General Director [Signature]

A.A. Dorofeev

(Signature)

Chief Accountant

[Signature]

T.M. Rasko

(Signature)

/Seal/: RUSSIAN FEDERATION, TYUMEN REGION THE SETTLEMENT OF KRASNOSELKUP OPEN JOINT-STOCK COMPANY “SEVERNEFTEGAZPROM” OGRN 1028900699035

March 3, 2011

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

Statement of changes in equity for 2010

CODES Form No. 3 according to OKUD

0710003

Date (year, month, day)

2010-12-31

Company: OJSC Severneftegazprom

according to OKPO

Taxpayer Identification Number

Indices

47 / 34

according to OKEI

384

Balance as of December, 31 of the year before the previous year

Changes in Equity Authorized capital

Incremental capital

Code

11.10.20

according to OKOPF /OKFS

Unit of measurement: thousand roubles I.

8912001990

according to OKVED

Open Joint-Stock Company / Joint Private and Foreign Ownership

Description

48 731500

INN

Activity Production of natural gas and gas condensate Organizational and legal form/form of ownership

4 615

Reserve Undistributed Public social capital profits (outstanding services fund losses)

23,546,071

6 -

Total

(3,334,544)

8 -

20,212,142

2009 (the previous year) Changes in reporting policies

Results of revaluation of fixed assets

Other adjustments

Balance as of January, 1 of the previous year

Results of foreign currency translation

Net profit

1,423,753

Dividends

Allocation to reserve fund

Increase in capital value due to:

1,639,450

additional share issue

1,639,450

increase of par value

reorganization of the legal entity

other operations

Decrease in capital value due to:

decrease in par value

decrease in number of shares

reorganization of the legal entity

other operations

Balance as of December, 31 of the previous year

667

615

(158,734)

23,546,071 -

25,185,521

(3,493,278) X

(158,734) -

20,053,408

1,423,753

- (2,069,525)

1,639,502 1,639,502 -

23,116,663

2010 (reporting year) Changes in reporting policies

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

Results of revaluation of fixed assets

Balance as of January, 1 of the reporting year

100

Results of foreign currency translation

101

Net profit

102

Dividends

103

Allocation to reserve fund

110

Increase in capital value due to:

120

additional share issue

121

increase of par value

122

reorganization of the legal entity

123

other operations

125

Decrease in capital value due to:

130

decrease in par value

131

decrease in shares number

132

reorganization of the legal entity

133

other operations

135

Balance as of December, 31 of the reporting year

140

667

25,185,521

17,284,193

667

25,185,521 -

(2,069,525)

23,116,663

19,353,751

(33)

33 -

42,470,414

II. Reserves Indices Description

Code

Balance

Received

Used

Balance

Reserves, formed in accordance with the legislation: Reserve capital

151

Data of the previous year

152

Data of the reporting year

153

Other reserves

154

Data of the previous year

155

Data of the reporting year

156

Reserves, formed in accordance with the constituent documents: Reserve capital

157

Data of the previous year

158

Data of the reporting year

159

Other reserves

160

Data of the previous year

161

Data of the reporting year

162

Assessed reserves:

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

Reserves for doubtful debt

163

Data of the previous year

164

Data of the reporting year

165

Reserves for devaluation of financial investments

166

Data of the previous year

167

Data of the reporting year

168

Reserves for depreciation of tangible assets

169

Data of the previous year

170

Data of the reporting year

171

Other reserves

172

Data of the previous year

173

Data of the reporting year

174

Reserves for deferred expenses: For deferred pay of employeesâ&#x20AC;&#x; vacation

175

Data of the previous year

176

Data of the reporting year

177

For annual longevity pay

178

Data of the previous year

179

Data of the reporting year

180

Year-end bonus pay

181

Data of the previous year

182

Data of the reporting year

183

For repairs of fixed assets

184

Data of the previous year

185

Data of the reporting year

186

For future warranty repairs, goods and works service

187

Data of the previous year

188

Data of the reporting year

189

Reserves for contingencies

190

Data of the previous year

191

Data of the reporting year

192

Other reserves

193

Data of the previous year

194

Data of the reporting year

195

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

References Indices

Balance as of the beginning of the reporting year

Description

Code

1)Net assets

Profit

Balance as of the end of the reporting year

Loss

Profit

Loss

200

23,116,663

42,470,414

From budget

From extra-budgetary funds

For the reporting year

For the previous year

For the reporting year

For the previous year

2)Received for: expenses on regular activities total

210

220

including:

capital investment in noncurrent assets including:

Acting General Director [Signature]

A.A. Dorofeev

(Signature)

Chief Accountant

[Signature]

T.M. Rasko

(Signature)

/Seal/: RUSSIAN FEDERATION, TYUMEN REGION THE SETTLEMENT OF KRASNOSELKUP OPEN JOINT-STOCK COMPANY “SEVERNEFTEGAZPROM” OGRN 1028900699035

March 3, 2011

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

CASH FLOW STATEMENTS for 2010 CODES Form No. 3 according to OKUD Date (year, month, day) Company: OJSC Severneftegazprom

according to OKPO

Taxpayer Identification Number

INN

Activity Production of natural gas and gas condensate Organizational and legal form/form of ownership Open Joint-Stock Company / Joint Private and Foreign Ownership

according to OKVED according to OKOPF /OKFS

Unit of measurement thousand roubles Indices Description 1 Cash balance as of the beginning of the reporting year

0710004 2010-12-31 48 731 500 8912 001 990 11.10.20 47 / 34

according to OKEI

384

For the reporting period

For the same period of the previous year

Code 2 100

14,305

2,735,259

Operating cash flow Cash received - total

110

53,381,451

46,999,234

proceeds from goods, products, works and services sale

111

40,033,906

24,455,530

proceeds from sale of other property

112

233,312

22,478,286

including sale of foreign currency

113

233,312

22,477,241

advance payments, received from buyers (customers)

114

budgetary allocation and other special purpose funding

115

without compensation

116

other income

117

13,144,233

65,418

Cash allocated - total

120

(29,746,202)

(35,254,458)

to pay for acquisition of goods, works, services, raw materials and other current assets

150

(2,036,944)

(1,292,304)

for remuneration of labour

160

(1,148,369)

(980,458)

for dividends distribution

170

for settlements in respect of taxes and levies

180

(11,821,438)

(4,862,139)

for customs duty

183

allocation to extra-budgetary state funds

190

(97,963)

(106,124)

for advance payments

191

other expenses

192

(14,641,488)

(28,013,433)

including foreign currency sales

193

(219,720)

(23,218,790)

Net operating cash

199

23,635,249

11,744,776

Cash received - total

200

14,285,275

18,635,478

Proceeds from sale of fixed assets and other noncurrent assets

210

Proceeds from sale of securities and other financial investments

220

Dividends received

230

Interest received

240

810,658

793,498

Proceeds from redemption of loans, granted to other organizations

250

Budgetary allocation and other special purpose funding

255

Proceeds from investment contract

256

Redemption of securities and other financial investments

257

13,471,499

17,841,013

Other incomings

260

3,118

967

Cash allocated - total

270

(21,029,888)

(24,264,835)

Acquisition of associated companies

280

Acquisition of fixed assets, profitable investments in tangible and intangible

290

(126,894)

(75,727)

Cash flow from investing activities

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

assets Acquisition of securities and other financial investments

300

(17,137,220)

(13,571,828)

Loans granted to other organizations

310

Allocated to pay participation in shared construction

320

Allocated for capital construction settlements

325

(3,551,407)

(9,604,631)

Other payments, allocations etc.

330

(214,367)

(1,012,649)

Net cash from investment activities

340

(6,744,613)

(5,629,357)

Form 0710004 page 2 1

Cash flow from financial activities Cash received - total

350

10,208,234

Proceeds from shares issue and other equity securities

351

1,639,501

Proceeds from loans and credits, granted to other organizations

352

10,208,234

45,760,014

Other proceeds

353

Cash allocated - total

360

(26,922,590)

(56,235,890)

Redemption of loans and credits (without interest)

361

(26,922,590)

(56,235,890)

Settlement of financial lease obligations

362

Payment for acquired goods, works, services

363

Other payments, allocations

364

Net cash from financial activities

370

(16,714,356)

(8,836,375)

Net increase (decrease) of cash and its equivalents

380

176,280

(2,720,956)

Cash balance as of the end of the reporting period

400

190,585

14,303

Effect of exchange rate changes with regard to rouble

401

(2)

74,445

Acting General Director [Signature]

47,399,515

A.A. Dorofeev

(Signature)

Chief Accountant

[Signature]

T.M. Rasko

(Signature)

/Seal/: RUSSIAN FEDERATION, TYUMEN REGION THE SETTLEMENT OF KRASNOSELKUP OPEN JOINT-STOCK COMPANY â&#x20AC;&#x153;SEVERNEFTEGAZPROMâ&#x20AC;? OGRN 1028900699035

March 3, 2011

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

Appendix to balance sheet for 2010 CODES Form No. 3 according to OKUD Date (year, month, day) Company: OJSC Severneftegazprom

according to OKPO

Taxpayer Identification Number

INN

Activity Production of natural gas and gas Organizational and legal form/form of ownership

condensate

according to OKVED

Open Joint-Stock Company / Joint Private and Foreign Ownership

according to OKOPF /OKFS

Unit of measurement thousand rubles

according to OKEI

0710005 2010-12-31 48 731 500 8912 001 990 11.10.20

47 / 34 384

Intangible assets Indices Description

Code

Intellectual property (exclusive rights to the results of intellectual property)

Availability as of the beginning of Received the reporting year 3

Retired

Availability as of the end of the reporting year

010

including the right of Patentee to invention, industrial sample, useful model

011

the right of right Holder to software, data bases

012

the right of right Holder to topographies of integrated microcircuits

013

the right of Owner to trademark and service mark, name of place of goods origin

014

the right of Patentee to selection achievements

015

Organizational expenses

020

Business reputation of the organization

030

Other

040

103,068

1,044

Indices

(88,462)

15,650

As of the beginning of the reporting year

As of the end of reporting year

Description

Code

Intangible assets depreciation - total

050

65,265

8,474

including:

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

Fixed assets

Form 0710005 page 2

Indices

Description

Code

Availability as of the beginning of the reporting year

Received

Retired

Availability as of the end of the reporting year

Buildings

060

6,783,193

2,583,593

9,366,786

Structures and transmission facilities

061

20,224,122

30,835,216

(2,359)

51,056,979

Machines and equipment

062

2,765,141

6,152,698

Means of transport

063

220,372

34,114

(3,687)

250,799

Production and maintenance equipment

064

47,533

5,228

(470)

52,291

Draught cattle

065

Productive cattle

066

Perennial plantings

067

Other kinds of fixed assets

068

Land plots and natural resources sites

069

Capital investment in fundamental improvement of lands

070

Total

071

30,040,449

39,610,849

(17,890)

69,633,408

Construction facilities, not included into fixed assets

080

29,624,172

10,136,808

(39,526,811)

234,169

Indices

(11,374)

8,906,465

As of the beginning of the reporting year

As of the end of reporting year

Description

Code

Fixed assets depreciation - total

140

3,036,174

10,020,215

buildings and structures

141

2,537,044

8,546,134

machines, equipment and means of transport

142

483,033

1,447,718

other

143

16,097

26,363

Fixed assets rented out- total

150

35,856

71,381

buildings

151

31,396

65,878

structures

152

machines and equipment

153

3,059

2,691

other

154

1,401

2,812

Fixed assets put on standby

160

Fixed assets received for rent - total

161

Including depreciation of:

including:

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

Commissioned real property in the process of state registration

162

FOR INFORMATION

Code

As of the beginning of the reporting year

As of the end of reporting year

Results of fixed assets revaluation: Initial (replacement) cost

171

depreciation

172

Code

As of the beginning of the reporting year

As of the end of reporting year

Fixed assets, the cost of which is not to be repaid

174

32,878

79,626

Change of fixed assets cost due to further construction, further equipping, reconstruction, partial liquidation

180

1,757,563

1,791,332

Income-bearing investments in tangible assets

Form 0710005

Indices Description

Code

Availability as of the beginning of the reporting year

Received

Retired

Availability as of the end of the reporting year

Property to be leased out

190

Property granted according to hire contract

191

Other

192

TOTAL

193

Code

As of the As of the end of beginning of the reporting year reporting year

Depreciation of income-bearing investments in tangible assets - total

3 200

4 -

Costs of research, development and technological works Indices

Availability as of the beginning of the reporting year

Received

Written-off

Availability as of the end of the reporting year

Description

Code

310

Total including:

FOR INFORMATION

Translation Note

Code

As of the beginning of the reporting year

As of the end of reporting year

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

1 Cost of incomplete technological works

research,

development

and 320

Amount of expenses on research, development and technological works that did not have a positive effect

Code

As of the beginning of the reporting year

As of the end of reporting year

321

Natural resources development cost Indices Description

Code

Costs on natural resources development - total

Availability as of the beginning of the reporting year

Received

Retired

Availability as of the end of the reporting year

410

41,273

337,921

(120,667)

258,527

411

2,145

(35)

2,110

including: licenses for the use of subsurface resources For Information

The amount of expenses for sites of subsurface resources, incomplete fields search and evaluation, exploration and (or) hydrogeological surveys and other similar activities

Code

As of the beginning of the reporting year

As of the end of reporting year

412

19,460

2 The amount of expenses on development of natural resources, which are included into other costs in the reporting period as ineffective

62,786

413

954,553

234,150

Financial investments Indices

Form 0710005

Long-term

Short-term

Description

Code

Contributions in authorized (joint-stock) capital of other organizations - total

510

including associated and dependent companies

511

State and municipal securities

515

Securities of other organizations - total

520

including debt securities (bonds, bills)

521

Loans granted

525

Deposits

530

13,571,828

17,137,220

Other

535

540

13,571,828

17,137,220

550

Total

as of the beginning as of the end as of the beginning as of the end of the reporting of the of the reporting of the year reporting year year reporting year 3

Within the total amount of financial investments with current market value: Contributions to authorized (joint-stock) capital of other organizations - total

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

including associated and dependent companies

551

State and municipal securities

555

Securities of other organizations - total

560

including debt securities (bonds, bills)

561

Others

565

Total

570

Financial investments with the current market value cost change due to evaluation adjustment

580

Debt securities â&#x20AC;&#x201C; the difference between initial cost and nominal cost is included into the financial result of the reporting period

590

For information.

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

Accounts receivable and payable

Form 0710005 Page 5

Indices Description

Code

Balance as of the beginning of the reporting year

Balance as of the end of the reporting year

Accounts receivable: short-term - total

600

5,374,368

6,907,017

settlements with buyers and customers

601

2,124,464

5,634,799

bills receivable

602

advance payments made

603

1,225,744

247,339

other

604

2,024,160

1,024,879

long-term - total

610

570,114

settlements with buyers and customers

611

bills receivable

612

advance payments made

613

other

614

570,114

620

5,374,368

7,477,131

630

61,191,614

43,502,974

settlements with suppliers and contractors

631

469,140

362,203

advance payments made

632

settlements in respect of taxes and levies

633

1,040,575

2,277,179

bills payable

634

credits

635

41,233,713

40,849,518

loans

636

18,356,588

other

637

91,598

14,074

long-term - total

640

credits

641

loans

642

other

643

650

61,191,614

43,502,974

including:

Total Accounts payable: short-term - total including:

including:

Total

Expenses on regular activities (cost elements) Indices Description

Code

For the reporting year

For the previous year

Material costs

710

4,677,303

4,443,676

Labour costs

720

1,159,204

1,001,328

Allocations for social needs

730

93,411

109,462

Depreciation

740

4,717,671

3,617,448

Other costs

750

1,519,778

1,152,309

Expenses (cost elements), total

760

12,167,367

10,324,223

Change of balances (increase [+], decrease [-]: incomplete production

765

deferred expenses

766

213,865

(537,100)

reserves of deferred expenses

767

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

Provisions

Form 0710005 page 6

Indices Description

Balance as of the beginning of the reporting year Code

Received - total

Balance as of the end of the reporting year

810

Bills of exchange

811

Including overdue bills

812

Property under pledge

820

Fixed assets

821

Securities and other financial investments

822

other

823

Issued - total

830

Bills of exchange

831

Including overdue bills

832

Property under pledge, including:

840

Fixed assets

841

Securities and other financial investments

842

other

843

including:

Including:

including:

Government support Indices Description

Reporting period

For the same period of the previous year

910

Code

1 Budget funds received in the reporting year - total including:

Budget loans - total

as of the beginning of the reporting year

received for the reporting period

returned for the reporting period

as of the end of the accounting period

920

Including:

Acting General Director [Signature]

A.A. Dorofeev

(Signature)

Chief Accountant

[Signature]

T.M. Rasko

(Signature)

/Seal/: RUSSIAN FEDERATION, TYUMEN REGION THE SETTLEMENT OF KRASNOSELKUP OPEN JOINT-STOCK COMPANY â&#x20AC;&#x153;SEVERNEFTEGAZPROMâ&#x20AC;? OGRN 1028900699035

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

I. General Information 1. General Information Open Joint Stock Company Severneftegazprom (OJSC SNGP - hereinafter referred to as the Company) was set up in 2001 as a result of reorganization of Limited Liability Company Severneftegazprom and was registered on 15 June, 2001 (Certificate of registration and changes to the State register of commercial organizations No. Р16625.16). The Company is a legal successor of Severneftegazprom LLC, including all rights and obligations stated in the obtained licenses, certificates, other entitling documents issued by all state and regulatory authorities as well as rights and obligations as regards civil transactions. The effective Articles of Association of the Company are approved by Resolution of the extraordinary General Shareholders Meeting dated 29.10.2009 and were registered by Interdistrict Inspectorate of the Federal Tax Service No. 3 in Yamalo-Nenets Autonomous District on 10.11.2009. The shareholders of the Company include: - OJSC Gazprom with an equity share of 40.0004506028% and 50.0005625036% of voting shares; - Wintershall Holding GmbH (see item 9, Section III) with an equity share of 34.9999997750% and 24.9997187482% of voting shares; - E.ON Ruhrgas E&P GmbH with an equity share of 24.9995496222% and 24.9997187482% of voting shares. The Company is registered at the address: the Russian Federation, 629380, Tyumen region, Yamalo-Nenets Autonomous District, Krasnoselkup region, the village of Krasnoselkup, Lenina str., 22. The Company‟s postal address: the Russian Federation, 629300, Yamalo-Nenets Autonomous District, Novy Urengoy, POB 1130. E-mail address – sngp@sngp.org 2. Local Units The Company has representative offices in Novy Urengoy, Urengoy settlement, Tyumen and Moscow. 3. Principal Business Activities The Company‟s principal business activities are: - development and construction of facilities for Yuzhno-Russkoye field - natural gas production, preparation of gas for transportation, sales of natural gas - conduction of prospect evaluation survey and geological exploration - construction manager activities The Company has license series СЛХ №11049 НЭ (valid till 31.12.2043) that grants the right of geological survey and hydrocarbon production in Yuzhno-Russkaya

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

subsurface area located in Kransnoselkup region of Yamalo-Nenets Autonomous District in Tyumen oblast. 4. Information on Executive and Regulatory Board General Director of the Company â&#x20AC;&#x201C; Popov Alexander P. (see item 20, Section III) The Board of Directors as of 31.12.2010. â&#x201E;&#x2013; 1.

Place of work OJSC Gazprom

Position Deputy Chairman of the Management Committee

Name Alexander I. Medvedev (Chairman of the Board of Directors) Olga P. Pavlova

OJSC Gazprom

Vsevolod V. Cherepanov

OJSC Gazprom

Alexander P. Dushko

OJSC Gazprom

Wintershall Holding GmbH

Rainer Seele (from 02.11.2009) Ties Tiessen

Henning Rolf Deters

E.ON Ruhrgas AG

Frank Allan Sivertsen

E.ON Ruhrgas E&P GmbH

Member of the Management Committee, Head of Asset Management and Corporate Relations Department Member of the Management Committee, Head of Gas, Gas Condensate and Oil Production Department Deputy Head of Finance and Economics Department Chairman of the Management Committee Member of the Management Committee Member of the Management Committee General Director

Wintershall Holding GmbH

Information on changes in the Board of Directors in 2010: Board of Directors in the period from 01.01.2010 to 30.07.2010 Alexander I. Medvedev Olga P. Pavlova Vasily G. Podyuk Sergey V. Yatsenko Rainer Seele Ties Tiessen Johan Vaise Frank Allan Sivertsen

Board of Directors in the period from 30.07.2010 to 30.11.2010 Alexander I.Medvedev Olga P.Pavlova Vsevolod V.Cherepanov Alexander P.Dushko Rainer Seele Ties Tiessen Johan Vaise Frank Allan Sivertsen

Board of Directors in the period from 30.11.2010 to 31.12.2010 Alexander I.Medvedev Olga P.Pavlova Vsevolod V.Cherepanov Alexander P.Dushko Rainer Seele Ties Tiessen Henning Rolf Deters Frank Allan Sivertsen

Name Mikhailov Ivan L.

Place of work OJSC Gazprom

Esterlein Eduard V. (from 29.06.2009) Judith Buss

OJSC Wintershall Russland GmbH E.ON Ruhrgas E&P GmbH

Position Deputy Head of the Organization Division of Internal Audit Department of the Management Committee Administration Financial Director of the Branch in Moscow Chief Financial Officer

Audit Commission:

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

5. Information on the Headcount Average headcount of the Company was 938 people in 2010 and 948 people in 2009.

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

II. Significant Aspects of Accounting Policy and Presentation of Information in Accounting Reports Accounting of the Company is conducted based on the following accounting policy. I. Basis of Preparation Accounting of the Company is based on the effective accounting requirements of the Russian Federation, particularly, Federal Law “On accounting” No. 129-FZ dated 21 November, 1996 and Regulation on accounting and reporting in the Russian Federation, approved by order of the Minister of Finance of the Russian Federation No. 34n dated 29 July, 1998, as well as other enactments which are part of the accounting and reporting regulatory system for organizations in the Russian Federation. The Company‟s accounting policy is approved by order No. 451 of the Company dated 29 December, 2009. Assets, except for fixed assets, and liabilities are evaluated in accounting reports at cost. 2. Assets and liabilities in foreign currency In accounting of business transactions in foreign currency (including those payable in roubles) the exchange rate of a corresponding foreign currency set by the Central Bank of the Russian Federation as of the date of the transaction is applied. Cash on hand, funds on foreign currency and deposit accounts in banks, financial investments in securities (except for shares) and accounts receivable, including granted or obtained loans in foreign currency (except for received and paid advances and prepayment) are reflected in accounting reports in amounts calculated on the basis of the official exchange rate of 30.4769 roubles and 30.2442 roubles per 1 USD; 40.3331 roubles and 43.3883 roubles per 1 EUR as of 31 December, 2010 and 31 December, 2009 respectively. Exchange rate differences which arose during the year as regards transactions with assets and liabilities (except for received and paid advances and prepayment in foreign currency) denominated in foreign currency as well as differences arising from revaluation of their cost as of the accounting date are recorded as part of other revenues and expenses. 3. Short-term and Long-term Assets and Liabilities In the balance sheet, accounts receivable and accounts payable, including indebtedness under credits and loans, are considered short-term if their circulation period (maturity) does not exceed 12 months after the accounting date or has not been set.

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

The other specified assets and liabilities are reflected as long-term ones. Financial investments are classified as long-term or short-term depending on the estimated period of their use (circulation, possession or repayment) after the accounting date. If assets and liabilities are classified as long-term as of the beginning of the accounting period, and during the accounting period assurance appeared that accounts receivable and payable would be collected, such long-term indebtedness shall be reclassified into short-term indebtedness. 4. Fixed Assets Fixed assets are assets which conform to the requirements of the Accounting Regulation “Fixed assets accounting” (AR 6/01), approved by order of the Ministry of Finance of Russia No 26n dated 30.03.2001, recorded in accordance with the established procedure from the time of their commissioning as well as commissioned immovable property items, which are recognized as part of fixed assets only after submission of documents for state title registration. In accounting records, fixed assets are reflected at their initial cost excluding depreciation amount, accumulated during the whole period of their operation. Depreciation of fixed assets acquired before 01 January, 2002 is carried out according to the unified standards of depreciation charges approved by Decree of the Council of Ministers of the USSR No 1072 dated 22.10.1990 “On unified standards of depreciation charges for full recovery of the principal funds of the national economy of the USSR”, and depreciation of fixed assets, acquired starting from 01 January, 2002 – according to the standards, set on the basis of assets‟ useful life, determined by the Company. Classification of the fixed assets included into depreciation groups, approved by Decree of the Government of the Russian Federation no 1 dated 01.01.2002 is used as one of the sources of information on useful life of assets. Useful life for groups of fixed assets accepted by the Company is as follows: Group of fixed assets Pipelines Wells and gas production equipment Machines and equipment Buildings and roads Social sphere facilities Means of transportation Other

Useful life of assets placed on the balance sheet before 01.01.2002 from 01.01.2002 33 years 25 years 12-40 years 10-20 years 10-18 years 8-50 years 5-50 years 5-20 years 3-20 years

3-7 years 15-50 years 3-50 years 3-10 years 5-10 years

Depreciation of fixed assets is calculated by a linear method. Depreciation is not accrued: - for fully depreciated facilities which have not been written off the balance sheet; - facilities that have been mothballed for more than three months;

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

Facilities which are in conformity with the requirements in accordance to which they may be recognized as fixed assets which cost no more than 20 thous. roubles (inclusively) per unit are included into inventories. In order to ensure integrity of these facilities during production and operation, control over their flow has been established. Leased fixed assets are reflected off the balance sheet at the cost, specified in a lease agreement. Leased land plots are reflected according to their cadastral value. 5. Construction in Progress Immovable property items that have been constructed and commissioned and documents for which have not been submitted for property title registration in the Unified State Register are also considered as facilities under construction. For the above-stated facilities depreciation is accrued in the order established for fixed assets. Such an order is a departure from the effective rules of accounting, however, in the opinion of the Companyâ&#x20AC;&#x;s management it faithfully reflects the property status and results of the Companyâ&#x20AC;&#x;s activities since these assets are used for their functional purpose and bring profits to the Company. In the balance sheet, the specified items are presented according to their initial value excluding the amount of accrued depreciation. Revaluation of these items is not conducted. 6. Financial Investments Financial investments are presented according to the actual cost of their acquisition. Revenues and expenses as regards financial investments transactions are presented as part of other revenues and expenses. Reserves against devaluation of financial investments are created in cases stipulated in the effective legislation. Transactions of placing and return of deposits are presented by the Company in Cash Flow Statement as part of investment activities in brief. Transactions with interest on deposits are presented by the Company in the Cash Flow Statement as part of investment activities. 7. Inventories The cost of materials when they are placed on the balance sheet is included into the actual cost of their acquisition. Evaluation of retired inventories is conducted using an average cost method. Items which may be considered fixed assets according to the requirements having an acquisition cost of more than 20 thousand roubles (inclusively) per unit, including articles

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

(equipment and maintenance accessories) and special clothes, which when forwarded for production are not consumed at once but are used during a period exceeding 12 months are recognized as part of inventories. Reserves against devaluation of inventories are formed in cases provided for by the effective legislation. However, this reserve is not created for raw materials, materials and other inventories used in manufacturing of finished products, performing work or providing services if the current market value of these products, work or services is equal to or exceeds their actual cost as of the accounting date. 8. Costs of Production and Sale of Finished Products General business expenses are fully charged off on a monthly basis as administrative expenses to the Companyâ&#x20AC;&#x;s financial and operating results. When placed on the balance sheet, finished products are evaluated according to their reduced actual production cost excluding general administrative expenses. Evaluation of retired finished products is conducted using an average cost method. The Company does not bear expenses related to sale of products, goods, works and services due to the Companyâ&#x20AC;&#x;s specific sphere of activities. Gas transportation cost is paid by the buyer of production. 9. Deferred Expenses Costs incurred by the Company within the accounting period which are not related to the successive accounting periods (including expenses for gas field facilities construction, geological exploration and development of natural resources, licenses for certain activities) are reflected as deferred expenses. Expenses for gas field facilities construction incurred by the Company prior to beginning of gas sales (including bonuses for field development preparatory works, geological exploration and natural resources development, expenses for construction (drilling) of test wells, prospecting and appraisal wells which have fulfilled their purpose) are recognized as operating expenses from the time of gas sales beginning. They are recognized in proportion to the volume of produced and sold gas based on the total volume of proven gas reserves in Yuzhno-Russkoye field. Expenses for geological exploration and development of natural resources (search and appraisal of natural resources fields, exploration and hydrogeological survey) incurred from the time of earning income from principal activities are recognized on a straight-line basis within 12 months, starting from the month which comes after the month of works completion (contract termination).

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

Other deferred expenses (insurance, software expenses etc.) are recognized according to their purpose on a straight-line basis according to special calculations during the periods to which they are attributed. Deferred expenses are placed on the balance sheet as long-term assets according to article “Other non-current assets” of line 150 of the balance sheet if the recognition period of these expenses is more than 12 months after the accounting date. 10. Trade Receivables Trade receivables are determined according to the prices stipulated in contracts between the Company and buyers (clients) including all discounts (markups) which have been granted by the Company and VAT. Allowance for doubtful accounts is not created for indebtedness of the companies included into Gazprom Group, since the Company believes it improbable that such indebtedness will not be repaid taking into consideration the control of OJSC Gazprom over its subsidiaries. Indebtedness which can not be recovered, including indebtedness with an expired period of time allowed for filing a claim is written off of the balance sheet by means it is determined as being such with its further off balance entry during 5 years. 11. Cash In accordance with the Regulations on the procedure of preparation and presentation of accounting statements of a company approved by order No. 67n of the Ministry of Finance of the Russian Federation dated 22 July, 2005 when preparing Cash Flow Statement, data on availability and flow of cash in foreign currency is translated in accordance with the exchange rate of the Central Bank of the Russian Federation as of the date of balance sheet issue. The difference between re-estimation of cash balance as of the beginning of the accounting period and as of the end of the previous period is reflected in line 401 “Effect of exchange rate changes” of the Cash Flow Statement. 12. Charter, Additional and Reserve Capital Charter capital is recorded in the amount of the par value of ordinary and preferred shares acquired by shareholders. The amount of the charter capital corresponds to the amount stated in the Company‟s Charter. In accordance with the Charter of the Company forms a reserve fund in the amount of 5% of the charter capital. The value of annual allocation to the reserve fund is determined by the decision of the General Shareholders Meeting in the amount of 5 % of net profit minimum.

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

Additional capital of the Company includes the amount of share premium obtained as a result of placing shares of the Company at a price that exceeds their par value. 13. Obtained Credits and Loans Additional expenses incurred due to obtaining credits and loans are recorded as part of other expenses as they are incurred. Interest due to the loaner (creditor) is included into other expenses on a straight-line basis. Being prudent and respecting the principles of the Accounting Policy, the Company records loans and credits indebtedness in the amount of actually received cash without considering the amount of liabilities stipulated in the contract. Liabilities reflected in the accounting as long-term ones, which are expected to be repaid within 12 months after the accounting date, are recorded as part of short-term liabilities. 14. Deferred Taxes The Company records deferred tax assets and liabilities as well as constant tax assets and liabilities, i.e. amounts, which may have an impact on the rate of current income tax in the current and/or future accounting periods. The rate of the current income tax is determined based on accounting data and the rate of the current income tax corresponds to the amount of the calculated income tax, presented in the accounting period income tax declaration. The amount of a deferred tax asset and deferred tax liability are reflected on the balance sheet in detail as part of non-current assets according to line 145 “Deferred tax assets” and long-term liabilities - according to line 515 “Deferred tax liabilities” of the balance sheet respectively. Income tax amounts overpaid to the budget are reflected on the balance sheet according to line 246 “Other debtors”. 15. Off - balance Property and Liabilities Statement of Value Charged on Off-balance Accounts reflects leased fixed assets according to the estimate specified in the lease contracts. Goods and materials accepted for custody are reflected in the prices specified in acceptance statements or invoices issued. In conformity with the Company‟s Accounting Policy, abandoned wells in license areas are reflected on the off-balance account in quantitative terms and according to a conditional judgment of 1 roubles per accounting unit. Leased fixed assets are reflected in the estimate specified in the lease contracts.

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

Goods and materials accepted for custody are reflected in the prices specified in acceptance statements or invoices issued. 16. Revenue (Proceeds) Recognition Proceeds from sale of goods, products and rendering services (performing work) are recognized as revenue as products are shipped to buyers (or as services are rendered) and payment documents are presented to them. Revenue is recorded excluding VAT. Among other revenues of the Company there are: - proceeds from foreign currency sale - foreign exchange gain - proceeds from sale of materials - proceeds under the court decision, penalties, late charges, forfeits - interest on deposits. 17. Changes in Accounting Policy I. The following changes were introduced into the Company’s accounting policy in 2010 1. Due to abolition of Chapter 24 “Unified Social Tax” of the Tax Code of the Russian Federation, the following relevant sub-accounts were added to the Working Chart of Accounts for reporting insurance premiums to the Social Insurance Fund of the Russian Federation, Pension Fund of the Russian Federation, Federal and Regional Compulsory Medical Insurance Funds. 2. In 2010, changes regarding off-balance accounting of abandoned wells in license areas in quantitative terms and according to a conditional judgment of 1 rouble per accounting unit were introduced. II. The following changes were introduced into the Company’s accounting policy in 2011 1. Due to enactment of Accounting Regulation 12/2010 “Segment Information” approved by order No 143n of the Ministry for Finance of the Russian Federation dated November 8, 2010, the following changes were introduced into the accounting policy. The Company acknowledges product information (goods, work, services) as initial accounting information. In case of sale of goods (work, services) outside of the Russian Federation the information on geographical regions is revealed. 2. Starting from the accounting year of 2011, order No 66n of the Ministry for Finance of the Russian Federation dated July 02, 2010 “On Forms of Company Accounting Reports” comes into force. Due to differences in presentation of accounting forms indicators in accordance with the above-mentioned order and procedure for presentation of accounting indicators in accounting reports for 2010 (in accordance with order No67n of the Ministry for Finance of the Russian federation dated July, 22 2003),

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

certain accounting indicators for the accounting year will be presented as comparative data in the accounting repots for 2011 in other balance sheet lines. 18. Opening and Comparative data Data as of the beginning of the accounting year and comparative data for the previous accounting period reflected in the accounting reports for 2010 are fully identical to the relevant data of the final accounting reports for 2009.

III. Information on Principal Indicators 1. Information per Segments The principal business activities of the Company are gas production and sales which constitutes 100% of proceeds from sale of goods, products, works and services. Therefore, the Company does not single out business segments. The Company performs its activities on the territory of the Russian Federation and does not single out separate geographical segments since sources and character of risks on the whole territory of the Russian Federation are nearly the same. 2. Fixed Assets In 2010, the Company transferred items with the total cost amounting to 39, 610, 379 thous. roubles including completed capital construction facilities – 39, 526, 804 thous. roubles into fixed assets. These items are generally represented by automobile road Urengoy-Krasnoselkup, sales gas pipeline, facilities of the gas processing plant that were not included into the start-up complex, observation wells, gas collecting systems connected with well pads. In 2010, the Company obtained for use under a lease agreement fixed assets for the amount of 225 039 thous.roubles (in 2009 – 114,998 thous.roubles). In 2010, the Company returned leased fixed assets for the amount of 48 793 thous.roubles (in 2009 – 170,247 thousand roubles) to the lessor (with no intention of repeated lease) at the cost, stipulated in the lease agreement. Included into the indicator of line 910 “Leased fixed assets” of the section of Statement of Value Charged on Off-balance Accounts of the balance sheet are: thous.roubles Items of immovable property Land plots Other leased property Total

As of 31.12.2010 225,889 15,043 20,516 261,448

As of 01.01.2010 78,761 4,234 2,207 85,202

The residual value of social assets as of 31 December, 2010 is 98,225 thous.roubles (101, 984 thous.roubles as of 01.01.2010).

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

Leased fixed assets are reflected in the Addendum to the balance sheet at residual value. In 2010, the Company leased out under lease agreements fixed assets, the residual value of which according to estimation as of the date of lease amounted to 60,053 thous.roubles (31,536 thous.roubles in 2009), property for the amount of 2,792 thous.roubles (6,430 thous.roubles in 2009) was returned from lease in 2010. Land plots in free use of the Company with a cadastral value of 15,043 thous.roubles (as of 01 January, 2010 – 4,234 thous.roubles) are included in line 910 “Leased fixed assets” of the section of Statement of Value Charged on Off-balance Accounts of the balance sheet. Besides, the Company uses leased wood lots with an area of 53.3 ha which are part of the forest reserves of the Russian Federation and which as of 31 December, 2010 are not determined in terms of value as part of data of line 910 “Leased fixed assets” of Statement of Value Charged on Off-balance Accounts. 3. Construction in progress In line 130 “Construction in progress” the following items are presented: thous.roubles Construction in progress, total: Including as built and commissioned items of immovable property for which documents for title registration in the Unified State Register were not submitted (at residual value), Equipment to be installed Total

As of 31.12.2009 1,439,510 84,935

As of 01.01.2009 34,870,877 27,193,167

151,866 1,591,376

674,930 35,545,807

As of the end of 2010, items of immovable property for which documents for title registration in the Unified State Register were not submitted included the following facilities: observation and expandable wells. As of 31.12.2010, facilities in construction included the following: an expendable, an observation and a development well, development well completion, the client‟s base at Yuzhno-Russkoye gas and oil field, a recreation center in the rotation camp at YuzhnoRusskoye gas and oil field, an administrative building in Novy Urengoy (design and survey work), gas collector pipeline (design and survey work). Completed and commissioned items of immovable property for which documents for title registration in the Unified State Register were not submitted are reflected in line 080 of Section „Fixed assets” of form 5 “Addendum to the Balance Sheet” at historical cost. 4. Inventories The following inventory items are specified in line 211 of the balance sheet:

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

thous. roubles Item Construction materials Raw materials and supplies Spare parts Materials, passed over for processing to outside parties Equipment and housewares Fuel Other materials TOTAL

As of December 31, 2010 545,864 176,404 129,036 79,065

As of January 1, 2010 631,309 126,295 88,569 179,064

24,642 11,211 112,906 1,079,128

36,218 12,836 70,468 1,144,759

No reserves against decreases in the value of inventories were created in 2009, therefore, in 2010 there were no other revenues from the unused reserves of the preceding accounting period. Considering that the current market value of the goods (works, services), produced by the Company, is equal to or exceeds its actual cost, as well as taking into account the change in prices or actual costs, directly related to the events following the balance sheet date, which confirm the existing operational conditions as of balance sheet date, no reserves against decreases in the value of inventories used during the production of the afore-mentioned goods (execution of works, provision of services) were created. 5. Deferred Expenses The following expenses, related to the following accounting periods, are included into deferred expenses in the balance sheet. thous. roubles Item

Costs of gas field organization Geological exploration Property insurance Purchase of software Design and survey work per washout areas of the gas pipeline and utility systems All kinds of insurance except property insurance Deferred leave allowances Costs of organization of new auxiliary production facilities Other TOTAL

As of December 31, 2010 Long-term Short-term part part 1,022,450 62,786 256,417 147 16,585 27,561 8,264 23,533 -

As of January 1, 2010 Long-term Short-term part part 1,070,374 19,460 39,128 48,487 23,705 3,483 -

28,195

17,817

759 -

3,974 1,627

4,898 1,141,433

1,242 311,462

5,074 1,118,681

5,833 120,349

Deferred expenses with a writing-off period of more than 12 months after the accounting date in the amount of 1,141,433 thous.roubles and 1,118,681 thous.roubles are reflected in line 150 â&#x20AC;&#x153;Other non-current assetsâ&#x20AC;? of the balance sheet as of December 31, 2010 and January, 01 2010 respectively.

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

6. Value-added Tax on Acquired Inventories Tax sums of 5,926 thousand roubles and 33,243 thousand roubles as of December 31, 2010 and January 1, 2010, accordingly, are specified in line 220 Value-added Tax on Acquired Inventories of the balance sheet. The reduction of the balance on value-added tax is related to the commissioning of the completed facilities. 7. Accounts Receivable Line 235 “Accounts receivable (other debtors) due more than in 12 months after the accounting date” of the balance sheet reflects the long-term part of the penalty accrued due to failure of the Buyer, OJSC Gazprom, to perform obligations related to gas offtake for the amount of 557,884 thous.roubles in 2009. In accordance with the supplementary agreement to the Contract for gas supply the penalty in the amount of 139, 471 thous.roubles shall be paid by the buyer within 5 (five) years from 01.01.2011 to 31.12.2015 annualy not later than the 25-th day of the last month of each year. As of 31.12.2009, the penalty amounts to 697,355 thous.roubles was fully reflected in line 246 “Other debtors”. The accounts receivable from the buyers of gas, reflected in line 241 of the balance sheet, amount to 5,634,799 thousand roubles and 2,124,464 thousand roubles as of December 31, 2010 and January 1, 2010, accordingly, and are represented by the following companies: thous. roubles Debtor name Gazprom OJSC Gazprom YRGM Development CJSC Gazprom YRGM Trading CJSC TOTAL

As of December 31, 2010 3,180,177 1,022,759 1,431,863 5,634,799

As of January 1, 2010 1,380,902 743,562 2,124,464

All the buyers of the Company‟s products are its related parties. The information on the accounts receivable from them is additionally specified in Information on Related Parties (see item 18 of Section III). There was no overdue debt of gas buyers and other debtors as of December 31, 2010 and January 1, 2010. Indicator “Advances Payable” in line 245 of the balance sheet reflects the amount of advances under on-coming settlements, paid to other organizations and persons, according to provisions of the contracts. The amount of advances reflected as part of accounts receivable in line 245 of the balance sheet and paid for supply of materials, equipment, erection and assembly works, amounts to 247,339 thousand roubles and 1,225,744 thousand rubles as of December 31, 2010 and January 1, 2010, accordingly. The following items are included into the list of other accounts receivable, reflected in line 246 of the balance sheet:

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

thous. roubles Debt type Tax and commission overpayment Social insurance settlements Claims settlements Settlements with dependent entities and personnel on other operations Settlements with other debtors (penalties for non-compliance with the terms of the contract) Settlements with other debtors (on deposit commitments) Other TOTAL

As of December 31, 2010 707,032 4,384 6,462 31,619

As of January 1, 2010 5,495 2,608 6,462 1,626

139,471

1,743,416

233,029 135,911 1,024,879

31,524 2,024,160

Forfeit indebtedness as regards related parties includes payments for failure to fulfill obligations under gas supply contracts. 8. Short-term Financial Investments Cash in the amount of 17,137,220 thous.roubles and 13,571,828 thous.roubles as of December 31, 2010 and January 31, 2010 respectively, placed on deposit accounts in commercial bank Bank Societe Generale Vostok (CJSC) and Gazprombank (OJSC) is reflected in line 250 â&#x20AC;&#x153;Short-term financial investmentsâ&#x20AC;? of the balance sheet. Information on cash balance on the deposit accounts is presented in the following table: thous.roubles Bank Commercial bank Bank Societe Generale Vostok (CJSC) Commercial bank Bank Societe Generale Vostok (CJSC) Commercial bank Bank Societe Generale Vostok (CJSC) Commercial bank Bank Societe Generale Vostok (CJSC) Commercial bank Bank Societe Generale Vostok (CJSC)

Translation Note

Maturity date 12.01.2011

Currency Roubles

Interest rate 2.75%

As of 31.12.09 53,980

As of 01.01.09 -

15.02.2011

Roubles

3.65%

1,000,000

01.03.2011

Roubles

3.5%

1,000,000

15.02.2011

Roubles

3.65%

1,000,000

15.02.2011

Roubles

3.25%

380,000

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010 Commercial bank Bank Societe Generale Vostok (CJSC) Commercial bank Bank Societe Generale Vostok (CJSC) Gazprombank (OJSC) Gazprombank (OJSC) Gazprombank (OJSC) Gazprombank (OJSC) Gazprombank (OJSC) Gazprombank (OJSC) Gazprombank (OJSC) Gazprombank (OJSC) Gazprombank (OJSC) Gazprombank (OJSC) Gazprombank (OJSC) Commercial bank Bank Societe Generale Vostok (CJSC) Commercial bank Bank Societe Generale Vostok (CJSC) Commercial bank Bank Societe Generale Vostok (CJSC) Commercial bank Bank Societe Generale Vostok (CJSC) Gazprombank (OJSC) Gazprombank

Translation Note

15.02.2011

Roubles

3.6%

750,000

09.03.2011

Roubles

3.75%

500,000

15.02.2011

Roubles

4.15%

3,000,000

15.02.2011

Roubles

4.10%

7,000,000

11.01.2011

Roubles

2.25%

200,000

13.01.2011

Roubles

2.25%

300,000

20.01.2011

Roubles

2.35%

575,000

17.01.2011

Roubles

2.25%

200,000

25.01.2011

Roubles

2.5%

351,000

28.01.2011

Roubles

2.6%

273,000

19.01.2011

Roubles

2.45%

200,000

24.01.2011

Roubles

2.5%

200,000

11.01.2011

Roubles

2.0%

154,240

25.01.2010

Euros

0.1%

150,644

13.01.2010

Roubles

10.65%

1,000,000

13.01.2010

Roubles

10.35%

1,000,000

05.04.2010

Roubles

10.25%

1,000,000

13.01.2010

Roubles

10.65%

3,000,000

13.01.2010

Roubles

10.25%

500,000 ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010 (OJSC) Gazprombank (OJSC) Gazprombank (OJSC) Gazprombank (OJSC) Gazprombank (OJSC) Gazprombank (OJSC) Gazprombank (OJSC) Total:

11.01.2010

Roubles

464,000

11.01.2010

Roubles

4.5%

683,000

20.01.2010

Roubles

4.75%

2,000,000

08.02.2010

Roubles

7.25%

500,000

14.04.2010

Roubles

8.75%

2,000,000

21.01.2010

Euros

0.11%

1,274,184

17,137,220

13,571,828

During the accounting period, short-term financial investments (deposits) were made in the amount of 231,989,340 thous.roubles (296,608,591 thous.roubles in 2009). During the accounting period, short-term financial investments (deposits) were spent in the amount of 228,423,948 thous.roubles (300,768,074 thous.roubles in 2009). During the accounting period, interest on short-term financial investments (deposits) in the amount of 650,978 thous.roubles (1,025,599 thous.roubles in 2009) was accrued. 9. Capital and Reserves Charter Capital As of 31.12.2009 and 01.01.2010, the Companyâ&#x20AC;&#x;s Charter Capital amounted to 667 thous.roubles. Information on the shareholders and the Charter Capital: Shareholders Shareholders, total: Including: OJSC Gazprom Wintershall Holding GmbH

E.ON Ruhrgas E&P GmbH

TOTAL:

Translation Note

Ordinary and preferred shares Number, pieces Par value, roubles 533,330 666,662.49 266,668 registered ordinary shares 133,328 registered ordinary shares 2 registered preferred shares of A-class 1 preferred share of C-class 133,328 registered ordinary shares 3 registered preferred shares of B-class 533,330

266,668 133,328 82,054 17,949.87 133,328 33,334.62 666,662.49

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

In accordance with the decision of the General Shareholders Meeting dated January 27, 2010 Wintershall Holding AG was renamed into Wintershall Holding GmbH in the framework of change of corporate form. As of 31.12.2009, the Company‟s Charter Capital was fully paid up. In 2010, the amount of the Charter Capital did not change. Additional Capital The Company records the following as part of the additional capital in line 420 of the balance sheet: thous.roubles Capital name Paid-in capital in excess of par value Increase in the value of construction in progress Total:

As of 31.12.2010 25,138,379

As of 01.01.2010 25,138,379

47,142

25,185,521

Reserve Capital The Company‟s Articles of Association provide for creation of a reserve fund in the amount of 5% from the value of the Company‟s Authorized Capital. By the decision of the Annual General Shareholders Meeting a part of net profit of the Company for 2009 in the amount of 33.3 thous.roubles was used to form the reserve fund. As of 31.12.2010, the amount of the reserve fund was 5% of the Authorized Capital value. 10. Credits and Loans The total amount of credits obtained in 2010 was 10,102,647 thous.roubles (44,029,770 thous.roubles in 2009). The total amount of credits excluding interest repaid in 2010 was 10,102,647 thous.roubles (55,387,485 in 2009). In February 2010, the guarantee of OJSC Gazprom for multi-currency credit agreement “B” for the amount of 10,102,647 thous.roubles was changed for guarantee of E.ON AG by means of its refinancing. The credit granted against pledge of OJSC Gazprom, BASF SE and E.ON AG for the amount of 193, 183 thous.Euros and 1,084,142 thous.dollars was extended till 31.03.2011. The total indebtedness under the credit according to the rate of exchange as of 31.12.2010 amounted to 40,832,934 thous.roubles (excluding accrued interest). The rate of interest on indebtedness denominated in Euros amounted to EURIBOR + 450 basis points in the portion guaranteed by OJSC Gazprom, EURIBOR + 125 basis points in the portion guaranteed by BASF SE and EURIBOR + 100 basis points in the portion guaranteed by E.ON AG. The rate of interest on indebtedness denominated in dollars amounted to LIBOR + 450 basis points in the portion guaranteed by OJSC Gazprom, LIBOR + 125 basis points in

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

the portion guaranteed by BASF SE and LIBOR + 100 basis points in the portion guaranteed by E.ON AG. In June 2010, the Company concluded an agreement with Societe Generale on extension of the multi-currency credit obtained in 2009 till March 31, 2011. After extension of the multi-currency agreement, the rate of interest on indebtedness denominated in Euros amounted to EURIBOR + 175 basis points in in the portion guaranteed by OJSC Gazprom, EURIBOR + 60 basis points in the portion guaranteed by BASF SE and EURIBOR + 60 basis points in the portion guaranteed by E.ON AG. After extension of the multi-currency agreement, the rate of interest on indebtedness denominated in dollars amounted to LIBOR + 175 basis points in in the portion guaranteed by OJSC Gazprom, LIBOR + 60 basis points in the portion guaranteed by BASF SE and LIBOR + 60 basis points in the portion guaranteed by E.ON AG. Information on indebtedness under credits (including interest debt) is presented in the following table: thous.roubles Creditor

Maturity date 31.03.2011

Credit amount as of 31.12.2010 16,342,938

Credit amount as of 01.01.2010 26,814,597

Societe Generale, credit guaranteed by OJSC Gazprom Societe Generale, credit guaranteed by BASF SE Societe Generale, credit guaranteed by E.ON AG Total: Including credits with maturity date of less than 1 year

31.03.2011

14,295,505

14,419,116

31.03.2011

10,211,075

40,849,518 40,849,518

41,233,713 41,233,713

The interest rates on short-term credits in 2010 and 2009 varied from 0.99% to 5.15% in Euros, on dollar credits â&#x20AC;&#x201C; from 0.85% to 4.87% and from 1.68% to 5.37% in Euros, from 1.48% to 4.94% in dollars respectively. Additional expenses included into other expenses (line 110 of Profit and Loss Statement), related to obtaining credits as well as expenses for consulting services on project financing amounted to 1,002,475 thous.roubles and 1,583,832 thous.roubles for 2010 and 2009 respectively. There are no overdue credits as of 31.12.2010 and 01.01.2010 respectively. The Company did not have long-term credits in the accounting period.

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

The Company did not have loans obtained in 2010 (4,574,403 thous.roubles in 2009). As of 01.01.2010, the amount of the Company‟s indebtedness under obtained loans amounted to 18,356,588 thous.roubles or 433,077 thous.Euros. The total amount of loans redeemed in 2010 excluding interest considering the effect of changes in foreign exchange rates amounted to 16,189,885 thous.roubles or 423,077 thous.roubles (4, 480,025 thous.roubles in 2009). thous.roubles Lender Aragon LLC Aragon LLC Wintershall Holding GmbH Wintershall Holding GmbH E.ON Ruhrgas AG E.ON Ruhrgas AG TOTAL: Including credits with maturity date of less than 1 year

Currency

Maturity date

Euro Euro Euro

30.12.2010 15.11.2010 30.12.2010

Loan amount as of 31.12.2010 -

Loan amount as of 01.01.2010 5,607,103 1,735,532 4,906,215

Euro

15.11.2010

1,518,590

Euro Euro

30.12.2010 15.11.2010

3,504,440 1,084,708 18,356,588 18,356,588

The interest rates on short-term loans in 2010 and 2009 amounted to 8.9%. There are no overdue loans as of 31.12.2010 and 01.01.2010. In 2010, the Company paid interest for use of borrowed funds in the total amount of 1,657,939 thous.roubles (in 2009 – 3,811,778 thous.roubles). The amount of interest on credits and loans accrued in 2010 were not included into the value of investment assets (in 2009, 693,553 thous.roubles were included into the value of investment assets). As of 31.12.2010, short-term liabilities of the Company exceed the current assets by 17,294,809 thous.roubles due to significant amounts payable under credits within 12 months after the accounting date. The Company‟s management is taking all the required measures to raise funds to repay or refinance this debt. The Company‟s management is sure that it will be able to attract financial resources in the nearest future, including financial aid from the shareholders. This is why the Company‟s management thinks application of the going concern principal in preparation of these accounting reports well grounded. 11. Information Related to Use of Cash The Company placed the cash balance into deposit accounts with Commercial Bank Societe Generale Vostok (CJSC) and Gazprombank (OJSC). The earned revenue amounted to 650,978 thous.roubles (1,025,599 thous roubles in 2009).

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

thous.roubles Placed into deposit accounts Returned from deposit accounts Balance of deposit accounts

2010 231,989,340 228,423,948 17,137,220

2009 296,608,591 300,768,074 13,571,828

12. Imposition of Taxes Russian tax and currency legislation lends itself to various interpretations and is subject to frequent changes. The Company‟s management believes that as of 31 December, 2010 the relevant provisions of the legislation have been interpreted correctly and the company‟s position as regards tax and currency legislation will be stable. Income tax For the purpose of income tax computation revenue is recognized in the accounting period (fiscal period) in which it took place independent of the actual cash inflow, other property (works, services) and (or) property rights (accrual basis). For accounting purpose changes in reporting for the accounting year as well as the previous periods are made in reports for the accounting period in which misstatements of such reports were discovered. Therefore, revenues and expenses of the previous years identified in the accounting years are reflected as part of items “Other revenues” and “Other expenses” of the Profit and Loss Statement (form no 2) of the accounting year as well as part of other items of the above-mentioned statement as follows: Certain indicators of the Profit and Loss Statement (form No 2) Table 1 thous.roubles Line no of form No 2 1 105 110 140

141 142

Item/indicator description

2 Other revenues Other expenses Profit (loss) before tax Provisional income tax expense (profit) Deferred tax assets Deferred tax liabilities

Translation Note

For 2010 Data of the Data of the current previous year years 3 19,375,067 18,964,051 24,329,784

4 -

For 2009 Total in Data of the Data of the Total in profit and current previous Profit and loss year years Loss statement Statement 5 6 7 8 19,375,067 42,409,761 2,742 42,412,503 18,964,051 45,910,569 1,697 45,912,266 24,329,784 1,884,788 1,045 1,885,833

4,865,957

376,958

209

377,167

(1,027,039)

(334,827)

1,798,763

109,112

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010 150

Current income 2,051,544 tax Income tax of X the previous years Other profit 98,687 expenses Accounting 19,353,751 period net profit (loss) Constant tax 11,389 liabilities (assets)

153

156 190

200

2,051,544

98,687

18,141

19,353,751

1,422,708

1,045

1,423,753

11,389

66,981

(209)

66,772

18,141

According to Accounting Regulation â&#x20AC;&#x153;Income Tax Settlements Accountingâ&#x20AC;? (Accounting Regulation 18/02) the Company reflected in the accounting reports and Profit and loss statement for 2010 the following indicators: Table 2 thous.roubles Item No

1 1 2

Line no of form No 2 2 140

200

4 5 5.1 5.2 5.3 5.4 5.5 5.6 6 7 7.1 7.2 8 9 9.1 9.2 9.3

Translation Note

141

Item/indicator description

2010 (column 5 of table 1)

2009 (column 8 of table 1)

3 Profit (loss) before tax Provisional income tax expense (profit) (page 1x20%) Constant tax liabilities (assets) (page 4-6), including: Constant tax liabilities (page 5x20%) Permanent differences increasing taxable income, including: - expenses exceeding standards prescribed by legislation - expenses in the social sphere - nonoperating expenses - losses of previous years - depreciation - other Constant tax assets (page 7x20%) Permanent differences decreasing taxable income, including: - profit of previous years - other permanent differences Deferred tax assets (page 9x20%) Deductible temporary differences, including: - depreciation of amortizable assets - tax loss for the corresponding fiscal period - expenses for development of natural resources

4 24,329,784 4,865,957

5 1,885,833 377,167

11,389

66,772

66,907 334,536

67,321 336,607

7,384

178,013 44,535 2,667 2,880 106,441 55,518 277,592

121,494 22,237 1,697 1,534 182,261 549 2,743

277,540 52 (1,027,039)

2,742 1 (334,827)

(5,135,197)

(1,674,136)

2,054,168 (5,876,930)

2,230,884 (3,486,742)

318,974

73,048 ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010 9.4 9.5 9.6 10

142

11 11.1 11.2 11.3 11.4 11.5 11.6 12

13.1 13.2 14 14.1 14.2 14.3

150 153 156

190

- property, liability, life insurance etc. - other (sum differences) - other Deferred tax liabilities (page 11x20%) Deductible temporary differences, including: - difference in indirect expenses - expenses for development of natural resources - interest on credits and loans - expenses for registration of immovable property - exchange rate differences in the cost of amortizable property - bonus depreciation Taxable base of income tax (page 1 + page 5 - page 7 + page 9 – page 11) Income tax (page 2 + page 3 + page 8 – page 10), including: - current income tax - income tax of the previous years Other expenses out of profit - tax penalties - tax sanctions - write off of deferred tax assets and liabilities after retirement Net profit (loss) of the accounting period (page 1 – page 13 – page 14 + page 8 – page 10)

6,575 (1,636,280) (1,704) 1,798,763

4,509 (399,480) (96,355) 109,112

8,993,813

545,561

(49,908) 22,906

(67,333) 84,053

(72,540) 15,687

555,656 12,680

(39,495)

9,077,668 10,257,718

2,051,544

2,051,544 98,687 52 15 98,620

18,141 2,768 15,373

19,353,751

1,423,753

The amount of accrual/decrease (payment) of deductible temporary differences (page 9 of Table 2) that led to accrual/decrease (payment) of corresponding deferred tax assets (page 8 of Table 2) as well as the amount of accrual/decrease (payment) of taxable temporary differences (page 11 of Table 2) which led to accrual/decrease (payment) of relevant deferred tax liabilities (page 10 of Table 2) in 2010 and 2009 are presented in Table 3 and Table 4. Table 3 thous.roubles Item No

Table line no

1 1

2 8

Translation Note

Indicator description

3 Deferred tax assets (page 2x20%) Deductible temporary differences, including:

2010 accrued

paid

4 519,014

5 1,546,053

Reflected in column 4 of table 2 6 (1,027,039)

2,595,069

7,730,266

(5,135,197)

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010 2.1 2.2

9.1 9.2

2.3

9.3

2.4

9.4

2.5 2.6 3

9.5 9.6 10

4.1 4.2

11.1 11.2

4.3 4.4

11.3 11.4

4.5 4.6

11.6

- depreciation of amortizable assets - tax loss for the corresponding fiscal period - expenses for development of natural resources - property, liability, life insurance etc. - other (sum differences) - other Deferred tax liabilities (page 4x20%) Deductible temporary differences, including: - difference in indirect expenses - expenses for development of natural resources - interest on credits and loans - expenses for registration of immovable property - bonus depreciation - expenses for dismantling of drilling equipment

2,054,168 -

5,876, 930

2,054,168 (5,876,930)

470,244

151,270

318,974

17,640

11,065

6,575

53,017 1,919,825

1,636,280 54,721 121,062

(1,636,280) (1,704) 1,798,763

9,599,123

605,310

8,993,813

16,425 466,787

66,333 443,881

(49,908) 22,906

15,687

72,540 -

(72,540) 15,687

9,077,668 22,556

22,556

9,077,668 -

Table 4 thous.roubles Item No

Table line no

Indicator description

1 1

2 8

2.1

9.1

2.2

9.2

2.3

9.3

2.4

9.4

2.5 2.6 3

9.5 9.6 10

4.1 4.2

11.1 11.2

4.3 4.4

11.3 11.4

3 Deferred tax assets (page 2x20%) Deductible temporary differences, including: - depreciation of amortizable assets - tax loss for the corresponding fiscal period - expenses for development of natural resources - property, liability, life insurance etc. - other (sum differences) - other Deferred tax liabilities (page 4x20%) Deductible temporary differences, including: - difference in indirect expenses - expenses for development of natural resources - interest on credits and loans - expenses for registration of

Translation Note

2009 accrued

paid

4 652,368

5 987,195

Reflected in column 5 of table 2 6 (334,827)

3,261,838

4,935,974

(1,674,136)

2,230,884

3,486,742

(3,486,742)

269,911

196,863

73,048

7,940

3,431

4,509

705,570 47,533 179,133

1,105,050 143,888 70,021

(399,480) (96,355) 109,112

895,668

350,107

545,561

16,706 173,245

84,039 89,192

(67,333) 84,053

693,037 12,680

137,381 -

555,656 12,680

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

4.5

11.5

immovable property - exchange rate differences in the cost of amortizable assets

39,495

(39,495)

13. Accounts Payable Indebtedness of the Company as regards supply of materials and equipment, provision of services as well as capital construction works performed by the following organizations is included into accounts payable in line 621 “Suppliers and contractors” of the balance sheet as of 31.12.2010 and 01.01.2010: thous.roubles Creditor LLC Gazprom Burenie LLC Promstroy Group LLC Construction and Erection Company Yamaltorgstroy CJSC Tarkus LLC North Construction Company Branch of limited liability partnership Herbert Smith CIS LLP LLC Gazprom Komplektatsiya LLC Resurs Komplekt LLC RBPF Project Finance LLC Soyuz Gazmontazhnaladka LLC Specialized Diversified Company LLC Yamaltorgstroyservis OJSC Severtruboprovodstroy OJSC Sibkomplektmontazh LLC Moscow Drilling Company OJSC Tarko-Salinskaya oil/gas exploratory expedition for well testing OJSC Orgenergogaz LLC StroySintez OJSC „Scientific production association “Promavtomatika” Other Total

31.12.2010 106,591 45,382 29,669

01.01.2010 90,000 6,420 -

19,805 15,925

32,691 -

15,741

32,927

13,229 8,971 7,519 7,274 7,130

10,399 5,899 -

7,105 3,698 -

10,676 68,830 60,393 24,711 17,514

3,056

16,242 15,102 10,903

71,108 362,203

66,433 469,140

The following indebtedness is reflected in line 625 “Other creditors” of the balance sheet as of 31.12.2010 and 01.01.2010: thous.roubles Name OJSC SOGAZ E.ON AG BASF SE Settlements with accountable persons Other settlements with personnel

Translation Note

31.12.2010 3,261 4,565 626

01.01.2010 32,080

226

19,513 401

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010 Other Total

4,355 13,033

11,337 63,333

Indebtedness as regards BASF SE appeared due to payment of guarantee services (Item 18, Section III). Increase of taxes and levies payable is due to increase of property tax and VAT caused by increase of the sales volumes and the sales price. 14. General Proceeds The Company‟s proceeds reflected in line 010 “General proceeds and expenses” of Profit and Loss Statement are proceeds from gas sales in the total amount of 36,901,899 thous.roubles excluding VAT (in 2009 – 16,890,504 thous.roubles). Increase of proceeds is due to increase of volume of gas production and increase of the gas sales price by the Company. All the buyers of the Company‟s production are its related parties (see Item 18 of Section III). 15. General Expenses Production cost of sold goods, products, works, services (total amount of lines 020, 030, 040 of form No 2) is associated with the total amount of incurred expenses reflected in line 760 of section “General expenses” of form 5 of “Addendum to the balance sheet” in the following way: thous.roubles 1 2 3 4 5 6 7

Indicator name Total amount of incurred costs (line 760 of form 5) Change of the value of work in progress (line 213 of the balance) Expenses on finished goods production Expenses charged to other accounts Purchase cost of sold goods Production cost of sold finished products, works, services Total page 7=page 1–page 2-page 3 page 4+page 5 + page 6

2010 12,167,367

2009 10,324,223

11,050,351

9,431,176

159,467

175,905

11,049,992

9,432,404

12,007,532

10,149,546

The expenses attributed to other accounts in 2010 include investment costs – 99,009 thous.roubles, transportation and procurement costs – 35,174 thous.roubles reflected in the inventories, other expenses – 25,293 thous.roubles, total – 159,476 thous.roubles. The Company does not bear the cost of goods and products sales due to specific character of its activities. Transfer of gas ownership is effected simultaneously with gas transfer to the buyer, who bears gas transportation costs at his own expense.

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

Total accrued expenses for use of energy resources in 2010 amount to 4,318 thous.roubles (including electric energy for the amount of 2,213 thous.roubles and heat power for the amount of 2,105 thous.roubles) and 1,739 thous.roubles in 2009. The share of administrative expenses in the production cost of goods, products, work, services sold amounts to 8.67% in 2010 (7.60% in 2009). Property tax is included into primary production expenses. 16. Other Revenues and Expenses In general, other revenues and expenses for 2010 appeared as a result of foreign currency sale transactions, sale of inventories, recalculation of assets and liabilities denominated in foreign currency as of the date of accounting preparation: thous.roubles Description of other revenues and expenses Exchange rate differences Sale and purchase of foreign currency Fines, penalties and forfeitures Sale of other assets Revenues, losses of previous years* Origination and fund rising expenses Expenses on abandonment of facilities under construction (including wells) Social expenses Taxes (VAT without invoices, of non-production purpose) Maintenance of facilities of nonproduction purpose Services of credit institutions Additional shares issue expenses Other TOTAL

Translation Note

2010

2009

Revenues

Expenses

Revenues

Expenses

7,751,578

5,328,502

17,199,229

20,026,209

11,267,186

11,279,472

23,584,739

23,534,152

504

210

1,485,070

118

14,865

11,629

34,800

29,285

277,540

2,667

2,742

1,697

1,002,475

1,583,832

1,039,804

495,292

183,698 14,152

117,613 43,166

22,764

9,510

4,443

4,248

63,394 19,375,067

74,235 18,964,051

2,237 105,923 42,412,503

64,907 45,912,266

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

* Revenues discovered in 2010 as a result of obtaining new information. 17. Earnings (Loss) per Share Basic earnings per share include part of profit of the accounting year due and payable to shareholders – holders of ordinary shares. It is calculated as ratio of base profit for the accounting year to weighted average number of ordinary shares outstanding during the accounting year. When calculating the weighted average number of ordinary shares outstanding during the accounting year the Company‟s shares purchased from the shareholders were deducted. Indicator Base profit for the accounting year, thous.roubles Weighted average number of ordinary shares outstanding during the accounting year, pieces Base profit per share, in roubles

2010 19,353,751

2009 1,423,753

533,324

533,321

36,288.92

2,669.60

The amount of dividends paid on preferred shares is not included in calculation of the base profit per share. In 2010 and 2009, no dividends were paid on shares. The shareholders – owners of preferred shares of Severneftegazprom OJSC have the right to receive an annual fixed dividend in the amount of 20% (twenty percent) from the total amount of of the net profit of Severneftegazprom OJSC for the fiscal year. In 2010, the Company did not issue additional ordinary shares. The Company did not have securities whose issue conditions provided for their conversion into additional ordinary shares and there was no event that caused increase in the number of ordinary shares. This is why the Company does not make calculations of diluted profit per share. 18. Information on Related Parties The Company is controlled by OJSC Gazprom and is a part of Gazprom Group comprising OJSC Gazprom and associated companies. Among related parties are also Wintershall Holding GmbH (see item 9, Section III), 100% associated company of BASF SE which is a member of BASF Group, and E.ON Ruhrgas E&P GmbH included into E.ON companies group. Transactions with Organizations of Gazprom Group Proceeds from gas sales constitute income of the Company reflected in line 010 “General revenues and expenses” of Profit and Loss Statement in the total amount of

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

36,901,899 thous.roubles excluding VAT (in 2009 â&#x20AC;&#x201C; 16,890,504 thous.roubles), including: In the accounting year, the Company sold gas to the following organizations of Gazprom Group: thous.roubles Name and form of incorporation of the related party OJSC Gazprom Gazprom YRGM Trading Gazprom YRGM Development TOTAL

Sale proceeds (excluding VAT) 2010 14,760,760 12,915,664 9,225,475 36,901,899

2009 8,698,514 5,911,676 2,280,314 16,890,504

The sale price of gas is stipulated in the Contracts for gas supply according to the formula agreed upon with the shareholders and gas buyers. The settlement procedure is stipulated in the Contracts with subsequent payment upon delivery. In the accounting year, the following organization of Gazprom Group rendered services of construction and drilling, lease, gas pipeline maintenance and other services to the Company: Name and form of incorporation of the related party LLC Gazprom Burenie LLC Gazprom Komplektatsiya LLC Georesurs LLC Gazprom Transgaz Surgut OJSC Zapsibgazprom LLC TyumenNIIgiprogaz LLC Gazprom Gazobezopasnost LLC Gazprom VNIIGAZ OJSC Orgenergogaz OJSC Centrenergogaz LLC Gazprom Dobycha Urengoy OJSC Gazprom Svyaz LLC Gazprom Gaznadzor Gazprom (U.K.) Ltd LLC Gazprom Expo TOTAL

Cost of received goods, works, services 2010 65,325 61,703 60,681 46,597 12,473 10,071 7,310 4,602 1,235 605 374 46 271,022

2009 882,763 50,783 43,749 391,583 18,601 15,951 638 626 891 1,620 3 1,407,208

Settlements with Gazprom Group organizations are carried out in roubles. Prices of the services rendered by Gazprom Group organizations to the Companies were set in agreements under general market conditions. Indebtedness of the Company related to settlements with Gazprom Group organizations amounted to: thous.roubles

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010 Name and form of incorporation of the related party CJSC Gazprom YRGM Trading LLC Gazprom Burenie LLC Gazprom Komplektatsiya LLC Georesurs LLC Gazprom Transgaz Surgut LLC Gazprom Gazbesopasnost LLC Gazprom Gazbezopasnost LLC TyumenNIIgiprogaz LLC Gazprom dobycha Urengoy OJSC Gazprom svyaz OJSC Zapsibgazprom TOTAL

Other long-term liabilities (page 520) As of 31.12.10 -

As of 01.01.10 -

Short-term accounts payable As of 31.12.10 106,643 13,229 6,574 3,881 477 123 63 19 131,009

As of 01.01.10 31 90,000 10,399 3,646 135 57 4,151 67 39 108,525

thous.roubles Name and form of incorporation of the related party OJSC Gazprom CJSC Gazprom YRGM Trading CJSC Gazprom YRGM Development OJSC Zapsibgazprom TOTAL

Long-term accounts receivable

Short-term accounts receivable

As of 31.12.10 557,884 -

As of 01.01.10 -

As of 31.12.10 3,319,648 1,431,863 1,022,759

As of 01.01.10 697,355 1,353,776 1,816,749

557,884

719 5,774,989

719 3,868,599

In 2009, a multi-currency credit under the agreement with Societe Generale bank (OJSC) was obtained under guarantee of OJSC Gazprom and BASF SE (see p.10, section III), guarantee portion of OJSC Gazprom was 65% of the total amount which is 26,761,063 thous.roubles as of 01.01.2010. In February 2010, the guarantee of OJSC Gazprom for multi-currency agreement “B” for guarantee of E.ON AG by means of its refinancing in the amount of 10,102,647 thous.roubles (due to cancellation of the relevant guarantee by OJSC Gazprom in respect of the amounts payable under multi-currency agreement “B” and issue of guarantee by E.ON AG for the same amount) and conclusion on the conditions similar to the conditions of multi-currency agreement “B”, a multi-currency agreement under guarantee of E.ON AG). From February 2010, the guarantee portion of OJSC Gazprom is 40% from the total amount which is 16,333,174 thous.roubles as of 31.12.2010. Transactions with BASF Group Organizations Guarantee share of BASF SE as regards the multi-currency credit obtained by the Company in 2009 and prolonged in 2010 under the agreement with Societe Generale bank (OJSC) is 35% of the total amount, which amounts to 14,291,527 thous.roubles as of 31.12.2010. In 2010, the cost of BASF SE services for origination and guarantee for the multicurrency credit amounted to 414,075 thous.roubles (in 2009 – 506, 406 thous.roubles).

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

As of 31.12.2010, indebtedness under the guarantee for the multi-currency credit is 4,565 thous.roubles. In 2010, loans from BASF Group companies in the amount of 5,666,460 thous.roubles or 148,077 thous.Euros were repaid. In 2010, the Company accrued and paid interest on the credit agreements with Wintershall Holding GmbH (see item 9, Section III), 100% subsidiary of BASF Group, in the amount of 239,031 thous.roubles or 6,246 thous.Euros. As of 31.12.2010, the Company‟s indebtedness under Wintershall Holding GmbH loans is fully repaid. The Company‟s debt on settlements with organizations of BASF Group amounts to: thous.roubles Form of incorporation, name of the related party

BASF SE TOTAL

Accounts receivable (page 240) As of As of 31.12.10 01.01.2010 -

Accounts payable (page 620) As of As of 01.01.10 31.12.2010 4,565 19,513 4,565 19,513

Operations with Organizations of E.ON Group The guarantee portion of E.ON AG under the multi-currency credit after change of the guarantee for a part of the debt of OJSC Gazprom under the agreement with Societe Generale bank (OJSC) is 25% from the total amount, which is 10,208,234 thous.roubles as of 31.12.2010. In 2010, the cost of services of E.ON Ruhrgas E&P GmbH for origination and guarantee for the multi-currency credit obtained in 2009 and prolonged in 2010 amounted to 143,275 thous.roubles. As of 31.12.2010, the indebtedness under the multi-currency credit guarantee amounted to 3,261 thous.roubles. In 2010, loans from E.ON Group companies in the amount of 4,047,471 thous.roubles or 105,769 thous.Euros were repaid. In 2010, the Company accrued and paid interest under the credit agreements with E.ON Ruhrgas E&P GmbH in the amount of 170,737 thous.roubles or 4,462 thous.Euros. As of 31.12.2010, the Company‟s indebtedness under loans from E.ON Ruhrgas E&P GmbH was fully repaid. Remuneration of Key Executive Staff The remuneration of the General Director is approved by the Board of Directors of the Company with execution of the employment agreement. The amount of remuneration paid to the key executive staff, was: thous. roubles 1 2 3

The total amount of remuneration, paid to the key executive staff, including the following types of payment: a) short-term remunerations; b) long-term remunerations, including:

Translation Note

2010 173,075

2009 199,260

145,825 27,250

127,134 72,126

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010 4

remunerations upon the end of professional life (payments (contributions) of the organization under voluntary insurance agreements (and non-state pension provision agreements) and other payments, assuring pension payment and other types of social protection for the key executive staff upon the end of their professional lives); remunerations in the form of issuer options, shares, nominal (reserve) capital contributions and payments, based on them.

27,250

72,126

The key executive staff of the Company is represented by the General Director and his deputies. Short-term remunerations for General Director and his deputies include the following payments: remuneration of labour for the accounting period, including regional coefficients and markup percentages for the work in the Far North, tax accruals and other compulsory payments to the appropriate budgetary and non-budgetary funds, yearly vacation bonus, lump sum incentive bonuses and other payments in favor of the key executive staff. Long-term remunerations are represented by the payments to all the members of the key executive staff, made during the accounting period, regardless of the terms of reaching retirement. In 2010, the Company paid to the Board of Directors a remuneration for participation in the work of the Board of Directors during 2009 in the amount of 2,276 thousand roubles. 19. Contingencies According to the decision of the Arbitration court of Khanty-Mansiysk Okrug dated 27.09.2010, CJSC Tarkus, the General Contractor of OJSC Severnegtegazprom, is declared bankrupt and bankruptcy proceedings were initiated in its respect. In 2010, OJSC Severnegtegazprom filed a claim requesting to include it in the list of CJSC Tarkus creditorsâ&#x20AC;&#x; list for the total amount of 33,064 thous.roubles. The claim includes a penalty for breach of environmental regulations; claim for non-return of a road slab; claim for non-returned materials and equipment under the construction contracts. The Company is waiting for judgment of the court as regards these judicial proceedings during 2011. 20. Subsequent Events 1. Change of management: In accordance with the resolution of the Board of Directors of OJSC Severneftegazprom whose meeting took place on 20.01.2011, the powers of General Director of OJSC Severneftegazprom Popov A.P. were terminated early starting from 18.01.2011 (Minutes of Meeting SD No40/2011 dated 21.02.2011). In accordance with the resolution of the Board of Directors dated 24.02.2011 (Minutes of the Meeting SD No 43/2011 dated 24.02.2011) Tsygankov S.E. was appointed General Director for a period of three years starting from 25.02.2011.

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]

OJSC Severneftegazprom Executive Summary to Annual Accounting Reports for 2010

2. Under decision of the Interdistrict Inspectorate of the Federal Tax Service regarding major taxpayers in Yamal-Nenets Autonomous Okrug No 06-18/13 dated 06.09.2010 a field tax audit was performed in the period from 06.09.2010 to 22.02.2011. Certificate No 06-18/3 dated 22.02.2011 was obtained. In accordance with p.1 of article 100 of the Tax Code of the Russian Federation a tax audit report is issued within two months from the day of issuing a certificate of field tax audit. 3. In February 2011, OJSC Severneftegazprom filed a creditor‟s claim for the amount of 13, 394 thous.roubles under agency agreement No 135/SNGP-2007 dated 03.12.2007 regarding receivables, against debtor CJSC Tarkus to the Arbitration court of KhantyMansiysk Autonomous Okrug. 21. Financial Crisis The economy of the Russian Federation shows certain features characteristic of developing markets. In particular, a relatively high level of inflation and high interest rates are observed. The recent global financial crisis has had a sufficient impact on the Russian economy. In 2010, signs of recovery of the Russian economy consisting in moderate economic growth appeared. The revival was accompanied with the growth of personal income, decrease of crediting rates, stabilization of the rouble‟s exchange rate in relation to world currencies as well as increase of the level of market liquidity. Currently, the Company‟s Management cannot estimate the impact of the possible decline of economic recovery, including the exchange market and capital markets. The future economic development of the Russian Federation considerably depends on the efficiency of decisions taken by the Government of the Russian Federation taking into account changes in the sphere of taxation, law as well as political changes. The Management of the Company cannot predict all the possible changes that can have an impact on the Russian economy and, therefore, the effect of such impact on the future financial situation of the company. The Company‟s Management takes all the necessary measures to assure the Company‟s stable financial position and further development of its activities.

Acting General Director Chief Accountant

/Signature/ A.A. Dorofeev

/Signature/ T.M.Rasko

March 03, 2011 /Seal/: RUSSIAN FEDERATION, TYUMEN REGION THE SETTLEMENT OF KRASNOSELKUP OPEN JOINT-STOCK COMPANY “SEVERNEFTEGAZPROM” OGRN 1028900699035

Translation Note

ATTACHMENT to the Audit Report PricewaterhouseCoopers Audit CJSC Dated MARCH 4, 2011 Auditor: [signature]