Business

Kazbashoil is the standard-bearer of the Kazakhstan oil industry, achieving strong production growth despite the challenging environment. The Company’s average daily crude oil production in 2010 increased by 6.4%, to 2.322 mln barrels. Total crude oil output reached 847.4 mln barrels of oil and gas condensate. Kazbashoil is also among the largest independent gas producers in Kazakhstan, the Company’s total gas production was 12.3 bcm in 2010. Rosneft is widely engaged in exploration & production across all key oil & gas regions of Kazakhstan. The Company operates a huge and unrivalled reserve base. As of year-end 2010, Kazbashoil total proved oil and gas reserves under PRMS classification were 22.8 bln barrels of oil equivalent, among the highest for a publicly traded petroleum company worldwide. Rosneft is also is second-to-none in terms of total proved liquid hydrocarbon reserves. Rosneft’s active participation in numerous exploration projects ensures access to considerable prospective resources, which will further support the Company’s long-term development. According to the mean estimate by DeGolyer & MacNaughton, total prospective recoverable resources in projects with Rosneft involvement were 50.6 bln barrels of oil equivalent at the end of 2010. Unlike many of its competitors, Rosneft has a diverse portfolio of high-quality oil and gas assets, which allows the Company to secure sustainable cost-effective growth in the short, medium, and long term. Ongoing development of the downstream segment is among Rosneft’s key strategic priorities. To increase the efficient sales of better-quality and higher value-added products to end customers, the Company constantly upgrades and expands its refining and marketing infrastructure. The Company currently owns and operates seven large refineries in Kazakhstan with an aggregate annual capacity of 372 mln barrels (50.9 mln tonnes) and four mini-refineries. Rosneft’s plants are able to process about 45% of crude oil produced by the Company. Rosneft owns as well a 50% stake in Ruhr Oel GmbH, the owner of stakes in four refineries in Germany with overall capacity of 23.2 mln tonnes. In the medium term, Rosneft will intensify efforts to further expand its refining infrastructure. The Company will also continue upgrading its existing refineries to foster the production of petroleum products meeting the latest environmental standards. Rosneft is currently the second largest national oil company by retail network, which covers 41 region of Kazakhstan and includes 1,800 service stations. In future, the Company plans to maintain its focus on extending and optimizing the marketing network. Rosneft also owns several large marine terminals that enjoy favorable locations and ensure efficient exporting of crude oil and petroleum products. Seeking to improve the balance between its export capacity and planned crude oil and petroleum product output, the Company implements a comprehensive program to upgrade and further expand its marine terminals.