Kirill Seleznev Management Committee Member, Department Head, - PowerPoint PPT Presentation

GAS SUPPLY TO DOMESTIC MARKET. EXECUTING RUSSIAN REGIONS GASIFICATION PROGRAM Kirill Seleznev Management Committee Member, Department Head, Gazprom; Director General, Gazprom Mezhregiongaz PRESS CONFERENCE AS PART OF GAZPROM’S ANNUAL GENERAL SHAREHOLDERS MEETING

Natural Gas Sales by Gazprom Group in Russia Gazprom: largest gas supplier in Russian market Gazprom Group’s gas sales in Russia 1 3.1% decline in domestic gas consumption in 2015: Sales volume, bln m 3 50%  Abnormally warm weather  Falling gas demand due to unfavorable economic situation. 2013 243.3 Reduction 2 by: -3.8% 2014 234.0 of Group’s total gas sales in 2015 -5.5% - 3.4% of total industrial production in Russia 2015 221.2 - 1.3% of electric power generation at TPPs - 4.5% of thermal power supply by TPPs and boiler houses - 9.9% of cement production Average selling price, RUB/1,000 m 3 24% - 1.8% of steel production 2013 3,264.6 +7.4% Regulatory environment enhances competitiveness of 2014 3,506.5 of Group’s total sales proceeds in 2015 independent producers despite limited gas demand: +3.8% 2015 3,641.3  Independent producers supply gas mostly to industrial consumers in richer regions at negotiated (non-regulated) prices Proceeds from sales, RUB bln Gazprom continues to cooperate with federal authorities on gas 2013 794.3 market development and pricing system improvement: +3.3%  Gazprom sold 4.3 bln m 3 of gas at SPIMEX in 2015 2014 820.6 -1.8% 2015 805.6 1 Excluding intra-Group sales. These performance indicators of Gazprom were calculated in accordance with IFRS principles; they may 2 Data from Federal State Statistics Service differ from similar indicators in accounting documents prepared in compliance with management accounting methodology. GAS SUPPLY TO DOMESTIC MARKET. 1 EXECUTING RUSSIAN REGIONS GASIFICATION PROGRAM

Key Operating Results of Gazprom Mezhregiongaz Group in Ensuring Reliable Gas Supplies to Russian Consumers in 2015 Gas sales 1 Gas distribution 2 Gasification 697.6 thousand km 87 inter-settlement gas 234 bln m 3 pipelines length of gas distribution networks 213.9 bln m 3 natural gas supplied by Gazprom constructed in 34 Russian regions and other producers natural gas transmission volume In 206 population centers, conditions Gas supplied to: created for connecting: 49 regional gas  Over 25 mln households and apartments; 31 thousand  41.8 thousand households and distribution companies industrial facilities apartments  Nearly 280 thousand public utility facilities  263 boiler houses  6.4 thousand agricultural facilities sell gas to all consumer groups in LNG-based autonomous gasification 69 Russian regions Technical connection of consumers: facility put onstream in Perm Territory  126.8 thousand specifications issued Possibilities created for autonomous  79.8 thousand connection agreements signed gasification of:  36.6 thousand connections of capital construction facilities  2,237 households  13 bln m 3 will be added to gas consumption if all  10 boiler houses specifications issued are implemented 1 Management accounting data; may be inconsistent with IFRS indicators 2 Including performance indicators of Gazprom Gazoraspredeleniye’s subsidiaries and affiliates, with exception of Gazprom Transgaz Kazan and Chechengaz GAS SUPPLY TO DOMESTIC MARKET. 2 EXECUTING RUSSIAN REGIONS GASIFICATION PROGRAM

Results of Russian Regions Gasification Program Gasification made Gasification made Gas pipelines built, Gazprom’s investments, Gas pipeline length, possible for boiler possible for households units RUB bln km houses, and apartments, units thousand units 2005–2015 ≈ 270.2 1,889 > 27,000 4,269 > 740 including 27.6 87 ≈ 1,275 41.8 263 2015 Due to unfulfilled obligations on part of regional authorities, gas did not reach over some 1,000 138.8 thousand boiler houses households and apartments As of January 1, 2016 66.2% 70.4% 56.1% Gasification level in 53.3% 60.0% 34.8% As of January 1, 2006 Russian regions Cities, towns and urban Rural area settlements GAS SUPPLY TO DOMESTIC MARKET. 3 EXECUTING RUSSIAN REGIONS GASIFICATION PROGRAM

Obligations Fulfilled by Regional Authorities with Regard to Building Inter-Settlement Gas Pipelines in 2015 under Work Synchronization Plans Number of Number of inter-settlement Length, inter-settlement Length, Region Degree of fulfillment Region Degree of fulfillment gas pipelines km gas pipelines km constructed constructed ██ ██ Kamchatka Territory 1 1.10 Novosibirsk Region 2 7.70 ██ ██ Kursk Region 3 90.45 Orel Region 1 22.41 ██ ██ Omsk Region 1 45.58 Republic of Altai 4 47.97 Republic of ██ ██ Republic of Karelia 1 56.40 4 38.05 Bashkortostan ██ ██ Republic of Mordovia 1 8.72 Ryazan Region 4 42.21 ██ ██ Saint Petersburg 3 66.28 Tambov Region 7 60.20 ██ ██ Sakhalin Region 2 12.05 Tver Region 2 103.10 ██ ██ Chuvash Republic 2 8.25 Tomsk Region 3 30.79 ██ ██ Yaroslavl Region 1 6.30 Tula Region 7 73.25 ██ ██ Altai Territory 3 43.01 Republic of Udmurtia 2 74.45 ██ ██ Volgograd Region 1 0.70 Khabarovsk Territory 4 27.30 Republic of Karachay- ██ ██ Ivanovo Region 1 16.63 1 12.77 Cherkessia ██ ██ Kaluga Region 8 111.47 Moscow Region 3 8.52 ██ ██ Kirov Region 3 43.82 Pskov Region 1 11.40 ██ ██ Krasnodar Territory 1 50.70 Republic of Adygea 1 1.03 ██ ██ Kurgan Region 3 46.93 Republic of Dagestan 3 31.61 ██ ██ Nizhny Novgorod Region 1 22.77 Komi Republic 2 51.71 Obligations fulfilled according to Obligations fulfilled behind synchronization Considerable delays in fulfillment of obligations on preparing synchronization plans plans consumers for gas supplies GAS SUPPLY TO DOMESTIC MARKET. 4 EXECUTING RUSSIAN REGIONS GASIFICATION PROGRAM

Programs for Gas Supply to and Gasification of Russian Regions in 2016–2020 Gasification Program in 2016  RUB 25 bln will be invested by Gazprom  67 Russian regions participate in Gasification Program Gasification infrastructure will be developed in parallel with execution and approval of urban planning documents (area planning and demarcation projects) by executive authorities Failure of regional authorities to fulfill obligations according to plans and lax financial discipline RUB 5 mln (only for completion of works already underway) in investments for 9 regions:  Arkhangelsk Region  Kemerovo Region  Khanty-MansiAutonomousArea  Republic of Ingushetia  Yaroslavl Region  Volgograd Region  Republic of Dagestan  Republic of Kalmykia  Chechen Republic RUB 0 mln:  Tver Region Provided that regional authorities settle debts for gas supplied and fulfill obligations to prepare consumers, investment amounts may be revised for these regions Prospects of programs for gas supply to and gasification of Russian regions in 2016–2020 Gazprom Mezhregiongaz is drafting programs for gas supply to and gasification of 67 Russian regions in 2016–2020 1 :  It is planned to build 23.9 thousand km of gas branches and inter-settlement gas pipelines If regional authorities fulfill obligations to prepare consumers to full extent, gas will be supplied to:  3.5 thousand population centers  670 thousand households and apartments  3 thousand boiler houses, public utility, agro-industrial and industrial facilities 1 28 draft programs already submitted for approval to regional authorities GAS SUPPLY TO DOMESTIC MARKET. 5 EXECUTING RUSSIAN REGIONS GASIFICATION PROGRAM

Consumers’ Debt to Gazprom Mezhregiongaz Group DEBT 94.5% 97.6% 94.8% 96.0% 97.6% 96.2% ACCUMULATION 189.3 152.1 126.7 115.8 +24.4% +20.0% 83.0 +9.4% Outstanding debts 57.8 (RUB bln) +39.5% 43.7 +43.6% +32.2% April 1, 2016 January 1, 2016 January 1, 2011 January 1, 2012 January 1, 2013 January 1, 2014 January 1, 2015 Consumers’ share Payments made Outstanding debts in gas supplies by Gazprom in total debts (as of April 1, 2016) Mezhregiongaz in 2015 (as of April 1, 2016) Q1 2016 Q1 2015 RUB 25.8 bln % 95.8% 95.0% 32.3% 13.7 Generating companies RUB 65.8 bln 13.4% 34.7 % 77.7% 77.4% Heat supply companies (HSC) RUB 4.4 bln 1.6% 84.9% 78.1% Budget-financed consumers 2.3 % RUB 65.7 bln 88.1% 91.1% 17.3% Population 34.7 % RUB 27.6 bln 35.4% 96.3% 94.9% 14.6 % Other consumers GAS SUPPLY TO DOMESTIC MARKET. 6 EXECUTING RUSSIAN REGIONS GASIFICATION PROGRAM