Consolidation completed

5 Oct 2006 11:16

OJSC OC Rosneft05 October 2006 Liquidation of Rosneft subsidiaries undergoing consolidation On October 1, as a result of its consolidation program, the operations of 12subsidiaries participating in the consolidation have ceased. These subsidiariesinclude Rosneft-Krasnodarneftegaz, Rosneft-Purneftegaz,Rosneft-Sakhalinmorneftegaz, Rosneft-Stavropolneftegaz, Yuganskneftegaz,Severnaya Neft, Selkupneftegaz, Rosneft-Komsomolsk Refinery, Rosneft-TuapseRefinery, Rosneft-Arkhangelsknefteprodukt, Rosneft-Nakhodkanefteprodukt andRosneft-Tuapsenefteprodukt. This step completes the process of consolidating the subsidiaries, which wascarried out in order to create an optimal organization and management structurefor the Company. As of October 1, all shareholders in the consolidatedsubsidiaries of Rosneft are shareholders in a single company and owners ofhighly liquid stock traded on the country's leading exchanges. After the completion of the consolidation program, the Company's charter capitalstands at RUR 105981778,10 (10,598,177,810 common shares with a nominal value ofRUR 0.01). A 75.16% stake in the Company's charter capital is held by the Russiangovernment via Rosneftegaz, with the remaining share widely distributed amongstrategic, institutional and individual shareholders. Rosneft's consolidation has resulted in the formation of a vertically integratedcorporate structure with a single profit and management center. This will allowincreased effectiveness of capital investments, improved operational results andthe abandonment of practices such as intra-group sales and transfer pricing,which will in turn minimize legal, tax and other risks associated with theCompany's operations. The consolidation process will also facilitate Rosneft'saccess to the capital markets, which is essential for financing capitalintensive projects, simplify loan structuring, thus improving the financingterms available to the Company. The single company will retain the scale and quality of its regional operations,including the complete fulfillment of obligations regarding payment of regionaltaxes at all levels, the continuation of all social programs at both thesubsidiaries and in the regions where they operate. By converting their shares, minority shareholders in the subsidiaries havegained ownership in Russia's second largest oil producer and are now able toshare in the success of a unified Company. OJSC Rosneft Information Division +7 495-221-31-07 phone +7 495-411-54-21 fax n_manvelov@rosneft.ru October 5, 2006 Rosneft Investor Relations a_bogdanckikov@rosneft.ru +7 495-221-35-55 phone This information is provided by RNS The company news service from the London Stock Exchange