OREANDA-NEWS. January 12, 2009. Rosneft Board of Directors reviewed the Company’s preliminary results for 2008 under the Russian standards and approved a business plan for 2009, reported the press-centre of Rosneft.

According to the preliminary results, in 2008, Rosneft’s oil and gas condensate production amounted to 110.1 mln tonnes, 9% more compared to the prior year. Organic production growth exceeded 4%, which is the best indicator among the Company’s peers.

This growth is primarily explained by further development of Rosneft’s extensive reserve base that was underpinned by increased production drilling at the Company’s core upstream enterprises. In 2008, Rosneft drilled 2,547 th. meters of production wells (up 6.3% compared to 2007) and commissioned 658 new wells.

Marketable gas output totaled 11.2 bcm, an increase of 1% compared to 2007. Furthermore, Rosneft completed 58.7 th. meters of exploration wells, which enabled the Company to add 141 mln tonnes of oil and 36 bcm of gas of the Russian ABC1 category, thus fully replacing volumes produced in 2008.

In 2008, Rosneft’s crude and condensate supplies were 115.8 mln tonnes (including volumes procured from third parties). Compared to 2007, the Company’s supplies to the refineries grew to 49.3 mln tonnes, while domestic sales increased to 9.0 mln tonnes. At the same time, exports decreased to 57.5 mln tonnes as compared to the previous year.

Rosneft’s refinery throughput (including mini-refineries) equals 49.3 mln tonnes, up 22.6% as compared to the prior year. The Company’s petroleum product output grew 23.6% to reach 47.2 mln tonnes, and petroleum product exports increased by 38.9% to 26.4 mln tonnes. In 2008, Rosneft’s average service station fleet was 1,644, compared to 1,629 stations in the prior year. Improved efficiency in downstream resulted in the Company’s retail sales growing to 4.9 mln tonnes, up more than 70% as compared to 2007.

At its meeting, the Board of Directors also approved Rosneft’s business plan for 2009 that envisages further growth in all operating indicators amid unfavorable macroeconomic environment.

In particular, in 2009, Rosneft plans to increase its oil and gas condensate output by 2% to 112.3 mln tonnes, primarily through accelerated production drilling (704 new wells) and the launch of the Vankor oil and gas field. Commissioning of a booster station at the Priobskoye field is expected to bring marketable gas production to 11.9 bcm, 5.8% more as compared to 2007.

To ensure continued reserve base expansion, in 2009, the amount of exploration work will be maintained at the 2008 level. Rosneft plans to complete 56.3 th. meters of exploration drilling, and to shoot 9.1 th. linear kilometers and 2.4 th. square kilometers of 2D and 3D seismic, respectively.

In 2009, the Company plans to refine 49.6 mln tonnes of crude oil, up 0.7% compared to 2008; petroleum product output is expected to rise by 0.5% to 47.4 mln tonnes. In addition, Rosneft will continue to implement core modernization and upgrade programs at its refineries. Particularly, the Company will focus on the catalytic cracking projects at the Kuibyshev and Syzran refineries, the construction of isomerization units at the Syzran and Angarsk refineries, and a delayed coking project at the Komsomolsk refinery. In 2009, Rosneft plans to further expand it retail network to reach 1,698 stations, which would allow increasing retail petroleum product sales to 5.4 mln tonnes.

On December 31, Rosneft Board of Directors also reviewed a set of measures aimed at further reducing operating and administrative expenses and minimizing adverse impacts of the global financial turmoil. Inter alia, these measures will ensure additional cash to finance Rosneft’s strategic investment projects and reduce debt. The 2009 business plan envisages positive free cash flow at USD 50 per barrel Brent.

Given the highly volatile macroeconomic environment of today, the Board of Directors resolved to review the implementation of the Company’s business plan for 2009 on a regular basis.

Additionally, Rosneft Board of Directors reviewed the Company’s operational program for the Southern Federal District of Russia and the Code of Corporate Conduct, and also approved several related-party transactions.