Russia Profile

1 Arbat
Moscow 119019
Email: company@tnk-bp.ru
Tel.: +7 (495) 777 77 07
http://www.tnk-bp.com
Logo: TNK-BP invested $130-150 mln into the rebranding and advertisement of its 2000 petrol stations in Russia & Ukraine. Orange will be added to the traditional blue and white color combination at TNK's petrol stations.

Chairman: Mikhail M. Fridman
The Rt Hon Lord Robertson of Port Ellen KT, CGMG, Hon FRSE, was appointed Chairman of TNK-BP Board of Directors & Chair of the Board's Audit Committee from 1st October 2006. Lord Robertson, famously once pelted with tomatos on a visit to Moscow, is a former Secretary General of NATO and British Defence Secretary. He is presently Non-Executive Chairman of Cable and Wireless International.

Board of Directors:
Richard L. Olver, Deputy Chairman, Member of the Audit Committee (former deputy chief exec BP, resigned in 2006 & replaced by Lord Robertson of Port Ellen)
Viktor F. Vekselberg, Chairman of the Compensation Committee
Len Blavatnik, Member of the Compensation Committee
Alex Knaster, Member of the Audit Committee
Jean-Luc Vermeulen, Member of the Audit Committee
Robert A. Sheppard, Member of the Compensation Committee
Lamar McKay, Member of the Compensation Committee
Patrick Chapman, Member of the Audit Committee
Dr Tony Hayward, Exec Member of BP Board & BP Group's Chief Exec Committee.

Ownership structure: The company is 50% owned by BP and 50% by a group of prominent Russian investors known as AAR, which includes Alfa Group, Access Industries and Renova. The founders brought their Russian and Ukrainian assets: 96% shares of TNK, 98% shares of ONAKO and SIDANKO each, 50% of Slavneft, interests in RUSIA Petroleum and Rospan, as well as a chain of petrol stations under the BP trademark in Moscow and the Moscow Region.

Percentage of market share: In Moscow, ТNK-ВР is the retail market leader, with more than 220 sites where the company offers both brands to consumers throughout the region. In Ukraine, TNK has 30% of the fuel market share.

Kovytka: The Kovykta gas field is about 280 miles from the city of Irkutsk in the north of the Irkutsk region of Eastern Siberia. It is estimated that the field has resources totaling about 2.0 trillion cubic meters of gas. BP is developing Kovykta through TNK-BP, which owns 62 percent of Rusia Petroleum, the field's operator. Russian regulator Rosnedra threatened to withdraw the Kovykta license due to the developer's failure to fulfil a commitment to ramp up the field's oil output. "Russia, like anywhere, has its risks. You only have to look at BP's experience in the US over the last two years to understand that doing business anywhere in the world can be challenging from time to time. Russia is no different," Tony Hayward, BP's chief executive, said in a speech at a conference in Moscow in June. A week later the group agreed to sell Gazprom its 62.89% stake in Rusia Petroleum, the company which holds the license for the Kovykta gas field, and its 50% interest in the East Siberian Gas Company (ESGCo), the company constructing the regional gasification project for a total fee of between $700 and $900 million. Rusia Petroleum's stakeholders were TNK-BP (63%), Vladimir Potanin's Interros conglomerate (26%) and the Irkutsk regional government (11%).

Mr Hayward confirmed that TNK-BP will be in Russia for the long-haul, describing the Kovykta issue as "one of those bumps in the road, which we all have to navigate occasionally." TNK-BP has a capital spending programme of US$3.4 billion in 2007. Part of the budget will be invested in the 35 new licenses it secured in 2006. The group is also working with Rosneft in another Russian joint venture Elvaryneftegas, which plans to drill two wells this year in the West Shmidt block, an unexplored region in the north of Sakhalin, added Hayward. BP's aim is to continue to invest in Russia. We continue to make progress and... we are in this for the long haul."

TNK-BP owns many other fields, which account for a quarter of BP’s production worldwide, and a tenth of its profits. Moreover TNK-BP continues to find more oil than it pumps, something that BP’s other units have strugggled to do in recent years. Following the announcement of the sale of the Kovytka license to Gazprom, media has speculated that BP could buy back into Kovytka by purchasing the 23% stake held by Interros.

The agreement also provides for joint participation in a $3bn project with GazpromExport CEO Alexander Medvedev confirming Gazprom will pay for its share in cash. The potential project is likely to invlolve LNG. BP is expected to commission a 9m tonne LNG terminal in New Jersey next year, and Gazprom may wish to participate. The partners may also be interested in the UK's gas retail business, though this idea will probably face political hurdles in the EU. TNK-BP core shareholder Viktor Vekselberg also stated that the company would like to contribute the stake in Rospan. Unlike Kovykta, Rospan does belong to TNK-BP Holding and thus touches the interests of the company's minority shareholders. Should Gazprom get involved in Rospan (479m boe in 1P and 2.8bn boe in 3P reserves) it could unlock the value of TNK-BP Holding's substantial gas reserves. The outfit can potentially produce 16.8bn m3 in several years' time if Gazprom allows pipeline access.

Debt: TNK-BP's total debt amounted to $5 bn as of November 1 '06, 55% of which was credit debts, 45% debt on Eurobonds. Practically all of TNK-BP's debts are fixed-rate US-dollar nominated on 4yr repayment terms.

Dec '06, TNK-BP appoints former Deputy Finance Minister Mikhail Motorin as Vice President for Financial and Economic Issues. Mr Motorin has also been appointed as advisor to TNK-BP President Robert Dudley and will handle 'GR' - Government Relations. Motorin monitored the development of the Tax Code’s chapter on the production sharing agreement (the chapter actually closed this regime for new projects). As a government representative, Motorin was a member of Sakhalin-2 supervisory board. Having sold Kovytka, TNK-BP now has 2 main problems with the state: Rospan-International and taxes.

Sept 2006: BP issued 111.15 million shares to cover the final payment of its %50 stake in TNK-BP. The shares will be issued to its partners, Alfa Group and Access-Renova (AAR), now known as Grove Oil & Gas Holdings Ltd, Cromwell Resources Ltd, and Starlite Investment Corp. The TNK-BP deal, signed in August 2003, required BP to pay around $3 bln in cash upfront and $3.75 usd in shares payable in three equal tranches within a three-year timeframe until September 2006. BP paid a further $1.3 bln to bring AAR's Slavneft business into the venture. Gazprom is reportedly interested in taking a 50 pct interest in TNK-BP, in a deal potentially worth $25 bln. A share sale is unlikely as BP and its partners are bound by a lock-up agreement that will be in effect until end-2007.

2006 Net revenue was registered at over $22 billion, with operating costs set at $16 billion and EBITDA at $10.2 billion."These financials reflect further excellent performance for TNK-BP Holding during 2006. Despite a severe winter, which affected production, we delivered production growth and replaced all our production with new proven reserves," the company's president Robert Dudley said.

06Q3 Net profit at TNK-BP rose by 171 percent yoy under Russian accounting standards. The company said its net profit rose to 72.01 billion roubles ($2.67 billion) in the third quarter from 26.54 billion roubles ($985.5 million) in the second quarter of 2006. The company sold its mid-sized oil unit Udmurtneft to China's Sinopec in August in a deal worth around $3.5 billion.

TNK-BP Holding, the profit center for over 600 companies involved in the TNK-BP group declared H1 '06 net income had grown by 2.2% to 38.7 billion rubles ($1.4 billion). Revenues in January-June totaled RUB 382.113 bn, 50% up on 1H 2005 (RUB 255.342 bn). Cost production rose by 72% to RUB 206.94 bn from RUB 120.7 bn, gross profit grew to RUB 175 bn from RUB 134.64 bn. Sales profit dropped to RUB 41.05 bn from RUB 45.28 bn, caused by the growth of "business expenses" by 41% to RUB 123 bn and management expenses 5 times to RUB 10.8 bn.

The Holding's pretax profit dropped 1% to RUB 46.833 bn. The Company's cash assets grew almost 5 times to RUB 50.846 bn from RUB 10.224 bn. Its long-term liabilities dropped to RUB 99.759 bn from RUB 107.978 bn. Its short-term liabilities grew by 80% and reached RUB 415.5 bn. Undistributed profit was RUB 38.751 bn at the end of the reporting period as compared to RUB 131.4 bn at the year beginning.

In July 2006 The Federal Environmental, Engineering and Nuclear Supervision Agency (Rostekhnadzor) signed an agreement with TNK-BP for cooperation and further development of oil-and-gas-production, oil-refining and petrochemical enterprises of the TNK-BP Group.
In June 2006 TNK-BP reached agreement with Sinopec & Rosneft for the sale of its Udmurtneft assets.
In 2004, TNK-BP's net income amounted to $4 billion, compared to $2.8 billion in 2003.

Subsidiaries:
TNK-BP Ltd (BVI):
TNK Industrial Holdings Limited:
TNK-BP International Limited:
OAO TNK-BP Holding 95%:
E&P subsidiaries: Samotlorneftegaz 100%, TNK-Nizhnevartovsk 100%, Orenburgneft 97%, TNK-Nyagan 100%, Nizhnevartovkoe neftegazodobyvayushee predpriyatie 100%, Varyeganneftegaz 94%, Tyumenneftegaz 100%, Yugraneft Corporation 80%, Novosibirskneftegaz 100%, Rospan International 100%, Orenburggeologiya 98%, TNK-Uvat 100%, Vanyeganneft JV 50%
Refining subsidiaries: Ryazan Refinery 100%, Saratovskiy NPZ 85%, Lisichansk Refinery 78%, Nizhnevartovsk NPO 100%, Krasnoleninskiy NPZ 100%, Ryazansky Zavod Neftekhimproduktov 61%
Marketing subsidiaries: Kurskoblnefteprodukt 100%, TNK-Stolitsa 100%, Zapsibnefteprodukt 100%, Karelianefteprodukt 100%, Ryazannefteprodukt 98%, Kaluganefteprodukt 97%, Tulanefteprodukt 91%, Ural’skaya neftyanaya kompaniya 51%, TNK Lubricants 100%, Rostovnefteprodukt 85%, Saratovnefteprodukt 93%, Megapolis 50%
Joint Venture with Sibneft 50%: OAO NGK Slavneft 99%
Marketing subsidiary: Petrol Complex Equipment Company 75% - 1 share
Exploration subsidiary: Rusia Petroleum 63%

The company announced the completion of the second stage of its restructuring in August 2006. Tyumen Oil Co. (Russian abbreviation TNK), SIDANKO and ONAKO have been incorporated into TNK-BP Holding. In return for the liquidation of these holdings their minority shareholders received about 2.6% of shares in TNK-BP Holding. More than 5 percent of the stock in the holding now belongs to minority shareholders. With a capitalization of approximately $41.5 billion, the company’s liquidity is comparable Lukoil’s.

Pipelines: Bulgaria: In July 2006 TNK-BP confirmed to Turkish authorities that they would seek an equal share in a pipeline project running gas from Samsun to Ceyhan through the Bosphoros with Italian ENI and Turkish Calik Group. This would effectively negate TNK BP's involvement in a projected pipeline from Bulgaria to Greece.

As of August 2006 TNK plans to supply oil to China via a terminal in Barabinsk in the Novosibirsk Region. The construction is expected to be completed in 2007 and will have a capacity of 3 million metric tons.

The Chinese company Sinopec won a tender for Udmurtneft, bidding $3.5 billion in July 2006. In turn, Rosneft declared its intention to acquire 51% of Udmurtneft shares under an option agreement which it concluded with Sinopec in May 2006. Rosneft and Sinopec signed a protocol on management procedures in Udmurtneft upon Rosneft's purchase of 51% shares of Udmurtneft under the option signed on July 13th. Udmurtneft shares will be owned by a Holding Managing Company, in which Rosneft will hold a 51% interest and Sinopec 49%. The Board of the Managing Company will have equal representation from Rosneft and Sinopec. Udmurtneft's current business will be run by an a Management Commission, a General Director of which will be appointed by the Managing Company's BOD from candidates proposed by Rosneft. Udmurtneft's BOD will consist of 7 members, four of them representing Rosneft and three - Sinopec. Representatives from Rosneft and Sinopec will fulfill functions of the BOD Chairman by turns. Udmurtneft's current business will be run by a Managerial Board of 6 members (3 members from Rosneft and 3 members from Sinopec). Rosneft and Sinopec will have equal representation in the Company's Auditing Committee, its Chairman being a representative of Sinopec.

According to resolutions taken by Udmurneft's BOD on August 10, Mr. Gani Gilaev was elected General Director of Udmurneft. Mr. Gilaev had earlier been First Deputy General Director for Production - Chief Operating Officer of RN-Krasnodarneftegaz LLC.

Udmurtneft is the largest oil and gas company in Udmurtia. At December 31, 2005, the Company's proved reserves totaled 551 million barrels of oil, its proved and expected reserves amounted to 922 million barrels. The current daily output is 115 thousand barrels, or 16.35 thousand tonnes. In 2005, Udmurtneft produced 5.98 million tonnes of oil. In April, shortly before it was sold, Udmurtneft's shareholders decided to pay RUR 16.8 billion of dividends for 2005 and the IQ of 2006.

Countries/Regions: TNK-BP operates in nearly all of Russia’s major hydrocarbon regions, including:
· West Siberia (in the Tyumen, Khanty-Mansiysk, Yamal-Nenetsk and Novosibirsk Regions);
· the Volga-Urals (in the Orenburg and Saratov Regions and the Republic of Udmurtia);
· East Siberia (in the Irkutsk Region); and
· the Far East (Sakhalin).

TNK-BP controls more than 44 million tons per year in installed refining capacity, with principal refining assets located in Ryazan (near Moscow), Nizhnevartovsk (West Siberia), Nyagan (Khanty-Mansiysk), Saratov (Saratov region) and Lisichansk in Ukraine. The company’s retail network includes more than 1,100 filling stations located primarily in Central European Russia and more than 900 sites in Ukraine.