Russia: Source of Energy security for Europe and Asia «Ernst and Young»

Russia: source of energy security for Europe and AsiaPage 2 Agenda Changes in global oil and gas business Global risks ranking Prospects for expanding of the Russian resource base Intellectual and human capital of oil and gas companies

Russia: source of energy security for Europe and AsiaPage 3 Changes in the global oil and gas business Emerging economies are recovering from the global recession much faster than mature economies Competition from national oil companies (NOCs) is growing A shift to new sales markets is being observed Governments of oil and gas exporting countries are seeking to create competitive conditions for the oil and gas sector International companies planning alliances with NOCs to improve reserves base The strategic role of unconventional resources, e.g. shale gas, becomes increasingly important

Russia: source of energy security for Europe and AsiaPage 4 Global risks ranking * Top 10 risks for oil and gas 1) Access to reserves: political constraints and competition for proven reserves 2) Uncertain energy policy 3) Cost containment 4) Worsening fiscal terms 5) Health, safety and environmental risks 6) Human capital deficit 7) New operational challenges, including unfamiliar environments 8) Climate change concerns 9) Price volatility 10) Competition from new technologies *Ernst & Young report Turn risks and opportunities into results 5 September 2011

Russia: source of energy security for Europe and AsiaPage 5 Prospects for expanding of the Russian resource base Shape of resource base Intensive exploration isnt considered as an essential part of current activity Significant part of reserves on brown fields falls into hard-to-recover category while water cut level exceeds 80% Sources: IHS Herold, «Ernst & Young» estimates

Russia: source of energy security for Europe and AsiaPage 6 Prospects for expanding of the Russian resource base Oil production targets Today industry analysis has been limited by medium-term aspects with outlook until The future production depends on: Accelerated development of Eastern Siberian and Caspian fields Active implementation of EOR methods Extensive exploration efforts Sources: Ministry of Energy of Russia, «Ernst & Young» estimates

Russia: source of energy security for Europe and AsiaPage 7 Prospects for expanding of the Russian resource base Exploration and level of risk Russian companies can more than double exploration investments In frontier regions success rate of exploration drilling will drop two times and more Cost of drilling is significantly higher comparing to onshore projects Sources: IHS Herold, «Ernst & Young» estimates

Russia: source of energy security for Europe and AsiaPage 8 Prospects for expanding of the Russian resource base Outcomes The need for a more active and extensive exploration is obvious To keep oil production volumes flat after 2030, exploration investments should be tripled It should be recognized that Russian companies cant execute this strategy by themselves in coming 30 years Sources: «Ernst & Young» estimates

Russia: source of energy security for Europe and AsiaPage 9 Intellectual and human capital oil and gas companies* Drivers of human capital deficit risks, as reported by organizations surveyed Ranked by frequency of mention Rank*Driver 1Shortage of personnel with necessary skills 2Increased global competition for talent 3Lack of development in talent management processes 4Negative impacts of law or regulation on organizations ability to attract talent * Based on 38 responses from oil and gas respondents to our global multi- sector survey. Rank order may not reflect statistically significant differences in all cases. Unclassifiable/refused responses not shown. Risk mitigation 1) Well-developed program for managing talent 2) Embedded culture of developing employee potential 3) Increased diversity of workforce 4) Focus on employee satisfaction *Ernst & Young report Turn risks and opportunities into results 5 September 2011

Russia: source of energy security for Europe and AsiaPage 10 Ernst & Young O&G Thought Leadership Turn risks and opportunities into results: Exploring the top 10 risks and opportunities for the oil and gas sector National oil company monitor series Cash in barrel Global Oil and Gas Tax Guide Coal bed methane Global E&P benchmark study The future of Russian oil exploration Joint venturing in the oil and gas industry

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