Gazprom

on Hybrid Markets of

Europe

“Energy: Perspectives and Challenges”

Regional Conference

Novi Sad, March 11, 2016

Sergei Komlev Head of Contract Structuring and Price Formation Directorate,

Gazprom Export

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2014 2015 Changes Changes, %

Gazprom JSC 146.6 158.6 12.0 8.2%

Algeria (incl. LNG) 38.9 36.1 -2.8 -7.2%

Qatar 23.7 28.1 4.4 19.0%

Iran 9.2 8.7 -0.5 -6.0%

Lybia (incl. LNG) 4.8 5.7 0.9 19.2%

Deliveries by Major Exporters

2014 2015 Changes Changes, %

Norway* 115.6 125.5 9.9 8.6%

Netherlands 63.1 48.6 -14.2 -23.1%

United Kingdom 41.2 43.9 2,7 6.7%

Bcm

Deliveries by Major Indigenous Producers

2

Deliveries by Major Countries in 2015

Bcm

* Including pipeline and LNG supply of Norway to the European market, but not supply to Asia and America

Source: Bloomberg, IEA, Eurostat, National Statistical Agencies, Estimates by Gazprom Export LLC as of

January 2016

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2014 2015 Changes Changes, %

Qatar 23.7 28.1 4.5 19.0%

Algeria 14.5 12.4 -2.1 -14.3%

Nigeria 6.0 8.0 2.0 33.2%

Norway 2.6 2.9 0.3 10.8%

Trinidad and Tobago 3.6 1.8 -1.8 -49.6%

Peru 1.3 1.5 0.1 -10.6%

Yemen 0.0 0.1 0.1 -

Oman 0.0 0.1 0.1 12.1%

Equatorial Guinea 0.1 0.0 -0.1 -

Total 51.8 54.9 3.1 5.9%

Bcm

Source: Bloomberg, Estimates by Gazprom Export LLC

LNG Deliveries to Europe by Country

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Long Term European Natural Gas Consumption

According to consensus forecast for 2025 and 2035, European gas demand could be 15% and 21% higher compared to 2015

Source: Gazprom Export

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Natural Gas European Demand and Production Gap

Due to the falling indigenous production European demand for additional gas imports may be 110 bcm by 2025 and 160 bcm by 2035

Source: Gazprom Export

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Source: IHS

Supply from Russia Covers Import Requirements of Serbia

0

0,5

1

1,5

2

2,5

3

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

bcm

Natural Gas Balance

Production Imports

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Source: IHS

Power Generation and Industry are the Major Consumers of Natural Gas in Serbia

30% 36% 36% 36% 36% 30% 40% 29% 37%

39% 41% 45% 47%

48% 44%

40% 40%

40% 40%

40% 53% 50%

36%

33% 31% 37% 38% 13%

12% 11% 11%

11%

11% 11%

5% 14%

21%

17% 16% 18%

15%

13% 14%

13% 13%

13%

13% 20%

2% 7%

6%

12% 12%

26%

1%

0

0,5

1

1,5

2

2,5

3

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

bcm

Natural Gas Consumption by Sectors

Power- and Heat Generation IndustryResidential, Commercial services Non-energy use

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Source: IEA

IHS Projects Growth in Demand for Natural Gas in Serbia

11%

2000

Coal

Oil

Gas

Hydro

Biofuel 13%

2013

1,5

2

2,5

3

3,5

4

4,5

5

2011 2015 2020 2025 2030 2035 2040

bcm

Source: IHS

+60%

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30,2%

12,6%

11,4% 2,2%

3,0% 1,3%

25,1%

4,4%

8,1% 1,7%

Gazprom - oil- and quasi-oil-indexedNorway 1/3 oil-indexedAlgeria - oil-indexedLibya - oil-indexedQatar - oil-indexedOther - oil-indexedNorway 2/3 hub-indexedQatar - hub-indexedGazprom - hub-indexedOther - hub-indexed

29,5%

12,6%

9,8% 2,1% 3,2%

1,3%

25,3%

4,9%

9,6% 1,6%

Gazprom - oil- and quasi-oil-indexedNorway 1/3 oil-indexedAlgeria - oil-indexedLibya - oil-indexedQatar - oil-indexedOther - oil-indexedNorway 2/3 hub-indexedQatar - hub-indexedGazprom - hub-indexedOther - hub-indexed

Source: IEA, «Gazprom export» LLC assessment

60,6%

39,4%

58,6%

41,4%

2014 2015

Gas-on-Substitute Competition versus Gas-On-Gas Competition in the European ‘Far Abroad’, 2015

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Evolution of 9 months moving average gasoil and TTF Month Ahead prices, 2008-2016

Source: Bloomberg

Correlation coefficient = 0.87 R Square = 0.76

Engle-Granger test for cointegration succeeded

Tight Correlation between European Gas-oil and TTF Prices

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Price Corridor for Natural Gas is Set by Inter-Fuel Competition

Ceiling

Floor

Oil/Oil products parity

Coal parity

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Full Costs of LNG Deliveries from North America to Europe

Source: Bloomberg, Wood Mackenzie

* P = HH * 115% + X, where HH – Henry Hub Forwards, X – total volume of estimated costs, pls., see slide #3

** NBP Forwards

Price Range* of US LNG Deliveries to Europe vs. Forward Prices** of European Hubs

In the medium-term, full costs of LNG deliveries to Europe are significantly higher than the forward prices.

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Full Costs of LNG Deliveries from North America to Asia

Source: Argus, Bloomberg, Wood Mackenzie

Full costs of deliveries of American LNG to Asia are higher than prices under proxy for a standard Asian contract in the medium-term, nevertheless oil price recovery may minimize loses.

* Based on oil forward prices and contract formula P ($/MMBTU) = 14% х Brent Futures + 1.6

Price Range* of US LNG Deliveries to Asia vs. Estimated Prices** of Asian Proxy Contract

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US LNG Exports to Europe and Asia

Source: Bloomberg, Wood Mackenzie

Europe (UK)

Asia (Japan, Korea)

US FOB LNG Price (2018-2020) = $6.0 – $6.5/MMBTU

(115%*HH + $3.0/MMBTU)

Transport Regas. Breakeven NBP

14%JCC+1.6

Margin

$0.69

$2.38

$0.40

$0.40

$7.59

$9.28

$4.3– $5.4

$8.0–$8.5

- $2.7

- $1.0

vs.

vs.

≈

≈

As of Q1 2016, Asian premium is USD 1.7 MMBTU.

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