On October 2, 2006, Rosneft completed its consolidation program, which was carried out in order to create a more efficient corporate structure.

The Company consolidated 12 of its subsidiaries into Rosneft.  These subsidiaries include seven production enterprises (Krasnodarneftegaz, Purneftegaz, Sakhalinmorneftegaz, Stavropolneftegaz, Yuganskneftegaz, Severnaya Neft and Selkupneftegaz), two oil refineries (Komsomolsk Refinery and Tuapse Refinery) and three marketing enterprises (Arkhangelsknefteprodukt, Nakhodkanefteprodukt and Tuapsenefteprodukt).

The consolidation created a vertically-integrated company with a single profit center and management structure, which increased the effectiveness of the Company’s capital Investorsments and its performance in general.  An integrated Rosneft will not only end intra-company sales and transfer pricing, but also minimize legal, tax-related and other risks associated with the Company’s operations.

The consolidation process will facilitate Rosneft’s access to capital markets, which is essential for financing capital intensive projects.  Another benefit will be simplified loan structuring.

Minority shareholders will benefit greatly from Rosneft’s consolidation.  After converting their shares to Rosneft shares, minority shareholders are now holders of highly liquid securities traded on the country’s leading stock exchanges.  Participation in a single profit center significantly reduces dividend-related risks for minority shareholders, as the dividend policy of the consolidated parent company specifies divided payments based on the Company’s overall performance, rather than on the results of individual subsidiaries. Minority shareholders will also be able to participate in the profits generated by highly promising exploration and development projects.