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NOVATEK announces 2006 business plan

Moscow, 20 December 2005. OAO NOVATEK (RTS: NVTK) announced today that its Board of Directors has approved the Company’s 2006 business plan including a capital expenditure program of between RR 6.5 billion to RR 7.0 billion.

The business plan is expected to deliver six to eight percent production volume growth in natural gas and 15 to 17 percent production volume growth in liquids (gas condensate and crude oil) over 2005 production. NOVATEK also anticipates throughput of approximately 2.0 to 2.1 million tonnes at the Purovsky processing plant and production of approximately 28 thousand tonnes of polymers at NOVATEK-Polimer during 2006.

«NOVATEK expects to deliver sustainable, profitable growth during 2006 by leveraging our core business capabilities, maintaining strict financial discipline in a cyclical pricing environment, and enhancing operating margins through downstream processing efficiencies and liquid export opportunities» noted Leonid v. Mikhelson, Chief Executive Officer and Chairman of the Management Board. «The 2006 capital budget is consistent with our long-term business strategy of increasing our hydrocarbon resource base, growing natural gas and liquid production volumes, and creating market opportunities through downstream liquids processing.»

Capital spending will focus on continued development at core fields, capacity expansion at the Purovsky processing plant and further exploratory drilling and geological surveying activities at our future prospects.

Forward-looking statements

Certain statements in this press release are not historical facts and are «forward looking» within the meaning of Section 27A of the Securities Act and Section 21E of the US Securities Exchange Act of 1934 (hereinafter, the Exchange Act). Forward looking statements include statements concerning our plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, our competitive strengths and weaknesses, plans or goals relating to forecasted production, reserves, financial position and future operations and development, our business strategy and the trends we anticipate in the industries and the political and legal environment in which we operate and other information that is not historical information. By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward looking statements will not be achieved.

PAO NOVATEK is one of the largest independent natural gas producers in Russia, and in 2017, entered the global LNG market by successfully launching the Yamal LNG project. Founded in 1994, the Company is engaged in the exploration, production, processing and marketing of natural gas and liquid hydrocarbons. Upstream activities of the Company’s subsidiaries and joint ventures are concentrated mainly in the prolific Yamal-Nenets Autonomous Area, which is the world’s largest natural gas producing area and accounts for approximately 80% of Russia’s natural gas production and approximately 15% of the world’s gas production. NOVATEK is a public joint stock company established under the laws of the Russian Federation.