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Moscow, Russia — 3 June 2005 — NOVATEK (RTS: NVTK) announced today that it has begun production at its new Purovsky processing plant. The plant was constructed to meet the growing demand for additional processing capacity driven by increased volumes of gas condensate production as well as the increased capacity utilization of Gazprom’s Surgutsky refinery, which has previously been used to process NOVATEK’s condensate.

The new processing plant will alleviate the acute problem currently faced by the Russian gas industry because of the depletion of natural gas reserves found in the shallower Cenomanain reservoirs. The Purovsky processing plant will increase processing capacity of condensate-rich, neocomian gas from the deeper reservoirs of the Yamalo-Nenets region. The initial stage of the plant will process two million tons of unstable gas condensate per annum, producing about 1.6 million tons of stable condensate and approximately 0.4 millions tons of liquefied petroleum gases annually. Unstable gas condensate will be delivered to the processing plant from NOVATEK’s fields utilizing its condensate pipeline. Capital investment in the initial stage of the processing plant amounted aggregated approximately USD 200 million. The Company already has plans to expand the processing capacity by another three million tons for a total processing capacity of five million tons per annum.

Leonid Mikhelson, Chairman of the Management Board of OAO NOVATEK commented: «This commissioning of this processing facility addresses the main issue faced by all gas producing companies; the lack of gas condensate processing facilities to produce high-value feedstock which is used in the petrochemical industry. The lack of gas condensate processing facilities hinders the development of new fields. The processing capacity of our new plant will enable us to meet NOVATEK’s current processing needs. It will also release capacity of the Surgutsky refinery to process unstable condensate from newly developed gas condensate fields from other gas production companies.»

The output from the plant will be transported by rail. A new section of track was built connecting the Purovsky processing plant with the Korotchaevo-Surgut railway lines as well as new tracks within the plant and a new station, Zavodskaya. This connection involved the construction of 20 kilometres of new railway track and 34 track switches. NovaTrans, a wholly-owned subsidiary of NOVATEK, was created to operate the rail facilities, and has leased 420 railway cars for liquefied gas shipments. Stable condensate shipments in 2005 will be provided by ОАО RZD.

The Company held an open tender for the delivery of processed condensate in 2005 which was won by BP and KOCH SUPPLY & TRADING, large hydrocarbon consumers and processors.

The launch of the Purovsky processing plant will have a significant impact on regional and local development. New employment has been created and substantial tax revenues have been guaranteed.

YaNAO Governor Yuryi Neelov, described the launch of the Purovsky processing plant as a new stage of Yamal’s industrial development commented, «One may say that the launch of this plant is the beginning of a new era for our region — the era of the gas processing industry. Moreover, we have not paid enough attention to the regions' condensate processing in the past, and the Purovsky ZPK will become the first condensate processing facility».

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.