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NOVATEK announces consolidated IFRS results for the year ended 31 December 2006

Moscow, 23 April 2007. OAO NOVATEK today released its audited consolidated financial statements for the year ended 31 December 2006 prepared in accordance with International Financial Reporting Standards («IFRS»).

IIFRS Financial and Operational Highlights

	FY 2006	FY 2005
Revenues	RR, mln	RR, mln
Oil and gas sales	47,488	37,246
Sales of polymer and insulation tape	1,109	964
Other	217	267
Total revenues	48,814	38,477
Net gains on disposals	9	3,631
Other income (loss)	(148)	79
Total revenues and other income	48,675	42,187
Total operating expenses	(29,522)	(22,861)
Profit before income tax	19,122	18,740
Profit for the year	14,007	13,662
Profit attributable to shareholders	14,079	13,697
Basic and diluted earnings per share⁽¹⁾	4.64	4.51
Normalized basic and diluted earnings per share ⁽²⁾	4.63	3.32

⁽¹⁾ In July 2006, NOVATEK registered a 1000:1 share split which has been given retroactive effect in the consolidated financial statements. The average weighted average number of shares outstanding in both periods is 3,036,306,000. Earnings per share amounts are presented in Russian roubles.

⁽²⁾ Normalized basic and diluted earnings per share exclude the one-time effect from the gain on disposals.

Total revenues grew by 26.9% year-on-year to RR 48,814 million for the twelve months ended 31 December 2006 from RR 38,477 million in the corresponding period of 2005, reflecting the general strength of our core business operations. The increase in total revenues from our primary business operations was attributable to increases in production volumes from our core fields and the favorable pricing environment for both domestic and international hydrocarbon sales.

Profit attributable to NOVATEK shareholders increased by 2.8% to RR 14,079 million, or RR 4.64 per share (basic and diluted) as compared to RR 13,697 million, or RR 4.51 per share (basic and diluted) for the corresponding period in 2005. Excluding the one-time effect of net gains on disposals, earnings per share (basic and diluted) increased by 39.5% to RR 4.63 per share from RR 3.32 per share in 2005.

Selected Operating Highlights

	FY 2006	FY 2005
Sales Volumes
Natural gas (millions cubic meters)	30,308	27,330
Stable gas condensate (thousand tons)	1,358	762
Liquefied petroleum gas (thousand tons)	505	241
Crude oil (thousand tons)	305	862
Oil products (thousand tons)	81	595

Sales volumes of natural gas for the full year increased by 2,978 million cubic meters, or by 10.9%, from 27,330 million cubic meters in 2005 to 30,308 million cubic meters in 2006. Net liquid sales volumes decreased by 8.6% from 2,460 thousand tons in 2005 to 2,249 thousand tons in 2006. The decrease in our liquid sales volumes is largely due to a change in commercial terms resulting in the recording of inventory balances and the disposal of Geoilbent in June 2005.

As at 31 December 2006, 179 thousand tons of stable gas condensate was recorded as «goods in transit» due to the change in commercial export terms. These volumes are recognized as inventory until such time as they are delivered to the final port of destination. NOVATEK also recorded 1billion cubic meters of natural gas as inventory and held in underground storage facilities maintained by OAO Gazprom. Natural gas volumes injected into underground storage facilities are expected to fluctuate period-to-period depending on market conditions, storage capacity, and field development plans.

Selected Balance Sheet Items
(in millions of Russian roubles)

	31 December 2006	31 December 2005
ASSETS
Non-current assets
Property, plant and equipment, net	66,734	65,675
Total non-current assets	68,508	66,840
Total current assets	15,818	11,922
Total assets	84,326	78,762
LIABILITIES AND EQUITY
Non-current liabilities
Long-term debt	543	892
Total non-current liabilities	10,552	10,781
Current liabilities
Short-term debt and current portion of long-term debt	2,565	8,202
Total current liabilities	5,098	10,432
Total liabilities	15,650	21,213
Equity attributable to OAO NOVATEK Shareholders
Total equity attributable to OAO NOVATEK shareholders	68,320	57,268
Minority interest	356	281
Total equity	68,676	57,549
Total liabilities and equity	84,326	78,762

The full set of audited consolidated IFRS financial statements and the related notes thereto as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations are available on the Company’s web site (www.novatek.ru).

PAO NOVATEK is the largest independent natural gas producer 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 Region, 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.

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