OJSC Rosneft (Rosneft or „the Company“) today, October 4, reported its consolidated financial results in accordance with US GAAP for the second quarter and first half of 2006, both periods ending June 30, 2006.

Financial review

In the first six months of 2006, Rosneft’s total revenues increased by 65.8% to USD 16,356 million from USD 9,864 million in the first six months of 2005. In the second quarter of 2006 Rosneft’s total revenues increased by 60.7% to USD 8,840 million from USD 5,501 million in the second quarter of 2005. In the first six months of 2006 EBITDA grew by 26.5% to USD 4,178 million from USD 3,302 million in the first six months of 2005. In the second quarter of 2006 EBITDA increased by 28.7% to USD 2,261 million from USD 1,757 million in the second quarter of 2005. Net income adjusted for the sale of CJSC Sevmorneftegaz and minority interest in the income of subsidiaries increased by 14.2% to USD 1,953 million as for the first six months of 2006 from USD 1,710 million as for the first six months of 2005. Similarly, Net income for the second quarter of 2006, adjusted for the sale of CJSC Sevmorneftegaz and minority interest in the income of subsidiaries, increased by 13.3% to USD 1,108 million from USD 978 million in the second quarter of 2005.

In the first six months of 2006 return on average capital employed (annualized) increased to 24.1% from 20.4%. Return on average equity (annualized) decreased to 39% from 47.8% as the Company’s capital structure continued to normalize. In particular, increased equity, led to a decrease in gearing to 51% as of June 30, 2006 from 54% as of December 31, 2005, indicating further progress by the Company toward achieving its mid-term target of 30%.

In the first six months of 2006, the Company further strengthened its cash flow generation. In particular, net cash provided by operating activities increased by 141.9% to USD 2,823 million compared to USD 1,167 million in the first six months of 2005. Capital expenditures increased by 56.8% to USD 1,403 million from USD 895 million. This increase is primarily attributed to the expansion of operations at Yuganskneftegaz and commencement of full-scale development at the Vankor field. Adjusted free cash flow before interest increased by a factor of 3.16 to USD 1,785 million from USD 565 million.

In the first six months of 2006 crude oil production of the consolidated subsidiaries increased by 8.2% to 38.111 million tonnes (1,540 kbpd) from 35.227 million tonnes (1,424 kbpd) in the same period of 2005. In the second quarter of 2006 crude oil production of the consolidated subsidiaries increased by 9.8% to 19.504 million tonnes (1,568 kbpd) from 17.757 million tonnes (1,427 kbpd) in the second quarter of 2005. In the first six months of 2006 crude oil production including equity share in affiliates increased by 8.1% to 38.429 million tonnes (1,553 kbpd) from 35.549 million tonnes (1.437 kbpd) in the first six months of 2005. In the second quarter of 2006 crude oil production including equity share in affiliates increased by 9.1% to 19.565 million tonnes (1,573 kbpd) from 17.925 million tonnes (1,441 kbpd) in the second quarter of 2005. Production growth in the first half of 2006 was mainly driven by increased production at Yuganskneftegaz (increase by 8.5% to 26.9 million tonnes (1,085 kbpd) from 24.8 million tonnes (1,001 kbpd)) and Severnaya Neft (increase by 24% to 2.8 million tonnes (111 kbpd) from 2.2 million tonnes (90 kbpd)). Natural and associated gas production by consolidated companies increased by 10.6% to 6.77 bcm in the first six months of 2006 from 6.12 bcm in the first six months of 2005. In the second quarter of 2006 natural and associated gas production by consolidated companies grew 4.6% to 3.21 bcm from 3.07 bcm in the second quarter of 2005. These increases came mainly from fields at Krasnodarneftegaz and Selkupneftegaz.

In line with Rosneft’s strategy of continuous upstream portfolio expansion, the Company made a number of acquisitions. In the first six months of 2006, the Company acquired licenses for exploration and development of the Tukolandsky, Vadinsky and Pendomayakhsky blocks in the Krasnoyarsk Territory as well as licenses for exploration and development of the East Sugdinsky, Sanarsky, Mogdinsky and Danilovsky blocks in the Irkutsk Region. As a result of these acquisitions, the Company added 2.8 billion barrels of category C3 and D crude oil resources and 318 bcm of category C3 and D gas resources. The amount paid for these and other licenses during the first six months of 2006 totaled USD 464 million.

In the first half of 2006, Rosneft announced its intention to exercise its option to acquire 51% of shares in OJSC Udmurtneft from Sinopec (China Petroleum & Chemical Corp), Sinopec having reached an agreement with TNK-BP (owner of 96.86% of Udmurtneft) on the acquisition of the Udmurt enterprise’s assets. The option exercise by Rosneft for the acquisition of the controlling stake in Udmurtneft will be completed on the basis of an option agreement reached between Rosneft and Sinopec in May of this year.

In July 2006, Rosneft completed the initial public offering of its shares and global depositary receipts. The total amount of funds raised during the placement was USD 10.6 billion making Rosneft’s IPO the fifth largest in the world. Rosneft’s shares have been listed and are traded on Russia’s RTS and MICEX exchanges, and the GDRs are traded on the London Stock Exchange under icker ROSN.

Rosneft’s US GAAP financial statements and management discussion and analysis for the first six months of 2006 and previous periods are made available for  download at www.rosneft.com.