OJSC Rosneft (Rosneft or “the Company”) today, May 23, reported its consolidated financial results in accordance with US GAAP for the full year 2005, reflecting the period ending December 31, 2005.

Financial review

Rosneft’s total revenues increased to USD 23,951 million in 2005 from USD 5,275 million in 2004. EBITDA grew to $7,030 million from 1,521 million. Similarly, net income increased from USD 837 million to USD 4,159 million. Net income adjusted for the sale of CJSC Sevmorneftegaz and minority interest in the income of subsidiaries increased from USD 903 million to USD 3,616 million. In 2005 the Company demonstrated improved performance in almost all its key indicators, including EBITDA margin (29.4% in 2005 vs. 28.8% in 2004), ROAE (47.7 vs. 19.6%) and ROACE (21.7% vs. 7.5%).

The Company’s strong financial performance was underpinned by its stabilization of Yuganskneftegaz operations in the first half of the year, a favorable price environment for oil and related products, significant organic growth in production, logistics optimization and continued focus on efficiency.

The turnaround at Yuganskneftegaz under Rosneft’s management is now in full swing, with daily oil production growing from 1005 kbpd (thousand barrels per day) on January 1, 2005 to 1094 kbpd on December 31, 2005, an increase of 8.7%. Daily production growth at other subsidiaries over the 12 months of 2005 equaled 11.8% from 446 kbpd on January 1, 2005 to 501 kbpd on December 31, 2005). Severnaya Neft, an industry leader in organic production growth, increased its output 36% from 81 kbpd to 110 kbpd. Purneftegaz, our second largest subsidiary maintained its production at 194 kbpd. Rosneft’s total oil production reached 1,595 kbpd on December 31, 2005, compared with 1,451 kbpd on January 1, 2005. Rosneft now ranks second in Russia in terms of daily oil production.

In 2005 the balance sheet of the Company saw substantial improvements as net debt was reduced by 13% to USD 11,030 at December 31, 2005 from USD 12,709 million as of December 31, 2004., representing a reduction in gearing ratio to 54% from 68% and substantial progress towards the Company’s target gearing level of 30%.

Net cash provided by operating activities was USD 2,912 million compared to USD 707 million in 2004, an increase of 312%. Strong operating cashflow was achieved despite significant negative impact of changes in working capital, of which the major portion was one-off and related to almost $2 billion of working capital needs including increased payables arising following the Yuganskneftegaz acquisition. The new scale of the Company’s production operations resulted in a significant increase in capital expenditure to USD 2,085 million in 2005 vs. USD 853 million in 2004, an increase of 144%, with the bulk of the amount invested in Yuganskneftegaz.

In line with our strategy to further expand our upstream portfolio, the Company made a number of acquisitions in 2005, including licenses for exploration and development of the East Sugdinsky and Vorgamosursky blocks, as well as a 25.94% stake in Verkhnechonskneftegaz, thereby strengthening our position in Eastern Siberia and Timano-Pechora. The company also increased its ownership in certain subsidiaries including Krasnodarneftegaz and Selkupneftegaz.

Rosneft’s audited US GAAP financial statements for 2005 and previous periods are available for download at www.rosneft.ru