Gazprom Neft thinks that Moscow oil refinery’s performance results in the year 2006 are unsatisfactory

JSC Gazprom Neft carried out an analysis of Moscow oil refinery’s financial indicators which were published in the refinery’s press- release from 1.03.07, and thinks that Moscow oil refinery’s performance results in the year 2006 are unsatisfactory.

Moscow oil refinery’s results improvement in 2006 in comparison with 2005 is an outcome of the common tendency of the refining margin increase in Russian refineries in conditions of favorable market outlook.

However by comparison of Moscow oil refinery’s performance results with other Russian oil refineries we can see that a net profit published in the press release (80 million rubles) in terms of tons is in 5 times lower than, for example, in Yaroslavnefteorgsintez. An oil refining margin in the Moscow oil refinery is twice as small as in the Omsk oil refinery.

These facts give an evidence of the refinery’s activities low effectiveness, refinery’s and its shareholders’ short-received profit.

Moreover, quality of the Moscow oil refinery’s product portfolio doesn’t meet modern market requirements.

The cause of the present situation in the Moscow oil refinery is a low quality of the corporate management and the shareholders’ long- running conflict. Nowadays, the Moscow oil refinery’s board of directors represents interests only of one shareholder – the Moscow oil and gas company. Shareholders owning 49% of shares are not admitted to the refinery’s management.

In addition, the Moscow oil refinery’s top management tries to create the appearance that refinery’s shareholders -the Moscow oil and gas company and Gazprom Neft – together participate in refinery’s management. However this information doesn’t quadrate to facts, because Gazprom Neft legally is not able to make decisions concerning refinery’s activities having no representatives in the in refinery’s management.