21NOV201218451513ROSNEFT OIL COMPANY

U.S.$10,000,000,000 Programme for the Issuance of Loan Participation Notes

to be issued by, but with limited recourse to,Rosneft International Finance Limited

for the sole purpose of financing loans to

ROSNEFT OIL COMPANYUnder the Programme for the Issuance of Loan Participation Notes (the Programme) described in this base prospectus (the Base Prospectus), Rosneft International FinanceLimited (the Issuer), subject to compliance with all relevant laws, regulations and directives, may from time to time issue loan participation notes (the Notes) on the terms setout herein, as completed by a final terms document (each, Final Terms) or a series prospectus (each, Series Prospectus) setting out the specific terms of each issue. Theaggregate principal amount of Notes outstanding will not at any time exceed U.S.$10,000,000,000 (or the equivalent in other currencies).

Notes will be issued in Series (as defined in ‘‘Overview of the Programme’’) and the sole purpose of issuing each Series will be to finance loans (each a Loan) to Rosneft OilCompany (the Company) as borrower, on the terms of a facility agreement between the Issuer and the Company dated 28 November 2012 (the Facility Agreement), asamended, supplemented and replaced from time to time and as amended and supplemented by a loan supplement to be entered into in respect of each Loan on each IssueDate (as defined below) (each a Loan Supplement and, together with the Facility Agreement, each a Loan Agreement) between the Issuer and the Company. Except asprovided in the Trust Deed (as defined herein), the Issuer will (a) charge, in favour of Deutsche Trustee Company Limited (the Trustee) for the benefit of itself and theNoteholders (as defined herein), by way of first fixed charge as security for its payment obligations in respect of each Series of Notes and under the Trust Deed certain of itsrights and interests under the relevant Loan Agreement, including its right to principal, interest and other amounts as lender under the relevant Loan Agreement andamounts received pursuant to the relevant Loan in an account of the Issuer (as described herein), in each case other than the Reserved Rights (as defined in the Trust Deed)and certain amounts relating to the Reserved Rights and (b) assign, in favour of the Trustee for the benefit of itself and the Noteholders, certain rights under the relevantLoan Agreement other than the Reserved Rights (the Assigned Rights).

In each case where amounts of principal, interest and additional amounts (if any) are stated to be payable in respect of a Series of Notes, the obligation of the Issuer to makeany such payment constitutes an obligation only to account to holders of the Notes (Noteholders), on each date upon which such amounts of principal, interest and additionalamounts (if any) are due in respect of such Series of Notes, for an amount equivalent to all principal, interest and additional amounts (if any, other than amounts received bythe Issuer in respect of the Reserved Rights) actually received by or for the account of the Issuer pursuant to the corresponding Loan Agreement. The Issuer will have noother financial obligations under the Notes. Noteholders will be deemed to have accepted and agreed that they will be relying solely on the covenant to pay under therelevant Loan Agreement and the credit and financial standing of the Company in respect of the financial servicing of the Notes.

AN INVESTMENT IN THE NOTES INVOLVES A HIGH DEGREE OF RISK. PROSPECTIVE INVESTORS SHOULD HAVE REGARD TO THE FACTORSDESCRIBED UNDER THE SECTION ENTITLED ‘‘RISK FACTORS’’ BEGINNING ON PAGE 16 OF THIS BASE PROSPECTUS.

The Notes and the corresponding Loans (together, the Securities) have not been, and will not be, registered under the United States Securities Act of 1933 (the Securities Act) orwith any securities regulatory authority of any State or other jurisdiction of the United States. The Notes may not be offered or sold within the United States or to, or for theaccount or benefit of, US persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Notes arebeing offered and sold outside the United States to non-US persons in reliance on Regulation S (Regulation S) under the Securities Act (the Regulation S Notes) and within theUnited States to qualified institutional buyers (QIBs), as defined in Rule 144A (Rule 144A) under the Securities Act, that are also qualified purchasers (QPs), as defined inSection 2(a)(51) of the Investment Company Act, in reliance on the exemption from registration under the Securities Act provided by Rule 144A and the exemption fromregistration under the Investment Company Act provided by Rule 3(c)(7) (the Rule 144A Notes). Prospective purchasers are hereby notified that sellers of the Notes may berelying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. For a description of these and certain further restrictions on offers, salesand transfers of the Notes and distribution of this Base Prospectus, see ‘‘Subscription and Sale’’ and ‘‘Transfer Restrictions’’.

This Base Prospectus has been approved by the Central Bank of Ireland (the Central Bank), as competent authority under Directive 2003/71/EC (the Prospectus Directive).The Central Bank only approves this Base Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Directive. Such approvalrelates only to the Notes that are to be admitted to trading on a regulated market for the purposes of Directive 2004/39/EC and/or which are to be offered to the public in anyMember State of the European Economic Area. Application will be made to the Irish Stock Exchange for the Notes issued under the Programme during the period of12 months from the date hereof to be admitted to the Official List (the Official List) and trading on its regulated market (the Main Securities Market). Reference in this BaseProspectus to Notes being ‘‘listed’’ (and all related references) shall mean that such Notes have been admitted to trading on the Main Securities Market. The language of thisBase Prospectus is English. Certain legislative references and technical terms have been cited in their original language in order that the correct technical meaning may beascribed to them under applicable law. Unlisted Notes may also be issued pursuant to the Programme. The relevant Final Terms in respect of the issue of any Notes willspecify whether or not such Notes will be listed on the Irish Stock Exchange (or any other stock exchange).

Regulation S Notes will initially be represented by interests in a global unrestricted Note in registered form (each, a Regulation S Global Note), which will be deposited with acommon depositary for Euroclear Bank SA/NV (Euroclear) and Clearstream Banking, société anonyme (Clearstream, Luxembourg), and registered in the name of thenominee of the common depository, on its issue date as set out in the relevant Final Terms (the Issue Date). Beneficial interests in a Regulation S Global Note will be shownon, and transfers thereof will be effected only through records maintained by, Euroclear or Clearstream, Luxembourg. Rule 144A Notes will initially be represented by oneor more global restricted Note in registered form (each, a Rule 144A Global Note and together with any Regulation S Global Notes, the Global Notes), which will be depositedwith a custodian for, and registered in the name of Cede & Co., the nominee of, The Depository Trust Company (DTC) on its Issue Date. Beneficial interests in a Rule 144AGlobal Note will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its participants. See ‘‘Clearing and Settlement’’. Individualdefinitive Notes in registered form will only be available in certain limited circumstances as described herein.

The minimum specified denomination of any Notes issued under the Programme shall be A100,000 (or its equivalent in any other currency as at the date of issue of theNotes), provided that (i) interests in the Rule 144A Notes shall be held in amounts of not less than U.S.$200,000 (or its equivalent in other currencies) and (ii) Notes with amaturity of less than 365 days shall be held in amounts of not less than A300,000 (or its equivalents in other currencies).

The Programme has been assigned ratings of BBI- CUP by Standard & Poor’s Credit Market Services Europe Limited (Standard & Poor’s), and (P)Baa1 by Moody’sInvestors Services Limited (Moody’s). The rating of certain Series of Notes to be issued under the Programme may be specified in the applicable Final Terms, and if suchSeries of Notes is rated, it will be rated by Standard & Poor’s, Moody’s and/or Fitch Ratings Limited (Fitch), as indicated in such applicable Final Terms. A rating is not arecommendation to sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating. In general, European regulatedinvestors are restricted from using a rating for regulatory purposes if such rating is not by a credit rating agency established in the European Community and registered underRegulation (EC) No 1060/2009 (the CRA Regulation) unless this is provided by a credit rating agency operating in the European Community before 7 June 2010 which hassubmitted application for registration in accordance with the CRA Regulation and such registration is not refused or (ii) the rating provided by a credit rating agency notestablished in the EEA but is endorsed by a credit rating agency established in the EEA registered under the CRA Regulation or (iii) the rating is provided by a credit ratingagency not established in the EEA is certified under the CRA Regulation. For the purposes of the credit ratings referred to in this Base Prospectus and in any applicableFinal Terms, each of Standard & Poor’s, Fitch and Moody’s is established in the European Union and is registered under the CRA Regulation. As such, each of Standard &Poor’s, Fitch and Moody’s is included in the list of credit rating agencies published by the European Securities and Markets Authority on its website in accordance with theCRA Regulation. Please also refer to ‘‘Risk Factors—Risks Related to the Issuer, the Notes and the Trading Market—Ratings of the Notes may be limited’’.

Arrangers and Permanent Dealers

Barclays Citigroup J.P. Morgan VTB Capital

Permanent Dealers

BofA Merrill Lynch Deutsche Bank Morgan Stanley

The date of this Base Prospectus is 28 November 2012

IMPORTANT INFORMATION ABOUT THIS BASE PROSPECTUS

This Base Prospectus comprises a base prospectus for the purposes of Article 5.4 of the ProspectusDirective and for the purpose of giving information with regard to the Issuer, the Company, as well as theCompany and its subsidiaries taken as a whole (Rosneft or the Group), which, due to the particular natureof the Issuer, the Company, the Group, the Notes and the Loans, is necessary to enable investors to makean informed assessment of the assets and liabilities, financial position, profits and losses and prospects ofthe Issuer, the Company and the Group. The Issuer (whose registered office appears on page 59 of thisBase Prospectus) and the Company (whose registered office appears on page 59 of this Base Prospectus)each accepts responsibility for the information contained in this Base Prospectus and any applicable FinalTerms in relation to Notes issued by it. To the best of the knowledge and belief of the Issuer and theCompany (having taken all reasonable care to ensure that such is the case) the information contained inthis Base Prospectus is factually accurate and does not omit anything likely to affect the import of suchinformation.

In addition, the Company, having made all reasonable enquiries, confirms that (i) this Base Prospectuscontains all information with respect to the Company, the Group, the Loans and the Notes that is materialin the context of the issue and offering of the Notes; (ii) the statements contained in this Base Prospectuswith regard to the Company are in every material particular true and accurate and not misleading; (iii) tothe best knowledge of the Company, the statements contained in this Base Prospectus relating to theGroup are in every material particular true and accurate and not misleading; (iv) the opinions,expectations and intentions expressed in this Base Prospectus with regard to the Company are honestlyheld, have been realised after considering all relevant circumstances and are based on reasonableassumptions; (v) there are no other facts in relation to the Company, the Group, the Loans and the Notes,the omission of which would, in the context of the issue and offering of the Notes, make any statement inthis Base Prospectus misleading in any material respect; and (vi) all reasonable enquiries have been madeby the Company to ascertain such facts and to verify the accuracy of all such information and statements.Accordingly, save as set out in the paragraph above, the immediately preceding sentence, and save as setout below, the Company accepts responsibility for the information contained in this Base Prospectus.

This Base Prospectus does not constitute an offer to sell Notes, or an invitation by or on behalf of theIssuer, the Company, the Arrangers or the Dealers (each as defined under ‘‘Overview of the Programme’’)to subscribe for or purchase any Notes.

This Base Prospectus is only being distributed to and is only directed at (i) persons who are outside theUnited Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Servicesand Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (iii) high net worth entities, andother persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order(all such persons together being referred to as relevant persons). The Notes are only available to, and anyinvitation, offer or agreement to subscribe, purchase or otherwise acquire such Notes will be engaged inonly with, relevant persons. Any person who is not a relevant person should not act or rely on thisdocument or any of its contents.

The distribution of this Base Prospectus and the offer or sale of the Notes in certain jurisdictions may berestricted by law. Persons who come into possession of this Base Prospectus are required by the Issuer, theCompany, the Arrangers and the Dealers to inform themselves about and to observe any such restrictions.

No person is authorised to provide any information or make any representation not contained in this BaseProspectus and any information or representation not contained in this Base Prospectus must not be reliedupon as having been authorised by or on behalf of the Issuer, the Company, the Trustee, the PayingAgents, Transfer Agents, Principal Paying Agent, Calculation Agent and Registrars (the Agents), any of theArrangers or the Dealers. Neither the delivery of this Base Prospectus nor any sale made in connectionherewith shall, at any time or in any circumstances, imply that the information contained in it is correct asat any time subsequent to its date or that there has been no adverse change in the financial position of theIssuer, the Company or the Group since the date hereof.

None of the Issuer, the Company, the Trustee, the Agents, the Arrangers or the Dealers or any of its ortheir respective representatives makes any representation or warranty, express or implied, to any offeree orpurchaser of the Notes offered hereby, regarding the legality of an investment by such offeree or purchaserunder applicable investment or similar laws. Each investor should consult with their own advisers as to thelegal, tax, business, financial and related aspects of any purchase of the Notes. To the fullest extentpermitted by law, none of the Arrangers or the Dealers accepts any responsibility for the contents of this

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Base Prospectus or for any other statement made or purported to be made by an Arranger or a Dealer oron its behalf in connection with the Issuer, the Company or the issue and offering of the Notes. EachArranger and each Dealer accordingly disclaims any and all liability whether arising in tort or contract orotherwise (save as referred to above) which it might otherwise have in respect of this Base Prospectus orany such statement.

Prospective purchasers must comply with all laws that apply to them in any place in which they buy, offeror sell any Notes or possess this Base Prospectus. Any consents or approvals that are needed in order topurchase any Notes must be obtained by such prospective purchaser. The Company, the Issuer, theTrustee, the Agents, the Arrangers and the Dealers are not responsible for compliance with these legalrequirements. The appropriate characterisation of any Notes under various legal investment restrictions,and thus the ability of investors subject to these restrictions to purchase such Notes, is subject to significantinterpretative uncertainties. No representation or warranty is made as to whether or the extent to whichany Notes constitute a legal investment for prospective investors whose investment authority is subject tolegal restrictions. Such prospective investors should consult their legal advisers regarding such matters.This Base Prospectus is not intended to provide the basis of any credit or other evaluation and should notbe considered as a recommendation by the Issuer, the Company, the Arrangers or the Dealers that anyrecipient of this Base Prospectus should purchase the Notes. Each potential purchaser of Notes shoulddetermine for itself the relevance of the information contained in this Base Prospectus and its purchase ofNotes should be based upon such investigation as it deems necessary. None of the Arrangers or theDealers undertakes to review the financial condition or affairs of the Issuer or the Company during the lifeof the arrangements contemplated by this Base Prospectus nor to advise any investor or potential investorin the Notes of any information coming to the attention of any of the Arrangers or the Dealers.

The Arrangers and the Dealers and their respective affiliates have performed and expect to perform in thefuture various financial advisory, investment banking and commercial banking services for, and mayarrange non-public market financing for, and enter into derivatives transactions with, the Company and itsaffiliates. The Arrangers and the Dealers are acting exclusively for the Company and the Issuer and no oneelse in connection with the Programme and the Notes and will not be responsible to any other person forproviding the protections afforded to their respective clients or for providing advice in relation to thisoffering.

This Base Prospectus contains summaries with respect to certain terms of the Trust Deed and the FacilityAgreement, but reference should be made to the actual documents for complete information with respectthereto. These documents will be made available free of charge to prospective investors upon request tothe Company or at the office of the Principal Paying Agent in London.

The Issuer is a company incorporated for an unlimited duration under the laws of Ireland. The registeredoffice of the Issuer is located at 5 Harbourmaster Place, IFSC, Dublin 1, Ireland. For further informationabout the Issuer, see ‘‘The Issuer’’.

This Base Prospectus has been filed with and approved by the Central Bank as required by the Prospectus(Directive 2003/71/EC) Regulations 2005 (the Prospectus Regulations). This Base Prospectus, as approvedby the Central Bank, will be filed with the Companies Registration Office in accordance withRegulation 38(1)(b) of the Prospectus Regulations.

Where the Issuer wishes to issue Notes with a maturity of less than one year, it shall ensure that the Notesare issued in accordance with an exemption granted under section 8(2) of the Central Bank Act, 1971, asamended.

Any investment in any Notes does not have the status of a bank deposit and is not within the scope of thedeposit protection scheme operated by the Central Bank. The Issuer is not and will not be regulated by theCentral Bank as a result of issuing the Notes.

NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, IS MADE BY THEARRANGERS OR THE DEALERS AS TO THE ACCURACY OR COMPLETENESS OF THEINFORMATION SET FORTH IN THIS BASE PROSPECTUS, AND NOTHING CONTAINED INTHIS BASE PROSPECTUS IS, OR SHALL BE RELIED UPON AS, A PROMISE ORREPRESENTATION, WHETHER AS TO THE PAST OR THE FUTURE.

EACH PERSON RECEIVING THIS BASE PROSPECTUS ACKNOWLEDGES THAT SUCHPERSON HAS NOT RELIED ON THE ARRANGERS, THE DEALERS OR ANY OF THEIRAFFILIATES OR ANY PERSON ACTING ON THEIR BEHALF IN CONNECTION WITH ITS

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INVESTIGATION OF THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION OR ITSINVESTMENT DECISION. EACH PERSON CONTEMPLATING MAKING AN INVESTMENT INANY NOTES ISSUED UNDER THIS PROGRAMME FROM TIME TO TIME MUST MAKE ITSOWN INVESTIGATION AND ANALYSIS OF THE CREDITWORTHINESS OF THE ISSUER, THECOMPANY AND THE GROUP AND ITS OWN DETERMINATION OF THE SUITABILITY OFANY SUCH INVESTMENT, WITH PARTICULAR REFERENCE TO ITS OWN INVESTMENTOBJECTIVES AND EXPERIENCE, AND ANY OTHER FACTORS WHICH MAY BE RELEVANTTO IT IN CONNECTION WITH SUCH INVESTMENT. EACH PURCHASER OF THE NOTESSHOULD BE AWARE THAT IT MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OFTHIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

INFORMATION CONTAINED IN THIS BASE PROSPECTUS IS NOT AN OFFER, OR ANINVITATION TO MAKE OFFERS, SELL, PURCHASE, EXCHANGE OR TRANSFER ANYSECURITIES IN THE RUSSIAN FEDERATION, AND DOES NOT CONSTITUTE ANADVERTISEMENT OF OFFERING OF ANY SECURITIES IN THE RUSSIAN FEDERATION. THESECURITIES REFERENCED TO IN THIS BASE PROSPECTUS HAVE NOT BEEN AND WILLNOT BE REGISTERED IN THE RUSSIAN FEDERATION OR ADMITTED TO PUBLICPLACEMENT AND/OR PUBLIC CIRCULATION IN THE RUSSIAN FEDERATION AND ARENOT INTENDED FOR ‘‘PLACEMENT’’ OR ‘‘CIRCULATION’’ IN THE RUSSIAN FEDERATIONEXCEPT AS PERMITTED BY RUSSIAN LAW.

THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE U.S. SECURITIES ANDEXCHANGE COMMISSION OR ANY OTHER FEDERAL OR STATE SECURITIES COMMISSIONOR ANY OTHER REGULATORY AUTHORITY IN THE UNITED STATES, NOR HAVE THEFOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THEOFFERING OF NOTES OR THE ACCURACY OR THE ADEQUACY OF THIS BASEPROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE INTHE UNITED STATES. THE NOTES WILL NOT BE REGISTERED UNDER THE SECURITIESACT. SUBJECT TO CERTAIN EXCEPTIONS, NOTES MAY NOT BE OFFERED OR SOLD IN THEUNITED STATES OR TO U.S. PERSONS. FURTHER INFORMATION WITH REGARD TORESTRICTIONS ON THE OFFERS AND SALE OF THE NOTES AND THE DISTRIBUTION OFTHIS BASE PROSPECTUS IS SET OUT UNDER ‘‘SUBSCRIPTION AND SALE’’.

NOTICE TO NEW HAMPSHIRE RESIDENTS

NEITHER THE FACT THAT A REGISTRATION STATEMENT, OR AN APPLICATION FOR ALICENCE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISEDSTATUTES (RSA 421-B) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT ASECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OFNEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEWHAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE ANDNOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OREXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THESECRETARY OF STATE OF NEW HAMPSHIRE HAS PASSED IN ANY WAY UPON THE MERITSOR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSONS,SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TOANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATIONINCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

AVAILABLE INFORMATION

The Company has agreed that, for so long as any Notes are ‘‘restricted securities’’ within the meaning ofRule 144(a)(3) under the Securities Act, the Company will, during any period in which it is neither subjectto Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act) norexempt from reporting pursuant to Rule 12g3-2(b) thereunder, provide to any holder or beneficial ownerof such restricted securities or to any prospective purchaser of such restricted securities designated by suchholder or beneficial owner or to the Trustee for delivery to such holder, beneficial owner or prospectivepurchaser, in each case upon the request of such holder, beneficial owner, prospective purchaser orTrustee, the information required to be provided by Rule 144A(d)(4) under the Securities Act.

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STABILISATION

In connection with the issue of any Series of Notes, the Dealers (if any) appointed as stabilising manager(s)(the Stabilising Manager(s)) (or any person acting on behalf of any Stabilising Manager(s)) may over-allotNotes or effect transactions with a view to supporting the market price of the Notes at a level higher thanthat which might otherwise prevail. However, this is no assurance that the Stabilising Manager(s) (or anyperson acting on behalf of any Stabilising Manager(s)) will undertake stabilisation action. Any stabilisationaction may begin on or after the date on which adequate public disclosure of the terms of the offer of therelevant Series of Notes is made and, if begun, may be ended at any time, but it must end no later than theearlier of 30 days after the issue date of the relevant Series of Notes and 60 days after the date of theallotment of the relevant Series of Notes. Any stabilisation action or over-allotment must be conducted bythe relevant Stabilising Manager(s) (or any person acting on behalf of any Stabilising Manager(s)) inaccordance with all applicable laws and rules.

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TABLE OF CONTENTS

OVERVIEW OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

ENFORCEABILITY OF JUDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

SUPPLEMENTAL BASE PROSPECTUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

PRESENTATION OF FINANCIAL AND OTHER INFORMATION . . . . . . . . . . . . . . . . . . . 52

OVERVIEW OF THE PROGRAMME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

EXCHANGE RATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

CAPITALISATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

SUMMARY CONSOLIDATED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 69

UNAUDITED PRO FORMA FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 77

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

THE RUSSIAN OIL AND GAS INDUSTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

REGULATION OF THE RUSSIAN OIL INDUSTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132

BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206

SHAREHOLDING STRUCTURE AND DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214

RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215

FACILITY AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218

TERMS AND CONDITIONS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262

THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277

TRANSFER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279

SUMMARY OF PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM . . . . . . . . 284

SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290

TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294

CERTAIN U.S. EMPLOYEE BENEFIT PLAN CONSIDERATIONS . . . . . . . . . . . . . . . . . . . 306

FORM OF FINAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308

LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315

GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316

INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

APPENDIX I: CLASSIFICATION OF RESERVES AND RESOURCES . . . . . . . . . . . . . . . . . A-1

APPENDIX II: GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7

ANNEX A: EXTRACT FROM DEGOLYER AND MACNAUGHTON RESERVESREPORTS DATED 31 DECEMBER 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-11

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-12

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OVERVIEW OF THE GROUP

This overview may not contain all the information that may be important to prospective purchasers of the Notesand, therefore, should be read in conjunction with this entire Base Prospectus, including the more detailedinformation regarding Rosneft’s business and the Financial Statements and related notes included elsewhere inthis Base Prospectus. Certain statements in this overview include forward-looking statements that also involverisks and uncertainties as described in ‘‘Forward-Looking Statements’’. Information is presented in this BaseProspectus on the basis of certain conventions and definitions that are set forth in ‘‘Presentation of Financialand Other Information.’’

Rosneft is a vertically integrated oil and gas group with upstream and downstream operations locatedprincipally in Russia. Rosneft’s three key areas of operations are exploration and production ofhydrocarbons, production of petroleum products and petrochemicals as well as distribution and sales of itsproducts.

Headquartered in Moscow, Rosneft is one of the world’s largest publicly-traded oil companies by provedreserves of hydrocarbons, and in terms of proved liquid hydrocarbon reserves and crude oil production.According to the Reserves Report (as defined in ‘‘Presentation of Financial and Other Information.’’)prepared by D&M, at 31 December 2011, Rosneft’s proved hydrocarbon reserves under PRMS standardswere 23,352 million barrels of oil equivalent, consisting of 18,351 million barrels of oil and 850 billion cubicmetres of gas. According to PRMS, as of 31 December 2011, Rosneft’s proved reserves had reserve life of25 years at current production level (including 21 years for oil and 68 years for gas). Rosneft’s reserves arelocated both in traditional oil and gas producing regions (the southern part of European Russia, WesternSiberia, central Russia and Timano-Pechora in northern Russia) and in new regions (Eastern Siberia, theRussian Far East and sea shelfs). See ‘‘Classification of Reserves and Resources’’ and ‘‘Presentation ofFinancial and Other Information’’.

In addition to its reserves, Rosneft has substantial resources potential. These resources are primarilylocated in Russian offshore and Eastern Siberia. As of 30 September 2012, Rosneft held licences for 29offshore areas in Russia’s seas and has acquired licences for two additional offshore areas inNovember 2012. According to the Resources Report, Rosneft’s onshore prospective resources (excludingSharjah) were estimated at 10,947 million barrels of oil and condensate and 747 billion cubic metres of gas,prospective resources at 12 out of Rosneft’s 31 offshore areas were estimated at 66,067 million barrels ofoil and condensate resources and 8,863 billion cubic metres of gas resources. During the course of 2011and 2012, Rosneft acquired 19 new blocks in offshore areas, however, their resource potential was notrecognised in the Resources Report, because ownership of these blocks had not been fully transferred toRosneft as of the time when the Resources Report was prepared.

Rosneft also conducts exploration activities outside Russia, concentrated mostly in Algeria, Abkhazia,Canada, United Arab Emirates and Venezuela. In particular, Rosneft is involved in two projects fordevelopment of two oil fields—Junin-6 and Carabobo-2 located in the Faja extra heavy oil belt in the basinof Orinoco river in Venezuela in partnership with Corporación Venezolana del Petróleo S.A. (CVP), asubsidiary of PDVSA. The first block—Junin-6—will be developed by PetroMiranda S.A., a joint venturecreated by CVP and NPC. NPC is a joint venture of five Russian companies (Rosneft, Gazprom Neft,TNK-BP, Lukoil and Surgutneftegas) each having a 20% stake in NPC. CVP holds a 60% interest and NPCholds a 40% interest in the joint venture. According to an audit by D&M, as of 31 December 2011contingent resources of the block accounting for Rosneft’s share equal to 803 million barrels of oil and2.86 billion cubic metres of gas, according to PRMS. In September 2012, Rosneft has entered into amemorandum of understanding with CVP in respect of establishment of a joint venture for thedevelopment of Carabobo-2 block and has agreed the form of agreement with CVP for the establishmentand management of the joint venture, which is currently awaiting approval by the National Assembly ofVenezuela. In the event of approval of the form of joint venture agreement by the National Assembly ofVenezuela, CVP will hold a 60% interest and Rosneft will hold a 40% interest in the new joint venture.According to PDVSA estimate, oil-in-place reserves at Carabobo-2 block amount to approximately6.5 billion tonnes of oil.

Rosneft produces hydrocarbons through 12 fully consolidated production and development units, fourproducing joint-ventures (which Rosneft accounts for using the equity method) and through Sakhalin-1, anunincorporated joint venture consolidated into Rosneft under the proportionate consolidation method.Rosneft production and development operations spread across all major oil and gas regions of Russia:Western Siberia, central Russia (Samara Region and Republic of Udmurtia), northern Russia (Timano-Pechora), Eastern Siberia, the Russian Far East (Sakhalin Island), as well as the North Caucasus and other

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parts of southern Russia. Except where expressly stated otherwise, all Rosneft operational informationherein includes the share of any minority interest owners and also Rosneft’s proportionate share of therespective results of operations accounted for using the equity method.

During the nine months ended 30 September 2012, Rosneft produced 664.5 million barrels of crude oil and11.02 billion cubic metres of natural and associated gas which is 2.5% and 19.0% more than for the sameperiod of the previous year. Rosneft produced 868.6 million barrels of crude oil and 12.79 billion cubicmetres of natural and associated gas in the year ended 31 December 2011. This represents a 2.5% and3.6% growth in comparison with the previous year volumes respectively. In 2011, Rosneft’s average dailyproduction output was at 2,380 thousand barrels per day, compared to 2,322 and 2,182 thousand barrelsper day in 2010 and 2009, respectively.

Rosneft’s downstream refining assets include seven large oil refineries in Russia (at Komsomolsk, Tuapse,Angarsk, Achinsk, Samara, Novokuibyshevsk and Syzran, with an aggregate annual throughput capacity of51.8 million tonnes of crude oil as of 31 December 2011), and four mini-refineries with a total aggregateannual capacity of 0.5 million tonnes. Rosneft also owns a 50% stake in Strezhevsky mini-refinery inWestern Siberia. In 2011, Rosneft acquired a 50% interest in Ruhr Oel GmbH (a joint venture betweenRosneft and BP), which owns stakes in four refineries in Germany—Gelsenkirchen (Ruhr Oel GmbHstake equals 100%), MiRO (24%), PCK Schwedt (37.5%), and Bayernoil (25%). The share of RuhrOel GmbH refining capacity in these four refineries equals 23.2 million tonnes per year (Rosneft’s netholding in Ruhr Oel GmbH refining capacity is 11.6 million tonnes), which is approximately 20% of overallGerman refining capacity. Total throughput of Rosneft’s refineries amounted to 57.9 million tonnes in 2011(including Rosneft’s share in total throughput of Ruhr Oel GmbH refineries of 7.21 million tonnes). See‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations-Changes in theProduction Volumes of Crude Oil, Gas and Petroleum Products—Petroleum Product Output’’.

Rosneft produces petrochemicals (ethylene, propylene and polyethylene) at the Angarsk Polymer Plant inRussia, with annual ethylene production capacity of 0.2 million tonnes per year and annual propyleneproduction capacity of 0.1 million tonnes per year and at the Gelsenkirchen refinery, which has apetrochemical facility with 1.0 million tonnes of ethylene capacity. Rosneft also owns the Neftegorsk andOtradnensky gas-processing plants in Samara region with total annual capacity of 1.9 billion cubic metresof gas.

Rosneft supplies crude oil to its own refineries in Russia and Germany and sells crude oil in the domesticand international markets (including, primarily, CIS, European and Asian-Pacific countries). Rosneftprocessed 37.75 million tonnes and 50.65 million tonnes of crude oil at its Russian refineries during the9 months ended 30 September 2012 and the 12 months ended 31 December 2011, respectively.

For the nine months ended 30 September 2012 Rosneft sold 49.9 million tonnes (365.0 million barrels) ofcrude oil to third parties, of which 0.5 million tonnes (3.6 million barrels) was sold on the domestic marketand 49.4 million tonnes (361.4 million barrels) was exported. The Company exported 31.3 million tonnes(229.0 million barrels) of oil to Europe and to countries other than CIS and Asia-Pacific countries,4.7 million tonnes (34.4 million barrels) of oil to the CIS and 13.4 million tonnes (98.0 million barrels) toAsia-Pacific countries.

Rosneft sold 64.2 million tonnes (469.6 million barrels) of crude oil in 2011, of which 0.3 million tonnes(2.2 million barrels) were sold on the domestic market and 63.9 million tonnes (467.4 million barrels) wereexported. The Company exported 41.2 million tonnes (301.4 million barrels) of oil to Europe and tocountries other than CIS and Asia-Pacific countries, 4.6 million tonnes (33.6 million barrels) of oil to theCIS and 18.1 million tonnes (132.4 million barrels) to Asia-Pacific countries out of which 15 million tonnes(110 million barrels) were delivered by pipeline to China under a long term contract, with the remainingamounts exported via the ports of Kozmino and De-Kastri.

Rosneft sold most of the crude oil that it exported to third party international oil traders, mainly viaTransneft transport capacities, including export pipelines and via Russian sea ports. Rosneft sold8.18 billion cubic metres and 9.74 billion cubic metres of gas in the 9 months ended 30 September 2012 andthe 12 months ended 31 December 2011 respectively. In 2011, Rosneft sold approximately 32% of its gasdirectly to Gazprom. Of the remaining 68%, Rosneft sold to independent gas traders and independentindustrial consumers, in both cases through the Unified Gas Supply System (UGSS), a gas transportationsystem owned and operated by Gazprom.

Rosneft owns developed infrastructure for the sale of petroleum products on the domestic market. TheCompany owns a chain of marketing companies engaged in wholesale and retail sale of petroleum

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products, including their storage, transport and transhipment. In the first nine months of 2012, Rosneftsold 16.2 million tonnes of petroleum products domestically and 17.6 million tonnes of petroleum productsfor export (excluding bunker fuel and petroleum products sold from Ruhr Oel GmbH refineries). Rosneftsold 21.43 million tonnes of petroleum products domestically and 24.85 million tonnes for export(excluding bunker fuel and petroleum products sold from Ruhr Oel GmbH refineries) in 2011. In the firstnine months of 2012 and in 2011, gasoline (including high and low octane gasoline) accounted for 38% and40% of petroleum products revenues on the domestic market, while diesel fuel accounted for 44% and45%, fuel oil accounted for 3% and 4%, and jet fuel accounted for 8% and 6%, respectively.

Rosneft’s retail business covers 44 regions of Russia from Murmansk in the north to the North Caucasus inthe south, and from Bryansk in the west to Sakhalin Island in the east. Rosneft sells gasoline, diesel fueland lubricants through its retail network. The Company’s network of filling stations consists ofapproximately 1,700 stations and is currently the second largest network of filling stations in Russia. TheCompany’s retail sales of petroleum products amounted to 5.0 million tonnes and 6.5 million tonnes forthe nine months ended 30 September 2012 and for 2011, respectively, which represented 11.7% and 11.9%of total petroleum products. Average daily sales volume of petroleum products per filling station was10.6 tonnes in 2011, compared to 8.7 tonnes in 2010 and 8.0 tonnes in 2009.

Rosneft is 75.16% owned by ROSNEFTEGAZ, which is fully owned by the Russian Federation, Rosneft isone of the largest tax payers in the Russian Federation with RUB 1,374 billion (U.S.$46.7 billion) chargedin taxes and export duties in 2011, which represented over 11% of the Russian total budget revenues,according to Russian Ministry of Finance. Rosneft has been recognised as a strategic company by theRussian Government and is one of the few Russian companies, which meet the licensing criteria for thedevelopment of the continental shelf of the Russian Federation.

Strategy

Rosneft aims to continue to develop its business to transform itself into a global energy company,providing consistently high returns to shareholders through sustainable growth, increased efficiency anddevelopment and application of innovative technologies. Rosneft sets for itself the following strategicobjectives:

Global leadership in production: maintain production levels at the existing fields, developing greenfieldprojects, offshore and tight oil reserves, exploring new resources, and expanding into international projects

As the world’s largest publicly-traded oil group by proved reserves of liquid hydrocarbons, ensuringeffective development of its reserves is one of Rosneft’s key objectives. Since its IPO in 2006 until 2011,Rosneft’s cumulative average growth rate for crude oil production was 8%. Rosneft produced 664.5 millionbarrels of crude oil during the nine months ended 30 September 2012 and 868.64 million barrels of crudeoil during 2011. Rosneft’s existing proved reserves consist of assets that are currently producing or underdevelopment. Rosneft intends to ensure the development of its reserves while maintaining industrycompetitive levels of capital expenditures and operating costs per barrel. The Group’s average lifting costsin 2011 calculated as exploration and development operating expenses divided by production volume wereat RUB 81.6 (U.S.$2.8) per barrel of oil equivalent in 2011.

Currently, the key production units for Rosneft are Yugansneftegaz and Purneftegaz in Western Siberia,Vankorneft in Eastern Siberia and Samaraneftegaz in Central Russia. Furthermore, Yurubcheno-Tokhomskoye field in Eastern Siberia and the northern extremity of the Chaivo field located on the shelfof the Sakhalin Island are important prospective producing assets for Rosneft. Rosneft expects these assetsto drive its production growth in the medium term.

Yuganskneftegaz is the key oil producing asset for Rosneft. It accounted for 56% of Rosneft’s total crudeoil production (including Rosneft’s share in production subsidiaries consolidated on equity basis) in 2011,having produced 488.14 million barrels of crude oil. Yuganskneftegaz’ assets are located primarily inWestern Siberia with the largest field, Priobskoye, being depleted by about 24% to date. Rosneft intends toapply enhanced oil recovery methods to increase reserve utilisation efficiency on Yuganskneftegaz’ fields.

Rosneft also plans to develop its new fields located in Eastern Siberia and the Far East. According to theReserves Report as of 31 December 2011, 2P reserves of the Vankorskoye field were estimated at3.3 billion barrels of oil equivalent. Commercial production at this field started only six years after theacquisition of this asset by Rosneft. See also ‘‘History’’. The advantage of the Vankorskoye field is not onlyits substantial reserves but also high average production rates of new wells which equal up to 3,500 barrels

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of oil per day. Rosneft owns 11 licences to areas around Vankorskoye field and Rosneft currently believesthat these areas have potential to increase its proved reserves.

Yurubcheno-Tokhomskoye field developed by VSNK is another important source of production growth forthe Group. According to the Reserves Report as of 31 December 2011, 2P reserves of Yurubcheno-Tokhomskoye field (including Tersk Kamov Licence Block) equal 997 million barrels of oil equivalent. TheGroup plans to start production at this field in 2016. Oil from Yurubcheno-Tokhomskoye field will beexported to the Asia-Pacific market through the ESPO pipeline. The production on Yurubcheno-Tokhomskoye field is currently expected to start in 2016 and Rosneft expects to reach peak productionlevel for this field at 100,000 barrels of oil per day by 2018.

The northern extremity of the Chaivo field, located offshore of Sakhalin island and developed bySakhalinmorneftegaz had 2P reserves of 136.7 million barrels of oil and condensate and 5.0 billion cubicmetres of gas, according to the Reserves Report as of 31 December 2011. The Group plans to startproduction at this field in 2014. Peak production is expected to reach 32,000 barrels of oil per day.

Extraction of tight oil from unconventional reservoirs at existing Rosneft fields in Western Siberia isanother potential source of production growth for Rosneft. Such reserves are concentrated in Achimov,Bazhenov and Tyumen formations. Amounts of tight oil reserves under Russian classification (ABC1+C2)at Rosneft licence areas are estimated by the Company at 5.8 billion barrels, with the production potentialof such reserves being in excess of 300,000 barrels per day. The Company has entered into cooperationagreement with ExxonMobil for the development of tight oil reserves and resources in Yuganskneftegaz’region of activity.

Replacement of extracted reserves is a key priority for Rosneft. The Group’s target level for proved reservereplacement ratio is set to be at least 100% of its annual production volume in any year. The proved oilreserve replacement ratio was 162% in 2011 under SEC standards.

According to the Annual Financial Statement for 2011, the Group’s finding and development costscalculated as the Group’s exploration and development costs divided by increase in hydrocarbon reservesamounted to RUB 84.13 (U.S.$2.86) per barrel of oil equivalent in 2011 – one of the lowest in the oilindustry.

Rosneft will concentrate its exploration efforts in the following geographical areas of Russia: licence areasaround Vankorskoye field, Irkutsk region and Evenkia in Eastern Siberia, and in the shelfs of the BlackSea, Azov Sea, Caspian Sea, Okhotsk Sea and Arctic seas.

According to Rosneft’s internal estimate, currently, approximately 90% of Rosneft’s prospective resources,amounting to approximately 189.58 billion barrels of oil equivalent (including 66,067 million barrels of oiland condensate resources and 8,863 billion cubic metres of gas resources included in the ResourcesReport), are concentrated in the Russian offshore, including approximately 138.82 billion barrels of oilequivalent in Barents Sea, Kara Sea and Pechora Sea shelfs, 24.21 billion barrels of oil equivalent in theBlack Sea, Azov Sea and Caspian Sea shelfs and 26.55 billion barrels of oil equivalent in the Okhotsk Seashelf. Rosneft actively cooperates with leading international oil companies in exploration of offshoreresources. In 2011 and 2012, Rosneft has signed strategic cooperation agreements (i) with ExxonMobil forthe joint exploration and development of subsoil of East Prinovozemelsky Blocks 1,2,3 blocks in Kara Seaand Tuapse Trough Licence Block in the Black Sea; (ii) with Eni for Fedynsky and Central Barents blocksin Barents Sea and the Western Chernomorsky block in the Black Sea and (iii) with Statoil for the jointexploration and development of Perseevsky block in Barents Sea and Kashevarovsky and Lisyansky blocksand Magadan 1 block in the Okhotsk Sea. Each agreement gives Rosneft partners a 33.33% interest inexchange for certain obligations to finance the geological exploration of the areas. Under the agreements,Rosneft’s partners will finance relevant exploration activities under carry financing arrangements for anaggregate amount of approximately U.S.$5 billion to cover several years of exploration. Agreements alsoprovide for the exchange of technologies and personnel training as well as give Rosneft the option toparticipate in certain international projects of its partners.

Rosneft intends to extend its resource potential in the Russian Arctic. The Company has applied forlicences in this region for subsoil blocks with large estimated resource potential.

Gas business development: monetisation of associated and natural gas reserves

As at 31 December 2011, Rosneft’s proved gas reserves were 850 billion cubic metres, with an additional388 billion cubic metres of probable reserves and 310 billion cubic metres of possible reserves under PRMSclassification. Over 90% of Rosneft’s proved gas reserves are located in Western Siberia (Purneftegaz and

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Yuganskneftegaz) and Eastern Siberia (Vankorneft). Purneftegaz is Rosneft’s largest production anddevelopment unit in terms of gas production, accounting for approximately 30% of Rosneft’s gasproduction in the nine months ended 30 September 2012. Purneftegaz accounts for 69% of Rosneft’sproven gas reserves.

In 2011, Rosneft’s natural and associated gas production was 12.79 billion cubic metres, which was 3.6%higher than in 2010, primarily as a result of increased production of associated gas in Samaraneftegaz,Vankorskoye field and Yuganskneftegaz.

Rosneft is undertaking a programme aimed at increasing its associated gas utilisation rate to 95% with aview to increase its overall gas production margins and improve its environmental compliance. Theprogramme envisages construction of gas gathering facilities, booster compressor stations andunderground storage facilities as well as gas operated power stations. As part of this programme, Rosneftis constructing the infrastructure for delivery of associated gas from the Vankorskoye field to Gazprom’sgas transport system. The construction of this infrastructure, which will enable Rosneft to implement anefficient utilisation system for associated gas, is a crucial element of Rosneft’s gas strategy. Theinfrastructure includes a gas pipeline to Khalmer-payutinskoye field, a gas preparation unit and acompressor station. Completion of the construction work is scheduled for 2013 and will enable utilisationof more than 95% of the gas produced at the field. This programme, when completed in 2013, willsubstantially increase Rosneft’s gas production.

Rosneft sells its gas in the domestic market only. Domestic market prices are currently lower than themarket prices in Europe or Asia but have increased steadily. Rosneft’s average gas sales price (excludingVAT) was RUB 1,470 (U.S.$50.00) per thousand cubic metres in 2011, RUB 1,289 (U.S.$42.45) perthousand cubic metres in 2010 and RUB 1,058 (U.S.$33.36) per thousand cubic metres in 2009. Rosneftsells its gas to end users, as well as to Gazprom. The Company’s long term strategy envisages significantexpansion of its gas business.

As part of this strategy, Rosneft has entered into a joint venture with ITERA Group, one of the largestindependent producers and traders of natural gas operating in the CIS and the Baltic States, by acquiringan interest in the capital of Itera, an existing company. Rosneft has a 51% interest in this joint venture andhas transferred a 100% interest in its subsidiary, owner of a licence for Kynsko-Chaselsky subsoil block, toItera in order to increase the production potential of the joint venture. The joint venture will provideRosneft with access to the regional distribution network. Rosneft intends to consider using the jointventure as an operator of its gas business. In 2011, Itera’s gas production was 12.6 billion cubic metres ofgas and its proved reserves amounted to 228.30 billion cubic metres of gas and 12.64 million barrels ofcondensate, under PRMS classification. As a result of its entry into this joint venture, Rosneft’s long-termgas production target has been increased to 100 billion cubic metres of gas.

In 2012, Rosneft and INTER RAO UES have entered into a long-term contract for the supply of up to875 billion cubic metres of gas. The contract envisages annual supplies of up to 35 bcm of gas produced byRosneft to the power plants of INTER RAO – Electric Power Plants (or any other INTER RAO UESpower plants) starting from 1 January 2016 until 31 December 2040. In 2012, Rosneft also entered into a5 year contract with Fortum for the annual supply of approximately 2.3 to 2.5 billion cubic metres of gasand into a 3 year contract with E.ON for the annual supply of approximately 1.6 billion cubic metres of gas.

Completion of refinery modernisation program: upgrading product offering and output to meet the growingdomestic demand for higher quality fuels and to comply with latest technical regulations for the quality ofmotor fuel

Since 2008, Rosneft has been implementing a large-scale refinery expansion and upgrade programmeaimed at increasing the refining volumes in order to meet the growing domestic demand for high-qualityfuels and at improving the quality of refining capacities in order to comply with new technical regulationsfor the quality of motor fuel passed by the resolution No 826 of the Commission of Customs Union dated18 October 2011, which require all motor fuel produced by the Russian refineries to comply with Euro-5quality standards from 2016. A total of 14 units have been built or upgraded since the start of themodernisation programme, which should be substantially completed by 2016.

The programme is intended to increase primary refining capacity at Rosneft plants by 7 million tonnes,conversion capacity by 17.7 million tonnes and reforming capacity by 30 million tonnes. Additionally,Rosneft intends to increase the light product yields from 56.6% in 2011 to nearly 80%.

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Rosneft intends to develop a petrochemical business, primarily in the Far East, and aims at supplying itsproducts primarily to the growing Chinese market. The key element of this strategy is the project fordevelopment of the Far Eastern Petrochemical Company (FEPCO), a petrochemical complex inNakhodka, a sea port located in the Far East, with an input capacity of 3.4 million tonnes. Once completed,the complex will specialise in the production of polymers (polyethylene, polypropylene, monoehyleneglycol, as well as other polymers). It is envisaged that the complex will have its own sea terminal forshipment of its products for export. As part of the drive to develop the petrochemical business, in 2011,Rosneft started a project for the expansion of capacities at the Angarsk Polymer Plant. The project isexpected to be completed in 2016 and includes reconstruction of existing capacities, and construction ofnew ones, including Russia’s biggest facility for the production of low pressure polyethylene with 345,000tonnes annual capacity.

Efficient domestic and export marketing of crude oil and petroleum products: enlarging retail network,optimising logistics and increasing the efficiency of distribution channels

Rosneft currently supplies most of its crude oil:

• to its own refineries in Russia and Germany;

• to meet its obligations under long-term export contracts, such as the contract between CNPC andTransneft, under which Rosneft has committed to supplying 15 million tonnes of oil to CNPC annuallyuntil 2030;

• through commercial tenders.

Rosneft owns and operates a developed infrastructure for the sale of petroleum products on the domesticand international markets. In the first nine months of 2012, Rosneft sold 16.2 million tonnes of petroleumproducts domestically and 17.6 million tonnes of petroleum products for export (excluding bunker fuel andpetroleum products sold from Ruhr Oel GmbH refineries). Rosneft sold 21.4 million tonnes of petroleumproducts domestically and 24.85 million tonnes for export (excluding bunker fuel and petroleum productssold from Ruhr Oel GmbH refineries) in 2011. Oil products produced by Rosneft’s German refineries aresold through the BP distribution network in Europe. Rosneft’s share of sold petroleum products producedby German refineries amounted to 6.8 million tonnes in the first nine months of 2012 and 5.9 milliontonnes in 2011.

Rosneft’s strategy of domestic petroleum products distribution is aimed at further developing a proprietarydistribution network and signing direct contracts with end users. This strategy consists of the following keycomponents:

• increasing the number of petrol stations in the vicinity of Rosneft refineries and their optimisationthrough divestiture of petrol stations with low sales volumes;

• increasing the sale of jet fuel, bunker fuel and lubricants to end users through dedicated marketingcompanies; and

• improving the quality of fuels and other petroleum products through modernisation of its refineries.

Technological leadership: gaining a technological edge through in-house scientific research and collaborationwith strategic partners, commitment to implementation of best practices in environmental and health andsafety procedures

Technology and innovation is of crucial importance in today’s business environment to ensure that an oilcompany remains competitive and capable of sustainable growth. Rosneft strives for:

• consistent application of the latest know-how and equipment;

• use of global best practices;

• improvement of the quality of management and control over business processes; and

• continuous enhancement of skill levels of Rosneft specialists.

Rosneft’s Corporate Scientific and Project Complex consists of 10 regional research and development(R&D) and project institutes, of which seven specialise in exploration and production and three in refiningand petrochemicals.

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Rosneft began monitoring, testing, adapting and applying promising technologies designed by Russian andforeign companies as part of the implementation of the Group’s new technology system. Rosneft hascreated a technology know-how repository with information on more than 200 technologies.

Rosneft is involved in international projects, programmes and partnerships as part of the implementationof the Group’s innovative development programme. In August 2011, Rosneft and ExxonMobil signed anagreement on strategic cooperation, which includes significant scientific and technical cooperation. In2012, Rosneft signed strategic cooperation agreements with Eni and Statoil, which provide for the mutualexchange of staff, technologies and best practices between the partners. In 2011 Rosneft set up the ArcticResearch and Design Center for Offshore Development, whose mission is to engage in research anddevelopment of offshore production technologies and to provide scientific support for the implementationof offshore projects on Russia’s Arctic shelf. The Arctic Research and Design Center for OffshoreDevelopment seeks to: bring together the knowledge of leading sector institutes in Russia, including thecompetence of Rosneft’s seven sector institutes, cooperate with international research and design centresand perform full-cycle design works for the Group’s offshore projects. As part of the strategic cooperationagreement with ExxonMobil, in June 2012 Rosneft and ExxonMobil have agreed the key terms ofExxonMobil’s participation in the Arctic Research and Design Center for Offshore Development.

Rosneft has the following priorities in health, safety and environmental (HSE) areas:

• continuing to improve industrial safety, working conditions and protection of the environment;

• improving industrial and environmental safety at production facilities to match the best practice ofinternational petroleum majors;

• consistently reduce industrial accident and injury rates, and negative environmental impact;

• further developing the Company’s Integrated Management System for HSE.

Recent Developments

TNK-BP Acquisition

On 22 October 2012, Rosneft announced two separate agreements in principle to acquire an aggregate100% equity interest in TNK-BP, Russia’s third largest hydrocarbon producer operating in Russia’s majorhydrocarbon regions (including Western Siberia, Volga-Urals and Eastern Siberia) with assets in Ukraine,Belarus, Venezuela, Vietnam and Brazil, through two separate transactions (together, the TNK-BPAcquisition):

• acquisition of a 50% equity interest in TNK-BP from BP, (the BP Acquisition); and

• acquisition of a 50% equity interest in TNK-BP from AAR, (the AAR Acquisition).

The BP Acquisition and the AAR Acquisition are entirely independent, and either could be consummatedwithout the other, leaving Rosneft with only a 50% equity interest in TNK-BP. (See ‘‘Risk Factors—Rosneft’s acquisition of TNK-BP Limited is subject to significant uncertainties and risks’’.)

On 22 November 2012, Rosneft entered into definitive agreements with BP with respect to the BPAcquisition, following the approval of the BP Acquisition by Rosneft’s Board of Directors on 20 November2012. Under the terms of the BP Acquisition, BP will sell its 50% interest in TNK-BP Limited, the ultimateholding company of TNK-BP, and its subsidiary TNK Industrial Holdings Limited to Rosneft forU.S.$17.1 billion in cash (plus interest thereon in the amount of U.S.$1.6 million per day from andincluding 18 October 2012 to and excluding the closing date) and 1,360,449,797 Rosneft shares,representing a 12.84% stake in Rosneft, currently held in treasury. BP will have the benefit of any Rosneftdividends on such shares having a record date after 18 October 2012. The completion of the BPAcquisition is subject to regulatory approvals, and is expected to occur in the first half of 2013.

In addition, BP has entered into an agreement to purchase from Rosneft’s parent, ROSNEFTEGAZ, afurther 600 million Rosneft shares, representing a 5.66% stake in Rosneft, at a price of U.S.$8.00 per share(plus interest thereon at a rate of 3.5% per annum from and including 18 October 2012 to but excludingthe closing date). Again, BP will have the benefit of any dividends on such shares having a record dateafter 18 October 2012. On completion of these transactions, BP will hold 19.75% of Rosneft shares,inclusive of its existing 1.25% holding in Rosneft, which, in accordance with Russian law and Rosneft’sCharter, would entitle BP to two seats on Rosneft’s Board of Directors. BP has agreed not to dispose ofany of the Rosneft shares acquired in the transaction for at least 360 days following the completion of thetransaction.

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Under the terms of the agreement in principle for the AAR Acquisition, Rosneft would acquire AAR’s50% equity interest in TNK-BP for a cash consideration of U.S.$28.0 billion (plus interest thereon at a rateof 3.75% per annum from and including 16 October 2012 to but excluding the closing date), subject to thenegotiation of definitive agreements, corporate and regulatory approvals and certain other conditions.

The management of Rosneft believes that the TNK-BP Acquisition is strategically important for the Groupand, if and when completed, should place it in a leading position globally among public companiesoperating in the oil and gas sector, reinforce its position as a regional downstream leader in Russia andEurope, as well as create significant synergies with TNK-BP, including in joint development areas,optimisation of oil and oil product supply logistics, production and sales of natural gas, as well as withrespect to cost and asset optimisation. Even if Rosneft ultimately acquires only 50% of TNK-BP, Rosneftbelieves that the acquisition will be of strategic benefit. Based on press reports, the Russian President haspublically supported the BP Acquisition, and the combined TNK-BP Acquisition was subsequentlyapproved by the Russian Government.

If both the BP Acquisition and the AAR Acquisition are completed, Rosneft will become the largestpublically traded oil and gas company in the world with daily production of 4.6 million barrels of oilequivalent and proved reserves of 38.3 billion barrels of oil equivalent under PRMS standards. Rosneft(together with TNK-BP) will have the largest refining capacity in Europe of approximately 1.9 millionbarrels per day and will have the largest retail network of filling stations in Russia consisting ofapproximately 2,500 filling stations. There can, however, be no assurance that either the BP Acquisition orthe AAR Acquisition will be completed. The completion of only one, without the other, would limit theexpected benefits of the overall TNK-BP Acquisition and entail certain risks, disadvantages and issues. See‘‘Risk Factors—Rosneft’s acquisition of TNK-BP Limited is subject to significant uncertainties and risks’’.

The total consideration payable by Rosneft under the definitive agreements for the BP Acquisition and theagreement in principle for the AAR Acquisition would amount to U.S.$45.1 billion in cash, excludingapplicable interest as described above, and a 12.84% equity interest in Rosneft. Rosneft intends to fund thecash component of the consideration with its existing cash resources (Cash, cash equivalents andshort-term investments and Financial assets on the consolidated balance sheets of Rosneft and TNK-BPamounted to over U.S.$15 billion as at 30 September 2012, in accordance with the financial statements ofRosneft and TNK-BP for the relevant period prepared in accordance with the IFRS) and a combination ofnew borrowings from Russian and international banks, proceeds of issues of debt securities in Russia(including domestic RUB bonds issuance programme for the maximum amount of up to the equivalent ofapproximately U.S.$3 billion, less the amount issued under that programme in October 2012 for theequivalent of approximately U.S.$600 million) and internationally (including the Notes), as well as internalcash flows, prepayments from offtakers under long-term export contracts and the proceeds from assetdisposals as part of Rosneft’s ongoing asset optimization programme. As at the date of this BaseProspectus, Rosneft has received a commitment from a syndicate of international banks to lend to Rosneftapproximately U.S.$30 billion, including up to U.S.$7.5 billion of long-term financing, to fund thecombined TNK-BP Acquisition.

INTER RAO UES Fortum and E.ON Contracts

In 2012, Rosneft and INTER RAO UES have entered into a long-term contract for the supply of up to875 billion cubic metres of gas. The contract envisages annual supplies of up to 35 bcm of gas produced byRosneft to the power plants of INTER RAO—Electric Power Plants (or any other INTER RAO UESpower plants) starting from 1 January 2016 until 31 December 2040. In 2016, Rosneft will supply 32.3 bcmof gas to INTER RAO UES. Under the agreement, natural gas and dry stripped gas will be supplied fromoil fields, which will allow Rosneft to significantly increase associated gas utilisation.

In 2012, Rosneft also entered into a 5 year contract with Fortum for the annual supply of approximately 2.3to 2.5 billion cubic metres of gas and into a 3 year contract with E.ON for the annual supply ofapproximately 1.6 billion cubic metres of gas.

Acquisition of Taas-Yuryakh Neftegazodobycha LLC

In March 2012, the Company acquired a 35.3% interest in Taas-Yuryakh Neftegazodobycha LLC fromSberbank Capital LLC for RUB 13 billion. Taas-Yuryakh Neftegazodobycha LLC holds licences for oilproduction at the Srednebotuobinskoye oil, gas and condensate field located 160 km north of the ESPOpipeline. Oil reserves of the field are estimated at 665 million barrels of C1 and 285 million barrels of C2category. This investment is accounted for using the equity method.

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RISK FACTORS

Prospective investors should consider carefully the risks set forth below and the other information contained inthis Base Prospectus prior to making any decision to invest in any Notes. Each of the risks highlighted belowcould have a material adverse effect on Rosneft’s businesses, operations, financial condition or prospects, whichin turn could have a material adverse effect on its ability to service the Company’s payment obligations underthe Loan and thus on debt service on the Notes. In addition, the trading price of the Notes could decline due toany of these risks, and investors could lose some or all of their investment.

Potential investors should note that the risks described below are not the only risks Rosneft faces. Rosneft hasdescribed only the risks it considers to be material. However, there may be additional risks that Rosneft currentlyconsiders not to be material or of which it is not currently aware, and any of these risks could have the effects setforth above.

An investment in the Notes involves a high degree of risk. Investors should carefully consider the followinginformation about these risks, together with the information contained in this Base Prospectus, before theydecide to buy Notes. The actual occurrence of any of the following risks could adversely affect Rosneft’soperating results and financial condition. In that case, the value of the Notes could also decline and investorscould lose all or part of their investment.

The risks and uncertainties discussed below are those that Rosneft believes are material, but these risks anduncertainties may not be the only ones that Rosneft faces. Additional risks and uncertainties, including thoseRosneft’s management currently is not aware of or deems immaterial, may also result in decreased revenues,increased expenses or other events that could lead to a decline in the value of the Notes.

Information is presented in this Base Prospectus on the basis of certain conventions and definitions that are setforth in ‘‘Presentation of Financial and Other Information.’’

Risks Relating to Rosneft and the Oil and Gas Industry

Global economic developments and Russian market conditions may adversely affect Rosneft’s business, financialcondition and results of operations

Rosneft’s results of operations are significantly influenced by general economic conditions, in particular inthe countries in which it operates and those in which it makes sales. The economic situation in thesemarkets has in various ways been adversely affected by weakening economic conditions and the turmoil inthe global financial markets. Market volatility has continued throughout 2010, 2011 and into 2012. Inparticular, global financial markets have experienced increased volatility since the second half of 2011, aperiod which has seen the sovereign rating downgrades of, amongst others, the United States, France,Japan, Austria, Greece, Ireland, Portugal, Spain and Italy. There can be no assurance that a furthereconomic downturn or financial crisis will not occur. The countries in which Rosneft operates, particularlyRussia, and most of the countries in which Rosneft’s products are sold, have experienced declining grossdomestic product (GDP), reduced industrial production, increasing rate of unemployment and decreasingasset values. See ‘‘—Risks Relating to Russia—Economic Risks—Economic instability in Russia and othermarkets in which Rosneft operates could harm Rosneft’s business and investment plans.’’

A deterioration in the financial condition of Rosneft’s customers could have an adverse impact on theircredit ratings and/or access to capital which, in turn, could lower demand for Rosneft’s products andservices. Furthermore, a worsening in the financial condition of Rosneft’s joint venture partners couldadversely affect Rosneft’s operations. In addition, a deterioration in the global financial markets could leadto the downgrade of lenders’ credit ratings, both in Russia and abroad, making access to credit moredifficult and costly.

Adverse economic developments of the kind described above have negatively affected and may continue tonegatively affect Rosneft’s business in a number of ways and could have a material adverse effect onRosneft’s operating results and financial condition.

Economic instability in the European monetary system may adversely affect Rosneft’s business, financial conditionand results of operations

There have been continued concerns over the stability of the European monetary system and the stabilityof certain European economies, notably Greece, Ireland, Portugal, Spain and Italy. Though repeatedsummits of, and attempts by, European leaders to find a lasting solution to such countries’ ability to repaytheir debt have produced bail-out packages and restructuring agreements for certain countries such as

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Greece, there remain continuing doubts concerning the stability of the European monetary system andeconomy. There can be no assurance that a further decline in the stability of European economies orcollapse of the European monetary system will not occur. See also ‘‘—Global economic developments andRussian market conditions may adversely affect Rosneft’s business, financial condition and results ofoperations’’.

Further deterioration or collapse of European economies or the European monetary system could have amaterial adverse effect on Rosneft’s operating results and financial condition.

A substantial or extended decline in crude oil, refined products or petrochemical products prices would have amaterial adverse effect on Rosneft’s operating results and financial condition

Rosneft’s business, financial condition and results of operations depend substantially upon prevailingprices of crude oil, refined products and petrochemical products. Historically, prices for oil, refinedproducts and petrochemical products have fluctuated widely in response to even relatively minor changesin many factors. Rosneft does not and will not have control over certain factors affecting prices for crudeoil, refined products and petrochemical products. These factors include:

• global and regional supply and demand and expectations regarding future supply and demand forcrude oil, refined products or petrochemical products;

• Russian and foreign governmental regulations and actions, including export restrictions and taxes oncrude oil and refined products, which can substantially affect profitability;

• the ability and willingness of the Organisation of Petroleum Exporting Countries (OPEC) and othercrude oil-producing nations to influence global production levels and prices;

• the worldwide military and political environment and uncertainty or instability resulting from anescalation or additional outbreak of armed hostilities or further acts of terrorism, including in theUnited States, the Middle East, the CIS or other resource-producing regions;

• prices and availability of alternative and competing fuels;

• global and regional social, economic and political conditions, particularly in the Middle East and otheroil-producing regions;

• prices and availability of new technology; and

• weather and climate conditions, natural disasters and industrial accidents.

In addition, certain other factors, such as the cost of exploring for, developing, producing, processing andmarketing crude oil-refined products and petrochemical products, as well as the loss, decline and failure todevelop refineries, transport, storage facilities and other infrastructure, though partially controlled byRosneft, can be affected by uncontrollable circumstances and developments.

Future crude oil, refined products and petrochemical price movements cannot be predicted with certainty.For example, crude oil pricing has been particularly volatile over the past several years. According to datafrom the U.S. Department of Energy, the spot price per barrel for Brent crude, an internationalbenchmark oil blend, in 2008 ranged from a low of U.S.$33.73 on 26 December to a high of U.S.$143.95 on3 July, averaging U.S.$96.94 per barrel for the year; in 2009 ranged from a low of U.S.$39.41 on18 February to a high of U.S.$78.68 on 1 December, averaging U.S.$61.74 per barrel for the year; in 2010ranged from a low of U.S.$67.18 on 25 May to a high of U.S.$93.63 on 23 December, averaging U.S.$79.61per barrel for the year; and in 2011 ranged from a low of U.S.$93.52 on 4 January to a high of U.S.$126.64on 2 May, averaging U.S.$111.26 per barrel for the year. In the first nine months of 2012, the price rangedfrom a low of U.S.$88.69 on 25 June to a high of U.S.$128.14 on 13 March. On 20 November 2012, theprice was U.S.$110.01 per barrel.

International prices for refined products and petrochemical products, which typically follow changes ininternational oil prices, have also fluctuated considerably in recent years, leading to changes in refiningmargins that can significantly affect Rosneft’s profitability. Rosneft’s revenues, operating results and futurerate of growth are highly dependent on the prices received for its crude oil, refined products andpetrochemical products. In addition, lower prices may reduce the amount of crude oil that Rosneft canproduce effectively (thereby decreasing the size of its reserves) or reduce the economic viability of projectsplanned or in development, leading to a reduction in capital expenditures or the inability to meet certain

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strategic goals. A decline or volatility in the prices of crude oil, refined products or petrochemical productscould have a materially adverse effect on Rosneft’s operating results and financial condition.

Rosneft does not currently engage in any hedging transactions or other derivatives trading to reduce theimpact of fluctuations of crude oil or gas prices on its financial condition.

Recent amendments to Russian customs law have shifted the tax dynamics and affected the profitability of Rosneft’supstream and downstream operations and further Russian tax amendments may negatively affect Rosneft’sprofitability

On 1 October 2011, the first stage of a new tax regime for the Russian oil industry took effect (the 60-66Amendments). The 60-66 Amendments reduced the marginal export duty rate on crude oil from 65% to60% and unify export duties for light and dark oil products at 66% of the export duty on crude oil. Morespecifically, the 60-66 Amendments increased the export duty on fuel oil from 46.7% to 66% whiledecreasing the export duty on light petroleum products from 67% to 66%. Starting from 1 May 2011, theRussian Government introduced a special export duty for gasoline equivalent to 90% of the export duty forcrude oil. Starting from 1 June 2011, the Russian Government introduced a special export duty for naphthaequivalent to 90% of the export duty for crude oil. Further tax amendments aimed at improving theprofitability of upstream operations while incentivising Russian oil companies to invest in upgrading theirrefineries have been passed and are expected to continue to be passed in the future.

The Russian government receives substantial revenues from export duties on crude oil and refinedproducts, as well as from upstream taxation, such as mineral extraction tax (MET). Rosneft has no controlover changes to Russian customs or tax law. The Russian government may institute changes in MET ratesor export duties in an attempt to promote macroeconomic goals, while at the same time alteringprofitability dynamics of Rosneft’s operations negatively, including in ways that could have a materialadverse effect on Rosneft’s financial results. Future legislative initiatives in the sphere of customs and taxregulation, which have a downward effect on the profitability of operations may, if approved, adverselyaffect Rosneft’s operating results and financial condition.

If adverse market conditions or a decline in hydrocarbon prices occur, Rosneft may not achieve its strategicobjectives and may be unable to finance its planned capital expenditures on time or complete them on budget

Rosneft’s management has developed strategic objectives, including global leadership in production,development of the gas business, refinery modernisation and the efficient domestic and export marketingof crude oil and petroleum products, under which Rosneft seeks to achieve several ambitious operationaltargets. See ‘‘Business—Strategy’’. There can be no assurance, however, that the Group will be able to meetany of these strategic goals on time or at all.

Development of Rosneft’s business requires significant capital expenditures, including in exploration anddevelopment, production, transportation, refining and marketing, as well as to meet its obligations underenvironmental laws and regulations. These projects run the risk of cost overrun and there can be noassurance that these projects will be completed on time, which may increase the capital expendituresrequired. Anticipated capital expenditures may also increase in the future. Rosneft expects to finance asubstantial part of these capital expenditures out of net cash provided by operating activities. Ifinternational crude oil prices fall, however, Rosneft will have to finance more of its planned capitalexpenditures from outside sources, including bank borrowings and offerings of debt or equity securities inthe domestic and international capital markets. The global banking and capital markets have been unstablesince August 2008 and are characterised by severe reductions in liquidity, greater volatility and the generalwidening of credit spreads. As a result, many lenders have reduced or ceased providing funding toborrowers, particularly in emerging markets, and there has been a general increase in the cost ofborrowing. Rosneft may be unable to raise the financing required for its future capital expenditures onacceptable terms or at all. If Rosneft is unable to raise the necessary financing, it will have to reduceplanned capital expenditures, which could adversely affect its operating results and financial condition inthe future.

The Group is currently undertaking a series of large-scale modernisation projects at its refineries, aimed atimproving efficiency and production capabilities at these facilities. See ‘‘Business—Refining Facilities’’.There can be no assurance that these modernisation projects will be sufficient to produce fuel to Euro-4and Euro-5 quality standards.

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Rosneft’s prospecting, exploration and production licences may be suspended or terminated prior to the end of theirterms and Rosneft may be unable to obtain or maintain valid applicable and required permits and authorisations

The Russian law No. 2395-1, ‘‘On Subsoil’’ dated 21 February 1992, as amended (the Subsoil Law), theRegulation On subsoil licensing No. 3314-1 approved by the Resolution of the Higher Council of theRussian Federation dated 15 July 1992, as amended, and regulations issued thereunder govern Russia’slicensing regime for prospecting, exploration and production of hydrocarbons. Under current Russianlegislation, the Federal Agency for Subsoil Use (Rosnedra) and the Federal Service for Supervision in theSphere of Nature Use (Rosprirodnadzor) that report to the Ministry of Natural Resources and Environmentof the Russian Federation (Minprirody), are responsible for issuing subsoil licences and monitoringcompliance with subsoil licence terms. Rosneft conducts its activities under numerous prospecting,exploration and production licences. Rosneft holds most of these licences following the consolidation of itsproducing subsidiaries in 2006, while Rosneft’s subsidiaries and joint ventures hold a part of the licences.The Subsoil Law provides that fines may be imposed and/or licences may be suspended or early terminatedif the relevant licensee fails to comply with licence requirements (such as development and operationalobligations), make timely payments of levies and taxes for the subsoil use, provide geological informationto controlling bodies or meet other requirements. The imposition of any such penalties may affectRosneft’s operating results and financial condition.

Rosneft must also obtain and maintain other supporting licences, permits, authorisations, rights to use landplots and forest areas and approvals to develop its fields. Most of Rosneft’s production and combinedprospecting, exploration and production licences expire between 2017 and 2051. The licence to Priobskoyefield, one of Rosneft’s most significant fields, expires in 2044 and the licence to Vankorskoye field,developed by Vankorneft, expires in 2017. Rosneft has 189 licences which expire in the next five years.Rosneft has been working to secure the extension of its licences. During the period from 2007 until30 September 2012, Rosneft obtained extensions for 127 licences, including 11 licences in 2012. Currently,the applicable law provides for the extension of exploration and production licences in line with the termsfor development of the fields specified in development project documentation. Operational figures forRosneft’s expected future production and reserves in this Base Prospectus are based on the assumptionthat Rosneft’s licences will be extended, as necessary.

The Subsoil Law provides that fines may be imposed and licences may be suspended or terminated early ifany of Rosneft’s subsidiaries which hold a licence, or Rosneft itself, fails to comply with licencerequirements or the Subsoil Law.

In general, regulatory authorities can exercise considerable authority in issuing and renewing licences andin monitoring licencees’ compliance with licence terms.

Rosneft may be unable to comply with certain requirements of licence agreements for some or all of theselicence blocks. If the authorities find that Rosneft has failed to fulfil the terms of its licences, permits orauthorisations, or if Rosneft operates in its licence blocks in a manner that violates Russian law, they mayimpose fines on Rosneft or suspend or early terminate its licences. Furthermore, Rosneft may have toincrease spending to comply with licence terms. Any suspension, restriction or early termination of subsoiluse rights under Rosneft’s licences could adversely affect Rosneft’s operating results and financialcondition.

In addition, because Rosneft did not own or control all of its subsidiaries when they obtained their initialsubsoil licences, it cannot be certain t