taif group of companiesfs.rts.ru/content/annualreports/125/2/nknc-2007-eng.pdf · 2008. 8. 6. ·...

TAIF Group of Companies

There is a desire to be with nature at least awhile in those rare moments of rest

Table of contents6 Address of the Chairman of the Board of Directors

8 Address of the General Director

10 Open Joint-Stock Company Nizhnekamskneftekhim 112 About Company

14 Position in Chemical Industry and World Market Standing

20 Most Important Events 2

26 Activity Results 328 Key Financial- Economic Indices

32 Balance Sheet

34 Profit and Loss Statement

36 Notes to Financial Statements for 2007

42 Auditor’s Report

44 Findings of the Auditing Committee

46 Investment Activities 448 Priority Trends of the Company Activities and Expected Future Development

49 Financing and Credits

50 Risks Related to the Company’s Business 552 Industrial Risks

54 Country and Regional Risks

56 Financial Risks

58 Legal Risks

60 Risks Related to the Company’s Activity

62 Corporate Activities 664 List of Corporate Documents

64 Capital Stock

67 Bonded Loans

68 Dynamics of Dividend Payments on Equity

69 Market Capitalization

72 Credit Ratings

73 Major Indices of Subsidiaries Activity

74 Management 776 Board of Directors

80 Management Board

84 Audit Commission

86 Personnel 8

94 Social Responsibility 9

102 Environmental Activity 10

108 Energy Saving 11

112 Press Coverage About Us 12

116 Contact Information 13

Address of the Chairman of the Board

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Dear shareholders!

For Nizhnekamskneftekhim Inc. the past year, 2007,

became another step of implementing the Company’s

strategic development program in the scope of the

tasks implied in the decree of the Security Council

of the Republic of Tatarstan of June 9, 2005, «On the

progress of execution of the Program of the Republic

of Tatarstan for development of oil, gas & chemical

complex for years 2004 through 2008», as well as

the starting point for shaping growth prospects for a

period of 2008 through 2012.

The Management of the Company effected a number

of actions related to modernization and perfection

of operations for the sake of higher performance,

increased monomer and polymer capacities, wider

product range, lower costs and deleted non-core as-

sets. Certain successes were achieved in streamlin-

ing of the corporative management system based on

IT introduction. All this resulted in profit and equity

value growth in the long run.

I note fruitful results of the reported year, however, I

want to emphasize that many things have to be done

yet to achieve the objectives. At the same time, I

express confidence in successful outcome of Nizh-

nekamskneftekhim Inc. efforts to cope with all the

challenges by virtue of their competitive advantages,

namely, effective technologies, high-quality products,

professionalism of their staff and your support, dear

shareholders.

General Director TAIF Inc.

Chairman of the Board of Directors

Nizhnekamskneftekhim Inc.

A.K. Shigabutdinov

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Address of the General Director

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Dear shareholders, colleagues, partners!

Assessing the operational and commercial activi-

ties of Nizhnekamskneftekhim Inc. during the year

of 2007 I note with satisfaction that they were very

successful and productive. In spite of unprecedented

growth of utilities prices we maintained positive dy-

namics in every principal development aspect.

Year 2007 yielded finished products to a tune of

over 55 billion Rubles, which in terms of volume is

12 % higher than the previous year. Sales proceeds

amounted to over 58.6 billion Rubles, net profit - over

4.1 billion Rubles. For the first time in the Company’s

history the annual export earnings exceeded 28.6 bil-

lion Rubles (over 1.1 billion US dollars), that is, it went

up 17 % compared to 2006 level.

We achieved the operations highest output of BR-Nd,

single-stage isoprene, ethylene oxide, styrene, poly-

styrene and ethylene.

In the scope of the butyl and halogenated butyl rub-

ber total capacity scale-up plan we started up a new

chloromethyl compressor and the 7-th polymeriza-

tion system. We commissioned an in-house power

source – cogeneration gas turbine unit GTU-75. We

started lithium catalyst based polybutadiene rubber

production (BR-Li). We mastered polyether output for

polyurethane systems and began deliveries of polym-

erization grade hexene-1 to consumers.

Ethylene Plant revamp activities were underway, as

well as construction of the Polyethylene Plant and

Polystyrene Plant III.

Being a city-forming enterprise, Nizhnekam-

skneftekhim Inc. kept on participating in solutions

of Nizhnekamsk city social problems during the last

year, namely, we contributed much in construction

of the municipal water purification facility, which

became operational in November 2007, and began

creating an automated environmental monitoring

system.

In 2007 the Company was awarded the Super Grand

Prix based on the results of the International Exhibi-

tion “Tires, technical rubber goods, rubbers – 2007”,

became the National Technological Prize “The Star of

High Technologies” winner and won the All-Russian

“The Best Russian Exporter” and “Customs Olym-

pus” competitions, was honored with titles “Leader

of Environmental Activity in Russia” and “Russian

Organization of High Social Efficiency”.

Nizhnekamskneftekhim Inc. management is com-

mitted to follow the same path in future by fulfilling

strategic plans, enhancing its international status,

increasing the equity capital and strictly honoring the

interests of the shareholders. We shall find support

in the Company’s strategic development program

aimed at dramatic change of the mid-term corpora-

tive operations pattern and at bringing of the output

to 130 billion Rubles.

In 2008 it is planned, among other things, to com-

plete revamp of the Ethylene Plant, to commission

the Polyethylene Plant and Polystyrene Plant III, to

continue the combined project activities for retrofit-

ting and capacity increase of butyl, halogenated butyl

and polybutadiene plants.

In 2007 Nizhnekamskneftekhim Inc. team celebrated

the 40-th anniversary of the day of the first output.

We are proud to have become the leader of the Rus-

sian petrochemical industry during this period and

will spare no pains to enhance competitiveness of our

products both on the foreign and home markets, to

fulfill our contractual commitments to our partners.

On behalf of Nizhnekamskneftekhim Inc. Board and

on my behalf I express sincere gratitude to all share-

holders for effective support and cooperation. I hope

that our combined efforts will continue to be fruitful

and successful.

General Director

NIZHNEKAMSKNEFTEKHIM Inc.

V.M. Busyguin

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A team knowing target to float to has a fair wind.

Seneca

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Open Joint-Stock CompanyNizhnekamskneftekhim

| About Company

| Position in Chemical Industry and World Market Standing

11

1

“Nizhnekamskneftekhim” INC – a dynamically advanc-

ing highly technological petrochemical company making

part of the “TAIF” Group. The Company’s birthday is 31

July 1967.

18 August 1993, it was registered by the Tatarstan

Republic Ministry of Finance and entered into the Reg-

istry of Joint Stock Companies being established in the

Tatarstan Republic territory, under № 388.

5 November 2002, it was reregistered by the TR Inter-

regional Tax Inspectorate № 20 of the RF Tax Collection

Ministry and entered into a Consolidated State Registry

for legal entities, under a state principal registra-

tion № 1021602502316. A taxpayer identification №:

1651000010.

To date, “Nizhnekamskneftekhim” INC is one of the

largest petrochemical companies of Europe. The pro-

duction complex embodies:

10 Major Plants; —

10 Base Divisions (Railway Transport, Ethylene —

Pipeline Systems, and others);

5 Centres including Research & Technology and —

Design;

7 General-Purpose Shops. —

Reprocessing a broad fraction of light hydrocarbons and

other petrochemical feedstock, the Company produces

monomers, polymers, synthetic rubber and other pet-

rochemical goods.

About CompanyOpen Joint-

Stock Company

Nizhnekamskneftekhim The range of marketable products alone comprises over

100 items. Major of them are:

Monomers

Ethylene —

Propylene —

Styrene —

Butadiene —

Synthetic Rubber and Resin

Butyl Rubber BK-1675N —

Chlorobutyl Rubber CBK —

Bromobutyl Rubber BBK —

Isoprene Rubber SKI-3 —

Ethylene-Propylene Rubber EPDM —

Butadiene Rubber SKD-N —

Butadiene Rubber SKD-L —

Polymeric Petroleum Resin —

Plastics

Polystyrene —

Polypropylene —

Ethylene- and propylene-based liquid derivatives

Ethylene Oxide —

Propylene Oxide —

Ethylene Glycols —

Ethylene Glycol Esters (ethyl cellosolve, ethyl —

carbitol)

Propylene Trimers and Tetramers —

Polyethers —

Surfactants (Neonols) —

Alpha-Olefins and so forth —

12

| About Company


«Nizhnekamskneftekhim» INC holds a dominant

position among the Russian petrochemical industry

companies in producing a number of goods.

The Company products are exported to more than

50 countries worldwide Major business partners of

“Nizhnekamskneftekhim” INC are:

Goodyear —

Dow —

Michelin —

Mitsui —

Pirelli —

Continental —

Akzo Nobel and other companies of repute —

Environmental Management is a priority domain

of the Company activities. All production facilities

of “Nizhnekamskneftekhim” INC have certificates

of conformity to ISO 14001:2004. The Company has

devised a long-term Environmental Management

Program which it adheres to in its practical activities.

A Quality Management System of “Nizhnekam-

skneftekhim” INC has been certified to comply with

the requirements of ISO 9001:2000.

Health and Occupational Safety Management System

has been certified to comply with the requirements of

OHSAS-18001:199.

Awards

Order of Lenin (1981); international prizes “For

Commercial Prestige”, “For Best Brand Name”, “For

Technology & Quality” (1997); kudos “Gold Mercury”,

“Russian National Olympus” (2000 & 2003); national

kudo “Best Company’2006”; title “Best Russian

Exporter of the Year” (2001, 2004, 2005); Grand Prix

of IX International Exhibition “Oil, Gas, Petrochem-

istry’2004”, XII International Exhibition “Energy &

Energy-Saving PowerTek’2007”; super Grand Prix of

International Exhibition “Tires & Rubber’2007”.

Nizhnekamskneftekhim INC Annual Report, 2007 13

2002

2003

2004

2005

2006

2007

0 200 400 600

$m

800 1000 1200

1,114

957

791

650

453

372

Year-wise export earnings

“Nizhnekamskneftekhim” INC is a major producer and exporter of petrochemi-

cal products in the Russian Federation. In 2007, 52% of made products (in money

terms) was export-marketed.

Due to the current Strategic Development Program aimed at launching new pro-

duction facilities, expanding the existing capacities and extending a grades range,

“Nizhnekamskneftekhim” INC is continuously scaling up supply volumes both to

domestic and overseas markets. The Company’s exported-product sales volumes

have been steadily increasing for several years. Over the past 5 years, an average

annual growth rate of export sales constituted 25%, and in tote, beginning 2003,

the exports volume increased 2.5 times.

Position in Chemical Industry and World Market Standing

Open Joint-

Stock Company

Nizhnekamskneftekhim

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The heavy-tonnage products, supplied to overseas markets, are synthetic types of

rubber (isoprene, butyl, halobutyl and butadiene), styrene, polystyrene, polypropyl-

ene, monoethylene glycol, neonols. In 2007, polyethylene glycol gained its position in

the overseas market.

Synthetic rubber covers 50% of products exported by “Nizhnekamskneftekhim” INC.

This product is extremely required on overseas markets. Synthetic rubber shipment

volumes to overseas Buyers are growing from year to year. In 2007, rubber exports

increased 19% compared to 2006.

“Nizhnekamskneftekhim” INC successfully cooperates with the largest overseas tire

companies among which are Michelin, Goodyear, Pirelli, Continental, Bridgestone

and concern Belshina. If in 2006 their share in synthetic rubber export volumes

constituted 24% it then considerably augmented to 41% in 2007, and expected at the

level of at least 57% in 2008.

Isoprene rubber SKI-3

For many years, NKNK has been supplying isoprene rubber SKI-3 to foreign mar-

kets. Industrial facilities to produce isoprene types of rubber (synthetic analogues

of natural rubber) were well developed in the Soviet Union. That necessity was

dictated by the remote location of the USSR from the markets of natural rubber

required for the country’s defense industry. Given that, 5 SKI Plants were con-

structed in the country. Only three of them have survived until now. Among them,

NKNK is an indisputable leader in production and supplies to foreign markets.

| About Company



This rubber is remarkable for its stable high quality and is in permanent demand

with foreign consumers. It is used in large volumes by such famous foreign com-

panies like Goodyear, Michelin, Continental, Bridgestone, Pirelli and others. Share

of “Nizhnekamskneftekhim” INC, as a producer, on the international market is

the highest. In 2007, it capacity-equaled approximately 30.1%, and constituted

approximately 34% in the global market supplies (including RF). NKNK’s share in

the domestic production volumes and supplies to the home market amounted to

43.7% and 45.6% respectively.

Production of isoprene rubber has been certified to comply with the quality man-

agement system ISO-9001.

Butyl rubber BK-1675N

Butyl Rubber Plant as part of “Nizhnekamskneftekhim” INC is widely known all

over the world. Butyl rubber is mainly applied to produce automobile inner tubes.

In the Russian Federation this type of rubber is produced only at Nizhnekamsk

and Togliatti. It should be noted that for many years “Nizhnekamskneftekhim”

INC maintains the leading positions in Russia both in production and sales of the

product. In 2007, the Company’s share in the butyl rubber domestic production

constituted 59.6%, and in supplies to the Russian market - 71.8%.

A principal demand for butyl rubber is concentrated on the Asian market. Due

to the high and sustained quality, “Nizhnekamskneftekhim” INC managed to

strengthen its positions on the external market. The Company’s butyl rubber

share on the global market (including RF) equals approximately 29%.

Halobutyl rubber

In 2004, after commissioning a Halobutyl Rubber (GBK) Unit “Nizhnekam-

skneftekhim” INC became a third producer and supplier of halobutyl rubber.

Approximately 90% of this type of rubber is applied to produce tubeless tire liners.

With a yearly-increasing tubeless tire production, the demand for GBK is steadily

increasing at an average of 6% a year. Major users of “Nizhnekamskneftekhim”

Open Joint-

Stock Company


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INC butyl rubber are the overseas large tire producers. In 2007, the shipment

share of “Nizhnekamskneftekhim” INC GBK to the overseas largest users consti-

tuted 36%. In 2008, that share is expected to equal at least 70% of the total export

volume.

In 2007, the share of “Nizhnekamskneftekhim” INC on the butyl rubber global

market constituted 5.3%

Production of butyl rubber has been certified to comply with the quality manage-

ment system ISO-9001.

Butadiene rubber SKD-N

Butadiene rubber is second-in-volume synthetic rubber consumed worldwide af-

ter SBR. Its share in the overall structure of synthetic rubber consumption world-

wide constitutes 25%. Approximately 70% of BR is applied to produce tires (treads,

buttresses and suchlike). But more preferable for that purpose becomes NdBR.

“Nizhnekamskneftekhim” INC put into operation precisely such kind of a produc-

tion unit in 2004. To have SKD-N Unit launched fully meets the Company’s strategy

targeted at setting up a production complex with a complete range of synthetic

rubber grades for tire and general mechanical rubber goods industries satisfying

the highest requirements of our time.

Over the period of a little bit more than 3 years, SKD-N has been successfully tried

by a number of largest users and now is shipped mainly to the overseas market.

As of 2004, SKD-N supplies augmented more than 2.5 times, and the butadiene

rubber global market share of “Nizhnekamskneftekhim” INC equaled 3.3% in

2007. “Nizhnekamskneftekhim” INC shared 33.3% of the SKD-N Russian produc-

tion and 15.5% of domestic supplies in 2007.

Production of SKD-N has been certified to comply with the quality management

system ISO-9001.

| About Company


17Nizhnekamskneftekhim INC Annual Report, 2007

Styrene

“Nizhnekamskneftekhim” INC is a leading producer and exporter of sty-

rene in the Russian Federation. Production of styrene has been certified to

comply with the quality management system ISO-9001. Styrene is applied

to produce many types of goods, e.g., EPS, HIPS, GPPS, ABS-plastics, dif-

fering block polymers, synthetic rubber, latex, and so forth.

The main foreign competitors of “Nizhnekamskneftekhim” INC on the

European styrene market are Dow, BASF, AtoFina, EniChem, Ellba, Repsol,

Shell. Share of NKNK in the world styrene production volumes is about 1%.

Share of “Nizhnekamskneftekhim” INC in the All-Russian styrene produc-

tion volume is approx 47%. “Nizhnekamskneftekhim” INC reprocesses

more and more styrene into polystyrene.

Polystyrene

“Nizhnekamskneftekhim” INC launched a PS Unit in 2003, licensed by

American company Fina Technology, using the original import equipment.

Due to the high quality and adequately selected range of grades, “Nizh-

nekamskneftekhim” INC occupied leading positions in the Russian market.

In 2007, it shared 53.3% in the RF total production volume, and 35% in the

RF market supplies. The Company’s global market supply share makes

0.8%.

Production of polystyrene has been certified to comply with the quality

management system ISO-9001.

Open Joint-

Stock Company


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Monoethylene glycol (MEG)

“Nizhnekamskneftekhim” INC is one of the major producers of monoethylene

glycol in the Russian Federation. In 2007, NKNK produced approx 28.6% of the

Russian total monoethylene glycol. The main West European competitors of NKNK

in MEG are Dow, Ineos, BASF, Shell. Share of “Nizhnekamskneftekhim” INC in the

world production and supply volumes is less than 1%.

Production of MEG has been certified to comply with the quality management

system ISO-9001.

Polypropylene

A PP Unit was commissioned at 2006 year-end. Today, this is the most up-to-date

PP Unit in the RF. Over the past year, the Company successfully developed domes-

tic and overseas PP markets. In the RF it occupies the leading positions producing

32% of the total PP. Share of “Nizhnekamskneftekhim” INC in supplies to the RF

constituted 20.6%.

Production of polypropylene has been certified to comply with the quality manage-

ment system ISO-9001.

Neonols (oxyethylated nonylphenols)

Neonols belong to surfactants applied as a base to produce diverse synthetic

detergents.

“Nizhnekamskneftekhim” INC is a single producer of neonols in the Russian

Federation and CIS, and is one of the leading players on the international neonol

market. NKNK’s share in the world market of oxyethylated nonylphenols consti-

tutes over 10%.

Production of neonols has been certified to comply with the quality management

system ISO-9001.

| About Company



Happiness is a result of labor and reward for it.

Aristotle

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Most Important Events of 2007

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Most important events of 2007

JANUARY

Butyl Rubber Plant commissioned a second rubber

finishing line “Welding” as per the Program to expand

butyl and halobutyl rubber total production up to 120

Ktpa. All processes at the Unit are highly automated

and mechanized.

Styrene and Polyether Resin Plant produced a mil-

lionth ton of propylene oxide since the Unit had been

put into operation.

The Conference of the labor collective of “Nizh-

nekamskneftekhim” INC reviewed the implementa-

tion of the 2006 bilateral obligations and adopted a

2007 labour agreement with all social guarantees

remained.

Most Important

Events of 2007

FEBRUARY

Michail Popov, First Deputy President of “NOVATEK”

JSC, and Vladimir Busygin, General Director of

“Nizhnekamskneftekhim” INC, signed a Protocol of

Intention, which defines major objectives in develop-

ing cooperation between the two companies for the

period until 2009 and long-term period until 2012.

Specialists of “Nizhnekamskneftekhim” INC, “Basell”

and “Tecnimont” successfully completed the per-

formance guarantee tests for the homopolymer

grade at the PP Production Facility.

MARCH

Vladimir Busygin, General Director of “Nizhnekam-

skneftekhim” INC, became winner of the TR contest

“The Law Territory” in nomination “For Substantial

Contribution to Maintaining Law-Enforcement Activi-

ties”.

22

APRIL

At the regular annual shareholders conference of

“Nizhnekamskneftekhim” INC, R. Minnikhanov stated

that “Nizhnekamskneftekhim” INC had successfully

materialized the objectives put forward by the TR

Government and Security Council. That very same

day, Ethylene Plant inaugurated startup of cracker

SRT-VI.

“Nizhnekamskneftekhim” INC hosted a session, with

the TR Deputy Prime Minister Ravil Muratov attend-

ing, which reviewed the ways of introducing a new

system of personnel industrial training.

The Company subdivisions had their Environmental

Management Systems audited. The experts of Czech

Quality Association CQS, which is a certification

authority of IQNet, assessed the systems as positive

in conforming to the international standard require-

ments.

MAY

Divinyl & HC Feed Plant put in operation a Divinyl Unit

to reprocess butanes into isobutane and isobutylene

fractions. Due to that a feedstock reprocessing line

“throughput” increased by 15-20%.

National Association of Inspection and Welding certi-

fied 30 welding procedures applied at Maintenance

Works.

JUNE

Oligomer Plant produced 1-hexene of polymeriza-

tion purity. The first lot of the product was shipped to

users.

“Nizhnekamskneftekhim” INC was honored with a

diploma “For Best Debut and Professional Booth

Work” per the results of the Exhibition “CHEMINEX/

Chemical Industry” in the context the Russian Na-

tional Industrial Forum “Industrial Technologies for

Russia 2007”.

Over the past month, Ethylene Plant operated with a

maximum possible feed charge and a record monthly

ethylene output of 47,733 t and propylene – 23,505 t.

“Nizhnekamskneftekhim” INC hosted a group of

specialists from TOO “KazRosGaz” – a JV of OAO

“Gazprom” and AO “National Company “KazMu-

nayGaz”. The Parties discussed the issues of mutual

cooperation.

I. Larionov, Deputy General Director-Head of Corpo-

rate Property & Investment Department of “Nizh-

nekamskneftekhim” INC attended IX Conference

of the Russian financial market players “Regional

Infrastructure of Securities Market: Problems and

Prospects”, which took place in Kazan.


JULY

The work of thousands of petrochemical employees

turned a 40-year anniversary of the Company into a

festival which on a large scale continued for two days.

A letter of gratitude was addressed to the person-

nel of “Nizhnekamskneftekhim” INC for an ample

contribution to the development of the petrochemi-

cal industry. Head of the Company Vladimir Busygin

was awarded a medal “For Valiant Labour”. Scores

of employees were given the awards of the Russian

Federation and Republican value.

AUGUST

August 1, the Ice-Hockey Palace of “Nizhnekam-

skneftekhim” INC hosted a solemn anniversary cer-

emony attended by M. Shaimiyev – the TR President,

A. Reus – the RF Deputy Minister of Industry and

Energy, managers of overseas and Russian compa-

nies – partners of “Nizhnekamskneftekhim” INC, as

well as the Company veterans.

August 1, M. Shaimiyev – the TR President took part

in inaugurating a cogeneration unit (GTU-75) featur-

ing a combined cycle to produce electric power and

steam, which means for the Company as the first

step in generating captive electric and heat energy.

SEPTEMBER

The Personnel Department of “Nizhnekam-

skneftekhim” INC was honoured with a title “Best

Personnel Unit’2007” per the results of the All-Rus-

sian contest.

A Filling Station of Divinyl and HC Feed Plant put into

service a rail weighbridge enabling to weigh rail cars

in static and dynamic conditions.

At its Charity Forum, “Nizhnekamskneftekhim” INC

on a large scale presented its charitable and spon-

sorship activities. Donations collected at the Fair and

at the Store of Good Deeds were forwarded to Kinder-

garten No.29 for children with poor hearing, correc-

tion kindergartens, to families with many children

and to support a cadet school.

OCTOBER

The Company Management took a decision to re-

condition a summer-time recreation centre “Leafy

Grove” to transform it into a year-round unit.

Most Important

Events of 2007

24

NOVEMBER

Annual Report and corporate website of “Nizh-

nekamskneftekhim” INC were honored with a prize

at X Annual Federal Contest for annual reports and

websites in nomination “For Comprehensive Informa-

tion at Website and in Annual Report”.

November 20, M. Shaimiyev – the TR President took

part in launching a Town Water Treatment Plant.

Synthetic Isoprene Rubber Plant started to produce a

new type of rubber — LiBR.

DECEMBER

General Director V. Busygin was awarded an honor-

ary medal “For Active Participation in Development

and Implementation of Ecology Programs” and a Cup

per the results of the All-Russian contest.

The Youth Organization of the Company won at the

republican show-contest for the best youth organiza-

tion of the TR Labour Federation.

“Nizhnekamskneftekhim” INC was recognized

as a winner in nomination “Leader of External

Trade’2007” per the results of the All-Russian contest

“Customs Olympus’2007”.

In line with the program on ethylene expansion up to

600 Ktpa, Ethylene Plant of “Nizhnekamskneftekhim”

INC put into operation an additional “cold” box E-EA

3004 intended to recover light HC fractions from con-

tact gas. It enabled to augment charging into crack-

ing heaters, and, accordingly, ethylene and propylene

output.


Consciousness of labor fruitfulness is one of the best pleasures.

Leo Tolstoy

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Key financial — economic indices

KEY FINANCIAL-ECONOMIC INDICES OF THE ACTIVITIES OF NIZHNEKAMKNEFTEKHIM

Output of marketable products in 2007 mounted to 55.2 billion rubles, exceeding

the level of the last year for 9.2 billion rubles. The growth of commercial output

compared with the level of 2006 has made 112.0 %. in comparable prices.

The products and services have been sold for the amount of 58.7 billion rubles.

Export share of commercial output mounted to 52 %.

Production of key products in kind

Activity Results

No. Description Measuring unit 2005 2006 2007

1. Commercial output mln. rubles 39,825.6 46,027.0 55,192.1

2. Sales of products, total mln. rubles 42,062.3 47,527.0 58,726.1

- including sales of marketable products mln. rubles 39,638.9 46,586.8 56,468.1

3. Expenses per 1 ruble of marketable products copecks 83.85 87.65 87.92

4. Before tax profit mln. rubles 3,500.9 4,692.6 5,616.5

5. Maintenance costs of social welfare institutions mln.rubles 606.7 692.4 748.7

6. Number of production personnel Man 18,953 19,039 18,955

7. Average monthly rate of wages of production personnel

Rubles 15,027 17,173 20,290

No Description Meas. units 2004 2005 2006 2007 2007/2006 in %%

1. Synthetic rubber SKI Tons 181,129 164,733 163,700 178 890 109.3

2. EPDM Tons 9,638 11,693 11,207 9,377 83.7

3. SBR – N Tons 29,318 62,107 72,332 82,996 114.8

4. Butyl rubbers Tons 81,415 94,617 107,726 107,156 99.5

5. Butadiene Tons 61,053 87,152 93,666 101,380 108.2

6. Ethylene Tons 450,133 465,339 480,691 511,069 106.3

7. Propylene Tons 199,100 203,132 212,640 260,041 122.3

8. Benzene Tons 171,705 179,762 187,593 195,690 104.3

9. Styrene Tons 250,980 276,800 283,264 287,814 101.6

10. MEG Tons 138,262 117,156 99,265 113,613 114.5

11. Ethylene oxide Tons 270,008 272,266 276,492 278,619 100.8

12. Propylene oxide Tons 67,250 69,142 68,518 72,234 105.4

13. Polyethers Tons 68,458 79,259 78,407 83,943 107.1

14. Propylene trimers Tons 59,539 49,048 42,827 28,932 67.6

15. Propylene tetramers Tons 22,496 17,355 17,817 10,950 61.5

16. Neonols Tons 122,708 122,846 121,870 117,899 96.7

17. Polystyrene Tons 48,589 78,871 106,986 123,031 115

18. Polypropylene Tons 0 0 19,944 155,029 0

19. Polyethylene Glycol Tons 0 0 6,104 22,964 0

28

0

0.5

1

1.5

2

2.5

Quick liquidity ratio

Overall liquidity ratio

1.9

1.3

1.3

0.8

1.95

1.13

2.3

1.6

2004 2005 2006 2007


| Balance Sheet



| Auditor's Report


Intensity of operation of production facilities

Dynamics of liquidity indices

Liquidity ratios remain within normative that is the evidence of the Company am-

ple funds availability for repayment of its short-term liabilities.

No. Production Capacity. %, % to the last year

2005 2006 2007

1. Synthetic rubber SKI-3 68.7 68.2 74.5 109.2

2. Butyl rubber 102.9 117.1 116.5 99.5

3. Ethylene 103.9 107.3 114.1 106.3

4. Propylene 105.8 110.0 135.4 123.1

5. Styrene EBS 85.9 90.5 88.1 97.3

6. Styrene SMPO 122.8 123.2 128.7 104.5

7. Propylene oxide 118.2 117.1 123.5 105.5

8. Ethylene oxide, first production line 72.8 71.2 67.3 94.5

9. Ethylene oxide, second production line 92.4 95.5 98.9 103.6

10. Polyether, Styrene and Polyether Resin Plant 104.4 101.6 106.2 104.5

11. Monoethyleneglyco l-1 84.4 68.0 83.4 122.6

12. Polystyrene 157.7 107 123 115

13. Polypropylene - - 103.4 -


8.7 12

.6

58.6

0

10

20

30

40

50

60

70Wear factor (%)

Renewal factor (%)

Retirement factor (%)

21.2

0.6

47.4

11.9

1

0.87

20062005 2007

49.2

200

400

600

800

1,000

1,200

691.

7

148.

8

743.

1

184.

9

866.

7

208.

0

1,13

8.4

258.

2

Availability of funds, in thousand rubles

Average monthly labor productivity of one worker, in thousand rubles

02004 2005 2006 2007

Dynamics of efficiency indices of the production

The flow of fixed assets

Activity Results

30

20,3

43.6

22,1

63.3 25

,183

.7 28,2

79.1

5,000.0

10,000.0

15,000.0

20,000.0

25,000.0

30,000.0

20052004 2006 20070.0


| Balance Sheet



| Auditor's Report


Dynamics of net assets, mln.rubles

Information on payments to the budget, RUR thou

The Company is effecting timely and in full current payments to budgets of all

levels within the terms specified by the legislation.

Description Charged Transferred

Budget of the Russian Federation 3,050,087 3,193,462

including Customs duties 266,791 269,540

Budget of Tatarstan Republic, including targeted budget funds

2,143,896 2,208,890

Local budget 453,765 453,942

Other entities of the Russian Federation 12,846 12,496

TOTAL 5,660,594 5,850,790


Balance sheetActivity Results RUR K

ASSETS At financial year beginning At accounting period end

I. Non-circulating assets

Intangible assets 320 253

Fixed assets 19,928,423 23,229,792

Uncompleted construction 4,401,083 5,493,505

Income investments in stocks of materials and capital equipment — —

Long-term financial investments 5,936,786 6,892,057

Deferred tax assets 96,705 109,577

Other non-circulating assets — —

Subtotal 30,363,317 35,725,184

II. Circulating assets

Inventories 5,977,532 5,896,204

including:

Feedstock, materials & other similar values 3,654,043 3,392,442

Livestock nurturing and fattening 26 26

Costs of uncompleted production units 1,515,212 1,790,845

Finished products and commodities for resale 48,453 50,001

Goods shipped 182,826 154

Future period expenses 576,972 662,736

Other inventories and costs — —

VAT on acquired values 1,067,921 855,232

Receivables (expected to be paid in more than 12 months after the report-ing date)

82,479 128,182

Including Buyers & Customers 82,479 128,182

Receivables (expected to be paid within 12 months after the reporting date)

7,493,169 7,610,079

Including Buyers & Customers 4,430,689 2,338,517

Short-term financial investments 313,535 168,915

Cash 625,172 188,178

Other circulating assets — —

Subtotal 15,559,808 14,846,790

BALANCE 45,923,125 50,571,974

LIABILITIES At financial year beginning At accounting period end

III. Capital & Reserves

Authorized capital 1,830,240 1,830,240

Owned stock redeemed from shareholders — —

Additional capital 10,258,941 10,228,345

Reserve capital 112,445 112,445

including:

Reserve funds established as per the Law — —

Reserves established as per the constituent instruments 112,445 112,445

Non-distributed profit (outstanding loss) 12,939,619 16,068,930

Subtotal 25,141,245 28,239,960

32


| Balance Sheet



| Auditor's Report


Manager Chief Accountant

RUR K

IV. Long-term liabilities

Loans & credits 12,463,550 10,967,559

Deferred tax liabilities 628,683 811,860

Other long-term liabilities — —

Subtotal 13,092,233 11,779,419

V. Short-term liabilities

Loans & credits 523,288 2,772,173

Payables 6,857,386 6,821,239

including:

Suppliers & Contractors 4,095,445 4,321,914

Debts to Company personnel 212,696 294,065

Debts to state off-budget funds 49,612 61,924

Tax and due debts 159,875 156,301

Other lenders 2,339,758 1,987,035

Profit payment debts to partners (founders) 146,545 678,325

Future period revenues 42,424 39,136

Reserves of forthcoming expenditures — —

Other short-term liabilities 120,004 241,722

Subtotal 7,689,647 10,552,595

BALANCE 45,923,125 50,571,974

Report on availability of values included in off-balance accounts

Rented fixed assets 93,878 300,613

including leased ones 93,878 165,49

Inventories accepted for responsible storage 8,991 8,991

Goods accepted for commission — —

Debts of insolvent debtors written off as loss 47,293 53,294

Liability and payment security received — —

Liability and payment security issued 9,408,759 3,115,414

Available housing deterioration 12,976 14,719

Deterioration of external accomplishment facilities and other similar facilities

3,392 4,457

Intangible assets received for application — —

Cost of other values 194,929 268,294


Profitand loss statement

Consolidated Profit and Loss Statement

in thousand rubles

Activity Results

Metrics For the accounting period For the similar period of the previous year

Designation Code

1 2 3 4

PROFIT AND LOSS FROM ORDINARY ACTIVITIES

Proceeds (net) from selling goods, products, labor, services (less VAT, excises & similar compulsory pay-ments)

10 58,726,102 47,526,951

Cost of goods, products, labor, services sold 20 -47,080,119 -37,375,998

Gross profit 29 11,645,983 10,150,953

Business costs 30 -1,630,000 -1,673,738

Administrative costs 40 -2,986,815 -2,631,336

Profit (loss) from sales 50 7,029,168 5,845,879

OTHER PROFIT AND LOSS

Interest receivable 60 53,904 193,640

Interest payable 70 -737,937 -835,683

Profit for partnership with other organizations 80 68,539 64,878

Other receipts 90 4,406,435 4,139,953

Other losses 100 -5,203,629 -4 716,056

Pretax profit (loss) 140 5,616,480 4,692,611

Deferred tax assets 141 12,872 7,734

Deferred tax liabilities 142 -183,178 -114,836

Current income tax 150 -1,364,483 -1,206,312

Income tax and other similar payments 160 14,692 -55,506

Net profit (loss) of the accounting period 190 4,096,383 3,323,691

FOR REFERENCE

Recurrent tax liabilities (assets) 200 190,007 191,282

Basic earnings (loss) per share 201 0 1.99

Diluted earnings (loss) per share 202 0 0

34

Description of Certain Receipts and Expenditures

in thousand rubles

Manager Chief Accountant


| Balance Sheet



| Auditor's Report


Metrics Code For the accounting period For the similar period of the previous year

Designation profit loss profit loss

1 2 3 4 5 6

Penalties, fines and forfeits, acknowledged or for which court (arbitration court) decisions were obtained in respect of recovery thereof

210 36,894 51,950 26,707 46,922

Previous years profit (loss) 220 496,534 628,351 4,048 204,103

Reimbursement of losses caused by failure to fulfill obligations or by undue fulfillment thereof

230 8,295 0 662 0

Exchange rate difference for foreign currency transactions

240 1,480,532 932,600 1,299,037 427,463

Deductions to valuation reserves 250 Х 0 Х 19,059

Amortization of receivables and accounts payable with expired limitation period

260 18,107 18,811 55,244 1,238


Notes to Financial Statements for 2007Activity Results

Financial accounting is performed in accordance with Federal Law of Russian

Federation dated 21.11.1996 No.129-FZ on Financial Accounting, and other regu-

lation documents.

Notes to Accounting Balance Sheet (Form No.1 BO)

In order to compare data for the previous financial period the figures in entries of

Accounting Balance Sheet (Form No.1 BO) have been changed without changing of

balance-sheet total:

Balance item Balance entry Amount as of the end of financial period 2006

Amount as of the beginning of financial period 2007

Deviation +;-(column 3 – column 4)

1 2 3 4 5

Long-term financial investments

140 5,896,739 5,936,786 -40,047 (loans granted to physical person)

Total for Section I 190 30,323,270 30,363,317 -40,047

Accounts receivable (expected to be paid during 12 months after reporting date)

230 122,526 82,479 40,047

Accounts receivable (expected to be paid during 12 months after reporting date)

240 6,587,311 7,493,169 - 905,858 (taxes and dues payments)

Other current assets 270 905,858 0 905,858

Total for Section II 290 15,599,855 15,559,808 40,047

36


| Balance Sheet



| Auditor's Report


Fixed assets

Re-evaluation of fixed assets was not performed.

Asset acquisition during the year of 2007 is 5,257

million rubles, asset retirement during the year of

2007 is 340 million rubles.

Asset value for the reporting period was increased

by 1,409 million rubles at the expense of recon-

struction of production units.

Cost of undepreciated fixed assets is 308 million

rubles including domestic buildings of 273 million

rubles, motorways of 35 million rubles.

Initial value of fixed assets received under the

contracts, which provide obligation fulfillment

(payment) with non-monetary assets, is consid-

ered as the cost of valuable property transferred or

subjected to transfer by organization. It is defined

on the basis of cost, at which company defines

cost of equivalent valuable property in comparable

conditions.

In case of failure to define cost of transferred or

subjected to transfer valuable property, the cost

of fixed assets received by company under the

contracts, which provide obligation fulfillment (pay-

ment) with non-monetary assets, is defined on the

basis of cost, at which the similar objects of fixed

assets are purchased in comparable conditions.

Cost of fixed assets objects is paid off through am-

ortization accrual.

Amortization of fixed assets objects is accrued on a

straight-line basis.

Amortization for the fixed assets objects accepted

for financial accounting before January 1, 2002

is accrued on the basis of useful life established

at registration, according to the Uniform Code of

Amortization Charges for Restoration of Agricultural

Fixed Assets Funds ССО, approved by Directive of the

USSR’ Council of Ministers dated 22.10.90 No. 1072.

Amortization for the fixed assets objects accepted for

financial accounting after January 1, 2002 is accrued

on the basis of useful life established by Directive of

Russian Government No.1 dated 01.01.2002 on Clas-

sification of Fixed Assets included in Depreciation

Groups.


Intangible assets

Amortization is accrued on a straight-line basis. Amortization charges are record-

ed by collecting certain sums on individual sub-account. Useful life established by

company is:

4 years on average for patents; —

10 years for trademarks. —

Financial investment

Financial investment is accepted for accounting at

initial cost.

Retirement of financial investment, for which the cur-

rent market value is not defined, is made according

to initial cost for each unit in accounting of financial

investments.

For debt securities, the current market value of

which is not defined, writing off the difference

between initial cost and par value during circulation

period in proportion to payable income for company’s

financial results under conditions, is not applicable.

Financial investment includes contribution of 394

million rubles to Ordinary Partnership in accord-

ance with the contract. Purpose of joint cooperation

is construction of water treatment station at the 3rd

pumping unit in Nizhnekamsk.

Activity Results

38

0

1,000

2,000

3,000

4,000

5,000

6,000

8,000

7,000

up t

o 2

year

s

up t

o 3

year

s

up t

o 4

year

s

up t

o 5

year

s

up t

o 6

year

s

over

7 y

ears

155

739

112

1,53

7

1,61

9

6,80

5

Long-term liabilities

At placing of notes (obligations) to receive loan money

the sum of interest or discount due to noteholder is

included to miscellaneous expenses on straight-line

basis (monthly) with no use of unexpired costs ac-

count.

Credit and loan expenditures in form of interests are

calculated as of the end of each month.

Additional costs connected with loan and credit pro-

curements are recorded in such reporting period the

specified costs were made.

Loan and credit procurement costs, directly con-

nected with acquisition and (or) construction of

investment asset, are included into original cost of

this asset. Such costs are amounting to 168 million

rubles.

Should procured credits and loans are used for pay-

ment of inventories, the accrued interests for credits

and loans are recorded as the miscellaneous costs.

Due date for the main types of long-term loan li-

abilities:

Research and development activity

Writing off the expenditures for performed research

and development work, process work is made on

straight-line basis.

Expenditures for research and development are

included in overhead expenses on straight-line basis

(via accounts of the 30th order) during one year (for

research and development expenditures before 2006

— during three years, for research and development

expenditures in 2006 - during two years) from the

first day of month following the month, in which these

researches were completed according to contractual

conditions or to assignment for these research and

development works, and started to actually use.


| Balance Sheet



| Auditor's Report


39Nizhnekamskneftekhim INC Annual Report, 2007 39

Inventory stocks

Recording of stock, materials and other similar

valuable property is made on the basis of actual cost

including cost specified in supply contract, ordering

costs and miscellaneous costs.

Flow recording of in-house manufactured semi-prod-

ucts and evaluation of them and of shipped goods

is performed in balance-sheet at accounting price

which is planning and standard value of production

(variable costs). Accounting price of in-house semi-

products is adjusted on monthly basis.

Goods purchased for resale are recorded in balance-

sheet at actual price.

Retirement of stock, materials and goods is per-

formed on the basis of average (moving) cost.

Reserves for reduction of valuable property cost are

created for each item of inventories and formed at

the cost of financial results per difference value be-

tween current market cost adjusted for material state

of inventory stocks and actual cost of inventories.

Notes to balance entries:

in entry 213 «In-process inventory costs» com- —

pleted scope of in-process works (as per State

Contract) is recorded as 83,300 thousand rubles);

record in entry 140 «Long-term financial invest- —

ment» expresses financial investment with

regard to long-term investment for one year and

loan at interest assigned to employees of the

Corporation with due date after 01.01.2009;

«Target financing and returns» are recorded in —

entry 660 «Other short-term liabilities»;

«Advances received » and «Other payables» are —

recorded in 625;

credit balance for account 69, except sub-ac- —

count «Federal budget settlements for Uniform

Social Tax», is recorded in entry 623 «State

extra-budgetary fund liability»;

credit balance for account 68 and credit balance —

for account 69 «Federal budget settlements for

Uniform Social Tax» in amount of 22,648 thou-

sand rubles are recorded in entry 624 «Tax and

fee liabilities»;

entry 960 «Securing of obligations and payments —

made» expresses guarantees issued to other

companies, amount of unsecured letter of credit

and collateral.

Activity Results

40

Notes to Form No.2 «Profit and Loss Report» of Balance Sheet:

In financial accounting proceeds are recognized at transfer of ownership.

Accounting of business expenses is made in Balance Sheet account “Merchandis-

ing costs” for corresponding sub-accounts.

Business and administrative costs are monthly charged off to reduction of sales

proceeds for the current month.

entries 020, 029, 040 are adjusted according to changes in accounting policy; —

result of currency sold in amount of 25 million rubles is recorded in entry 100; —

refund of profit taxes for previous years in amount of 37 million rubles and —

other similar payments are recorded in entry 160;

basic earnings per share for 2006 are 1.99 rubles as recorded in entry 201, —

dividend rate for reporting period is not declared, therefore basic earnings

per share are not calculated.


| Balance Sheet



| Auditor's Report



Activity OutcomesActivity Results

Auditing Organization “AUDI”

420111, Kazan, Pushkin St., 18

Tel./Fax: (843) 236-86-71

e-mail: [email protected]

Auditor’s Report to Open Joint Stock Company Nizhnekamskneftekhim on Financial (Accounting) Statements.

Auditor: Limited Liability Auditing Company “Audi”.

Location: Pushkin St., 18, Kazan, 420111, tel.: (843)

236 86 71.

State Registration Certificate № 1021602853326 was

issued to OOO Auditing Company “Audi” by Inter-Dis-

trict Inspectorate of the Russian Federation Ministry

for Taxes and Dues №14 for the Republic of Tatarstan

on 06.12.2002.

The license for carrying out general audit №

E006382 was issued by the RF Ministry of Finance on

07.09.2004.

The license is valid until 07.09.2009.

OOO Auditing Company “Audi” is a member of the

Professional Auditors’ Union “IPAR”, certificate №846

dated August 18, 2005.

OOO Auditing Company “Audi” has Quality Certificate

№102 in respect of auditor’s services, issued by the

Professional Auditors’ Union “IPAR” on October 12,

2005.

Term of Certificate: until 12.10.2008.

Body being audited:

Name: “Nizhnekamskneftekhim” INC

Legal Address: Nizhnekamsk, Republic of Tatarstan,

423574.

Location: Industrial Area, Nizhnekamsk, Republic of

Tatarstan, 423570.

State Registration Certificate of “Nizhnekam-

skneftekhim” INC №1021602502316 dated 05.11.2002.

We audited the attached Financial (Accounting) State-

ments of “Nizhnekamskneftekhim” INC for the period

from January 1, 2007, to December 31, 2007, inclusive.

The Financial (Accounting) Statements of “Nizh-

nekamskneftekhim” INC comprises:

Accounting Balance Sheet (form № 1) as of Janu- —

ary 1, 2008;

Profit and Loss Statement (form № 2) from Janu- —

ary 1, 2007, up to December 31, 2007;

Statement on the Capital Changes (form № 3) —

from January 1, 2007, up to December 31, 2007;

Report on Cash Flow (form № 4) from January 1, —

2007, up to December 31, 2007;

Appendices to the Accounting Balance Sheet —

(form № 5) for the period from January 1, 2007,

up to December 31, 2007;

explanatory notes. —

Preparation and submission of this Financial (Account-

ing) Statements is the responsibility of “Nizhnekam-

skneftekhim” INC being the Executive Body.

Out duty is to express the opinion on reliability of this

Statements, in all essential respects, and on compli-

42


| Balance Sheet



| Auditor's Report


ance of the accounting order with the Russian Federa-

tion Legislation based on the audit carried out.

We performed our audit in line with:

RF Federal Statute № 119-FZ of 07.08.2001 —

“About Auditing Activity”;

Effective Federal Regulations (Standards) of —

Auditing Activity;

Domestic Standards of Auditing Activity of OOO —

Auditing Company “Audi”;

Statutory Acts of the Authority Regulating Activity —

of the Body being Audited.

The audit was planned and performed in order to

obtain reasonable assurance that the Financial (Ac-

counting) Statements are free of significant falsifica-

tion. The audit was carried out on the selective basis

and included examining, on a test basis, evidence

supporting figures given in the Financial (Accounting)

Statements and disclosure therein information about

financial and economic activity, estimation of adher-

ence to principles and rules of making up the Financial

(Accounting) Statements, review of basic estimation

metrics, obtained by the management of the body

under audit, as well as estimation of the Financial (Ac-

counting) Statements concept.

The following data domain of business accounting

were audited: accounting of non-current and working

assets, accounting of funds and reserves, accounting

of long-term and short-term liabilities, accounting of

financial outcomes.

Based on the results of examination, the consolidated

auditor’s report was made out, as well as “Written

Information Letter of OOO Auditing Company “Audi” to

the Top Management of “Nizhnekamskneftekhim” INC

on the Auditing Results for 2007 Accounting Period”

was presented.

We believe, the audit performed provides a reason-

able basis to express our opinion on reliability of this

Financial (Accounting) Statements and on compliance

of the accounting order with the Russian Federation

Legislation.

In our opinion, the Financial (Accounting) Statements

of “Nizhnekamskneftekhim” INC present fairly, in

all material respects, the financial position as of

31.12.2007 and the results of financial and economic

activity for the period from January 01, 2007, to De-

cember 31, 2007, inclusive, in line with the require-

ments of the Russian Federation Legislation in the

part of the Financial (Accounting) Statements prepara-

tion.

The auditor’s examination was finished on March 7,

2008.

Auditing Organization Manager

(Auditor’s Qualification Certificate

K 016611 of 24.06.04)

S.E. Markaryan

Audit Manager

(Auditor’s Qualification Certificate

№ K017780 of 05.08.04)

A.G. Garyntsev


Findings

Of the Auditing Committee on the Results of Financial and EconomicActivity of “Nizhnekamskneftekhim” INC for 2007,Nizhnekamsk, March 18, 2008

The Auditing Committee of “Nizhnekamskneftekhim”

INC was elected at the general stockholders’ meeting

on April 26, 2007, based on Article 85 of the Fed-

eral Law “About Joint Stock Companies”, Statute of

“Nizhnekamskneftekhim” INC.

Auditing Committee Chairman:

Olga Vladimirovna Ignatovskaya

Auditing Committee Members:

Aleksey Ivanovich Belyaev —

Dmitriy Ivanovich Teslenko —

Rashit Gashikovich Salakhutdinov —

Nailya Zalyalyutdinovna Gilmutdinova —

During check-out procedure, the Committee reviewed

Annual Report, Annual Accounting Statements of

“Nizhnekamskneftekhim” INC for 2007, and Auditor’s

Report — OOO Auditing Company “Audi”, certifying

reliability of the Company’s Financial Statements.

Activity Results

In the course of such audit, it was defined, that:

“Nizhnekamskneftekhim” INC activity in 2007 1 |

was in compliance with the Russian Federa-

tion Legislation. The Accounting Statements

were prepared based on the effective Russian

Federation Accounting Rules. The accounting

policies as of 2007 was approved by Order №

787 dated 29.12.2006 of the General Director

of “Nizhnekamskneftekhim” INC.

Sales revenue in 2007 amounts to 58,726,102 2 |

thou. Rubles, profit on sales – 7,029,168 thou.

Rubles, pretax earnings – 5,616,480 thou.

Rubles, net income – 4,096,383 thou. Rubles.

44

The Company’s balance sheet assets as of 3 |

31.12.2007 equal to 50,571,974 thou. Rubles,

including the following:

Non-current assets amount to 35,725,184 —

thou. Rubles, among them 23,229,792 thou.

Rubles fall within fixed assets – 65.0% of the

Company’s total non-current assets;

Working assets amount to 14,846,790 thou. —

Rubles, among them 5,896,204 thou. Rubles

fall within inventories – 39.7% of the total

working assets, 7,738,261 thou. Rubles fall

within receivables – 52.1% of the total work-

ing assets;

Capital and Inventories amount to 28,239,960 —

thou. Rubles;

Long-term liabilities amount to 11,779, 419 —

thou. Rubles, among them 10,967,559 thou.

Rubles fall within loans and borrowings;

Short-term liabilities amount to 10,552,595 —

thou. Rubles, including 6,821,239 thou. Ru-

bles, which fall within payables.

Salaries were regular, the current arrears of

wages was equal to 294,065 thou. Rubles.

Net asset value of “Nizhnekamskneftekhim” INC 4 |

as of 31.12.2007 amounted to 28,279,096 thou.

Rubles. Increments of net assets for 2007 was

equal to 3,095,427 thou. Rubles.

The Company’s Accounting Statements allow to figure

out the complete and objective concept on financial

and economic activity of the Company and outcomes

thereof. No facts of breach of the order of Finan-

cial and Accounting Statements presentation were

disclosed. The accounting is in compliance with the

Russian Federation Legislation. The Company keeps

to the term of making Statements.

Based on audit and analysis of activity of “Nizh-

nekamskneftekhim” INC, the Auditing Committee,

taking into consideration the opinion of the Com-

pany’s auditor, has sufficient ground to confirm reli-

ability of the data, contained in the Annual Report and

Annual Accounting Statements for 2007.


| Balance Sheet



| Auditor's Report


Chairman of Auditing Committee:

O.V. Ignatovskaya


There is nothing strong like idea the time of which has come.

Thomas Edison

46

Niz

hnek

amsk

neft

ekhi

m IN

C A

nnua

l Rep

ort,

200

7

Investment Activities

| Priority Trends of the Company Activities and Expected Future

Development

| Financing and Credits

47

4

Investment activities

Priority trends of the Company activities (results of the reported year) and expected future development

Completion of revamping of ethylene plant bring-1 |

ing the ethylene production up to 600,000 t/y.

Completion of construction of a polyethylene pro-2 |

duction plant with the capacity of 230,000 t/y.

Completion of construction of the third stage of 3 |

polystyrene plant with capacity of 50,000 t/y.

Continuation of work on comprehensive project 4 |

for revamping and expansion of rubber produc-

tion units:

Production of butyl rubber and halobutyl —

rubber — up to 120,000 t/y.

Production of ND catalyzed PBR - up to —

100,000 t/y.

Production of styrene-butadiene rubber and —

lithium catalyzed PBR with total capacity up

to 100,000 t/y.

Continuation of work on setting-up the produc-5 |

tion of ABS-plastics with the capacity of 60,000

t/y.

Continuation of work on the project of production 6 |

of expandable polystyrene with the capacity of

40,000 t/y

Continuation of work on implementation of 7 |

comprehensive enterprise management system

based on R/3 software package, SAP AG com-

pany.

Implementation of energy saving program up to 8 |

2010 year.

Implementation of activities of ecological pro-9 |

gram.

Implementation of comprehensive strategic pro-10 |

gram of development until the year of 2012.

Investment Activities

48

Financing and credits

Construction of polyethylene plant 1 |

Financing of expenditures related to the project was arranged through the

credit facility under SACE guarantee (120 million US dollars for the term of 10

years arranged by Citibank).

Revamping of ethylene complex 2 |

Long-term credit facilities (6 – 10 years) of Bayerische Hypo und Vereinsbank

AG were established for financing of contracts for imported equipment totally

amounting to 33.125 million euro and credit facility from Moscow International

Bank for 13.6 million euro.

In the course of the year the short-term borrowed assets provided by ZAO KB 3 |

Citibank and ZAO UniCredit Bank were used for budgeting of capital invest-

ment program, also credit funds of HSBC bank in the amount of 30 million US

dollars were used in 2007.

In 2007 the Company made the advanced repayment of credits totally amount-4 |

ing to 122.88 million US dollars.

| Priority Trends of the Company Activities and Expected Future

Development

| Financing and Credits


Having future requires being able to do something new.

Peter Drucker

50

Niz

hnek

amsk

neft

ekhi

m IN

C A

nnua

l Rep

ort,

200

7

Industrial risks

“Nizhnekamskneftekhim” INC conducts its business

in the petrochemical industry sector. Raw mate-

rial and power industry have the highest ratio in the

structure of costs in this branch. The major risks

could be the price changes of raw material, energy

and products manufactured.

In 2007 the world prices for crude oil were grow-

ing under the influence of close balance of demand

and supply, geopolitical risks (war in Lebanon, tense

situation in the North Korea and Iraq), as well as

speculative behaviour of market players. Average

annual price of Brent crude oil reached 72.63 dollars

per barrel, which is 11% higher than in 2006. Accord-

ing to the last forecast of Purvin & Gertz the average

annual price of Brent grade in 2008 will grow to 85.44

dollars per barrel, which is 18% higher than in 2007.

The prices of crude oil render immediate impact on

the straight-run naphtha – basic feedstock for pet-

rochemistry. In 2007 the European prices of naphtha

had a tendency to rise that resulted in the next all-

time highest prices of some aromatic hydrocarbons

and their derivatives: benzene, styrene, polystyrene

etc. Average annual price increased by 20% com-

Risks Related

to the Company’s

Business pared to 2006. The highest growth was registered in

the 4-th quarter of 2007 when the price quotations of

straight-run gasoline reached absolute record - 870

dollars/ton, FOB Rotterdam. According to Chemical

Market Associates Inc. it is expected that the price of

naphtha in 2008 will rise by 16% in comparison with

2007.

Thus, “Nizhnekamskneftekhim” INC. as well as other

enterprises of the branch, operates in conditions

fraught with risks, mainly caused by escalating prices

of raw material and utilities. Risks, connected with

possible change of prices of the company’s products,

depend on the conditions of the global petrochemical

market. Normally the growth of prices for finished

products in the world market falls behind the growth

of feedstock prices.

The main risk factor in 2007 was the highest ever

price of petrochemical feedstock. However, the

growth dynamics of production sales export was

maintained in 2007: “Nizhnekamskneftekhim” INC

increased the export in money terms by 16% com-

pared to 2006. The increase of export volumes was

promoted by 19% growth of synthetic rubber, 93% of

plastics, 6% of ethylene oxide and its derivatives, 3%

of oligomer products and others.

The market of rubber and plastics is assessed by our

Company as being steady in 2008 maintaining the

high level prices. Due to reduction of European ca-

pacities of polystyrene and polypropylene production

in 2006 – 2007 and also the delay of implementation

of some declared projects of cracking units in Asia

and Middle East as well as production of styrene and

monoethylene glycol, it is possible to forecast that the

52

| Industrial Risks


| Financial Risks

| Legal Risks

| Risks Related to the Issuer’s Activity

favorable balance will be maintained in the foreign

market in the near-term outlook. The strengthening

cooperation of “Nizhnekamskneftekhim” INC with

the major consumers of rubber products (Miche-

lin, Pirelli, Goodyear, Continental, Bridgestone, JSC

Belshina) allows to schedule general increase of

volumes of production and sales of synthetic rubber,

including available hydrocarbon production, such as

butyl, halobutyl and butadiene rubber, and also new

kinds of rubber (SBR and Lithium PBR) having good

potential in the global market. And this in its turn

shall minimize the risk of reduction of sales volumes

of the main product group – synthetic rubber that is

50% of export.

Besides, the high degree of vertical integration of

“Nizhnekamskneftekhim” INC allows prompt adapta-

tion of the portfolio of the company’s production for

varied conditions of the market with the purpose of

receiving the maximum profit from sales.

Substantial advantage of “Nizhnekamskneftekhim”

INC in the export activities, which allows minimiza-

tion of the potential risk caused by high prices of raw

material and products, is that our Company does

not fix the price for long-term period when conclud-

ing contracts for certain product volumes, which

permits to respond dynamically to the situation with

raw material. In case of unfavorable foreign market

conditions our Company has the opportunity to direct

a part of deliveries to the domestic market and vice

versa.

Resolution of issues of raw material and power

supply is promoted by close cooperation with the

companies of a petrochemical and energy complex,

and also the policy of the higher management of the

Republic of Tatarstan aimed at the active governmen-

tal support of the entire oil-gas-chemical complex of

the Republic.


Risks Related

to the Company’s

Business “Nizhnekamskneftekhim” INC is one of the largest

enterprises of petrochemical industry in the Russian

Federation. Political and economic situation in the

modern Russia has a significant effect on the activi-

ties of our joint-stock company.

The economic situation of the Russian Federation

is characterized by sustained growth and stability.

It should be emphasized that for the last years the

risk of social and political instability in the country

has substantially declined, which basis were the low

incomes of the people being under social security

(education, medicine, law-enforcement agencies,

retirees). “Nizhnekamskneftekhim” INC gives large

attention to questions related to social risks, and

conducts active social policy in the region.

Country and regional risks

There are no risks related to geographical features

of the country and region, in which the company

conducts its basic business, since the place of dis-

position of the plant is characterized by absence of

danger of natural disasters. Besides, in view of the

level of development of a transport infrastructure,

there are no risks of the cease of the communication

due to geographical inaccessibility and remoteness.

The convenience of disposition allows smooth ship-

ping of products by railway and motor transport from

warehouses of the Company.

In the present-day conditions the state of domes-

tic chemical and petrochemical industry in many

respects depends on export volumes. Therefore the

most beneficial segments of chemical and petro-

chemical complex were and still remain the produc-

tion enterprises operating not only on the home

market but also the ones with strong export potential.

54

| Industrial Risks


| Financial Risks

| Legal Risks


“Nizhnekamskneftekhim” INC holds the leading

position among the Russian producers and export-

ers of petrochemicals. Basically there is a permanent

demand for all products produced by “Nizhnekam-

skneftekhim” INC on the external market, whose

capacity is many times higher than the domestic

market. In case of any failures in operation of domes-

tic consumers of products, “Nizhnekamskneftekhim”

INC has the opportunity to redistribute the flows of

goods of the Company between the foreign and the

domestic markets. Besides, the extensive geogra-

phy of product deliveries to foreign markets allows

the redistribution of product deliveries, if necessary,

between the individual countries.

“Nizhnekamskneftekhim” INC exports its products to

50 countries worldwide. The main share of products

is supplied to the countries of Europe, non-suscepti-

ble to serious political risks and natural disasters, as

well as the USA.

As to other major export markets, including the

countries of South-East Asia (South Korea, Taiwan,

China, India), at present the political stability is

observed in these countries-consumers of prod-

ucts of “Nizhnekamskneftekhim” INC along with

positive rates of economical growth, which ensures

the steady demand for products of “Nizhnekam-

skneftekhim” INC.

Thus, owing to a convenient site and advanced trans-

port and other infrastructure, and also to high export

potential, the Company has all possibilities to reduce

to the minimum the regional and country risks re-

lated to its business.


Risks Related

to the Company’s

Business Exposure of “Nizhnekamskneftekhim” INC to risks

associated with change of the interest rates, ex-

change rate of foreign currencies, in connection

with business of the company or in connection with

hedging, conducted by the Company for the purpose

of reduction of adverse consequences of impact of

above risks:

Risk of change of the interest rates

Some long-term transactions of “Nizhnekam-

skneftekhim” INC use floating interest rates (based

on LIBOR or EURIBOR) therefore there is a risk of

cost increase of such borrowings.

Factor of decrease: such transactions (credit

transactions, where floating interest rates are used)

provide for the mechanism of switching to fixed inter-

est rate.

Risk of the exchange rates

The main part of credit liabilities of “Nizhnekam-

skneftekhim” INC is nominated in US dollars. There-

fore there is a certain currency risk related to the

increase of exchange rate of US dollar/ruble.

Factor of decrease: about 60% of total revenue of the

company is based on the export sales of products.

The main currency of export sale proceeds is US dol-

lar, which certainly reduces this currency risk.

Financial risks

Besides, there is a risk to “Nizhnekamskneftekhim”

INC, related to the fact that the main prices for

products are defined in US dollars while the consid-

erable part of expenses incurred by the Company is

in rubles. Use of instruments for hedging of currency

risks in the Company’s practice would help reduce

this risk.

Inflation impact on securities payment as well as presumed actions of the Company directed to reduction of this risk

There is no considerable affect of current inflation

rate on the Company’s financial status. Price esca-

lation caused by the change of inflation rate shall

proportionally increase both the production costs and

the proceeds of the Company.

In case of unfavorable change of general inflation

figures “Nizhnekamskneftekhim” INC intends to re-

duce the delays of payments for its counterparties to

optimize the control of accounts receivable and costs.

The critical inflation values (according to Company

opinion) is over 25% a year, however the Company

estimates the probability of inflation escalation in

Russia in the midterm as fairly low in view of anti-

inflationary policy pursued by the Russian Federa-

tion government and the Central Bank of Russian

Federation

56

| Industrial Risks


| Financial Risks

| Legal Risks


In case of unfavorable change of interest rates

(raising) “Nizhnekamskneftekhim” INC considers to

gradually reduce the volumes of short-term loans

and credits, there is also a possibility of gradual

switching over to long-term credit resources with

floating interest rate.

Valuation of contracts with foreign counter-agents is

performed in US dollars, in case of the dollar’s fall in

relation to national currency the Company’s returns

in rubles could decrease. But the exchange risks,

including the risk of the dollar downing relative to

ruble, are included in all newly concluded contracts.

Indices of the financial statements of “Nizhnekamskneftekhim” INC that are mostly subject to changes resulted from financial risks, and also risks affecting the indices of the fiscal accounting of our joint-stock company, probability of their origin and behavior in the financial statements

Sections of the financial statements of “Nizhnekam-

skneftekhim” INC that are mostly subject to changes

caused by the specified risks: section of accounts

payable, net profit as well as cost price. In case of

occurrence of above-stated financial risks, the net

profit can decline, the debt service expense would in-

crease and consequently the cost value too. Probabil-

ity of such risks is insignificant. The specified factors

will necessitate attraction of extra money resources,

and that again will result in the increase of accounts

payable.

Fast growth of inflation and interest rates for bor-

rowed assets could greatly impact the figures of

financial statements of “Nizhnekamskneftekhim” INC

(change of total balance). Regardless of economic

stabilization in Russia in recent years one cannot rule

out the possibility of above risk occurrence.


Risks Related

to the Company’s

Business Conducting its economic activity in the territory of the

Russian Federation, “Nizhnekamskneftekhim” INC is

exposed to legal risks, connected with:

change of currency regulations; —

change of the tax laws; —

change of rules of the customs control and du- —

ties;

change of the judicial opinion on the issues —

related to the company’s business (including

licensing), which can adversely affect the results

of its business.

Besides, Russian legal structure has some specific

risks, such as the presence of contradictions between

the regulations of same level and/or different levels,

lack of identical interpretation of standards, high degree

of actual power of executive bodies as well as possible

lack of experience of judges when delivering the judg-

ment.

Risks associated with changes of the currency legislation

Sudden change of currency control could complicate the

appropriate execution of obligations under agreements

(contracts), earlier concluded with contracting parties

(Russian and foreign), which call for making payments

on these in foreign currency and it could necessitate the

conclusion of the supplementary agreements for such

contracts. In this context “Nizhnekamskneftekhim” INC

is largely dependent on the changes of currency legisla-

tion. It should be noted that the Federal law #173-F3

dated 10.12.2003 “On currency exchange regulation and

Legal risks

control” compared to the previous law has expanded

the rights of participants of foreign economic activity

and created a foundation for further liberalization of

currency relations. The last changes of the currency

legislation were introduced quite recently therefore it is

unlikely that there will be next change in the short-term

future. Accordingly, it is not likely that the position of

the Company will go down because of any change of the

currency legislation.

Risks related to change of the tax legislation

As well as any other economic entity “Nizhnekam-

skneftekhim” INC is the participant of the tax relations.

“Nizhnekamskneftekhim” INC is one of the major

taxpayer of the Republic of Tatarstan making payment

of federal, regional and local taxes.

General principles of taxation in the Russian Federation

being the basis of the tax system in Russia have been

established by part one of the Tax code of the Russian

Federation. Part one of the Tax code of the Russian

Federation defines general rules that should be fol-

lowed by the subjects of tax legal relations and assigned

their rights and obligations as well as legal procedures

served to observe the rights and duties.

Among the most substantial changes that could have

an adverse effect on the Company business one could

point out any changes or amendments to legislative

acts on taxes and duties concerning the increase of tax

rates and also imposition of new categories of taxes.

Such changes as well as other changes of tax legislation

could result in the increase of tax payments and, as a

consequence, the decrease of the net profit of the Com-

58

| Industrial Risks


| Financial Risks

| Legal Risks


pany. “Nizhnekamskneftekhim” INC assesses the legal

risks related to changes of tax legislation at the average

level. The Company always reacts to any changes of tax

legislation to ensure absolute and strict observance

of its requirements and the Company also perfectly

respects the revenue laws concerning its activity, how-

ever, this does not eliminate a potential risk of diver-

gence of views with relevant regulatory organizations on

the matters permitting ambiguous interpretation.

Risks related to change of rules of the customs control and duties

As the most part of the equipment acquired for produc-

tion is imported, or is made of foreign manufacture

components, the change of rules of the customs control

and duties could result in certain risks for our joint-

stock company associated with appreciation of the

acquired fixed assets.

At present basically new legal base of the customs

procedures is created in Russia complying with uni-

versally acknowledged standards, that provides for

direct regulation of legal relations in the customs area

based on the rules of RF Customs code #61-F3 dated

28.05.2003 and in the system of direct action rules. For

the purpose of improvement of operation of customs

authorities of the Russian Federation the large scope of

work was carried out for preparation of regulatory and

legal framework on the basis of RF Customs code, prac-

tice and experience of administration of international

legislation. Such changes in the customs legislation are

evaluated positively since they increased the transpar-

ency of customs procedures and simplified them.

No major changes of customs duties are foreseen for

products exported by the Company. Such risks are as-

sessed by the Company as minimal.

The risks related to change of the judicial practice on issues, associated with activity of the company (including licensing matters), which could have an adverse affect on the results of its business

Changes of requirements on licensing of the principal

activities of “Nizhnekamskneftekhim” INC, as well

as the change of the judicial practice on the matters

related to activities of the company (including licens-

ing issues), can have a negative effect on the business

activities of the Company in the event when because

of these changes the Company fails to receive (extend)

licenses required for its further business, or the current

licenses are withdrawn in a judicial procedure, however,

probability of occurrence of suchlike events is insignifi-

cant.

Probability of changes of judicial practice related to

activities of “Nizhnekamskneftekhim” INC (including

licensing issues) is considered negligible and shall not

have a material effect on its business. In case any modi-

fications are introduced in the judicial practice related to

activities of the Company, then the company shall plan

its financial and economic activities accordingly.


Options for extension of licenses of our joint-stock company for certain lines of business or for projects that are restricted in any business (including natural resources)

Expiration of licenses causes the problems of per-

forming the licensed activities of the Company. Our

joint-stock company adheres to the requirements

of licenses, takes all necessary actions to obtain the

licenses and to maintain their validity and minimize

the probability of suspension, change or withdrawal

of a license - to avoid such risk the Company per-

forms the respective systematic work for timely re-

newal of licenses (re-issue of licenses). The Company

assesses the risk related to passible non-extention

of the Company Licenses as insignificant.

Risks attributed to changes of legislation or to reso-

lutions of federal or local authorities on licensing is-

sues are beyond control of “Nizhnekamskneftekhim”

INC and the Company shall not guarantee that there

will be no such changes in the future that could

adversely affect its business. However, at present

there are no conditions of legal, economic or political

nature that could cause complications of licensing

procedure or reduce the feasibility of license exten-

sion for “Nizhnekamskneftekhim” INC.

Risks Related

to the Company’s

Business

Risks related to the Company’s business

60

Liability of the Company for debts of third parties including the affiliates of “Nizhnekamskneftekhim” INC

Our Company assesses the risk of probable liability

for debts of third parties including the affiliates of the

Company as negligible.

| Industrial Risks


| Financial Risks

| Legal Risks


Probability of loss of consumers with at least 10 per cent share of total sales proceeds of Company’s products (work, services)

In view of the high world demand for crude oil and

petrochemicals and also owing to extensive commer-

cial geography of “Nizhnekamskneftekhim” INC busi-

ness the Company considers that the risks of loss of

heavy consumers are non-significant.


Unity of interests, unity of aims, unity of actions.

Henry Ford

62

Niz

hnek

amsk

neft

ekhi

m IN

C A

nnua

l Rep

ort,

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7

Corporate activitiesCorporate activities

The List of Corporate Documents currently in force at “NIZHNEKAMSKNEFTEKHIM” INC:

The Articles of “Nizhnekamskneftekhim” INC —

Regulations for the Board of Directors of “Nizhnekamskneftekhim” INC, —

revised version voted for by the General meeting of stockholders 26.04.2007

Regulations for the General meeting of stockholders ОАО “Nizhnekam- —

skneftekhim” INC., revised version voted for by the General meeting of

stockholders 26.04.2007

Statute on the Audit Commission activities of “Nizhnekamskneftekhim” INC., —

revised version voted for by the General meeting of stockholders 26.04.2007

Statute on Information Policy of “Nizhnekamskneftekhim” INC —

Statute on Dividends payoff Policy of “Nizhnekamskneftekhim” INC —

Statute on Administration of Internal Management of “Nizhnekam- —

skneftekhim” INC

Statute on Independent Directors of “Nizhnekamskneftekhim” INC —

“Nizhnekamskneftekhim” INC. in its corporate activities is guided

by the Code of Corporate Behavior recommended by FCSM RF Instruction

No. 421/p, dated 04.04.2002, and by the Code of Corporate Behavior

of “Nizhnekamskneftekhim” INC.

Capital Stock

The capital stock of “Nizhnekamskneftekhim” INC. as of 10.03.2008 is

Rbl.1,830,239,750 and split into 1,830,239,750 shares, Rbl.1 par value each, includ-

ing 1,611,256,000 ordinary (voting) registered shares and 218,983,750 preference

registered shares. All shares are placed with the public; there are no assessable

capital stock placed with the public. The capital stock is fully paid up.

The Articles of “Nizhnekamskneftekhim” INC. provide for availability of

27,400,000,000 declared ordinary registered shares and 218,983,750 declared

preference shares, Rbl.1 par value each, and within this number shares may be

issued additionally.

64

1 | ОАО Svyazinvestneftekhim (Management of "TAIF-Invest" Ltd.; in nominal holding of Central Depositary of RT)

461,307,20025.2% 28.6%

2 | Telecom-Management Ltd.

15.2% 17.3% 278,562,490

3 | MKB Avers OAO (nominal holder)

29.4% 33.4% 538,491,806

4 | Depository Company UralSib ZAO

8.1% 9.3% 148,876,375

173,325,3999.5%

5.3%

5 | ZAO DКК (nominal holder)

118,195,015

6.5%

2.1%

6 | Other legal entities and nominal holders

2.6%

1.4%

111,481,465

7 | Individuals (over 10,000 shareholders)

SHARES TOTAL:

1,830,239,750100%

Including voting shares

1,611,256,000100%

% to Capital Stock (%)

% voting shares (%)

Shares quantity


| Capital Stock

| Bonded Loans



| Credit Ratings


Distribution of “Nizhnekamskneftekhim” INC shares as of March 01.03.2008


Corporate activities

Securities issue data

No. Share type Number of shares in issue

Number of paid off shareson issue

Method of placement

Cost of placement Governmental body,in charge of issue registration, registration No.

Status of issue

Privatization plan by Decree №41 of RT State Committee for Property dd 11.08.93

1. ordinaryRbls.. 10.

6,445,024 6,445,024 private offering Rbls. 10 руб. at nominal value, Rbls 6,40 at a.discount

RT Ministry of Finance № 11-1п-423dated 18.08.93

Annulled

2. preferredRbls.. 10.

875,935 875,935 free of charge RT Ministry of FinanceNo. 11-1n-423 dd.18.08.93

Собрание акционеров 23.04.98

3. ordinaryRbls 1.

64,450,240 — conversion — FCCB of Russia № 1-02-00096-А от 28.12.98.

Placed

4. preferredRbls 1.

8,759,350 — — FCCB of Russia № 2-02-00096-А от 28.12.98.

Собрание акционеров 20.04.01

5. ordinaryRbls 1.

1,546,805,760 — distributed among shareholders

— FCCB of Russia 1-02-00096-А от 15.08.03.

Placed

6. preferredRbls 1.

210,224,400 — — FCCB of Russia № 2-02-00096-А от 15.08.03.

66


| Capital Stock

| Bonded Loans



| Credit Ratings


“NIZNEKAMSKNEFTEKHIM” INC. bond issues

In November 2001, “Nizhnekamskneftekhim” INC. resorted to the first

Rbls.300,000,000 bond issue repaid in November 2002.

On 24.05.2002, “Nizhnekamskneftekhim” INC. placed the second

Rbls.1,500,000,000 bond issue that was repaid on the 24.05.2005.

On 02.09.2003, “Nizhnekamskneftekhim” INC. placed the third Rbls. 2,000,000,000

repaid 01.09.2007.

On 04.04.2005, “Nizhnekamskneftekhim” INC. placed the 4th Rbls. 1,500,000,000

bond issue with a 7 year maturity and half-year coupon payments. The half-year

coupon payments of the forth bond issue have been made before being offered

(02.04.2009) on 03.10.2005, 03.04.2006, 02.10.2006, 02. 04.2007 and 01.10.2007 at

the rate payments of 9.99%.

On 22.12.2005 “Nizhnekamskneftekhim” INC. completed placement of the first US

$200,000,000 Eurobond issue with a 10 year maturity and half-year coupon pay-

ments. The coupon payments’ schedule is strictly observed.


0

2

4

6

8

10

12

14

16

Year

0

20

40

60

80

100

120

140

160

Year

1994

5.5

5.5

1995

6 6

1997

1996

41515

1998

0.4

1.5

1999

0.5

1.5

2000

1.5

1.5

2001

0.05

40.

06

2002

0.05

40.

06

2003

0.06

20.

062

2004

0.18

550.

1855

2005

0.17

650.

1765

2006

0.54

480.

5448

2007

0.67

150.

6715

In Rbls.

In %to nominal

value

Ordinary registered shares Preferred registered shares

1994

55 55

1995

60 60

1997

1996

4015

0

150

1998

4015

0

1999

5015

0

2000

150

150

2001

5.4

6

2002

5.4

6

2003

6.2

6.2

2004

18.5

518

.55

2005

17.6

517

.65

2006

54.4

854

.48

2007

67.1

567

.15


Dynamics of dividend payments on equity issues ОАО Nizhnekamskneftekhim

Total accrued dividends for the year 2007 amounts to 1,229,006 thousand Rubles

(BD recommendations). Extraordinary general meetings of stockholders of “Nizh-

nekamskneftekhim” INC. were not held in 2007.

68

Ordinary Preferred

22.1

1112

9.96

183

Total: 1,830,239,750

0

5

10

15

20

25

Market price as of 28. 12. 2007. Rbls.

Capital issues allowable for sales

1,611,256,000

218,983,750

Capitalization Rbls.

35,626,674,766.72

2,181,478,890.26

Total: 37,808,153,656.98


| Capital Stock

| Bonded Loans



| Credit Ratings


Market capitalization “Nizhnekamskneftekhim” INC.

Information on Market capitalization “Nizhnekamskneftekhim” INC. 31.12.2007

Market capitalization of “Nizhnekamskneftekhim”

INC. shares is based on the buying price (demand)

on closing of the last selling day of the accounting

business period of aforementioned shares at the ОАО

Stock Exchange RTS.

One can find data on sales of ordinary and preference

shares of “Nizhnekamskneftekhim” INC., аs well as

data on current sales at the Web-site of ОАО Stock

Exchange RTS at the following address:

http://www.rts.ru. (http://www.rts.ru/ru/archive/agr-

securityresults.html).

For searching sales information one can use code

of the instrument (registered ordinary share) of

“Nizhnekamskneftekhim” INC. — nknc; preferred

registered shares of “Nizhnekamskneftekhim” INC. –

nkncp).

Note: from 12.10.2007 ordinary shares of “Nizh-

nekamskneftekhim” INC. are passed to sales in the

Quotation List «A2» ОАО Stock Exchange RTS.


09.0

1.20

07

16.0

1.20

07

23.0

1.20

07

30.0

1.20

07

06.0

2.20

07

13.0

2.20

07

20.0

2.20

07

27.0

2.20

07

06.0

3.20

07

13.0

3.20

07

20.0

3.20

07

27.0

3.20

07

03.0

4.20

07

10.0

4.20

07

17.0

4.20

07

24.0

4.20

07

01.0

5.20

07

08.0

5.20

07

15.0

5.20

07

22.0

5.20

07

29.0

5.20

07

05.0

6.20

07

12.0

6.20

07

19.0

6.20

07

26.0

6.20

07

03.0

7.20

07

10.0

7.20

07

17.0

7.20

07

24.0

7.20

07

31.0

7.20

07

07.0

8.20

07

14.0

8.20

07

21.0

8.20

07

28.0

8.20

07

04.0

9.20

07

11.0

9.20

07

18.0

9.20

07

25.0

9.20

07

02.1

0.20

07

09.1

0.20

07

16.1

0.20

07

23.1

0.20

07

30.1

0.20

07

06.1

1.20

07

13.1

1.20

07

20.1

1.20

07

27.1

1.20

07

04.1

2.20

07

11.1

2.20

07

18.1

2.20

07

25.1

2.20

07

01.0

1.20

08

08.0

1.20

08

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

09.0

1.20

07

16.0

1.20

07

23.0

1.20

07

30.0

1.20

07

06.0

2.20

07

13.0

2.20

07

20.0

2.20

07

27.0

2.20

07

06.0

3.20

07

13.0

3.20

07

20.0

3.20

07

27.0

3.20

07

03.0

4.20

07

10.0

4.20

07

17.0

4.20

07

24.0

4.20

07

01.0

5.20

07

08.0

5.20

07

15.0

5.20

07

22.0

5.20

07

29.0

5.20

07

05.0

6.20

07

12.0

6.20

07

19.0

6.20

07

26.0

6.20

07

03.0

7.20

07

10.0

7.20

07

17.0

7.20

07

24.0

7.20

07

31.0

7.20

07

07.0

8.20

07

14.0

8.20

07

21.0

8.20

07

28.0

8.20

07

04.0

9.20

07

11.0

9.20

07

18.0

9.20

07

25.0

9.20

07

02.1

0.20

07

09.1

0.20

07

16.1

0.20

07

23.1

0.20

07

30.1

0.20

07

06.1

1.20

07

13.1

1.20

07

20.1

1.20

07

27.1

1.20

07

04.1

2.20

07

11.1

2.20

07

18.1

2.20

07

25.1

2.20

07

01.0

1.20

08

08.0

1.20

08

0.2

0.1

0

0.3

0.4

0.5

0.6

0.7

0.8

Quoting for buying1 share (NKNC), $

Quoting for selling1 share (NKNC), $

Weighted average price of the deal (NKNC), $

Quotations of ordinary shares of “Nizhnekamskneftekhim” INC. at ОАО Stock Exchange RTS in 2007

Quotations of preferred shares of “Nizhnekamskneftekhim” INC. at ОАО Stock Exchange RTS in 2007


70

09.0

1.20

07

16.0

1.20

07

23.0

1.20

07

30.0

1.20

07

06.0

2.20

07

13.0

2.20

07

20.0

2.20

07

27.0

2.20

07

06.0

3.20

07

13.0

3.20

07

20.0

3.20

07

27.0

3.20

07

03.0

4.20

07

10.0

4.20

07

17.0

4.20

07

24.0

4.20

07

01.0

5.20

07

08.0

5.20

07

15.0

5.20

07

22.0

5.20

07

29.0

5.20

07

05.0

6.20

07

12.0

6.20

07

19.0

6.20

07

26.0

6.20

07

03.0

7.20

07

10.0

7.20

07

17.0

7.20

07

24.0

7.20

07

31.0

7.20

07

07.0

8.20

07

14.0

8.20

07

21.0

8.20

07

28.0

8.20

07

04.0

9.20

07

11.0

9.20

07

18.0

9.20

07

25.0

9.20

07

02.1

0.20

07

09.1

0.20

07

16.1

0.20

07

23.1

0.20

07

30.1

0.20

07

06.1

1.20

07

13.1

1.20

07

20.1

1.20

07

27.1

1.20

07

04.1

2.20

07

11.1

2.20

07

18.1

2.20

07

25.1

2.20

07

01.0

1.20

08

08.0

1.20

08

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

09.0

1.20

07

16.0

1.20

07

23.0

1.20

07

30.0

1.20

07

06.0

2.20

07

13.0

2.20

07

20.0

2.20

07

27.0

2.20

07

06.0

3.20

07

13.0

3.20

07

20.0

3.20

07

27.0

3.20

07

03.0

4.20

07

10.0

4.20

07

17.0

4.20

07

24.0

4.20

07

01.0

5.20

07

08.0

5.20

07

15.0

5.20

07

22.0

5.20

07

29.0

5.20

07

05.0

6.20

07

12.0

6.20

07

19.0

6.20

07

26.0

6.20

07

03.0

7.20

07

10.0

7.20

07

17.0

7.20

07

24.0

7.20

07

31.0

7.20

07

07.0

8.20

07

14.0

8.20

07

21.0

8.20

07

28.0

8.20

07

04.0

9.20

07

11.0

9.20

07

18.0

9.20

07

25.0

9.20

07

02.1

0.20

07

09.1

0.20

07

16.1

0.20

07

23.1

0.20

07

30.1

0.20

07

06.1

1.20

07

13.1

1.20

07

20.1

1.20

07

27.1

1.20

07

04.1

2.20

07

11.1

2.20

07

18.1

2.20

07

25.1

2.20

07

01.0

1.20

08

08.0

1.20

08

0.2

0.1

0

0.3

0.4

0.5

0.6

0.7

0.8

Quoting for buying1 share (NKNC), $

Quoting for selling1 share (NKNC), $

Weighted average price of the deal (NKNC), $


| Capital Stock

| Bonded Loans



| Credit Ratings



Credit ratings

In December 2005, 2 International Rating Agencies assigned credit ratings to “Nizhnekamskneftekhim” INC.

Moody’s investors Service Ltd.1 |

Types of credit ratings assigned Rating mark as of the end date of accounting quarter

Forecast of rating changes

Rating date assignment

Record of rating marks changes

Issuer credit rating В1 Stable 12.12.2005, 26.02.2008

No changes

Issuer long term credit rating on the national scale A2.ru Stable 12.12.2005 No changes

Euro bonds rating 200 million USD / up to the year 2015.*

B2 Stable 12.12.2005 No changes

Types of credit ratings assigned Rating mark as of the end date of accounting quarter

Forecast of rating changes

Rating date assignment

Record of rating marks changes

Issuer default rating В+ Stable 01.11.2006 No changes

Issuer priority-oriented uncovered rating В+ Stable 02.12.2005, 01.11.2006

No changes

Issuer short term credit rating B Stable 02.12.2005, 01.11.2006

No changes

Issuer long term credit rating on the national scale

A(rus) Stable 02.12.2005, 01.11.2006

No changes

Euro bonds rating 200 million USD / up to the year 2015.*

B+ Stable 23.12.2005 No changes

* Eurobond issue data, to which ratings have been assigned:

Denomination Currency Quantity issued Date of issue Date of final redemption Code ISIN

Eutrobonds US Dollars 200,000,000 22.12.2005 22.12.2015 XS 0238468457

Note: Eurobond issue was arranged against security

of “Nizhnekamskneftekhim” INC., NKNK FINANCE

PLC, Ireland, being the issuer.


Fitch Ratings Ltd.2 |

Note: At present, “Nizhnekamskneftekhim” INC. rat-

ings are under review of Fitch Ratings Ltd. following

the results of “Nizhnekamskneftekhim” INC. activi-

ties in 2006. (according to IAS).

72


| Capital Stock

| Bonded Loans



| Credit Ratings


Major Indices of Subsidiaries Activity

No. Name Proceeds Gross Profit Number of Personnel

RUR K % of Total RUR K % of Total Number % of Total

1 2 3 4 7 8 11 12

5,816,310 100 730,827 100 5,612 100

1 “Polimer-NKNK” Ltd 151,891 2.61 34,344 4.7 133 2.37

2 “Neftekhimagroprom” Ltd 117,000 2.01 -17,736 680 12.12

3 “UOP “Neftekhim” Ltd 275,431 4.74 17,286 2.37 655 11.67

4 “NKNK-Service” Ltd 41,788 0.72 39,763 5.44 38 0.68

5 “Polimerkholodtekhnika” Ltd 90,037 1.55 37,866 5.18 73 1.3

6 “Trust TCHXPC” Ltd 1,168,558 20.09 82,799 11.33 2,032 36.21

7 “Transport-Express” PAP Ltd 141,236 2.43 29,065 3.98 320 5.7

8 “Vtorresoursy” Ltd 30,448 0.52 3,277 0.6 29 0.52

9 “Shop No. 4100” Ltd 59,809 1.03 21,476 2.94 85 1.51

10 “NefteKhimSevilen” JSC 633,566 10.89 41,322 5.65 332 5.92

11 “CKK “Neftekhimik“ Ltd 40,955 0.7 -1,714 102 1.82

12 “SOV-NKNK” JSC 5,281 0.07 -1,095 139 2.4

13 “RMZ-NKNK” Ltd 57 ,683 0.84 -10,582 690 12.3

14 “Neftekhimresoursy-NKNK” Ltd 740 0.03 -102 51 0.8

15 “NKNK-Divinil“ Ltd 3,001,887 51.61 330,474 45.22 253 4.51


To foresee means to rule.Peter the First

74

Niz

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neft

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m IN

C A

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200

7

Management

| Board of Directors

| Management Board

| Audit Commission

75

7

ManagementManagement

Board of Directors

Radik R. Gaizatullin

Born in: 1964 Title: Finance Minister for the Tatarstan Republic Share in the Issuer Authorized Capital: none Issuer equity share: none

Vladimir M. Busygin

Born in: 1949 Title: General Director of “Nizhnekamskneftekhim” INC Share in the Issuer Authorized Capital: 0.03% Issuer equity share: none

Albert K. Shigabutdinov

Chairman of Board of Directors Born in: 1952 Title: General Director of “TAIF” JSC Share in the Issuer Authorized Capital: none Issuer equity share: none

76


| Management Board

| Audit Commission

Nahil U. Maganov

Born in: 1958 Title: First Deputy General Director for Oil & Oil Product Sales & Processing-Head of Oil & Oil Product Sales Department, “Tatneft” JSC Share in the Issuer authorized capital: none Issuer equity share: none

Rafkat A. Kantyukov

Born in: 1953 Title: General Director of “Gazprom transgaz Kazan” Ltd Share in the Issuer Authorized Capital: none Issuer equity share: none

Sergei V. Alekseyev

Born in: 1966 Title: Deputy General Director of “Svyazinvestneftekhim” JSC Share in the Issuer Authorized Capital: none Issuer equity share: none

Aidar R. Metshin

Born in: 1963 Title: Head of Nizhnekamsk Municipal Region, Tatarstan Republic Share in the Issuer authorized capital: none Issuer equity share: none


Management

Ruslan A. Shigabutdinov

Born in: 1976 Title: Deputy General Director of “TAIF” JSC Share in the Issuer authorized capital: none Issuer equity share: none

Ilshat Sh. Fardiyev

Born in: 1960 Title: General Director of “Tatenergo” JSC Share in the Issuer authorized capital: none Issuer equity share: none

Rinat K. Sabirov

Born in: 1967 Title: Head of Department for Oil-Gas-Chemical Complex Issues at the Office of the Tatarstan Republic Cabinet of Ministers Share in the Issuer authorized capital: none Issuer equity share: none

Vladimir V. Presnyakov

Born in: 1951 Title: Deputy General Director for Oil-Refining & Petrochemistry, “TAIF” JSC Share in the Issuer authorized capital: 0.0005% Issuer equity share: 0.0006%

78

The aggregate fee amount paid to the Board members of “Nizhnekam-

skneftekhim” INC for the year 2007 totalled RUR 9,029,394.

Note: Persons who are members of the Board of Directors and Management

Board of “Nizhnekamskneftekhim” INC have their fees included only in the aggre-

gate fee amount for the Management Board of “Nizhnekamskneftekhim”.

The Board of Directors incorporates an Audit Committee and a Personnel & Fee

Committee.

Radik R. Gaizatullin, member of the Board of “Nizhnekamskneftekhim” INC, is

an Audit Committee Chairman; Rinat K. Sabirov, member of the Board of “Nizh-

nekamskneftekhim” INC, is a Personnel & Fee Committee Chairman.

Both Committees function pursuant to the Regulations on those committees

of and approved by the Board of Directors of “Nizhnekamskneftekhim” INC on

24.11.2006.


| Management Board

| Audit Commission

Participation of members of the board of directors of Nizhnekamskneftekhim Inc in the board meetings in 2007-2008.

No. Name/No. of minutes of meeting

1 2 3 4 5 (in absentia) 6 TOTAL TOTAL Grand total

Date of meeting 26.04.2007 18.05.2007 27.07.2007 23.11.2007 19.02.2008 19.03.2008 (in presentia) (in absentia)

1 A. K. Shigabutdinov + + - + + + 4 1 5

2 V. M. Busygin + + + + + + 5 1 6

3 S. V. Alekseyev + - + + + + 4 1 5

4 R. R. Gaizatullin - + - + + + 3 1 4

5 R. A. Kantyukov - - + (п.м.) + + - 1 1 2

6 N. U. Maganov - - - - + - 0 1 1

7 A. R. Metshin + + + + + + 5 1 6

8 V. V. Presnyakov + + + + + + 5 1 6

9 R. K. Sabirov + + + + + + 5 1 6

10 I. Sh. Fardiyev - + + - + + (п.м.) 2 1 3

11 R. A. Shigabutdinov + + - + + + 4 1 5

Note: п.м. - member of the board of directors sent his opinion in writing


Management BoardManagement

Vladimir A. Belokurov

Born in: 1945 Title: Director of Styrene & Polyether Resin Plant Share in the Issuer authorized capital: none Issuer equity share: none

Azat Sh. Bikmurzin

Born in: 1969 Title: Director of Ethylene Plant Share in the Issuer authorized capital: 0.0004% Issuer equity share: 0.0003%

Vladimir P. Bobonin

Born in: 1938 Title: Deputy General Director for Industrial Engineering & Reconstruction Share in the Issuer authorized capital: 0.0025% Issuer equity share: 0.0018%

Tabriz G. Burganov

Born in: 1951 Title: Director of Synthetic Isoprene Rubber Plant Share in the Issuer authorized capital: 0.0047% Issuer equity share: 0.0043%

Management Board of “Nizhnekamskneftekhim” INC consists of 27 members.

Vladimir M. Busygin

[General Director; Chairman of Management Board] Born in: 1949 Title: General Director “Nizhnekamskneftekhim” INC Share in the Issuer authorized capital: 0.03% Issuer equity share: none

Akhtyam T. Amirkhanov

Born in: 1964 Title: Director of Synthetic Rubber Plant Share in the Issuer authorized capital: 0.0007% Issuer equity share: 0.0006%

Rustam M. Akhmetov

Born in: 1959 Title: Deputy General Director for Economics Share in the Issuer authorized capital: 0.0028% Issuer equity share: 0.001%

80


| Management Board

| Audit Commission

Alexander M. Vdovin

Born in: 1954 Title: Chief Power Engineer Share in the Issuer authorized capital: 0.003% Issuer equity share: 0.0026%

Ildar A. Gainutdinov

Born in: 1948 Title: Manager of Finance Department Share in the Issuer authorized capital: 0.0014% Issuer equity share: 0.0009%

Rashat A. Galiullin

Born in: 1957 Title: Deputy General Director for Commerce Share in the Issuer authorized capital: none Issuer equity share: none

Shamil Sh. Galaviyev

Born in: 1954 Title: Chief Mechanical Engineer Share in the Issuer authorized capital: 0.008% Issuer equity share: 0.009%

Khamit Kh. Gilmanov

Born in: 1949 Title: First Deputy General Director-Technical Director Share in the Issuer authorized capital: 0.004% Issuer equity share: 0.004%

Igor V. Larionov

Born in: 1970 Title: Dy General Director-Head of Corporate Property & Investment Dept. Share in the Issuer authorized capital: 0.005% Issuer equity share: 0.006%

Gennady M. Makarov

Born in: 1951 Title: Director of Ethylene Oxide Plant Share in the Issuer authorized capital: 0.005% Issuer equity share: 0.006%

Irina N. Maximova

Born in: 1962 Title: Manager of Export Department Share in the Issuer authorized capital: 0.0014% Issuer equity share: 0.0011%


Management

Leonid M. Maltsev

Born in: 1949 Title: Deputy General Director for Production Share in the Issuer authorized capital: 0.005% Issuer equity share: 0.004%

Akhat F. Minnullin

Born in: 1958 Title: Director of Polystyrene Plant Share in the Issuer authorized capital: 0.001% Issuer equity share: 0.0007%

Oleg N. Nesterov

Born in: 1960 Title: Director of Butyl Rubber Plant Share in the Issuer authorized capital: 0.001 Issuer equity share: 0.0007%

Siren’ G. Sakhapov

Born in: 1957 Title: Director of Oligomer Plant Share in the Issuer authorized capital: none Issuer equity share: none

Aidar R. Sultanov

Born in: 1965 Title: Manager of Law Department Share in the Issuer authorized capital: 0.0013% Issuer equity share: 0.001%

Aleksei I. Tokinov

Born in: 1951 Title: Director of Divinyl & HC Feed Plant Share in the Issuer authorized capital: 0.0018% Issuer equity share: 0.0012%

Victor S. Trifonov

Born in: 1965 Title: Director of Polyolefin Plant Share in the Issuer authorized capital: none Issuer equity share: none

82

Nikolai I. Ukhov

Born in: 1951 Title: Director of Information Technology Department Share in the Issuer authorized capital: 0.0036% Issuer equity share: 0.004%

Nurislam F. Fatykhov

Born in: 1948 Title: Deputy General Director for Personnel, Welfare & General Issues Share in the Issuer authorized capital: none Issuer equity share: none

Eugene A. Tsyganov

Born in: 1951 Title: Deputy Commercial Manager-Head of Sales Department Share in the Issuer authorized capital: 0.0015% Issuer equity share: 0.0017%

The aggregate fee amount paid to all Management Board members of “Nizhnekam-

skneftekhim” INC totalled RUR 170,826,627.40.


| Management Board

| Audit Commission

Vasily N. Shuysky

Born in: 1957 Title: Labour Committee Chairman Share in the Issuer authorized capital: 0.0007% Issuer equity share: 0.00005%

Ilfar R. Yakhin

Born in: 1963 Title: Chief Accountant Share in the Issuer authorized capital: 0.00002% Issuer equity share: 0.00002%


Audit CommissionManagement

Olga V. Ignatovskaya

Born in: 1963 Title: Chief Accountant of “TAIF” JSC Share in the Issuer authorized capital: none Issuer equity share: none

Aleksei I. Belayev

Born in: 1952 Title: Head of Oil Refining & Petrochemical Complex Department of the Tatarstan Republic Ministry for Industry & Trade Share in the Issuer authorized capital: none Issuer equity share: none

Nahila Z. Gilmutdinova

Born in: 1951 Title: Lead Advisor of Economic Analysis Department at the Tatarstan Republic Ministry of Finance Share in the Issuer authorized capital: none Issuer equity share: none

Audit Commission of “Nizhnekamskneftekhim” INC consists of 5 members.

84


| Management Board

| Audit Commission

Rashit G. Salakhutdinov

Born in: 1965 Title: Dy Head of Corporate Property & Investment Dept.-Head of Assets Department Share in the Issuer authorized capital: none Issuer equity share: none

Dmitry I. Teslenko

Born in: 1961 Title: Head of Finance & Economics Department of “TAIF” JSC Share in the Issuer authorized capital: none Issuer equity share: none

The aggregate fee amount paid to all Audit Commission members of “Nizhnekam-

skneftekhim” INC totalled RUR 1,139,758.


There are no professions of great future, but professionals with great future.

E.Mackenzie

86

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Personnel

87

8

19,000

19,500

20,000

20,500

21,000

20,4

45

20,4

67

19,7

08

Headcount (persons)

Figures in percentage terms (%)

Including (persons):

2005

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2005 2006 2007

2,35

22,

395

2,35

3

2,62

82,

689

2,65

4

367

363

344

15,0

9815

,020

14,3

57

ManagersSpecialists

OfficersWorkers

2006

2007

Managers

Specialists

Officers

Workers

11.5%

12.9%

1.8%

73.8%

11.7%

13.1%

1.8%

73.4%

11.9%

13.5%

1.7%

72.9%

Personnel

Staff policy of “Nizhnekamskneftekhim” INC is directed to achievement of the

Company’s strategic goal – gaining stable profit at the expense of manufacture

of competitive products and rendering services, satisfying needs of overseas and

domestic customers.

Company staff characteristics

Personnel

88

Elementary education

Unfinished secondary education

Elementary professional and secondary education

Secondary professional education

Higher education

2005

21.86

23.47

51.86

2.78

0.03

100%

2006

100%

23.53

23

51.03

2.41

0.03

2007

100%

24.85

22.8

50.25

2.08

0.02

35

36

37

38

39

40

41

42

37

38

41

The number of Doctors of Science and Candidates of Science (persons):

2005

2006

2007

Qualitative split of staff at “Nizhnekamskneftekhim” INC


950

1,000

1,050

1,100

1,150

1,200

1 04

1

1,16

8

1,16

8

Total (persons) Including (persons):

2005

0

50

100

150

200

250

350

300

2006

2007

Hig

her

sch

ools

gra

duat

es

Am

ong

them

:F

ull-

tim

e at

tend

ance

Sec

onda

ry p

rofe

ssio

nal

sc

hoo

l gra

duat

es

Am

ong

them

:F

ull-

tim

e at

tend

ance

Col

lede

s gr

adu

ates

176 19

512

3

155

180

102

137

126 13

7

136

124 13

6

207

247

317

Information on employment of young people under 30

The number of young people under 30 as of January 1, 2008, amounts to 5,268

employees, or 26.7% of the total headcount.

Personnel

90

Average age:

2005

36

38

40

42

44

46

2006

2007

Ave

rage

age

of e

mpl

oyee

s

Ave

rage

age

of m

anag

ers

Ave

rage

age

of s

peci

alis

ts

Ave

rage

age

of w

orke

rs

40.4

40.4

40.3

45.3

40.1

39.8

39.4 39

.839

.839

.8

45.2

44.9

Headcount and age composition of “Nizhnekamskneftekhim” INC staff


Above 60

31-50 years old

51-60 years old

18-30 years old

20.9%

25.10%

53.0%

1.0%

21.2%

1.10%

25.9%

51.8%

26.7%

22.1%

49.8%

1.4%

2

5

2

11

2

2

11

2

11

2

5

11

2,000

4,000

6,000

8,000

10,000

12,000

Age categories (persons):

5,12

35,

304

5,26

8

4,27

54,

335

4,34

3

210

226

269

10,8

3710

,602

9,82

8

0

18-3

0 ye

ars

old

31-5

0 ye

ars

old

50-6

0 ye

ars

old

Abo

ve 6

0

2005

2006

2007

Personnel

92

In September 2007, the Personnel Department of “Nizhnekamskneftekhim” INC

was given the title honor of “Best Russian Personnel Department” based on the

results of the cognominal All-Russian Competition.

“Nizhnekamskneftekhim” INC carries out permanent work with the personnel in

respect of recommendation thereof for the positions of managers and specialists.

In 2007, the reserve list contained 638 employees, 131 of them were promoted.


Good deeds are behind, the fame is always ahead.

Omar Haiam

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Social Responsibility

95

9

Concentrating the basic efforts on an industrial activity, “Nizhnekamskneftekhim”

INC., at the same time, gives enhanced attention to the social issues. Creation of

favorable working conditions, versatile support and increase of social security of

workers and their families are priority issues of social policy of the company.

The guidelines of social programs are reflected in the collective agreement con-

cluded annually between administration and trade-union committee of the com-

pany. In the collective agreement are enumerated guarantees and social benefits

for the labor, working hours and leisure time, occupational safety and health, legal

safeguard, as well as social and economical interests of the youths and creation of

cultural mass work and sport and recreation activities.

In 2007 all obligations fixed in the collective agreement are fulfilled, following the re-

sults of republican contest, it was declared as one of the best among the collective

agreements of other companies. The sum of social payments under the collective

agreement amounted to 411.8 million rubles.

Social

Responsibility

Social policy

Health promotion and rest of employees

In 2007 about 6,000 sanatorium permits for the sum of more than 71 million rubles

have been acquired for employees, including the “Korabelnaya Roscha” sanatorium

- dispensary and “Dubravushka” recreation camp which the company maintains

out of profit. In 2007 about 3,564 workers and their children have recuperated their

health in “Korabelnaya Roscha” (The Ship grove), more than 2,000 permits are real-

ized to those who enjoyed their rest in “Dubravushka” recreation camp.

In order to provide qualitative and duly health services to workers the management

of “Nizhnekamskneftekhim” Inc. has concluded a contract of voluntary medical

insurance with ZAO Spaseniye insurance company. According to this contract the in-

surer provides medical services at the city hospitals No.2 and No.3, Central District

Hospital.

For these purposes the company has allocated 88.5 million rubles in 2007.

“Nizhnekamskneftekhim” INC. is the only company in the city, which has kept all

three children’s summer camps functioning. About 2,360 children spent the sum-

mer time of 2007 down there.

96

Mortgage program

The management of “Nizhnekamskneftekhim” INC. pays great attention to the

major social issue - provision of the workers with the comfortable habitation.

At the company, the Regulation «About the order of realization of habitation pro-

gram» is developed and authorized and 72 apartments have been allocated to the

workers in 2007.

More than 2,000 petrochemical workers have expressed their desire to participate in

the social mortgage program and have registered in the State Housing Stock. They

have received 619 apartments with 161 apartments out of that number in 2007.

On balance, the company has houses for young families. In total - 30 typical

houses - hostels for 3,600 young families.

Care for veterans

The enterprise does not disregard the former workers. Interests of more than 6

thousand pensioners represent the Council of veterans of work and war in their

daily work. The former workers of “Nizhnekamskneftekhim” INC. receive monthly

surcharges to pensions from the fund of the company, receive lump sums at leav-

ing for pension; compensations by the Victory Day, the Day of defenders of Father-

land, the Day of older persons, the Day of the Chemist and personal anniversaries.

For monthly surcharges to pensions in 2007 the company has transferred more

than 16 million rubles. The total sum of payments to pensioners to celebratory

dates has made about 6.2 million rubles.

All pensioners are attached for medical service to the city hospital № 3 where they

receive medical aid from “Nizhnekamskneftekhim” INC., they get preferential

permits for sanatorium-and-spa treatment. In 2007 the company transferred

7.1 million rubles for medical treatment of non-working pensioners.

Pensioners of the company receive free-of-charge the company published news-

papers “Petrochemist” and “The Voice of People”.

Since 2001, veterans - petrochemists receive monthly surcharge from the Nation-

al Non-state Pension Fund, one of the founders being “Nizhnekamskneftekhim”

INC. Total amount of surcharge in 2007 is more than 16 million rubles.


The organization of work with young specialists

At “Nizhnekamskneftekhim” INC. are employed 19.7 thousand persons. The

average wages in 2007 have made 19,738 rubles. Average age of workers at the

enterprise is 40.3 years. The 26.7 % of the total number of people working for the

company are young people in the age below 30 years. The collective of petrochem-

ical workers is annually joined by graduates of basic educational institutions: the

Kazan state university of technology, the Nizhnekamsk institute of chemistry and

technology, the Nizhnekamsk petrochemical college and professional vocational

schools № 44 and № 62.

All young workers are assigned to instructors, this allows them to adapt faster to

production process. In order to involve them in active industrial and public activi-

ties and to quickly solve the problems of young families, in the plants are formed

the Councils for work with young specialists.

In order to encourage students to study better the management of the company

and the trade union committee has established educational scholarships. In 2007

were paid out 192 such scholarships 1,000 rubles each.

The young workers who have come back at the enterprise after service in the

army, are paid an allowance on appointment at the rate of 5 thousand rubles,

young families are allocated loans.

Every year, at the “Nizhnekamskneftekhim” INC. are held competitions on profes-

sional skill, art and amateur songs, tourist meetings, military and technical relay

races.

Young petrochemical workers take part in search and burial of remains of soldiers

fallen in the Second World War. Two times a year the “Neftekhimic” search party

goes on an expedition to Leningrad and Pskov regions.

The panel games club of the company took part in the KIVIN’2008 International

Festival and proved to be the best team among the industrial enterprises of the

republic.

Social

Responsibility

98

In 2007 году the youth organization of the company took the prize-winning place in

the Republican contest for the best youth organization of the Trade Union Federa-

tion of Tatarstan. Our team was also awarded diplomas of winners at III Republi-

can Festival of amateur performances held within the frame work of the contest.

Educational programs

For the organization of vocational training, retraining and improvement of profes-

sional skill of the staff, the educational center for personnel training is found

at the enterprise. It has licenses for educational activity on 74 professions and

trades.

In 2007, in the educational center were trained 8,932 employees, including 7,877

workers.

Artistic creativity

It is a policy of the company to keep cultural and educational activities at a high

level.

At the Arts and Crafts Palace there are 11 art groups: Romantics pop group,

Yashlek song and dance group, Nadezhda war and labor veterans choir, Art youth

theater, Zabavushka children’s folksongs group and others. They number about

450 talented workers of the company and their children. Four creative teams are

the prize winners of the All-Union Festivals. Five of them are awarded the title

of «Folk group». Experienced tutors are in charge of the groups, 8 of which are

awarded the title of «Honored art worker of the Republic of Tatarstan».

In 2007 creative groups of the Arts and Crafts Palace arranged 451 performances

before the public.

At the Arts and Crafts Palace there is the biggest in the city trade union library of

“Nizhnekamskneftekhim” INC., which book collection is more than 70,000 books.


Participation in social and economical development of the region

Being a basic urban developing enterprise, the company actively participates in

construction and revamping of important social establishments of the city and

the region. In 2007 the company put on stream the city water treating station with

unique purification system, being the general investor for that project.

The 30 million rubles allocated for development of automated real-time environ-

mental survey system, for air monitoring around the industrial area and in the city

blocks. The company equipped 3 children’s community in the new city blocks with

modern play grounds.

The company renders a charitable help to social establishments of the city. In

the Year of Charity the total amount of the charitable and sponsor’s help in 2007

has made more than 13 million rubles. The company workers and engineers gave

their one day salaries and wages for repairs of the city children’s hospital.

Our company is a sponsor to 21 educational institutions, Including 13 schools, 2

professional vocational schools, petrochemical collage.

For construction of the Parkland on the area of 10 hectares with 10 thousand

trees to be planted, the company already spent 24.5 million rubles.

Social

Responsibility

100

Company anniversary

In the summer 2007 года engineers and workers of the company solemnized the

40-th anniversary of the first product manufactured at the petrochemical complex.

Many different festivities were timed to the anniversary.

In all the plants the youth played mind games «What? Where? When?» dedicated

to construction and development of the petrochemical complex.

More than 2000 petrochemical workers took part in the festival of amateur talent

group «Neftekhim with you and for you». For students of city schools and colleges

a contest of compositions “We are the future of our city and the petrochemical

complex” was organized.

Amateur poets, writers, musicians of the city dedicated their creations to the an-

niversary of the company. A book of the best poems was published and a compact

disk was recorded with musical pieces.

More than 100 children at the age of 4 to 15 presented their paintings to the con-

test «Neftekhim and me is a united family».

During festivities a renovated «Avenue of veterans» was inaugurated on the terri-

tory of the first industrial area. Culmination of the festivities was a petrochemical

workers function with the honored guests: the President of the Republic of Tatar-

stan M. Shaimiyev, RF Deputy Minister of Industry and Energy A. Reus, Managers

of foreign and Russian companies — partners of “Nizhnekamskneftekhim” INC.


Living is not breathing but acting.Adam Smith

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Environmental Activity

103

10

Environmental management is the priority sphere of activities of “Nizhnekam-

skneftekhim” INC. Being a major producer of petrochemical products the Com-

pany complies with the up-to-date requirements for provision of ecological safety.

The task of minimizing the negative impact on the environment is resolved by way

of introduction of advanced production technologies, revamping of environmental

constructions and perfecting of existing environmental management system.

Waste waters including storm water are decontaminated or purified on the

internal treatment facilities; the major portion of exhaust gases are discharged

to atmosphere after purification or decontamination; unusable solid wastes are

stored on the Company’s landfill.

Environmental monitoring is carried out by internal laboratories authorized to

supervise emissions and state of environment.

The results of many years of monitoring give evidence that the level of air con-

tamination in the Company’s sanitary-hygienic zone does not exceed permissible

rates and the discharged effluents do not have a pronounced impact on the quality

of Kama river water.

Positive results of environmental activity of “Nizhnekamskneftekhim” INC gained

recognition of governmental bodies of the Republic of Tatarstan and the Russian

Federation.

Environmental ActivityEnvironmental Activity

104

0

0.2

0.8

0.6

1.2

0.4

1

1.6

1.4

1.8

2003 2004 2005 2006 2007

tons/million rubles

1.55

1.54

1.41

1.28

1.04

0

0.05

0.2

0.15

0.1

0.25

0.3

2003 2004 2005 2006 2007

tons/million rubles

0.22

6

0.27

4

0.26

8

0.26

4

0.23

5

Specific volume of pollutant emissions

Specific formation of non-recycled waste


Beginning from 2004 our Company has become the prize winner of the Republic-

wide “ECOleader” contests, and in 2007 “Nizhnekamskneftekhim” INC was

awarded the diploma of absolute winner of “ECOleader” contest. From 2005 to

2007 based on the results of All-Russian contest the Company was awarded the

diploma “Leader of environmental planning in Russia”. In 2006 and 2007 “Nizh-

nekamskneftekhim” INC was winning the national prize “Ecomir”.

From 2004 the environment management system has been functioning in full

compliance with ISO 14001 international standard. Environmental planning of

“Nizhnekamskneftekhim” INC is focused on implementation of Ecological policy

adopted in 2003.

Practical activities oriented to implementation of Ecological policy have been de-

tailed in the program of environmental management for the period of 2004-2008.

This program makes provision for further improvements of industrial processes,

replacement of obsolete equipment, further automation of production control

system, revamping of old environmental facilities and construction of new ones.

To ensure the ecological safety of the Company and with regard to its expected

future development till 2012 the new ecological program was prepared in 2007 for

the period from 2007 to 2015.

The most objective factor reflecting the environmental activity of any organization

is the ecological efficiency of its production operation. The ecological expenses

include: pollutant emissions, discharge of waste water to water basin, formation

of non-recycled waste, efficiency of land use. All types of ecological impact are

estimated for 1 million rubles of commercial products, whose value is based on

the prices of 2004.

Environmental Activity

106

0.01

0

0.04

0.03

0.02

0.05

0.08

0.07

0.06

2003 2004 2005 2006 2007

Hectare/million rubles

0.07

1 0.06

8

0.06

2

0.05

4

0.05

200

0

800

600

400

1,000

1,600

1,400

1,200

2003 2004 2005 2006 2007

m3/million rubles

1,34

0

1,35

1

1,35

0

1,10

9

1,09

4

Efficiency of land use

Specific volume of waste water discharged to water basin


Rational deeds are made of goodjudgment and purity of intents.

Arthur Schopenhauer

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Energy Saving

109

11

Today “Nizhnekamskneftekhim” INC is the heaviest user of utilities among the

industrial enterprises of the Tatarstan Republic, consuming 11.5% of electrical

power and 33% of heat energy generated by the entire “Tatenergo” System.

In line with Energy Saving Program within the period of 2000 – 2007, the Company

put into practice 657 energy saving arrangements with the economic effect total-

ing RUR 1.9 billion.

Saved:

3.7 million Gcal of heat energy; —

174 million kw-hr of electrical power; —

121 thousand tons of equivalent fuel. —

A second energy-auditing, carried out in 2005-2006 by the Center of Energy -Sav-

ing Technologies under RT Cabinet of Ministers, determined the achieved status

and the remaining energy saving potential for preparation of Energy Saving Pro-

gram at “Nizhnekamskneftekhim” INC for the period of 2006-2010.

In March 2006, there was devised and issued a “Utilities Passport of “Nizhnekam-

skneftekhim” INC – industrial user of fuel and energy resources”, effective until

2012.

With a view of further energy -saving implementations and pursuant to the RT

Statute № 24 of March 23, 2006 « On approval of “Energу effiency in the Tatarstan

Republic for years 2006-2010” Program», Nizhnekamskneftekhim” INC has devel-

oped a “2006-2010 Energy-Saving Program”.

The program contemplates for 111 basic energy-saving implementations at the

Company to yield economic effect of RUR 757m.

Energy Saving

Energy Saving

110

Main trends of Energy Saving Program realization:

Improvement of existing energy-saving technologies; —

Implementation of new energy-saving technologies; —

Use of new high-performance catalysts; —

Revamping and upgrading of process equipment; —

Installation of less power consuming pumping equipment; —

Increasing of production capacities; —

Secondary resources conservation; —

Reduction in unproductive losses of feedstock and energy resources; —

Equipping of all production units with automated control systems; —

To improve the reliability of power supply, existing power control boards (PCB –0.4

kV) are replaced with “Siemens” ones.

The implementation of this program started in 2005 and it will run up to 2012.

It is planned to replace 250 PCB’s, 27 distribution boards and transformer substa-

tions.

The Company’s both industrial areas have the control panels installed and put into

service to monitor the power supply system for all NKNK Plants. They enabled to

follow the actual consumption as a whole for the Company and for the individual

subdivisions and to promptly supervise a power consumption regime.

In order to reduce energy costs and raise the competitiveness of its products ,

“Nizhnekamskneftekhim” INC has completed the construction of its own energy

source based on a gas-turbine technology and put into operation one power gen-

erating unit with capacity of 25 MW.

84.1 thousand Gcal of heat energy and 55.8 million kw-h of electric power have

been generated by the Gas-Turbine Unit in 2007.

With new Regulations, introduced for electric power wholesale and retail markets

to operate under the Government Provision No. 530, “Nizhnekamskneftekhim”

INC started activities in new transitional period conditions for energy system

reforming.


The fame is in hands of labor.Leonardo Da Vinci

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Press Coverage About Us

113

12

Press Coverage

About Us

Press Coverage About Us

No Topics Publications

1 “JSC Nizhnekamskneftekhim is not susceptible to time influence”

“Izvestiya”, No.8 of 19.01.07, page 9

2 “Administration and Trade Union : lessons of joint activities ”

“Vasha Gazeta”, No. 4, of 24.01.07.

3 “Nizhnekamskneftekhim ”- floor is given to success

“Respublika Tatarstan ”, No.16, of 30.01.07.

4 “Right for justice” “Trud” No.16 of 31.01.07.

5 “Rely on police but don’ t fail yourself “ “Leninskaya Pravda”, No.22 of 31.01.07. (Enclosure “Tatar Inform”)

6 “Rely on police but don’ t fail yourself “ “Nizhnekamskoye Vremya ”, No.5, of 30.01.07.

7 “Development perspectives of the Russian Neftekhimiya”

“Neft. Gaz. Bizness v Tatarstane” No.1 of 2007.

8 “The article of the General Director” “Kataliz v promyshlennosty” No.1 of 2007.

9 “Hard nut” “Sovetskiy Sport ” of 31.01.07.

10 “Nizhnekamskneftekhim is defining the strat-egy till 2012”

“Vremya I Dengi ”, No.20 of 6.02.07.

11 “Yanga programma tiksherelde” (“The new programme has been tested” )

“Vatanym Tatarstan”, No.22 of 7.02.07.

12 “Success is not written in the Contract” “Vremya I Dengi ”, No.22 of 8.02.07.

13 “Success is not written in the Contract” “Rossiiskaya Gazeta ”, No. 28, of 9.02.07

14 “Personnel is the main capital of Neftekhim” “Vremya I Dengi ”, No.28-29 of 16.02.07.

15 “Personnel is the main capital of Neftekhim” “Respublika Tatarstan ”, No.31, of 20.02.07.

16 “Let the prayers come true “ “Vasha Gazeta” , No.9, of 28.02.07.

17 “Let kindness be a fellow traveller” “Nizhnekamskoye Vremya ”, No.10, of 6.03.07.

18 “Millions of pink roses from V. Busygin” “Vasha Gazeta” , No.10, of 7.03.07.

19 “The Big” heart of Neftekhim” “Vasha Gazeta” , No.10, of 7.03.07.

20 “Let kindness be a fellow traveller” “Leninskaya Pravda”, No.53, of 14.03.07. (Enclosure “Tatar Inform”)

21 “Mortgage program of Neftekhim workers “ “Argumenty and Facty ” of 14.03.07.

22 “Nizhnekamskneftekhim – We can make rub-ber ”

“Neft. Gaz. Bizness Tatarstana ”of Decem-ber 2006/February 2007.

23 “Nizhnekamsk industrial area today and tomorrow ”


24 “Not susceptible to time influence ” “Tatarstan” No.3-2007

25 “Tabyshnyng ochtan bere”- aktsionerlarga (“One third of the gained to the shareholders ”)

“Vatanym Tatarstan”, No.57-58 of 30.03.07.

26 “We say Nizhnekamskneftekhim, meaning quality”


27 “Neftekhim- yugary syifat digan souz” (“Neftekhim means high quality”)

“Vatanym Tatarstan”, No.61 of 4.04.07.

28 “Simply believe in miracle” “Vasha Gazeta” , No.14, of 4.04.07.

29 “The way to responsibility” “ Delovoy Ekologicheskiy Zhournal”, No.1 of 2007

30 “What does life mean? Love …” “Tatarstan” , April 2007

31 “Nails could have been made of these people…” “Nizhnekamskoye Vremya ”, No.20, of 15.05.07.

32 “JSC Nizhnekamskneftekhim : real perspec-tives”

Proekt “Dostoyanie Respubliki” (Atach-ment to “Vedomosti” newspaper )

33 “Two fates” “Tatarstan” No.5-2007

114

34 “The big family of Neftekhim workers” “Vremya I Dengi ”, No.95-96 of 25.05.07.

35 “Nizhnekamskneftekhim : real perspectives” “Respublika Tatarstan ”, No.103, of 26.05.07.

36 “The family celebration of Neftekhim workers” “Vasha Gazeta” , No.22, of 30.05.07.

37 “We are the future of the city and the plant” “Vasha Gazeta” , No.23, of 6.06.07.

38 “Let the stars of Neftekhim never fade” “Vasha Gazeta” , No.26, of 27.06.07.

39 “JSC Nizhnekamskneftekhim will call back the complaints from the European Court of Human Rights ”


40 “Business card of Nizhnekamskneftekhim” “Biznes i Vystavky”, No.5-6 of 2007.

41 “Over the thresholds of the market — to world leadership”

“Rossiiskaya Gazeta” , No. 147, 11.07.07

42 “Environment protection priorities ” “Rossiiskaya Gazeta” , No. 154, 19.07.07

43 “Nizhnekamskneftekhim is 40 ”. The series of printed materials on operations, history, social policy and other.

“Elita Tatarstana”, July 2007.

44 “JSC Nizhnekamskneftekhim: the harmony of the past and the future”

“Tatarstan”, No.7 -2007.

45 “To be remembered …“ “Vasha Gazeta” , No.30, of 26.07.07.

46 “Ber sulyshta uzgan yul” (The way passed at one breath )


47 “Fiker Sandygynda Nilar Bar?” (What is there in the chest of thoughts?)


48 “The strong manage the world leadership” “Rossiiskaya Gazeta” , No. 164, 31.07.07

49 “Personnel is programming success” “Vasha Gazeta” , No.37, of 12.09.07.

50 “Personnel is programming success” “Respublika Tatarstan ”, No.190, of 22.09.07.

51 “Nizhnekamskneftekhim: friendship as a lesson”

“Vasha Gazeta” , No.39, of 26.09.07.

52 “How to make the city beautiful ” “Vasha Gazeta” , No.41, of 10.10.07.

53 “JSC Nizhnekamskneftekhim: the history of one victory ”

“Neft. Gaz. Bizness Tatarstana ” August 2007

54 “Investments in nanotechnologies- experience of Nizhnekamskneftekhim”


55 Sources of our springs “Tatarstan”, No.10 -2007.

56 The experience of building IR-service in the company of a real sector

“RZB”, No. 22 of 2007

57 “Dreams come true: this has been proven by Nizhnekamsk Neftekhim workers”


58 “Dreams are being realized” “Respublika Tatarstan”, No.239, of 1.12.07.

59 “Nizhnekamsknefekhim : from pilot projects to commercial production”

“Vremya I Dengi”, No.227 of 4.12.07.

60 “Industrial area - Perspectives with Nizh-nekamskneftekhim”


61 “Zolotnik” оf Russia “is with JSC Nizhnekam-skneftekhim”

“Vremya I Dengi ”, No.239-240 of 20.12.07.

62 “The youth of Nеtftekhim – well done !” “Vasha Gazeta” , No.51, of 19.12.07.

63 “Specific features of petrochemical energy systems ”

“Izvestiya Tatarstana”, No.51, December 21-27, 2007

64 “The future of Nizhnekamskneftekhim is in the hands of the young”

“Respublika Tatarstan”, No.255-256, of 25.12.07.

65 “New, environmentally clean production — wa-ter treatment unit of Nizhnekamskneftekhim”

“Stroyexpertiza“ , No.8 December , 2007.

66 “Champions of Neftekhim” “Sovetskiy Sport” , December 2007.


That home is good where guests are welcome. Antuan de Sent Exupery

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Contact Information

117

13

Contact information

Full company name:

“NIZHNEKAMSKNEFTEKHIM” INCORPORATED

Location and postal address:

423574 Republic of Tatarstan, Nizhnekamsk

“NIZHNEKAMSKNEFTEKHIM” INC

Date of “NIZHNEKAMSKNEFTEKHIM” INC state

registration:

Registered on August 18, 1993 by the Ministry of Fi-

nance of the Republic of Tatarstan and entered in the

Registry of joint-stock companies established on the

territory of the Republic of Tatarstan under No. 388.

Re-registered by inter-regional inspectorate No. 20

of the Ministry of Taxes and Charges of the Russian

Federation for the Republic of Tatarstan on Novem-

ber 5, 2002 and entered in the Unified State Registry

of legal entities under the main state registration No.

1021602502316.

Tax-payer identification number: 1651000010.

Auditors:

Full company name:

Limited liability auditing company “Audi” — as per

RAS (Kazan)

Full company name:

Closed Stock Company

“PricewaterhouseCoopers Audit” — as per IFRS

Independent estimator:

Full company name:

Limited liability auditing company

“Center Audita I Konsaltinga”, city of Kazan.

Registry holder:

Full company name:

Closed Stock Company “Mezhregionalnaya Reg-

istrazionnaya Kompaniya” [Branch No. 4, city of

Nizhnekamsk, ul.Korabelnya,1]. License for registry

keeping activities, register No. 10 000-1-00297 is

granted by the Federal Committee for Equity Market

on 20.02.2004 without limitation of validity.

Mass media:

List of mass media, publishing, in accordance with

Clause 9.19 of Nizhnekamskneftekhim Articles of

Incorporation, notifications about shareholders’

meetings: newspapers “Neftekhimik”, Hezmattash

Avazy”, “Leninskaya Pravda”, “Tugan Yak”, “Respub-

lika Tatarstan”, “Vatanym Tatastan”.

Contact

information

Дизайн, верстка, фото ООО «Артик»,2008. E-mail: [email protected]

423574 Republic of Tatarstan, Nizhnekamsk

“NIZHNEKAMSKNEFTEKHIM” INC

Teletype “ MAYAK” 724614, 724620

Tel.: (8555) 37-71-81, 37-78-38

Fax: (8555) 37-93-09, (495) 255-38-21

e-mail: [email protected]. http://www.nknh.ru