Address from the Chairman of the Board of Directors

Dear Shareholders and Investors,

Gazprom Neft’s key objective for the period until 2025 is to increase shareholder value through the effective use of the resource potential and the greater incorporation of oil reserves in development, the establishment of new sources of business growth, and a maximum return on investment in new projects. In 2017, Gazprom Neft made steady progress towards achieving its strategic goals, continued to consistently improve its production indicators, and demonstrated strong financial results.

This is largely a reflection of the Company’s effective management and the high quality of the decisions made while clearly adhering to the path specified in the long-term strategy.

The Board of Directors plays the most important role in resolving strategic issues that aim to ensure the sustainable development of Gazprom Neft’s business. This management body focused on the fulfilment of Gazprom Neft’s strategic performance indicators in 2017 as well. The Board of Directors concluded that Gazprom Neft’s business developed in full accordance with the long-term plans and goals outlined in the strategy in 2017. At the same time, the decision was made to exclude a target benchmark for oil refining volume abroad from the company's long-term development strategy due to changes in the macroeconomic environment.

Challenges related to the innovative development of Gazprom Neft were another focus of the Board of Directors, which reviewed the implementation of the Company’s innovative development programme for 2016 and took a close look at priority projects and tools for implementing Gazprom Neft’s technology strategy. The Company also approved its target environmental indicators for the period of 2017-2019, which take into account the specifics of production activities, the Company’s development plans as well as environmental measures at Gazprom Neft industrial facilities.

The principles of corporate governance at Gazprom Neft are based on the meticulous observance of the rights and interests of shareholders and strict compliance with the requirements of Russian law. Adhering to the recommendations of the Code of Corporate Governance, each year the Board of Directors analyses its own activities and reviews an assessment of the state of corporate governance at the Company. The assessment conducted in 2017 confirmed that such key components of the corporate governance system as Shareholder Rights, Information Disclosure, and Corporate Social Responsibility are consistent with best practices.

In 2017, the Board of Directors approved a number of important regulatory documents that ensure the regulation of the Company’s activities. Such documents include the Internal Control Policy, the Regulation on Information Policy, the Regulation on Insider Information, and the Internal Audit Policy.

Gazprom Neft continues to improve its corporate governance system. In doing so, the Company relies on the best Russian and international experience and utilizes tools that meet its current business needs and aim to improve its effectiveness.

Alexey Miller Chairman of the Board of Directors Gazprom Neft PJSC