#1NOVATEK Strategy Update 2009 – Conference Call - NOVATEK, Moscow, Russia 23 December 2008#2Disclaimer NOVATEK This presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity in any jurisdiction. Neither this presentation nor any part thereof, nor the fact of its distribution, shall form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. The information contained in this presentation has not been independently verified. The information in this presentation is subject to verification, completion and change without notice and neither the Company is under any obligation to update or keep current the information contained herein. Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its respective members, directors, officers or employees nor any other person accepts any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. This presentation and the information contained herein does not constitute and should not be construed as an offer to sell or the solicitation of an offer to buy securities in the United States as defined in Regulation S under the US Securities Act of 1933 (the "Securities Act"). Any securities of the Company may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. The Company has not registered and does not intend to register any portion of the Offering in the United States or to conduct a public offering of securities in the United States. This presentation does not constitute a public offering or an advertisement of securities in the Russian Federation and does not constitute an offer or a proposal to make offers or to acquire any securities in the Russian Federation. This presentation contains "forward-looking statements" which include all statements other than statements of historical fact. Such forward-looking statements can often be identified by words such as "plans," "expects," "intends," "estimates," "will," "may," "continue," "should" and similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at the date as of which they are made, and none of the Company or any of its respective agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. The information and opinions contained in this presentation are provided as at the date of this presentation and are subject to change without notice. 2#3Presentation Team NOVATEK Leonid V. Mikhelson Chief Executive Officer Chairman of the Management Board Member of the Board of Directors Mark A. Gyetvay Chief Financial Officer Member of the Management Board Member of the Board of Directors Alexander M. Fridman Chief Operating Officer Deputy Chairman of the Management Board Nikolay N. Titarenko Commercial Director Deputy Chairman of the Management Board 3#4Agenda NOVATEK Section 1. Company Overview...... 2. General Business Climate... 3. Exploration & Production...... 4. Financial Strategy.......... 5. Questions & Answers.. Slide # 5 9 11 19 24 4#5NOVATEK Section 1: Company Overview 5#6Our Strategy In Motion NOVATEK Removed production constraints Launched 2nd phase at the Yurkharovskoye field (September 2008); ◆ Constructed natural gas low temperature separation and gas condensate preparation units • Increased field productive capacity by 7.2 bcm and NOVATEK's total capacity to 37 bcm per annum (over 100 mmcm per day) ◆ Built and connected a 52 km natural gas pipeline, 1,420 mm diameter, and a 35 km, 1,420 mm diameter, looping by-pass system to increase transportation capacity at the field to 34 bcm per annum • Commissioned 10 new wells Constructed methanol plant at Yurkharovskoye field reducing purchase and delivery expenses while eliminating potential environmental risks Increased processing and storage capacity Launched 2nd phase at Purovsky Plant in November 2008, current total plant capacity of 5 mmt per annum and increased plant storage capacity for stable gas condensate by 60,000 m³ to 90,000 m³ 6#7Main Themes - 2009 NOVATEK Liquidity Capital Expenditures Projects Crisis Management ➤ maintain strong cash position manageable debt position. ➤ sustainable cash flows ➤ no management shareholder collateralization issues ➤ decreasing inflationary pressure on oil service costs ➤ largely financed by operating cash flows ➤ continued focus on core gas business ➤ operations scaleable to business environment ➤ low risk development drilling program ➤ low cost producer ➤ delivered key infrastructure projects in 4Q 08 ➤ relatively low debt position ➤ firm credit policy ➤ strong balance sheet ➤ adhere to prudent investment decisions 7#8Looking Ahead - Focus On Core Gas Segment NOVATEK Prioritize investment program to focus on core natural gas and gas condensate production capacity and changing market conditions - 2009 – Estimated E&P CAPEX between RR 14.2¹ billion (minimum case) and RR 21.81 billion (maximum case) ◆ 2009 - Increase production capacity up to 44 bcm (maximum case) 2010 - Estimated E&P CAPEX RR 28.31,2 billion – 35.71,3 billion - 2010 - Increase production capacity up to 51 bcm (maximum case) Postpone oil field development programs at East-Tarkosalinskoye and Khancheyskoye fields Defer significant capital commitments to processing facilities until 2010, after confirmation of new Russian gas balance, and certain exploration activities Notes: (1) Net of VAT, nominal amounts (2) Estimated capex for 2010 under the minimum 2009 capex case (3) Estimated capex for 2010 under the maximum 2009 capex case 8#9NOVATEK Section 2: General Business Climate 9#102009 - 2010 2008 Operating Environment Capacity Constraints Eliminated through... 2nd Phase Yurkharovskoye field development Gas pipeline - Yurkharovskoye field to UGSS (34 bcm capacity) 2nd Phase Purovsky Plant 2nd Stage methanol plant Yurkharovskoye field (40,000 tons p.a.) Complete gas condensate pipeline Complete de-ethanization plant 3rd or 3rd and 4th phase Yurkharovskoye field development LTSU additional 7 - 14 bcm NOVATEK Market Dynamics Non-Controllable Weather GDP Growth Competition Management significantly removed operational constraints over the past year but operating environment now impacted by market uncertainty which is beyond management's control 10#11NOVATEK Section 3: Exploration & Production 11#12Notes: (1) 2008 Key E&P Highlights NOVATEK's exploration activities Seismic Field/License area Yurkahrovskoye New Yurkharovskoye Khancheyskoye Olimpiyskiy (Sterkhovoye) Raduzhniy Zapadno-Urengoyskiy Yarudeyskiy Assoc. lic. areas¹ El-Arish (Egypt) C₁ NOVATEK Reserve Growth Liquids Drilling Gas 141 km² (3D) 4 wells 13 bcm 0.9 mmt 42 km² (3D) 1 well 6.9 bcm 1.0 mmt 225 km² (3D) 3 wells 4.7 bcm 0.4 mmt Interpretation of 3D and 2D 1 well 3.9 bcm 1.0 mmt 225 km² (3D), Interpretation of 2D 2 wells 2.4 bcm 0.3 mmt 280 km² (3D) 150 linear km (2D) 1,591 linear km (2D) 1,133 km² (3D) 1 well 3 wells 1.8 bcm 3.4 bcm 0.1 mmt Estimated increase in Russian classified C, reserves of approximately 36.1 bcm of gas and 3.7 mmt of liquids as of YE 2008 Gross figures, not adjusted for NOVATEK's shareholding in associated license areas 12#13E&P Breakdown 2008 NOVATEK Production Estimate Natural Gas 30.8 BCM Liquids E&P Capex Estimate, RR 30,136 MM¹ Infrastructure 2% 11% ■ Drilling 35% 2.6 MMT 21% Total 221 MMBOE 4% ■ Purovsky/Ust-Luga 11% 16% Pipelines ■Compressor Stations Exploration Development Capex Estimate, RR 26,812 MM¹ Yurkharovskoye Purovsky/Ust-Luga 6,368 Sterkhovoye 2,281 E. Tarkosalinskoye 2,042 Khancheyskoye 1,043 Other 644 Termokarstovoye 116 Notes: (1) Net of VAT, nominal amounts 14,318 Other Exploration Capex Estimate, RR 3,298MM¹ Yurkharovskoye 718 Khancheyskoye 582 Associates 415 Egypt 372 Zapadno-Urengoyskiy 316 Other RR 130 MM 291 Sterkhovoye 288 Raduzhniy 247 New Yurkharovskoye 69 13#14E&P Program 2009 and 2010 NOVATEK Continue phase development at the Yurkharovskoye field Increase field capacity by up to 14 bcm per annum • Complete gas condensate pipeline from the Yurkharovskoye field to the Purovsky Plant resulting in a significant decrease in operating expenses for 3rd party transportation costs Complete de-ethanization facilities at the Yurkharovskoye field resulting in a significant decrease in operating expense for 3rd party de-ethanzation costs Other field development East-Tarkosalinskoye - Maintain field productive capacity by constructing and commissioning two compressor stations for the Cenomanian layer and one compressor station for the Valanginian layer Khancheyskoye - Maintain field productive capacity by completing and commissioning one compressor station for Valanginian layer ◆ Sterkhovoye - Complete gas condensate separation unit and drill wells 14#15E&P Program 2009 and 2010 NOVATEK Expand processing capabilities ◆ 2010 Russian gas balance will be main determining factor in expansion of processing facilities - Purovsky Plant – expand LPG storage capacity by 18,000 m³ to 27,000 m³ ◆ Ust-Luga - continue with project design work Exploration work Continue exploration drilling at Yurkharovskoye, New Yurkharovskoye, West Urengoyskiy and Olimpiyskiy fields and other license areas Continue seismic work at more than 10 license areas Initiate changes in license classification from exploration license to production license at four fields Continue seismic interpretation work and drilling preparatory work in 2009 and begin exploration drilling in 2010 at the El-Arish field in Egypt 15#16E&P CAPEX Forecast - 2009 NOVATEK 2009F E&P CAPEX Program, RR MM¹ 2009F E&P CAPEX by Activity Other 334 Minimum Maximum 1% 1% Other exploration 352 6% 8% 5% 8% 27% 9% Sterkhovoye 718 ■Minimum Capex 14,216 34% 14% 12% Khancheyskoye 761 Maximum Capex 21,770 19% 23% Purovsky/Ust-Luga 1,087 E. Tarkosalinskoye 1,983 Yurkharovskoye 8,981 33% 7,554 16,535 Infrastructure Pipelines ■ Purovsky ■ Drilling ■Compressor Stations ■Exploration Other The launch of the 3rd phase and associated drilling program at the Yurkharovskoye field are the principal differences between 2009 Minimum and Maximum capex cases. The determining factor will be based on market dynamics in 2009. Notes: (1) Net of VAT, nominal amounts 16#17Yurkharovskoye Field Development Plan - 2009 E&P Capex Breakdown, RR MM¹ 2009F-Minimum 8,981 3,336 2,627 2,549 360 109 2009F-Maximum 16,535 2,549 360 109 6,965 6,552 NOVATEK Capacity Increase, bcm (annualized) Field capacity max 2009 capex 25 7.2 20 15 Field capacity min 2009 capex 10 5 0 IQ IIQ IIIQ IVQ 2009 2009 E&P Capex - min/max cases Minimum 37% 29% 1% 29% 4% Infrastructure ■Drilling ■ Pipelines ■ Exploration ■Compressor Stations Infrastructure Pipelines Notes: (1) Net of VAT, nominal amounts Compressor Stations Maximum 42% 40% 1% 15% 2% Drilling Exploration 17#18Yurkharovskoye Field Development Plan NOVATEK Drilling program Key changes to original development plan Original - total of 88 wells and an artificial Diameter, mm island to reach planned field capacity of 27 bcm Updated¹ - total of 79 wells and no artificial island to reach planned field capacity of 32.5 bcm - Change decrease in well count and elimination of artificial island results in lower capex and environmental risk Achimov and Jurassic layers "New well" "Old well" +1-,% 168 114 +47% Deviation, m 3,500 2,000 +75% Horizontal run,m 1,000 500 +100% Initial debit, mcm/day Drilling cost, $/mcm cum. prod. 1.64 2.72 -40% 5,500 1,250 +340% Updated strategy defers capital expenditures related to these layers to future periods depending on updated Russian gas balance and market demand Notes: (1) Based on maximum capex program 18#19NOVATEK Section 4: Financial Strategy 19#20Current Financial Status Balance Sheet Strong positive cash position NOVATEK Reconfirmed access to available credit lines Debt ratios - among the lowest in industry peer group - Limited bad debt exposure – Prepayments and Offtaker bank guarantees Currency exposure partially mitigated by USD denominated revenue from liquids sales Outstanding Operating Leverage Limited downside price risk for majority of revenue stream Low cost producer Expected savings in Opex and Capex due to price deflation and field optimization 20 20#21Financial Guidance NOVATEK Metric 2003 2004 2005 2006 2007 9M08 Guidance EBITDA, %1 30% 36% 54% 48% 47% 49% 43-45% Effective tax rate² 33.1% 28.3% 27.3% 26.7% 27.0% 24.5% 24-26% Net Income, %³ 19% 23% 32% 29% 30% 32% 23-25% ROE, %4 27% 13% 24% 21% 23% Να 21-23% ROACE, %5 21% 13% 20% 20% 21% Να 18-20% Net debt / Total 29% 27% 8% (3%) 3% 8% 15-30% Capitalization' Financial guidance consistent with actual results over the relative time periods Notes: EBITDA represents net income before finance income (expense) and income taxes from the statements of income, and depreciation, depletion and amortization and share- based compensation from the statements of cash flows as a percentage of Total revenues and other income Effective tax rate represents total tax expense calculated as a percentage of our reported IFRS profit before income tax and share of net income from associates as a percentage of Total revenues and other income 1. 2. 3. 4. 5. Net income plus finance expense (net of taxes)/Total debt plus total equity 6. ROE represents net income/total shareholders equity Net debt represents total debt less cash and cash equivalents. Total capitalization represents total debt, total equity and deferred income tax liability 21#22Operational Metrics NOVATEK Metric 2003 2004 2005 2006 2007 3yr Avg4 Lifting costs, $/boe 0.43 0.38 0.52 0.45 0.58 0.52 F&D costs, $/boe 0.72 1.06 0.30 0.57 3.14 1.46 RR costs, $/boe 1,2 0.72 0.69 0.30 0.66 3.70 1.13 RR rate³ 249% 118% 313% 144% 107% 198% We rank as the second lowest cost producers in the global oil and gas industry as confirmed by the IHS Herold and Harrison Lovegrove "Global Upstream Performance Review" editions 2006 and 2007 Notes: Includes acquisition cost for oil and gas assets not included in appraisal reports RR costs per boe could potentially increase above guidance based on current trends in acquisitions of O&G companies and assets and increasing costs for new licenses 1. 2. 3. Based on gross production for all fields 4. According to IHS Herold and Harrison Lovegrove 22#23Natural gas will remain the fuel of choice in the 21st century A compelling investment case NOVATEK Sustainable business model 23 year R/P life 653 bcm P1 Gas reserves 84% Proved Developed Low-risk Efficient Assets Domestic gas price will continue to increase, high upside to liquid price Favorable pricing environment VALUE Notes: (1) C₁C2 Russian reserve classifications Healthy Balance Sheet Large cash on hand, strong liquidity ratios, and substantially de-levered Substantial un-booked resources¹ 1.3+ tcm of natural gas 185+ mmt of liquids approx. 10 billion boe Focused E&P capex program Focus on developing core natural gas and gas condensate assets 23#24NOVATEK Questions & Answers 24