#1NOVATEK Second Quarter 2018 Operational and Financial Results Conference Call WE WAPKEPH Mark A. Gyetvay, Deputy Chairman of the Management Board Moscow, Russian Federation 26 July 2018#2Disclaimer - Forward Looking Statement Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The words "believe," "expect," "anticipate," "intends," "estimate," "forecast," "project," "will," "may," "should" and similar expressions identify forward-looking statements. Forward-looking statements include statements regarding: strategies, outlook and growth prospects; future plans and potential for future growth; liquidity, capital resources and capital expenditures; growth in demand for our products; economic outlook and industry trends; developments of our markets; the impact of regulatory initiatives; and the strength of our competitors. The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control and we may not achieve or accomplish these expectations, beliefs or projections. In addition, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include: • • changes in the balance of oil and gas supply and demand in Russia and Europe; the effects of domestic and international oil and gas price volatility and changes in regulatory conditions, including prices and taxes; the effects of competition in the domestic and export oil and gas markets; ⚫ our ability to successfully implement any of our business strategies; ⚫ the impact of our expansion on our revenue potential, cost basis and margins; ⚫ our ability to produce target volumes in the face of restrictions on our access to transportation infrastructure; ⚫ the effects of changes to our capital expenditure projections on the growth of our production; • • • inherent uncertainties in interpreting geophysical data; commercial negotiations regarding oil and gas sales contracts; changes to project schedules and estimated completion dates; potentially lower production levels in the future than currently estimated by our management and/or independent petroleum reservoir engineers; ⚫ our ability to service our existing indebtedness; ⚫ our ability to fund our future operations and capital needs through borrowing or otherwise; ⚫ our success in identifying and managing risks to our businesses; ⚫ our ability to obtain necessary regulatory approvals for our businesses; • • the effects of changes to the Russian legal framework concerning currently held and any newly acquired oil and gas production licenses; changes in political, social, legal or economic conditions in Russia and the CIS; the effects of, and changes in, the policies of the government of the Russian Federation, including the President and his administration, the Prime Minister, the Cabinet and the Prosecutor General and his office; ⚫the effects of international political events; • the effects of technological changes; the effects of changes in accounting standards or practices; and inflation, interest rate and exchange rate fluctuations. This list of important factors is not exhaustive. When relying on forward-looking statements, you should carefully consider the foregoing factors and other uncertainties and events, especially in light of the political, economic, social and legal environment in which we operate. Such forward-looking statements speak only as of the date on which they are made. Accordingly, we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. We do not make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario. The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice. By participating in this presentation or by accepting any copy of this document, you agree to be bound by the foregoing limitations. NOVATEK 2#3Summary Operational Highlights - 2Q18 ☐ Revenue was RR 196 bln representing an increase of 52.0% compared to 2Q17 ☐ Natural gas production (including our proportionate share in JVs) was 16.4 bcm, representing an increase of 4.2% compared to 2Q17 □ Liquids production (including our proportionate share in JVs) was 2.9 mmt, representing an increase of 0.3% compared to 2Q17 ☐ Natural gas sales volumes was 15.1 bcm, representing an increase of 5.3% compared to 2Q17 □ NOVATEK's share in LNG production was 773 mt 653 mmcm of LNG were sold on international markets NOVATEK 3#4Key Events 2Q18 ☐ Annual General Meeting of Shareholders approved the dividend payment in amount of RR 14.95 per ordinary share (or RR 149.5 per GDR). □ NOVATEK and TOTAL become partners in Arctic LNG 2 project. ☐ The Board of Directors of NOVATEK resolved on creating a transportation subsidiary called Maritime Arctic Transport LLC. ☐ A subsidiary OOO NOVATEK-Kamchatka was established to build an LNG transshipment terminal on the Kamchatka Peninsula. ☐ Yamal LNG shipped first LNG cargo to Spain. MOU with KOGAS was signed. Strategic Cooperation Agreement with Sovcomflot was signed. □ NOVATEK obtained the right for geological research works at the Palkurtoiskiy license area and the Centralno-Nadoyakhskiy license area. □ NOVATEK was announced as the winner of the "Change Management. Visionaries." award. NOVATEK 4#5NOVATEK Operational Overview#6Hydrocarbon Production Natural Gas Production, mmcm 15,762 16,508 Yamal LNG 16,418 Yamal LNG JVS Liquids Production, mt JVs JVs 1,709 1,757 YING 1,720 YING Khanchey Khanchey Khanchey 1,209 JVS 1,179 1,208 JVS JVS JVS JVS JVs Yurkharov Yurkharov Yurkharov Yarudeysk Yarudeysk Yarudeysk East-Tarko Other East-Tarko Other East-Tarko Other 2Q17 1Q18 2Q18 1Q18 Khanchey Khanchey Khanchey Yurkharov Yurkharov Yurkharov Fast-Tarko 2Q17 oye oye oye East-Tarko East-Tarko East-Tarko Fast-Tarko East Larko 2Q18 2Q17 1Q18 2Q18 Gas condensate Crude oil The main factors positively impacting our production growth were the commencement of natural gas and gas condensate production at Yamal LNG at the end of 2017, as well as the acquisition by the Group of new production fields. This allowed us to fully compensate the decrease in production at mature fields of our subsidiaries and our joint venture Nortgas. NOVATEK 6#7Purovsky Plant and Ust-Luga Complex Purovsky Plant Total volumes delivered in 2Q18: 2,788 mt - - - Yurkharovskoye field: 314 mt East-Tarkosalinskoye and Khancheyskoye fields: 111 mt Other fields: 40 mt Purchases from our joint ventures: 2,323 mt ☐ Total output of marketable products: 2,774 mt - Stable gas condensate: 2,173 mt LPG: 601 mt Ust-Luga Complex ☐ Total volumes delivered in 2018: 1,782 mt Total output of marketable stable gas condensate refined products: 1,735 mt Naphtha: 1,071 mt ☐ Stable gas condensate refined products sold: 2,028 mt - Other products: 664 mt - to Europe: 1126 mt - to the Asian Pacific Region: 646 mt to North America: 72 mt Other: 184 mt NOVATEK 50532570 HOBATOK MK/D Ever Love EXPLOR 7#8Liquids in Tankers Liquids sales Naphtha Jet fuel Gasoil and fuel oil LPG Crude oil Stable gas condensate USA NORWAY FINLAND SWEDEN RUSSIA Ust-Luga UK ESTONIA NETHERLANDS DENMARK POLAND BELGIUM GERMANY ROMANIA ITALY GREECE JAPAN CHINA SOUTH KOREA TAIWAN THAILAND SINGAPORE "Goods in transit" 30.06.2017 ~ 92 thousand tons "Goods in transit" 31.12.2017 ~ 314 thousand tons "Goods in transit" 30.06.2018 ~ 196 thousand tons 92 mt Asia-Pacific Region (Naphtha) NOVATEK 314 mt Asia-Pacific Region (Naphtha) 196 mt Asia-Pacific Region (Naphtha) 8#9NOVATEK Financial Overview – 2Q18 to 2Q17 1#10Performance Summary 2Q18/2Q17 Macroeconomic Brent US$/bbl 74.4 24.80 RR depreciation/(appreciation) to US$ Financial 61.8 4.65 (in millions of Russian roubles) Total revenues 195,822 Total operating expenses 135,606 66,992 41,573 EBITDA including share in EBITDA of JVs 101,339 PP&E, net* 415,612 81,294 Total assets* 1,111,779 137,277 Total liabilities* 283,675 21,551 Total equity* 828,104 115,726 Operating cash flow 61,885 Cash used for capital expenditures 22,052 Free cash flow 39,833 8,842 Operational 45,267 22,771 13,929 Natural gas production (bcm) 16.42 0.66 Liquids production (mmt) 2.93 0.01 -20% 0% 20% 40% 60% 80% 100% * 30 June 2018 to 30 June 2017. Note: Number on the right is the absolute change, number on the left is the value for the reporting period, size of bar is % change NOVATEK 10#11Market Distribution - Sales Volumes Natural Gas Sales Volumes, mmcm Liquids Sales Volumes, mt 14,380 15,149 653 4.3% 4,072 4,273 2,380 58.4% 2,537 95.8% 13,780 13,569 89.6% 59.4% 1,692 41.6% 1,736 40.6% Ex-field 600 2Q17 4.2% 927 2Q18 6.1% End-customers ■International markets Our total natural gas sales volumes increased due to sales of LNG purchased from our joint venture Yamal LNG to international markets from December 2017, as well as an increase in volumes sold in the Russian Federation. 2Q17 ■Domestic 2Q18 Export Our total liquids sales volumes increased mainly due to the sale of stable gas condensate refined products in transit at the end of the first quarter of 2018. NOVATEK 11#12Total Revenues (RR million) Change due to price Change due to volume Mainly due to increases in average realized net prices as a result of an increase in the respective benchmark prices on international markets. 11,475 195,822 3,284 5,269 -15 204 29,501 -210 -944 159 9,312 128,830 6,040 2,917 The commencement of sales of LNG purchased from our joint venture Yamal LNG to international markets from December 2017, as well as an increase in sales prices and volumes in the Russian domestic market resulted in an increase in our aggregate average price by 16.2% and sales volumes by 5.3%. 2Q17 Natural gas SGC refined products LPG Stable gas condensate Crude oil Other products Other revenues 2Q18 NOVATEK 12#13Total Revenues Breakdown ■Natural gas, including LNG Stable gas condensate refined products 7% LPG Stable gas condensate ■Crude oil ■ Other NOVATEK 7% 2Q18 1% 14% 5% 39% 2Q17 0% 11% 6% 32% 34% 44% 13#14Operating Expenses (RR million and % of Total Revenues (TR)) 2Q17 % of TR 32,567 25.2% 11,531 9.0% 44,098 34.2% 8,572 6.7% 2Q18 % of TR 34,554 17.6% 14,871 7.6% 49,425 25.2% 8,655 4.4% Transportation expenses 37,794 1Q18 % of TR 21.1% 2Q18 34,554 % of TR 17.6% Taxes other than income tax 13,422 7.5% 14,871 7.6% Non-controllable expenses 51,216 28.6% 49,425 25.2% Depreciation and amortization 8,097 4.5% 8,655 4.4% 5,084 3.9% 5,826 3.0% Materials, services & other 5,563 3.1% 5,826 3.0% 3,911 3.0% 5,079 2.6% General and administrative 4,593 2.6% 5,079 2.6% 504 0.4% 2,004 1.0% n/a 89 n/a Exploration expenses Net impairment expenses (reversals) 1,709 1.0% 2,004 1.0% -4 n/a 89 n/a 874 63,043 0.7% 48.9% 943 72,021 0.5% 36.8% Change in natural gas, liquids and WIP -1,952 n/a 30,990 24.1% 94,033 73.0% 63,585 32.5% 135,606 69.3% Subtotal operating expenses Purchases of natural gas and liquid hydrocarbons Total operating expenses 69,222 38.5% 943 72,021 0.5% 36.8% 61,815 34.5% 131,037 73.0% 63,585 32.5% 135,606 69.3% Our total operating expenses increased YoY by 44.2% mainly due to an increase in volumes of natural gas purchased from our joint ventures, in particular, with the commencement of LNG production at Yamal LNG at the end of 2017, and an increase in the average purchase prices for hydrocarbons. NOVATEK 14#15Transportation Expenses (RR million) Change due to tariff/geography Change due to volume -251 225 34,554 333 653 32,567 630 -111 35 799 -326 Increased primarily due to an increase in the proportion of sales to our end-customers located at more distant regions from our production fields in the current period as compared to the reporting period in the previous year. Increased due to a 10.5% increase in volumes of liquids sold and transported via rail, as well as a 3.9% increase in weighted average transportation cost per unit. 2Q17 Natural gas by pipelines Liquids by rail Hydrocarbons by tankers Crude oil Other 2Q18 NOVATEK 15#16Taxes Other Than Income Tax Expense (RR million) 11,531 2Q17 131 101 14,871 3,108 UPT Property tax Other taxes 2Q18 Our unified natural resources production tax expense increased mainly due to an increase in UPT rates for crude oil and natural gas as a result of an increase in benchmark crude oil prices, as well as due to changes in the formula for crude oil UPT rate calculation effective 1 January 2018. NOVATEK 16#17Materials, Services and Other Expenses (RR million) 2Q17 128 190 69 5,084 NOVATEK 32 32 203 5,826 20 20 79 21 Due to an increase in current repair works performed on wells and maintenance of fixed assets at our core production subsidiaries. Repair expenses fluctuate period-to- period depending on the assets repair schedule at our production subsidiaries. Due to write-off of materials used for current repair works and technological process maintenance at our production subsidiaries. Employee compensation Repair & maintenance Materials and Rent expenses supplies Preparation, transportation and processing of hydrocarbons LPG volumes reservation Insurance Other 2Q18 expenses 17#18General and Administrative Expenses (RR million) 3,911 1,521 65 14 18 2 61 34 5,079 -473 -51 -23 Increase due to: an indexation of base salaries effective from 1 July 2017; an increase in accrued provision for bonuses to key management; the related increase in social contributions for medical and social insurance and to the Pension Fund; as well as the acquisition of new production assets. Social expenses and compensatory payments fluctuate period-on-period depending on the implementation schedules of specific programs we support. 2Q17 Employee Legal, audit & compensation consulting services Social expenses & compensatory payments Advertising expenses Repair & maintenance Fire safety & security Insurance expense Business travel Rent expense expense Other 2Q18 NOVATEK 18#19Profit Attributable to NOVATEK Shareholders (RR million) 66,992 ין 3,243 (32,595) (1,987) (3,340) (3,651) (6,034) 15,553 (1,935) 32,041 (972) (3,233) 2Q17 Total revenues Purchases of natural gas and liquid hydrocarbons Transport Taxes other than Other operating Finance income income tax expenses (expense) Share of profit (loss) of joint ventures Income tax Other operating Non-controlling expense income (loss) interest 2Q18 Our purchases of unstable gas condensate from our joint ventures increased by 97.3% as compared to the corresponding period in 2017 due to an increase in purchase prices, which are impacted by international crude oil prices excluding export duties. Our purchases of natural gas increased by 123.2% as compared to the corresponding period in 2017 mainly due to the commencement of purchases of LNG produced at Yamal LNG for subsequent sale on international markets from December 2017 and an increase in volumes of natural gas purchased from Arcticgas in order to fulfill our contractual sales obligations on the domestic market. In addition, our purchases of natural gas increased due to an increase in purchase prices on the domestic market that are influenced by the regulated natural gas prices. Our proportionate share of loss of joint ventures decreased by 46.1% as compared the corresponding period in 2017 primarily due to the production launch at the first LNG train at our joint venture Yamal LNG in the end of 2017, as well as an increase in revenues from liquids and natural gas sales in our joint venture Arcticgas primarily as a result of higher average realized prices. NOVATEK 19#20Total Debt Maturity Profile (RR million) 207,263 171,710 45,060 66,437 35,553 11,559 1,022 3,796 Available Liquidity 1 July 2018 - 1 July 2019 - 1 July 2020 - 1 July 2021 - 1 July 2022- 30 June 2019 30 June 2020 30 June 2021 30 June 2022 30 June 2023 ■Cash ■ Available credit lines ■Current portion of long-term debt 28,466 After 30 June 2023 Long-term debt The Group has available credit line facilities from banks with credit limits in the amount of RR 120 billion and the equivalent of USD 750 million and EUR 50 million. Debt repayment schedule: Up to 30 June 2020 - Loan from the Silk Road Fund and Other loans Up to 30 June 2021 - Loan from the Silk Road Fund, Eurobonds Ten-Year (USD 650 mln) and Other loans Up to 30 June 2022 - Loan from the Silk Road Fund Up to 30 June 2023 – Loan from the Silk Road Fund and Eurobonds Ten-Year (USD one bln) After 30 June 2024 - Loan from the Silk Road Fund NOVATEK 20#21NOVATEK Financial Overview – 2Q18 to 1Q18 1#22Total Revenues (RR million) Change due to price Change due to volume Mainly due to increases in average realized net prices as a result of an increase in the respective benchmark prices on international markets. 5,492 13,880 1,321 2,566 179,403 647 12 1 140 485 -22,334 14,123 Due to seasonal decrease in natural gas sales volumes. 98 86 195,822 1Q18 Natural gas SGC refined products Stable gas condensate LPG Crude oil Other products Other revenues 2Q18 NOVATEK 22 22#23Total Revenues Breakdown ■Natural gas, including LNG 5% Stable gas condensate refined products 7% LPG Stable gas condensate ■Crude oil ■ Other NOVATEK 2Q18 1% 14% 39% 1Q18 1% 12% 5% 6% 27% 34% 49% 23#24Transportation Expenses (RR million) Change due to tariff/geography Change due to volume 1,692 37,794 22 -472 62 415 46 1,587 -6,621 Due to seasonal decrease in natural gas sales volumes. 29 29 34,554 1Q18 Natural gas by pipelines Liquids by rail Hydrocarbons by tankers Crude oil Other 2Q18 NOVATEK 224#25Materials, Services and Other Expenses (RR million) 5,563 -375 125 17 24 301 23 23 20 20 128 5,826 1Q18 Employee compensation Repair & maintenance Materials & supplies Rent expenses Preparation, transportation & processing LPG volumes reservation Fire safety & security Other 2Q18 expenses NOVATEK 25#26General and Administrative Expenses (RR million) 4,593 1Q18 NOVATEK 851 -76 114 18 -585 Social expenses and compensatory payments fluctuate period-on-period depending on the implementation schedules of specific programs we support. Employee compensation Legal, audit & consulting services Social expenses & compensatory payments 54 54 333 5,079 77 Advertising expenses Repair & maintenance Business travel Rent expense Other 2Q18 expense 26#27NOVATEK Appendices#28RR bln Internally Funded Investment Program 70 14 60 50 12 10 40 8 61.9 30 0 57.3 48.8 48.1 20 42.8 57.3 39.1 35.1 10 19.3 0 -7.2 -7.2 -4.7 -8.1 -5.7 -10.5 -11.3 -9.7 -10 -22.1 -20 -30 2Q16 3Q16 -6 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Cash used for capital expenditures Operating CF Operating CF/CAPEX 2 46 42 O Core investments in upstream exploration, production and processing facilities funded primarily through internal cash flows NOVATEK Note: for 2Q16 Normalized Operating Cash Flow is used, excluding advance income tax payments of RR 9,932 million based on the gain on the disposal of the 9.9% equity stake in OAO Yamal LNG. 28 Operating CF / CAPEX#29Change in Inventories Natural gas, mmcm 3000 2500 2000 1500 1000 500 0 NOVATEK 30/06/16 30/09/16 31/12/16 31/03/17 30/06/17 30/09/17 31/12/17 31/03/18 30/06/18 Natural gas Liquid hydrocarbons 1,200 1,000 800 600 400 200 0 Liquids, mt 29 29#30NOVATEK Questions and Answers