Investor Presentaiton

Management's Discussion and Analysis Nine months ended September 30, 2011 The following review of our financial position and results of operations is based on, and should be read in conjunction with, our unaudited condensed consolidated financial statements and related selected notes for the nine months ended September 30, 2011. Certain information contained in this section, including information with respect to our plans and strategy, includes forward-looking statements and inherently involves risks and uncertainties. In assessing this report, various risk factors must be considered, which means that our actual results may differ significantly from those presented in these statements. Rounding Certain monetary amounts, percentages and other figures included in this report have been subject to rounding adjustments. Amounts shown in tables may not be the arithmetic accumulation of the figures that precede them, and figures expressed as percentages in the text and in tables may not total 100%. Business overview We are one of the leading global manufacturers and suppliers of tubular products for the oil and gas industry, as well as other industrial applications. We are the leading manufacturer and supplier of steel pipes for the oil and gas industry in Russia. The largest share of our sales belongs to high-margin oil country tubular goods (OCTG). We operate 24 production sites, which are geographically diversified with locations in Russia, the United States, Romania and Kazakhstan, and supply to more than 65 countries worldwide. In the first nine months of 2011, 62% of our sales volumes were derived from the clients located in Russia, and 23% from the clients located in North America. In the first nine months of 2011, the Russian pipe market continued to recover from the economic downturn and grew 23% as compared to the first nine months of 2010. Sales volumes of our tubular products in the Russian market grew significantly as well; however our market share decreased from 26% to 24% as a result of growing production facilities of other pipe producers and higher imports, in particular from the Ukraine. Nevertheless, we retained a strong market position for our key products, maintaining a 58% market share in seamless OCTG and 69% in seamless line pipe sales. We are the largest exporter of pipes in Russia. Export sales of pipes produced in Russia constituted 13% for the first nine months of 2011, remaining at the level of respective period of 2010. In January to September 2011, we sold 3,168 thousand tonnes of tubular products, an increase of 11% compared to the same period of 2010, including 1,763 thousand tonnes of seamless pipes. Our sales of seamless and welded OCTG achieved 1,131 thousand tonnes, a 4% increase compared to the first nine months of 2010. In January to September 2011, we reported total consolidated revenue of U.S.$5,151 million, up 31% as compared to the same period of 2010. Adjusted EBITDA increased 27% to U.S.$827 million in the first nine months of 2011 from U.S.$649 million in the first nine months of 2010. Adjusted EBITDA margin equaled to 16% in the first nine months of 2011 as compared to 17% in the same period of 2010. In the third quarter of 2011, our sales volumes declined as compared to those in the each of the preceding two quarters, as, usually, market activities are lower in that quarter of each year and we made our planned equipment maintenance works during that time. However we managed to sustain positive development trend for the first nine months 2011 as compared to the respective period of 2010. 1 See Group IFRS Financial Statements for calculation methodology. 2

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