CORPORATES

CREDIT OPINION3 June 2020

Update

RATINGS

Gazprom, PJSCDomicile Moscow, Russia

Long Term Rating Baa2

Type LT Issuer Rating - FgnCurr

Outlook Stable

Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.

Analyst Contacts

Artem Frolov +7.495.228.6110VP-Sr Credit Officerartem.frolov@moodys.com

Victoria Maisuradze +7.495.228.6067Associate Managing Directorvictoria.maisuradze@moodys.com

CLIENT SERVICES

Americas 1-212-553-1653

Asia Pacific 852-3551-3077

Japan 81-3-5408-4100

EMEA 44-20-7772-5454

Gazprom, PJSCUpdate following rating affirmation

SummaryTo determine Gazprom, PJSC's (Gazprom) long-term issuer rating, we apply our Government-Related Issuers (GRI) rating methodology because the company is controlled by the Russianstate. In accordance with this rating methodology, Gazprom’s Baa2 long-term issuer ratingfactors in (1) the company's Baseline Credit Assessment (BCA) of baa2, which measuresits standalone credit strength, excluding any extraordinary government support; (2) theBaa3 local-currency rating of the Government of Russia, with a stable outlook; (3) the highdefault dependence between the state and the company; and (4) the high probability of thegovernment providing support to the company in the event of financial distress.

Gazprom’s Baa2/P-2 ratings, which are on par with Russia’s Baa2/P-2 country ceilings forforeign-currency debt, remain supported by its strong business fundamentals, including its (1)vast natural gas reserves, which are the largest in the world (16% of the global gas reserves);(2) diversification in oil business, which generated more than 30% of its consolidatedEBITDA in 2019, through its 95.68%-owned subsidiary Gazprom Neft PJSC (Baa2 stable);(3) status as a core strategic holding of Russia, benefiting from a high level of governmentsupport, because of the company’s economic, political and reputational importance to theRussian state; (4) position as Russia's largest producer and monopoly exporter of pipelinegas, and owner and operator of the world's largest gas transportation and storage system; (5)solid market position as Europe's largest gas supplier; (6) low production costs, supportingprofitability and competitiveness in export markets; and (7) significant portfolio of long-termtake-or-pay gas export contracts with oil-pegged or hub-indexed prices.

The ratings factor in our expectation that the company’s credit metrics, including its leverageand cash flow metrics, will imminently deteriorate in 2020 because of the weak prices anddemand for gas in Europe, the company’s key export market, amid the coronavirus outbreak.Gazprom will be able to restore its credit metrics in 2021-22 assuming the gas marketin Europe starts to recover. The temporary deterioration in credit metrics in 2020 will bemitigated by Gazprom’s robust liquidity, supported by its continuing access to domestic andinternational debt capital markets.

Gazprom's Baa2 long-term issuer rating is constrained by Russia’s Baa2 country ceilingfor foreign-currency debt. Despite its high volume of exports, Gazprom remains exposedto Russia's macroeconomic, regulatory and operating environment, because most of itsproduction facilities are in Russia.

MOODY'S INVESTORS SERVICE CORPORATES

Exhibit 1

Gazprom's interest coverage and cash flow metrics will largely recover in 2021 after weakening in 2020 on low gas export prices andvolumes

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2014 2015 2016 2017 2018 2019 2020F 2021F

RCF/net debt (LHS) EBIT/interest expense (RHS)

All figures are calculated using Moody’s estimates and standard adjustments.Sources: Moody’s Financial Metrics™ and Moody's Investors Service forecasts

Credit strengths

» Huge gas and oil reserves, the development of the Yamal project and the Eastern programme of gas exports to China, supportinglong-term growth

» Low production costs, supporting profitability and competitiveness in export markets

» The ongoing diversification of gas export routes, despite geopolitical challenges

» A significant portfolio of long-term take-or-pay gas export contracts with oil-pegged or hub-indexed prices

Credit challenges

» The expected weakening in credit metrics because of low gas export prices and volumes

» Increasing competition with independent gas producers in the domestic market

» Exposure to Russia's macroeconomic, regulatory and operating environment, including the evolving tax regime

Rating outlookThe stable outlook reflects our expectation that the deterioration in Gazprom’s credit metrics will be temporary, and that the companywill be able to restore its credit metrics over a 18-24-month period after the coronavirus outbreak and its macroeconomic and marketeffects have passed.

Factors that could lead to an upgradeWe could upgrade Gazprom's rating if we were to upgrade Russia's sovereign rating and raise the foreign-currency bond country ceiling,provided the company retains its solid credit metrics on a sustainable basis and maintains its strong operating performance, marketposition and liquidity. Gazprom's long-term issuer rating is unlikely to exceed Russia's sovereign rating by more than one notch becauseof the company's close credit linkages with the government.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

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Factors that could lead to a downgradeWe could downgrade Gazprom's rating if we were to downgrade Russia's sovereign rating or lower Russia’s foreign-currency bondcountry ceiling, or the company’s operating performance, market position, financial metrics or liquidity were to deteriorate materiallyon a sustained basis.

Key indicators

Exhibit 2

Gazprom, PJSC

Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 2020-proj. 2021-proj.

Average Daily Production (Mboe / Day) 9,439.1 9,545.2 10,538.2 11,006.7 11,070.1 10,000-11,000 10,000-11,000

Total Proved Reserves (Mmboe) 133,487 132,689 130,390 127,544 126,130 123,000-125,000 123,000-125,000

EBIT / Avg. Book Capitalization 11.1% 6.7% 6.9% 13.1% 7.6% 4.1% 6.4%

EBIT / Interest Expense 7.5x 4.6x 5.5x 11.3x 7.0x 3.5x 6.1x

RCF / Net Debt 69.0% 46.4% 35.0% 73.8% 37.8% 21.0% 34.3%

Debt / Book Capitalization 25.6% 21.1% 24.3% 24.3% 24.0% 26.0% 23.8%

All figures and ratios are calculated using Moody’s estimates and standard adjustments. Moody's forecasts (f) or projections (proj.) are Moody's opinion and do not represent the views ofthe issuer. Periods are financial year-end unless indicated. LTM = Last 12 months.Source: Moody’s Financial Metrics™

ProfileHeadquartered in Russia, Gazprom, PJSC (Gazprom) is one of the world's largest integrated oil and gas companies. It is focused on theexploration, production and refining of gas and oil, as well as the transportation and distribution of gas to domestic, former SovietUnion (FSU) and other export markets. Gazprom also owns and operates the Unified Gas Supply System in Russia, and it is the leadingexporter of pipeline gas to Western Europe.

As of 31 December 2019, Gazprom had proved total oil and gas reserves of 126.1 billion barrels of oil equivalent, with proved gasreserves of 17.7 trillion cubic metres in accordance with the Petroleum Resources Management System standards, equivalent to aroundone-sixth of the world's total reserves. In 2019, Gazprom produced 501.2 billion cubic metres (bcm) of natural gas. Hydrocarbonproduction by its subsidiary Gazprom Neft PJSC amounted to 63.3 million tonnes (mt) of crude oil and gas condensate, and 22.9 bcmof gas in 2019. In 2019, Gazprom generated revenue of RUB7.7 trillion and Moody’s-adjusted EBITDA of RUB2.2 trillion. The Russianstate controls 50.23% of Gazprom's shares.

Exhibit 3

Revenue structure by product (for 2019)Exhibit 4

Gas sales by geography (for 2019)

Gas50%

Refined products27%

Crude oil and gas condensate10%

Electric and heat energy7%

Gas transportation services3%

Other3%

Source: Gazprom

Europe and other countries*46%

Russia46%

Former Soviet Union countries8%

*Including gas trading volumes.Source: Gazprom

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Detailed credit considerationsHuge reserves will continue to be monetised, primarily through export salesExport gas sales to Europe and other non-FSU countries, including China (A1 stable), will remain the key driver of Gazprom’sprofitability and cash flow generation. Net revenue from these sales represented 66% of Gazprom's net gas sales in 2019 and 33% ofthe company's total net sales during the same period. According to the Russian law on gas exports, Gazprom has an exclusive right toexport gas through gas pipelines.

In 2019, Gazprom's gas deliveries to Europe (including Turkey) and other export markets, excluding the FSU, declined to 192.6 bcmfrom a record-high 201.9 bcm in 2018, primarily because of competition from growing LNG imports to Europe. Gazprom estimatesthat the European gas consumption increased to 559 bcm in 2019 from 549 bcm in 2018, while import requirements (the gap betweenown consumption and production) increased because of the decline in indigenous production to 235 bcm in 2019 from 253 bcm in2018, driven by production cuts at the Groningen field in the Netherlands and lower production in Norway and the UK. Fundamentally,after the coronavirus outbreak has passed, we expect demand for natural gas in Western Europe to continue to be supported by itsbroader use in power generation instead of coal, a less environment-friendly fuel, while the continuing decline in indigenous productionwill bolster the need for imports.

In the first quarter of 2020, Gazprom's exports to Europe fell by 19% from that in the year-earlier period, driven by a warmer winter,a high volume of gas in the company’s underground storage facilities in Europe, growing competition from LNG suppliers and thesharp decline in demand for gas from industrial consumers amid the coronavirus outbreak. Gazprom expects its gas export deliveries toEurope to decline to around 167 bcm in 2020. The gradual ramp-up in gas supplies to China from the company’s Chayandinskoye fieldin Eastern Siberia through the Power of Siberia pipeline to around 5 bcm in 2020 will compensate for some portion of the decline insupplies to Europe.

In 2019, Gazprom's share of the European gas market declined slightly to 36% from 37% in 2018 amid intensified competition fromlower-priced LNG from other countries. Nevertheless, Gazprom remains solidly positioned in the European gas market and is likely tomaintain its market share of more than 30%, aided by lower costs, a higher stability of supplies and flexibility in the consumption ofpipeline gas compared with LNG, and a significant portfolio of long-term take-or-pay contracts with either oil-pegged or hub-indexedprices.

Exhibit 5

Gas exports will significantly decline in 2020 amid the coronavirus outbreakAverage daily sales of natural gas

0

100

200

300

400

500

600

700

800

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F

Mill

ion c

ubic

metr

es p

er

day

Russia Export (excl. FSU)* FSU countries

*Including trading volumes.Sources: Gazprom and Moody's Investors Service estimates

Before the coronavirus-induced market downturn in Europe, Gazprom’s domestic gas sales have been less profitable than exports,because its prices for the domestic market are regulated and constrained at a fairly low level for social considerations, given thatthe company has a solid share of around 60% in the domestic gas market (including gas deliveries to its own electricity-generatingsubsidiaries and the gas used by its gas transportation system).

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Gazprom expects the domestic gas demand to grow only marginally in the long term. According to the draft Russian Energy Strategyuntil 2035, the annual domestic gas consumption will increase to 520 bcm in 2035 from 494 bcm in 2018, although we view theseforecasts as fairly conservative. Supply will grow faster to 924 bcm in 2035 (including substantial production growth in LNG, which isexported) from 728 bcm in 2018.

This growing supply-demand imbalance would intensify Gazprom’s competition with independent Russian gas producers, primarilyPAO Novatek (Baa2 stable) and PJSC Oil Company Rosneft (Baa3 stable), and might lead to some decline in its domestic market share,unless its domestic prices are liberalised. Liberalisation would enable the company to better compete on price with independent gasproducers, which are currently able to sell gas at some discounts to Gazprom’s regulated price.

The Yamal project and the Eastern programme will remain key for strategic developmentGazprom estimates that the construction of pipelines and upstream development will continue to represent a major part of itscapital spending in the gas business. Gazprom's upstream activities will remain focused on the development of gas reserves locatedin Russia's Yamal peninsula, most notably the Bovanenkovskoye and Kharasaveiskoye fields. Production at Gazprom's brownfieldsin the Nadym-Pur-Taz region, which account for around 70% of the company's gas production, is currently declining. Production atthe Bovanenkovskoye field was 87.4 bcm in 2019, and the company expects plateau production of 115 bcm per year to be reachedby 2021, accounting for most of Yamal's total production. Gas from Yamal will feed export deliveries to Western Europe, as well asdomestic sales. Gazprom estimates that fields in Yamal, Eastern Siberia and the Far East will account for up to 60% of its total gasproduction by 2035, while the share of the Nadym-Pur-Taz region will decline towards 30%. The company retains the flexibility toincrease annualised production from its existing fields by 50-100 bcm, with relatively limited investments, if there is sufficient demand.

In 2014, Gazprom signed a 30-year $400 billion contract with China National Petroleum Corporation (A1 stable). The contractenvisages exports of 38 bcm per year of Russian gas from the Chayandinskoye and Kovyktinskoye fields in Eastern Siberia to Chinathrough the new 3,000 km Power of Siberia pipeline starting from December 2019, with full capacity to be reached by 2025.

The Chayandinskoye field was launched in December 2019 as planned, and it supplied 328 million cubic metres (mcm) of gas throughthe Power of Siberia pipeline through the end of 2019. The field will reach plateau production of 25 bcm per year by 2024. TheKovyktinskoye field will be launched in 2022 and will reach plateau production of 25 bcm per year by 2025. Gazprom estimatesthe total cost of the Power of Siberia project, comprising the development of the Chayandinskoye and Kovyktinskoye fields and theconstruction of the Power of Siberia pipeline, at RUB2 trillion (more than $27 billion at the current exchange rate).

Exhibit 6

Development of the Yamal and Eastern fields will support Gazprom's production in the long term

Region FieldPlateau gas production,

bcmpaLaunch year

Expected years of achieving

plateau production

Bovanenkovskoye (Cenomanian-Aptian deposits) 115 2012 2021

Bovanenkovskoye (Neocomian-Jurassic deposits) 25 2025-2027 2030-2032

Kharasaveiskoye (Cenomanian-Aptian deposits) 32 2023 2025

Kharasaveiskoye (Neocomian-Jurassic deposits) 18 2027-2029 2029-2031

Kruzenshternskoye 33 2025-2028 2029-2033

Kamennomysskoye-sea 15.1 2025 2027-2029

Severo-Kamennomysskoye 14.5 2027-2029 2032-2033

Urengoyskoye (Achimov deposits) 37.5 2020-2025 2023-2027

Chayandinskoye 25 2019 2024

Kovyktinskoye 25 2022 2025

Yuzhno-Kirinskoye 21 2023 2029-2032

Kirinskoye 5.5 2014 2022

Yamal Peninsula and

the Gulf of Ob

Eastern Siberia and Far

East

Source: Gazprom

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Gas export infrastructure capacity and diversification continue to improveIn December 2019, Gazprom signed a new five-year contract with NJSC Naftogaz of Ukraine (Naftogaz) for the transit of Gazprom’sgas to Europe through Ukraine, which replaced the 10-year contract that expired on 31 December 2019. The contract envisages aminimum transit volume of 65 bcm of gas in 2020 and 40 bcm annually over 2021-24. The new gas transit tariff, which has not beendisclosed, is likely to be moderately higher than the previous tariff.

As part of the agreement, Gazprom paid Naftogaz $2.9 billion, in line with a Stockholm court's decision in February 2018, whichGazprom had been appealing. The two companies also agreed to withdraw all legal claims against each other on which final courtdecisions had not yet been made. The agreement significantly reduced Gazprom’s legal risks and maintained its export infrastructurecapacity and diversification, while its liquidity remained healthy following the $2.9 billion settlement payment.

Through the new contract, Gazprom secured significant gas transit volumes through Ukraine and maintained its export infrastructurecapacity and diversification of its export routes. In 2019, out of Gazprom’s total 192.6 bcm gas exports to Europe, around 90 bcmwere delivered through Ukraine. Although the capacity of Gazprom’s alternative export pipelines to Europe is gradually increasing, itis still not sufficient to fully replace that of the Ukraine transit infrastructure and remains exposed to geopolitical challenges, includingsanctions and regulatory limitations.

Other than Ukraine, the company’s main existing routes to Europe are the Nord Stream pipeline through the Baltic Sea to Germany,which has a total annual capacity of 55 bcm, and the Yamal-Europe pipeline through Belarus to Poland, which has a total annualcapacity of 33 bcm. In January 2020, Gazprom commissioned the Turkish Stream pipeline through the Black Sea to Turkey. One of thepipeline's two lines, each of which has a capacity of 15.75 bcm, is used for exports to Europe and the other is to Turkey. Later in 2020 orearly 2021, Gazprom intends to complete the construction of the Nord Stream 2 pipeline, which will run parallel to Nord Stream andhave a capacity of 55 bcm.

Exhibit 7

Gazprom's midstream projects will increase and diversify export capacity

Project Destination Length, kmTotal cost of the

project

Design capacity,

bcmpaLaunch year

Nord Stream 2 Western and Central Europe >1,200 EUR9.5 bln 55.0Planned for late 2020 /

early 2021

TurkStream Turkey, Southern Europe >930 EUR7 bln 31.5 Jan-20

Power of Siberia China 2,962 RUB2 trln 38.0 Dec-19

Project costs for Power of Siberia include upstream development.Sources: Gazprom and Moody's Investors Service estimates

Credit metrics will weaken in 2020 on low gas and oil prices and reduced salesIn 2019, average prices of Gazprom's gas sales to Europe declined to $211/mcm from $246/mcm in 2018, but still remained muchhigher than average spot prices of around $160/mcm. Gazprom's export prices are linked to oil prices and spot gas prices at hubs, andtend to follow benchmark price developments with a three- to six-month lag. As a result, we expect a decline in Gazprom's realisedexport prices in 2020, reflecting the drop in oil and gas prices since the beginning of the year, which we expect to remain particularlydepressed until the coronavirus outbreak and its macroeconomic and market effects have passed. Even after that, the potential forrecovery in prices will remain limited by the deceleration in global economic growth, growing supply of LNG, international tradedisputes and geopolitical tensions. In 2019, the share of oil-linked and quasi-oil-linked contracts in the company's export sales was32%, while hub-indexed contracts represented 56.7%, spot sales and sales through electronic platform represented 11.3%.

In Russia, Gazprom sells gas at regulated prices, which tend to follow the inflation. However, the 2019 price adjustment, effectivefrom 1 July 2019, amounted to only 1.4%, compared with domestic inflation of 4.3% in 2018. Russia's socioeconomic developmentforecast envisages an annual increase of less than 3.0% in regulated gas prices in 2020-24, compared with inflation of below 4.0%.Before the coronavirus outbreak, domestic gas sales have been the lowest-margin segment for Gazprom, with an average realisedprice of around $64/mcm in 2019, compared with $211/mcm for export sales to far abroad markets during the same period. However,

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domestic deliveries are more stable in terms of volumes and are not subject to a 30% export duty on gas, while transportation costs ondomestic deliveries are lower than those for export sales.

Exhibit 8

Gazprom's gas export prices will significantly decline in 2020 on lower demand and gas and oil benchmark prices

0

50

100

150

200

250

300

350

400

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F

US

D p

er

thousand c

ubic

mete

rs

Russia Export (excl. FSU) FSU countries

Sources: Gazprom and Moody's Investors Service estimates

Gazprom's earnings and leverage are sensitive to the rouble exchange rate. Around 68% of Gazprom's revenue is denominated inforeign currency, compared with 48% of operating expenses and 23% of capital spending, which partly buffers the impact of lower oiland gas prices on its earnings as the rouble depreciates.

As of year-end 2019, Gazprom had a moderate leverage of 2.2x Moody's-adjusted total debt/EBITDA, up from 1.5x as of year-end2018. Leverage was considerably lower on a net debt basis, at 1.6x and 1.0x Moody's-adjusted net debt/EBITDA as of the same dates,respectively, because of the company’s sizeable cash and deposits buffer. Gazprom’s target reported net leverage range is 1.0x-2.0x ona sustainable basis and below 2.5x in 2020.

We expect Gazprom’s Moody’s-adjusted EBITDA to decline towards RUB1.5 trillion in 2020 from RUB2.2 trillion in 2019, based on thecompany’s assumption that the average price and volume of Gazprom's gas sales to Europe will decline to $133/mcm and 167 bcm,respectively, from $211/mcm and 192.6 bcm in 2019. We also expect Gazprom’s Moody’s-adjusted retained cash flow (RCF) to declinebelow RUB900 billion in 2020, from RUB1.3 trillion in 2019, dented by lower operating cash flow and fairly high dividends of RUB361billion, which the company will pay despite the challenging market environment.

We recognise the company’s planned measures to save more than RUB450 billion in operating costs and capital spending in 2020.However, we estimate that the positive effect of cost-cutting on the company’s earnings and cash flow will be insufficient to offset thenegative effect of the drop in gas and oil prices and sales volumes.

As a result of lower EBITDA and RCF, we expect Gazprom’s total debt/EBITDA to increase towards 3.5x as of year-end 2020 from2.2x as of year-end 2019, net debt/EBITDA to increase above 2.5x from 1.6x and RCF/net debt to decline towards 20% from 38% (allmetrics are Moody’s-adjusted).

The recovery in Gazprom’s credit metrics will be subject to a recovery in the European gas market, where the company generated 66%of its revenue from net gas sales in 2019. Assuming a recovery in Gazprom's average price and volume of gas sales to Europe to $195/mcm and 190 bcm in 2021, we expect its total debt/EBITDA to decline below 2.5x, net debt/EBITDA to decline below 2.0x and RCF/netdebt to increase above 30% as of year-end 2021 (all metrics are Moody's-adjusted).

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Exhibit 9

Leverage will increase in 2020-21 on reduced earnings amid the drop in gas export prices and volumes

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

-

500

1,000

1,500

2,000

2,500

3,000

3,500

2015 2016 2017 2018 2019 2020F 2021F

RU

B b

illio

ns

EBITDA (LHS) Total debt/EBITDA (RHS) Net debt/EBITDA (RHS)

All figures are calculated using Moody’s estimates and standard adjustments.Sources: Moody’s Financial Metrics™ and Moody's Investors Service forecasts

Gazprom expects its investment programme, including capital spending, in its gas business (including value-added tax (VAT), which isrecovered from the budget on a monthly basis, while the capital spending is incurred) to be around RUB900 billion in 2020, down fromthe peak of RUB1.3 trillion in 2019. Capital spending in Gazprom's oil business represented by its subsidiary, Gazprom Neft PJSC, will bereduced to below RUB400 billion in 2020 from RUB472 billion in 2019, while capital spending in its power generation business will bearound RUB80 billion in 2020 (all amounts are including VAT).

In December 2019, Gazprom adopted a new dividend policy, which anticipates an increase in payouts to at least 30% of adjustednet profit under IFRS for 2019, 40% for 2020 and 50% for 2021, compared with 27% for 2017-18. The policy also anticipates that ifGazprom’s net debt/EBITDA rises above 2.5x (compared with 1.4x reported as of year-end 2019), the company may reduce dividendpayouts to keep leverage at a comfortable level. Gazprom aims to adhere to its policy payout ratio despite the difficult marketenvironment. In line with the policy, in 2020, the company will pay RUB361 million in dividends for 2019, or 36% of 2019 company-adjusted net profit. We expect Gazprom’s post-dividend free cash flow (FCF) to be strongly negative in 2020, driven by the decline inoperating cash flow and generous dividend payouts, which will outweigh the supportive effect of lower capital spending on FCF.

ESG considerationsGazprom’s more-than-80% gas-focused production mix reduces its exposure to carbon transition risk. Natural gas is significantly lesscarbon-intensive than liquid hydrocarbons, with lower carbon emissions in the production process and as a fuel. Natural gas emissionsare 25% lower than for liquid fuels and 40% lower than for coal, according to the US Energy Information Administration. Oil demandcould peak in the next 10-15 years, well before natural gas, which has a central role in the energy transition of power generation awayfrom carbon.

The transition to a low-carbon economy will benefit Gazprom because of the growing demand for gas in the European Union (EU),which is the key market for Gazprom’s pipeline gas exports. The EU’s ambitious goals of reducing greenhouse gas emissions by 20% in2020 and 40% in 2030 from the 1990 levels, and achieving zero net emissions by 2050 will support its demand for gas. In the longerterm, however, gas will face increasing competition from renewables, with fewer users still needing to switch to natural gas from otherfuels. Gazprom is developing technologies to produce and use methane-hydrogen fuel and to produce hydrogen using natural gas.

Gazprom, a participant in the UK-based Carbon Disclosure Project since 2009, has one of the highest disclosure scores among Russiancompanies, and since 2017, an independent auditor has verified its greenhouse gas emissions data. In 2018, the company signed theClimate and Clean Air Coalition’s Guiding Principles on Reducing Methane Emissions across the Natural Gas Value Chain. Gazprom hasset a target of reducing its 2014 level of per-tonne greenhouse gas emissions by at least 6.6% by 2020 and at least 16% by 2030.

The rapid and widening spread of the coronavirus outbreak, the deteriorating global economic outlook, falling oil prices and asset pricedeclines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects ofthese developments are unprecedented. The oil and gas sector has been one of the sectors most significantly affected by the shockgiven its sensitivity to consumer demand and sentiment, and oil and gas prices. We regard the coronavirus outbreak as a social risk

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under our ESG framework, given the substantial implications for public health and safety. Gazprom's rating reflects our expectation thatthe impact of the coronavirus outbreak on its credit quality will be limited.

Gazprom’s corporate governance risk is mitigated by the fact that it is a listed company and demonstrates a good level of publicinformation disclosure, including quarterly and annual operating and financial results. Nine out of 11 members of its board of directorsare appointed by the government.

Liquidity analysisAs of 31 December 2019, Gazprom’s liquidity comprised cash and short-term deposits of RUB1.4 trillion, multiple committed backupfacilities, and operating cash flow of more than RUB1.25 trillion, which we expect it to generate over the next 12 months. This liquiditywill cover Gazprom's debt maturities of RUB774 billion over the same period, its consolidated investment programme of more thanRUB1.3 trillion and dividend payouts of RUB361 billion.

Gazprom is not subject to financial sanctions imposed by the US and the EU on select Russian corporates since 2014. Following thewithdrawal of Naftogaz’s and Ukraine’s legal claims against the company, whose outcome was otherwise uncertain, Gazprom retains itshistorically good access to public debt capital markets without the threat of any proceeds from new placements outside Russia beingseized. This access will enable it to refinance upcoming debt maturities as needed.

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Methodology and scorecardWe apply our Integrated Oil and Gas Industry rating methodology to determine Gazprom's BCA. This results in a Baa1 scorecard-indicated outcome, including a three-notch discount that reflects constraints related to the government's policy goals. Gazprom'scurrent BCA of baa2 is below the scorecard-indicated outcome, capped by Russia’s Baa2 country ceiling and factoring in ourexpectation that the company’s credit metrics will weaken in 2020-21.

Exhibit 10

Rating factorsGazprom, PJSC

Integrated Oil and Gas Industry [1][2] Current

FY 31/12/2019

Moody's 12-18 Month

Forward View as of June 2020[3]

Factor 1 : Scale (20%) Measure Score Measure Score

a) Average Daily Production (Mboe / d) 11,070.1 Aaa 10,000-11,000 Aaa

b) Proved Reserves (MMboe) 126,130 Aaa 123,000-125,000 Aaa

c) Crude Distillation Capacity (Mbbls / d) 868 Baa 868 Baa

Factor 2 : Business Profile (25%)

a) Business Profile Aa Aa Aa Aa

Factor 3 : Profitability and Efficiency (10%)

a) EBIT / Average Book Capitalization 7.6% Ba 6.4% Ba

b) Downstream EBIT / Total Throughput Barrels ($ / bbl) $5.4 Baa $4.5 Baa

Factor 4 : Leverage and Coverage (25%)

a) EBIT / Interest Expense 7.0x Baa 6.1x Baa

b) RCF / Net Debt 37.8% A 34.3% A

c) Total Debt / Book Capitalization 24.0% Aa 23.8% Aa

Factor 5 : Financial Policy (20%)

a) Financial Policy A A A A

Rating:

Scorecard-Indicated Outcome from Factors 1-5 A1 A1

Notching Factor: Government Policy Framework 3 3

a) Scorecard-Indicated Outcome After Notching Factor Baa1 Baa1

b) BCA Assigned baa2

Government-Related Issuer Factor

a) Baseline Credit Assessment baa2

b) Government Local Currency Rating Baa3

c) Default Dependence High

d) Support High

e) Actual Rating Assigned Baa2

[1] All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations.[2] As of 31/12/2019 (LTM).[3] This represents Moody's forward view, not the view of the issuer, and unless noted in the text, does not incorporate significant acquisitions and divestitures.Source: Moody’s Financial Metrics™

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Appendix

Exhibit 11

Peer comparison

FYE

Dec-17

FYE

Dec-18

FYE

Dec-19

FYE

Dec-17

FYE

Dec-18

FYE

Dec-19

FYE

Dec-18

FYE

Dec-19

LTM

Mar-20

FYE

Dec-18

FYE

Dec-19

LTM

Mar-20

Revenue (USD billions) $112.3 $131.5 $118.4 $237.2 $279.3 $255.6 $388.4 $344.9 $321.2 $89.5 $78.2 $72.5

Avg. Prod. (Mboe/day) 10,538 11,007 11,070 3,985 3,834 3,952 3,734 3,738 3,702 1,762 1,766 1,751

Proved Reserves (Mmboe) 130,390 127,544 126,130 21,221 24,293 22,445 11,373 10,901 10,901 6,827 6,906 6,906

Distil. Capacity (MB/day) 854 888 868 4,918 4,724 4,739 2,913 2,832 2,832 548 732 732

EBIT/Avg Book Capital 6.9% 13.1% 7.6% 7.1% 9.7% 6.2% 11.3% 9.4% 5.5% 12.4% 10.4% 8.0%

DS EBIT/Throughput Bbls $5.0 $3.8 $5.4 $7.7 $7.8 $2.8 $10.0 $8.6 $9.2 $2.6 -$0.3 $0.5

EBIT / Int. Exp. 5.5x 11.3x 7.0x 12.0x 15.0x 9.8x 7.9x 6.2x 3.6x 11.5x 7.6x 5.9x

RCF / Net Debt 35.0% 73.8% 37.8% 32.3% 44.2% 19.4% 43.3% 31.2% 23.4% 59.0% 40.5% 27.9%

Total Debt/Capital 24.3% 24.3% 24.0% 19.3% 18.1% 20.6% 32.8% 33.9% 34.3% 38.2% 40.2% 41.1%

Gazprom, PJSC Exxon Mobil Corporation Royal Dutch Shell Plc Eni S.p.A.

Baa2 Stable Aa1 Negative Aa2 Negative Baa1 Stable

All figures and ratios are calculated using Moody’s estimates and standard adjustments. FYE = Financial year-end.Source: Moody’s Financial Metrics™

Exhibit 12

Moody's-adjusted debt breakdownGazprom, PJSC

(in RUB millions) Dec-15 Dec-16 Dec-17 Dec-18 Dec-19

As Reported Debt 3,442,215 2,829,623 3,266,518 3,863,822 4,111,417

Pensions 233,077 236,852 258,132 226,585 291,684

Operating Leases 106,800 90,456 113,169 111,531 0

Non-Standard Adjustments 107,351 44,757 303,842 320,668 325,592

Moody's-Adjusted Debt 3,889,443 3,201,688 3,941,661 4,522,606 4,728,693

All figures are calculated using Moody’s estimates and standard adjustments.Source: Moody’s Financial Metrics™

Ratings

Exhibit 13

Category Moody's RatingGAZPROM, PJSC

Outlook StableIssuer Rating Baa2ST Issuer Rating P-2

GAZ CAPITAL S.A.

Outlook StableSenior Unsecured Baa2

GPN CAPITAL S.A.

Outlook StableBkd Senior Unsecured Baa2

GAZ FINANCE PLC

Outlook StableSenior Unsecured Baa2

GAZPROM NEFT PJSC

Outlook StableIssuer Rating Baa2

Source: Moody's Investors Service

11 3 June 2020 Gazprom, PJSC: Update following rating affirmation

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12 3 June 2020 Gazprom, PJSC: Update following rating affirmation