TransneftNon-Deal Roadshow

2

Table of Contents

I. Transneft today

II. Business and operating profile

III. Financial profile

IV. Credit summary

I. Transneft today

4

Transneft today

Transneft is an owner and monopoly operator of Russia’s crude oil pipeline infrastructure

Russia is the world’s largest producer and second largest exporter of crude

Transneft transports over 90% of all Russian crude production to internal and export destinations

Transneft’s pipelines and sea terminals are Russia’s principal oil export channels, handling approx. 80%1 of Russian crude oil export

Key facts

Financial highlights

Support/Services Subsidiaries

Main pipeline subsidiaries

2003

1 Note: non-CIS crude exports (excluding transit)

US$mSales 6,233 5,223 3,721EBITDA 3,188 2,678 1,977EBITDA Margin 51.2% 51.3% 53.1%Net Income 1,723 1,429 996CFO 2,480 2,105 1,025CAPEX (1,825) (1,978) (1,014 )Total Debt/Equity 4.9% 6.6% 8.0%Total Debt/EBITDA 0.2x 0.2x 0.3xEBITDA/Gross Int. Exp. 51.1x 31.5x 16.8x

100%

100%

100%

100%

64%

100%

100%

75.5%

100%

100%

Upper Volga Main Pipelines

Nizhny Novgorod

Druzhba Main PipelinesBryansk

Volga Main PipelinesSamara

Northern Main PipelinesUkhta

North Western Main Pipelines

Kazan

SibnefteprovodTyumen

Trans-Siberian Main Pipelines

Omsk

Ural-Siberian Main Pipelines

Ufa

Central Siberian Main Pipelines

Tomsk

Black Sea Main PipelinesNovorossiysk

100% Baltic Main PipelinesSaint Petersburg

Notes: 1) IFRS accounts2) Exchange rate calculation:

Average $/RUR rate used for cash flow and income statement numbers; End of period $/RUR rate used for balance sheet items Source: Transneft

2004LTM 3Q05

100%

100%

100%

100%

100%

100%

99.5%

100%

100%

100%

SvyaztransneftMoscow

Volzhysky PodvodnikNizhy Novgorod

Centre for Technical Diagnostics

Moscow

Stroyneft Moscow

GiprotruboprovodMoscow

Transneft (UK) Ltd.London

“Transneft” Insurance CompanyMoscow

Centre for Metrological SupportMoscow

Primorsk Specialised Sea Port

Leningrad area

TranspressMoscow

Diagnostics/ repair of underwaterpipelines

Main pipeline construction management

Feasibility studies and research

Financing for importprocurement

Insurance services

Metrology support

Freight loading/ unloading, oil transport

Publishing

Communication and network support

100% Supplementary pension plans

“Transneft” Pension Fund

Moscow

TransneftleasingMoscow

100%

Diagnostics of mainpipelines

Leasing services

Subsidiary companies

5

Transneft is the world’s largest crude pipeline network operator

Transneft’s pipelines link Russia’s main oil producing provinces to domestic refineries, export sea terminals and connection points with oil pipeline networks of neighboring countries

Only 52%2 of Russian export oil transported by Transneft have to transit through Ukraine, Belarus or the Baltic countries

Oil provinces with the highest production growth prospects, such as West Siberia and Timan-Pechora, are already connected with Transneft’s main pipeline system

Good geographic coverage and the size of Transneft’s pipeline network allow for substantial economies of scale

2 Note: as of July 2005; Source: Transneft

Transneft’s pipeline network

Highlights

48,075 km1 of trunk pipelines with diameters ranging from 420 to 1,220 mm

336 pumping stations

861 surface storage tanks with total capacity of 14.2 million m3

Three oil loading sea terminals in Novorossiysk, Tuapse (Black Sea) and Primorsk (Baltic Sea)

Comprehensive Environmental Management System

Conformity to ISO 14001 standards

Key facts and figures

Russia’s proven reserves by region

50

10 5 3 20

204060

WestSiberia

Volga-Urals

Timan-Pechora

EastSiberia

Far East

bln

to

nn

es

1 Note: as of 30-Jun-05

Source: International Energy Agency: World Energy Outlook 2004

6

Russian government owns and runs Transneft

Source: Transneft

Government stake - 75% capital and 100% control Consideration towards company’s interests Control over investment and dividend policy Implicit government support in negotiations with off-

takers, suppliers and transit countries

Unique status of exclusive agent for Russian oil exports

It is the Government policy that all new major pipeline projects be led by Transneft

Considers key financial and financing parameters of Transneft

History of reinvesting earnings into business development and modest dividends

Management structure

Stockholder’s Meeting(Government maintains 100% of

voting rights)

Board of Directors(7 government appointed members

and 2 Transneft executives)

President (Mr. Vainstock)

Administrative Board(9 Transneft managers)

Auditing Committee (3 members from various government ministries)

Direct government control Supportive regulatory environment Prudent shareholder with long-term strategic vision

Shareholder structure

Domestic & International Investors

Russian Government

Transneft

25% of Equity (Preferred shares)0% Control

75% of Equity (Common Shares)100% Control

Russian Federation Support for TransneftRussian Federation Support for Transneft

7

Transneft is a government tool and a source of income Transneft’s crude oil load

Non-CIS crude exports (excluding transit)

Critical role in Russian economy

The oil sector is key to the Russian economy as it provides: A quarter of national GDP and government income Two thirds of country’s export revenues

Transneft is the Russia’s primary crude oil export channel Economics of oil pumping via a pipeline are superior to any

alternative mean of transportation Alternatives often are complimentary, not competing

Transneft is one of the tools the Russian government uses to exercise control over oil companies by means of determining tariffs and new pipeline projects

161 169 187 207 210

166

18714

20

20

20

21

216

153138

95.2%95.7%

95.2%

94.3% 94.5%

0

50

100

150

200

250

300

350

400

450

500

2000 2001 2002 2003 2004

Vo

lum

e (m

ln,

ton

nes

)

85%

87%

89%

91%

93%

95%

97%

Percen

tage o

f total R

U o

il ou

tpu

t carried b

y Tran

sneft (%

)

Exports of transit oil

Exports of RU oil

Shipments of RU oil to refineries

Percentage of Ttl RU oil output

Source: Ministry of Industry and Energy; Renaissance Capital 2005 Russia Oil & Gas Yearbook; Transneft Source: BP’s Statistical Review of World Energy; Transneft

81%79%83%90%92%

16%18%

14%5% 6% 4%

2%

4%3%

3%

0

50

100

150

200

250

2000 2001 2002 2003 2004

Vo

lum

e (m

ln,

ton

nes

)

Transneft Rail Other by-passing infrastracture

133 143159

186

216

8

European pipeline network 2004 European oil consumption by source

Transneft is deeply integrated into the European oil supply chain

Source: Transneft, BP’s Statistical Review of World Energy

Transneft’s network is fully interconnected with the European pipeline system Transneft is the principal channel for European crude oil imports

Directly: via pipeline connection points Indirectly: via alternative transportation methods

Transneft’s integration into the global economy is set to increase with construction of new pipelines connecting Russian oil producers with new markets

Comments

Former Soviet Former Soviet UnionUnion34.1%34.1%

North AfricaNorth Africa12.3%12.3%

Asia-Pacific Asia-Pacific and Otherand Other

5.1%5.1%

West AfricaWest Africa3.5%3.5%

East & East & Southern Southern

AfricaAfrica0.2%0.2%

DomesticDomestic20.0%20.0%

USAUSA1.5%1.5%

CanadaCanada0.1%0.1%

MexicoMexico1.2%1.2%

South & Central South & Central AmericaAmerica

1.5%1.5%

Middle EastMiddle East20.5%20.5%

OtherOther25.9%25.9%

TransneftTransneft74.1%74.1%

9

380

421

459

490505

520

450 450

187208

238 246 254 261

223 226 226

480

445 445

420

241

223

211

0

100

200

300

400

500

600

2002 2003 2004 2005E 2010E 2015E 2020E

Vo

lum

e (m

ln t

on

nes

)

Actual Production Production - best case

Production - base case Actual Export

Export - best case Export - base case

Russian crude oil production and export in comparison with forecasts of “Russia’s Energy Strategy to 2020”

Unique position to benefit from increasing global oil demand

Actual Forecast

2002-2020 Production growth rate:

Best case: 37%Base case: 18%

2002-2020 Export growth rate:

Best case: 40%Base case: 21%

Source: Ministry of Industry and Energy; Energy Strategy of Russia for the Period to 2020, Transneft

World 2002-2020 growth: 39%

Global annual oil demand

27%

12%

58%

51%

67%

38%17%

Source: International Energy Agency: World Energy Outlook 2004

0

1 000

2 000

3 000

4 000

5 000

6 000

2002 2010 2020

Vo

lum

e (m

ln t

on

nes

)

North America EuropeAsia & Pacific Latin AmericaAfrica and Middle East Transition economiesMisc

10

Sales, EBITDA and EBITDA margin evolution Debt financial ratios evolution

Strong financial performance

1,399

1,923

2,567

3,121

3,721

6,233

534

3,188

5,223

972

1,5291,727

1,977

2,678

38.2%

50.6%

59.6%

55.3%53.1%

51.2%

51.3%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1999 2000 2001 2002 2003 2004 LTM3Q05

US

$, m

ln

0%

10%

20%

30%

40%

50%

60%

70%

Pe

rce

nt

Sales (left axis)

EBITDA (left axis)

EBITDA margin (right axis)

0.05 0.04

0.23 0.23

0.32

0.24

0.1631.5

51.1

71.8

48.7

20.6

16.818.0

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

1999 2000 2001 2002 2003 2004 LTM3Q05

Tim

es

(X

)

0

10

20

30

40

50

60

70

80

Tim

es

(X)

Total Debt/EBITDA (left axis)

EBITDA/Gross Interest Expense (right axis)

Source: Transneft

II. Business and operating profile

12

Year

Average annual tariff(RUR/t) 123.2 165.2 224.5 250.3 296.2

Number of revisions 6 1 2 3 2

Average annualincrease 34.1% 35.9% 11.5% 18.3%

Russian PPI 33.1% 9.7% 17.5% 13.0% 28.4%

Clarity and supportive nature of tariff regulation

Introduced in 2002, the new tariff methodology provides a clear and transparent framework for tariff-setting and tariff-changing processes

The current tariff structure is flexible and takes into account costs of running different pipelines individually

The tariff-setting mechanism is essentially a “cost-plus” system, allowing for recovery of operating costs and costs of funding of new projects

In addition to the tariffs set by the government, there is a possibility for Transneft to set long-term, negotiated and bilateral tariffs with some of its customers

Tariff changes are proposed by Transneft and either approved or modified by the regulator

The Company has been able to successfully justify its requests for the tariff increases

200420022000 2001 2003

Superior economics of oil transportation via pipelines allow Transneft to keep its tariffs significantly below those charged by railways while still fully recovering costs and maintaining healthy profit margins

Route

Western Siberia-Western border 15.69 44.59

Western Siberia-Novorossiysk 20.13 32.24

Western Siberia-Primorsk 20.75 26.90

Western Siberia-Meget (Irkutsk) 15.28 55.90

Bashkiria-Primorsk 15.35 21.03

Bashkiria-Novorossiysk 12.79 21.03

Timano-Pechora-Primorsk2 27.33 16.71

Timano-Pechora-Western border 22.30 34.65

Samara-Tuapse 6.43 17.42

Transneft’s tariff (US$/ton)

Railway tariff1 (US$/ton)

Source: Transneft

History of average annual tariff increases

Transneft’s vs. railway tariffs

Comments Superior economics of transportation via pipeline

Source: Russian Railways1) Using railway cars with capacity of 125 tonnes2) Transneft tariff to the the railway point

13

Route

Belarus (to southern border) 1.14 245 0.53

Transneft's average1 10.28 2440 0.42

Belarus (to western border) 2.6 521 0.41

Ukraine (to Odessa) 6.3 1112 0.57

Ukraine (to western border) 5.6 634 0.78

Lithuania (to Butinge) 2.12 226 0.94

Kazakhstan (to Russian border) 22.92 1379 1.66

CPC (Tengiz-Novorossiysk) 30.83 1600 1.93

HaulageTariff US$/ 100 t-km)

Tariffs still have room to grow

Despite a consistent trend of tariff growth, they still remain low in comparison to tariffs in other countries

Given the expected levels of international and domestic Russian oil prices, the share of Transneft’s tariffs in oil producers’ costs is modest. Transneft’s tariff currently stands at 3.5% of the oil price

As a result, Transneft is well positioned to apply for further tariff increases to meet costs of maintaining and upgrading the existing pipeline infrastructure as well as developing new pipelines

Transit tariff (US$/tonne)

1 Note: excluding foreign transits.Source: Average annual tariff data - Transneft; Crude oil price - Bloomberg

Russia (Transneft)1 10.28 48,700 2440 0.42

Enbridge Energy LP 5.63 5,635 706 0.80

Average Haul

Tariff US$/ 100 t-km)

Revenues (US$/tonne)

Network (km)

Transneft’s tariffs in perspective Transneft’s vs. international tariffs

$12.25$4.38 $5.66 $7.15 $8.16 $10.28

$252.36

$198.41

$173.16$166.95$194.25

$353.474.08%4.11%4.13%

3.39%

2.25%3.47%

$0

$50

$100

$150

$200

$250

$300

$350

$400

2000 2001 2002 2003 2004 2005

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

Transneft's average tariff Urals Med Tariffs as % of Urals

Transneft’s average annual tariffs as % of oil price

Source: Transneft, Enbridge Energy LP

14

Transneft’s customer base is solid and well diversified

01,0002,0003,000

4,0005,0006,000

2000 2001 2002 2003 2004

Domestic tariffs Export tariffs Non-core revenue

For 2005 Transneft has 146 contracts for oil transportation services with oil producing companies and other market participants

None of the customers, including foreign transit shippers, accounted for more than 20% of the oil volume pumped by Transneft in the 1st half of 2005

Comments Share (%) in volumes transported in 1H05

Evolution of revenues2004 Revenues composition

Domestic tariffs 37%

Export tariffs 52%

Other revenues 11%

LUKoil 17.1%

TNK-BP 15.3%

Rosneft 14.2%

Surgutneftegaz 13.8%

Sibneft 6.5%

Tatneft 5.5%

Slavneft 5.2%Tomskneft 3.1%

Bashneft 2.4%Samaraneftegaz 2.3%

Russneft 2.2%Others 12.4%

Source: Transneft

15

Transneft’s pipeline network is relatively young, compared to the US inter-state liquid pipeline network

At the same time, with appropriate maintenance, repair and replacement programs in place, the physical life of a pipeline is virtually unlimited

Since 1999, Transneft has been implementing a massive asset modernization program, spending approximately $1 billion annually on asset repairs and upgrades. As a result, today: Fewer defects have to be repaired annually Proportion of replaced or repaired pipeline is on a downward trend

Transneft’s pipelines are modern and well maintained

Transneft has a strong track record in asset management

Pipelines by time of construction

CapEx per pipeline kilometer (US$)Transneft’s maintenance record

Source: Company data, excluding new constructions

23,651

41,033

63,063

23,400

83,103

3,392 4,183

21,09620,892

2002 2003 2004

Transneft Enbridge Energy Valero LP

Pipeline replaced, km 775 674 629 645 430 797

Coating replaced, km 863 818 494 374 267 87

Replacement & rehabilitation,

% of network 3.5 3.1 2.3 2.1 1.5 1.8

Pumping stations upgraded 10 57 103 73 41 7

Underwater crossings repaired - - 579 373 - 41

Underwater crossings replaced - - 19 66 42 37

Diagnostics,’000 km 13.3 12.9 18.8 22.5 24.7 27.7

Defects repaired, thousands 86.1 108.8 75 49 58.9 41

200420022000 2001 20031999

Source: Transneft, Media reports, Renaissance Capital

67%

7%

34%

7%

26%

59%

1930s - 1960s 1970s - 1980s 1990s - 2000+

US liquid pipeline industry Transneft

Source: AOPL, media reports, Transneft, Renaissance Capital

16

Accident Rate, per 1,000km

Safety and environment protection are paramount concerns for Transneft’s management

Transneft’s accident rate is enviable

Accidents at Transneft’s pipelines happen due to the same reasons as those at other pipeline companies, but less frequently

There have been no terrorist attacks on the pipeline system

Commentary

Spill accident rate is an ultimate indicator of Transneft pipelines’ condition

Causes of incidents, US

Causes of incidents, Transneft

Source: US Department of Transport’s Office of Pipeline Safety, Transneft, FERC, CONCAWE

Causes of incidents, Europe

Corrosion 25%

Equipment failure or personnel mistake

20%Third-party 19%

Pipe defects 17%

Other 19%

Construction 22%

Third-party 49%

Corrosion 12%

Pipe defects 17%

0.27

0.42

0.270.280.31

0.31

0.30

0.39

0.19

0.040.08

0.04 0.060.04

0.000.050.100.150.200.250.300.350.400.45

2000 2001 2002 2003 2004

US Europe Transneft

Mechanical Failure 10%

Third Party 90%

17

Growing Russian oil export is the driving force behind Transneft’s capacity extension

Factors behind Transneft’s capacity extension needs are market driven:

As European demand for Russian oil is growing slower than its production, Russian oil producers are trying to enter new markets in North America and Far East

China and India have emerged as large importers of crude oil and their needs are growing at a faster rate than anywhere else in the World

Throughput capacity of Bosporus, and Danish passages is limited and close to saturation

…technologically driven:

The optimal capacity utilization for oil pipelines is around 60-80%

…and geopolitically driven:

By construction a Baltic Pipeline System Transneft has created a new Baltic route, eliminating dependence on pipelines and sea terminals of Baltic States

The US government wants to reduce dependence of the US economy on oil from the Middle East

Japan and China are interested in diversification of their sources of oil supply

Route

Western Siberia-Primorsk 98.9%

Western Siberia-Eastern Siberia 87.7%

Western Siberia-Samara 96.4%

Samara-Novorossiysk 82.0%

Samara-Western Border 85.2%

T-Pechora-Yaroslavl 95.0%

New pipelines are needed Current capacity utilization by route

Average network capacity utilization (2004, %)

Source: Transneft, annual reports

Capacity Utilization

92%

28%

60%

Transneft Enbridge Energy Valero LP

18

Completed investment projects

Potential projects under construction/consideration

All new projects are well considered before being undertaken

Transneft has significant experience in successfully completing large-scale projects and is well positioned to do the same in the future

Extensive economic and technical feasibility studies are conducted before the implementation stage of the project is reached

Large projects are typically broken into stages allowing for spreading CapEx over the period and using cash flows generated by the first stages to fund subsequent phases

The priorities in terms of route directions and the general features of a project are approved by the government and outlined in a special government program “Russia’s Energy Strategy to 2020”

For the next few years the Company has identified a number of projects, with ESPO being a principal one, that would allow its clients to enter new markets

Project

Chechnya bypass $165m 7m tpa2000

Sukhodolnaya – Rodionovskaya extension (Ukrainian bypass) $240m 26m tpa

2001

Baltic Pipeline System $2.5bn Current 50m2004

up to 60m tpa3rd stage:

by 20062006

Total Capacity

Timing of Completion

Total Investment

Source: Transneft, FactivaNote: 1) Estimated in 2004 prices 2) Estimated in 2005 prices

Project

Eastern Siberia – Pacific Ocean $11.5bn1 80m tons pa1st section:

2008

Kharyaga-Indiga $2.2bn2 24m tons pa-

Total Capacity

Timing of Completion

Total Investment

Comments

19

Baltic Pipeline System overview

Rationale Transit of Russian oil to the sea terminals of Latvia (Ventspils) and

Lithuania (Butinge) cost Russian oil producers US$ 140 million per year

Construction of the Baltic Pipeline System and the sea terminal of Primorsk considerably reduced that amount

Implementation phases The first phase of the project with throughput capacity of 12m tpa

was completed in 2001. It leveraged existing infrastructure and required 457 km of new pipelines, two pumping stations, 700 thousand cubic meters of storage and a new specialized sea port at Primorsk to be built

The second phase was completed in several stages during 2003-04, eventually expanding throughput capacity of the system to 50m tpa. The project included construction of 945 km of new pipelines and three pumping stations

Expansion to throughput of 60/m tpa is to be completed during the 1st half of 2006

Project highlights BPS added significant new export capacity for Russian oil Gradual capacity build-up proved to be efficient and boosted

Transneft’s return on investment

Comments BPS route

BPS commissioning stages

Phase I 12 0.24 Dec-2001Phase II 18 0.36 Jul-2003

30 0.60 Nov-200342 0.84 Feb-2004

47.5 0.95 Aug-200450 1.00 Sep-2004

Phase III 60 1.20 2006

Million barrels/day

Completion Date

Million tons/year

Export Capacity

20

Eastern Siberia - Pacific Ocean project overview

Rationale The reference direction for the pipeline is the Asia-Pacific region, a

rapidly growing segment of the world’s crude oil and oil products market

Limited potential for incremental demand for the Russian oil in Europe, its major market

Implementation phases The first phase of construction would involve building the 2355 km

pipeline with diameter of 1220/1067 mm from Taishet to Skovorodino, 6 pumping stations, a tanker sea terminal in the Perevoznaya Bay with 3 loading berths, and oil storage facilities with total capacity of 1,36 mln cubic meters

Further development will involve extension of the Taishet-Skovorodino route and Perevoznaya Bay terminal and building a Skovorodino-Perevoznaya route

Project highlights Planned throughput capacity of up to 80 million tons per year (at

completion) Will open up a new Pacific port, from which Russian oil exports

could be shipped by tanker to other Asian markets and possibly North America

Comments ESPO route

ESPO gradual commissioning

Phase I 30 2,355 6.6 2004 2008Completion 80 4,368 11.5 2008

Projected Cost

(US$bn)

Export Capacity (MMT)

Pipeline Length

(km)

Completion year

Year of Decision

21

Northern Route overview

Project and its rationale

Connect Timan-Pechora region, with the Barents Sea coastline Allow for increased oil production at the largely untapped Timan-

Pechora oil fields (in-place reserves are estimated to total 4.9 bn tons of oil equivalent)

Construct a more efficient method of oil transportation than currently available alternatives

Diversifying export routes by facilitating oil transportation to North America and Europe

Project highlights Construction would involve building the 467 km pipeline with

diameter of 820 mm, 2 pumping stations, and oil storage facilities with total capacity of 770 thousand cubic meters

A sea port with 2 loading berths would be built at the final point of the pipe on the Barents Sea coast

Implementation phases

Construction is scheduled to take 2 years Government approval is needed to design and carry out the

construction of the project Guarantees of the pipeline being fully used need to be

provided by oil producers

Comments Northern route

Northern route planned commissioning

Kharyaga-Indiga 24 467 2.2 2006 2008

Projected Cost

(US$bn)

Export Capacity (MMT)

Pipeline Length

(km)

Completion year

Year of Decision

III. Financial profile

23

Financial highlights

Established track-record of profitable, strongly cash generative operations and prudent financial management: Robust and sustainable profitability with EBITDA margin over 50% and EBIT margin over 40% over the past 5 years Strong cash generation allowing for full coverage of maintenance CapEX Significant degree of financial headroom and flexibility in our business plan

Excellent credit fundamentals Strong balance sheet Sound credit ratios Utility business model with a near-monopoly, predictable and diversified revenue stream deriving from a financially very strong

group of corporate clients Sound financial policy

Policy of maintaining significant cash balances allows for financial flexibility Low dividend pay-out ratio, determined by the Russian government Transneft was one of the first Russian companies to prepare consolidated IFRS accounts (1998)

Transneft’s corporate credit ratings are the highest in Russia. Moody’s senior unsecured rating would pierce Russia’s sovereign rating, when assigned to future unsecured debt issues: Moody’s:

Corporate Rating – Baa2 / Stable Senior Unsecured Rating – A2 / Stable

S&P: Corporate Rating – BB+/Stable Senior Unsecured Rating – BB+/Stable

Note: According to Moody’s GRI (Government Related Issuer’s) methodology, Transneft’s future unsecured debt issues would be rated “A2”, currently 3 notches above Russia’s sovereign ceiling of “Baa2”.

24

Sales growth Vs. crude oil price Transneft’s profitability

1,9231,399

2,567

6,233

5,223

3,1213,721

47

35

27242327

17

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1999 2000 2001 2002 2003 2004 3Q05

US

$m

0

10

20

30

40

50

$/b

bl

Sales (left axis) Urals CIF Med (right axis)

534

972

1,977

2,678

133 161

1,529

1,727

3,188

996889924

1,429

1,723

38.2%

50.6% 51.2%

59.6%

51.3%

55.3%

53.1%

8.4%

9.5%

36.0%

27.6%

27.4%26.8%28.5%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1999 2000 2001 2002 2003 2004 3Q05

US

$m

0%

10%

20%

30%

40%

50%

60%

EBITDA Net Income

EBITDA margin (right axis) Net Income margin (right axis)

Transneft is able to grow revenues and maintain profitability regardless of oil price dynamics

Sales growth Vs. crude volumes

1,3991,923

2,567

3,7213,121

5,223

6,233

299 313342

373415 447 451

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1999 2000 2001 2002 2003 2004 3Q05

US

$m

0

100

200

300

400

500

(MM

T)

Sales (left axis) Crude volume (right axis)

25

0.180.18

0.93

0.55

0.0

0.2

0.4

0.6

0.8

1.0

US inter-statepipelines

BP Pipelines(Alaska) Inc.

Enbridge EnergyLP

Transneft

US

$/t

-km

Controllable cash* expenses comparison

Transneft operating costs breakdown

Other 20%

Strong profitability is supported by a continuously competitive cost structure

Note: data as of LTM3Q05

Controllable Cash Expenses = Total Expenses less Depreciation and Taxes (other than income taxes) Source: Transenft, companies, FERC, all data for FY2003

Depreciation 18%

Salaries 15%

Electricity 15%

Maintenance and Repairs 10%

COGS 6%

Materials 9%

Insurance 7%

Source: Transneft

Operating expenses

1,399

1,923

2,567

5,223

3,6613,721

3,121

1,2651,063

1,495

3,051

2,233

1,879

40.6%40.4%

20.7%

34.0%

40.6%41.4%44.5%

0

1,000

2,000

3,000

4,000

5,000

6,000

1999 2000 2001 2002 2003 2004 3Q05

US

$, m

ln

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Sales (left axis)

Operating Expenses (left axis)

Operating margin (right axis)

26

CommentsCash Flow and CapEx

Cash flows and CapEx

Strong cash generating capability allows to fully cover maintenance CapEx, estimated at approximately $1 bn annually

Future tariffs for new pipelines will be set to fully recover construction costs, including costs of financing

We expect free cash flow to increase significantly after 2011, once the principal network buildout phase is completed

590

800

2,480

897

1,025

1,185

2,105

478

1,0781,014

1,978

1,825

0

500

1,000

1,500

2,000

2,500

2000 2001 2002 2003 2004 LTM3Q05

US

$, m

ln

Cash Flows from Operations CapEx

27

CommentsEvolution of income and dividends

High profitability and conservative dividend policy rapidly increase Company’s equity base

The existing tariff structure, based on “costs plus” system and set by the government, calls for a low dividend payout ratios

Conservative capital structure characterized by low leverage

At its projected most leveraged in 2008, Transneft’s leverage remains manageable:

Total Debt/EBITDA < 1.6x

EBITDA/Interest Expense > 16.9x

133 161

889

1,429

6 74 90 86 138

996924

00

500

1,000

1,500

1999 2000 2001 2002 2003 2004

US

$m

0.00

0.02

0.04

0.06

0.08

0.10

0.12

%

Net Income (left axis)

Dividend payments (left axis)

Divident payout ratio (right axis)

Capital structure

Evolution of Leverage and Coverage

0.05 0.04

0.23 0.23

0.32

0.24

0.16

71.8

48.7

20.6 18 16.8

31.5

51.1

0.00

0.10

0.20

0.30

0.40

1999 2000 2001 2002 2003 2004 LTM3Q05

Tim

es

(X

)

0

10

20

3040

50

60

70

80

Tim

es

(X)

Total Debt/EBITDA (left axis)

EBITDA/Gross Interest Expense (right axis)

IV. Credit summary

29

Credit summary

Oil pipeline transportation monopoly in the World’s largest crude oil producing and second largest oil exporting country

Strong relationship with the Government, which has no foreseeable intention to privatize Transneft

Deep and increasing integration into the global oil supply chain

Favorable tariff environment which guarantees Transneft profitable growth

Experienced management team with proven expertise

Established track–record of profitable, cash generative operations and prudent financial management

Transneft has one of Russia’s strongest corporate financial profiles and is the highest-rated Russian corporate borrower

Key credit investment highlights

30

Additional information: WWW.TRANSNEFT.RU

WWW.TRANSNEFT.RU

31

Disclaimer

This communication and this document do not constitute an offer of sale of any securities. The following presentation may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever.

All information contained in this document is public and may be obtained via publicly available sources of information (e.g. press articles, internet, Transneft’s international financing department, Transneft website, etc)

Some of the information in this presentation may contain forward-looking statements regarding future events or the future performance of Transneft, as defined in the safe harbour provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “are expected to”, “intends”, “will” “will continue”, “should”, “would be” “seeks”, “approximately”, “anticipates” or similar expressions or the negative thereof or other variations thereof or comparable terminology. These forward-looking statements include all matters that are not historical facts. Transneft undertakes no obligation to publicly update or publicly revise any forward-looking statement, whether as a result of new information, future events or otherwise.