1. Russian-American Chamber of Commerce in the USA Russian energy supply : Coal, Gas, Oil

2. COAL Around two-thirds of the world’s coal reserves and consumption are in four countries, the US, Russian Federation, China and India. Coal consumption has been rising rapidly in recent years. Over the period 2002–2007, for example, average annual increases of 6% p.a. were registered. Around 70% of coal use worldwide is for electricity generation. With the vast resource base, and a global reserves-to-production (R/P) ratio of close to 133 years,6 clearly there is potential for further robust growth.

3. Coal reserves top countries: Source: BP Statistical Review of Word Energy, 2008 3

4. Coal consumption top countries: Source: BP Statistical Review of Word Energy, 2008 4

5. GAS Russia, with its massive reserves, is the second largest consumer of natural gas. Recent growth has been modest and promises to continue to be so as the scope for increasing gas use efficiency remains substantial. In addition, gas prices have been on the rise.

6. Natural Gas 6

7. Key findings: Natural gas produced by independent producers in Russia will increase in 2030 at a CAGR of 2.77% from 2010. Export of natural gas from Central Asia to Russia is projected to hit more than 100 Billion Cubic Meters by 2030. Domestic consumption of natural gas is projected to rise at a CAGR of around 4% from 2008 to 2012. Russian natural gas export to Europe and Asia is expected to grow at a CAGR of around 2.2% from 2010 to 2030. Natural gas price in the domestic market is expected to grow at a CAGR of around 25.5% during the period 2008-2011. Diesel consumption will grow faster than gasoline in Russia during 2008-2012. 7

8. GAS industry in numbers For the period of 2001-2007 gas production in Russia increased from 581.9 to 654 bcm. By 2020, Gazprom alone plans to produce 650-670 bcm per year. Additional production boost of 140-150 bcm by the same year is expected to come from other gas producers, such as LUKOIL, Novatek, Rosneft, TNK-B Advanced technology use: Russia first-ever plant for liquefied natural gas (LNG) Yuzhno-Sakhalinsk The Sakhalin liquefaction plant, to operate at full capacity beginning in 2010, is expected to produce 5 percent of the world's annual LNG supply. 8

9. OIL Russia has the world's seventh- biggest oil reserves, at 80 billion barrels, according to BP, a British oil firm. Russian production in the first quarter of 2008, crude oil and NGLs production is expected to increase gradually from 9.7 mb/d in 2006 to 11 mb/d by 2012 and a further 0.5 mb/d by 2015

10. Oil Supply 10

11. Oil per capita consumption, 2030 11

12. Pressure on Investment in the Russian Oil Sector Russian oil companies pay three separate taxes on their activities: A royalty on crude production; taxed at 22% after certain allowances An export tax; based on the market price of Urals crude in the preceding two months. Light products attract a 30% discount on the tax charged and fuel exports benefit from a 60% discount. A corporate profit tax of 24%, charged on net income, in common with other industries. FEES: Rosneft paid some $260 million for a license to develop the East Sugdin oil and gas field, with reserves of some 200 million tons of oil and more than 40 billion cubic meters of gas FUTURE PROSPECTS: Rosneft may still acquire new licenses, but developing new oil and gas fields in Eastern Siberia would require billions of dollars in investments 12

13. Russian Oil industry challenges: The small set of large (≥ 50,000 b/d) new fields coming on-stream by 2012 is precisely known. Mature depleted Russian oil basins (Western Siberia, Tartarstan) and tough new fields (Eastern Siberia, Far East) require huge investments in infrastructure, new wells, enhanced oil recovery, etc. to maintain or add to production. Government policy does not cap oil output but rather impedes exploration & production activity with burdensome tax rates on Russian oil companies. The Federation—Vladimir Putin and his sidekick Dmitry Medvedev—also hassles and seeks to eject foreign operators (and their capital) after they have exhausted their usefulness, e.g. Shell at Sakhalin-2.

14. 14 Geography Area: 17 million sq. km. (6.5 million sq. mi.); about 1.8 times the size of the United States. Cities: Capital--Moscow (pop. 8.3 million). Other cities--St. Petersburg (4.6 million), Novosibirsk (1.4 million), Nizhniy Novgorod (1.3 million). Population (2007 est.): 141.4 million. Annual growth rate (2007 est.): -0.484% (population declining) Education (total pop.): Literacy--99.4% Health: Life expectancy (2007 est.)--59.12 yrs. men, 73.03 yrs. women RUSSIA

15. 15 GDP (official exchange rate): $1.286 trillion (2007 est.) GDP - real growth rate: 8.1% (2007 est.) GDP - composition by sector: agriculture: 4.6% ; industry: 39.1% ; services: 56.3% (2007 est.) Labor force: 75.1 million (Nov. 2007 est.) Investment (gross fixed): 19.4% of GDP (Jan.– Sept. 2007 est.) Stock of direct foreign investment - at home: $271.6 billion (2006) Stock of direct foreign investment - abroad: $209.6 billion (2006) Russia possesses one-fifth of the world's timber reserves 3 % of foreign investments goes to the timber industry I.RUSSIAN ECONOMY

16. 16 RussianAmericanChamber.com info@russianamericanchamber.com