MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2020

The following discussion and analysis of our financial condition and results of operations as of 31 December 2020 and for the year then ended (hereinafter referred to as “MD&A”) should be read in conjunction with our audited consolidated financial statements as of and for the year ended 31 December 2020 (hereinafter referred to as the “consolidated financial statements”). The audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).

The financial and operational information contained in this MD&A comprises information on PJSC SIBUR Holding and its consolidated subsidiaries (hereinafter jointly referred to as “we”, “SIBUR”, “Company” or the “Group”).

SELECTED DATA(1) (3) (5)

Operating Results

The following table presents the Group’s key operational metrics for the years ended 31 December 2020 and 2019:

Year ended 31 December Change Thousand tonnes, except as stated 2020 2019 %

Processing and production volumes

APG processing, SIBUR’s share(2) (million cubic metres) 21,225 22,617 (6.2%) NGLs purchasing 4,455 3,965 12.4% Raw NGL fractionation(3), SIBUR’s share 7,773 7,739 0.4%

Sales volumes Petrochemical products, including: 5,149 3,767 36.7% Polyethylene (PE) 1,311 261 402.3% Polypropylene (PP) 1,118 737 51.7% Plastics and organic synthesis products 812 793 2.4% Elastomers 431 529 (18.5%) Intermediates and other chemicals 751 542 38.6% Midstream products, including: Natural gas (million cubic metres) 17,583 18,817 (6.6%) LPG 3,362 5,145 (34.7%) Naphtha 975 1,172 (16.8%)

(1) In this and other tables of this MD&A, immaterial deviations in the calculation of percentage changes, subtotals and totals are explained by rounding. All the operational data is presented in line with segment reporting. (2) Excluding third-party volumes processed at SIBUR’s capacities. (3) Including volumes processed at third-party capacities and excluding third-party volumes processed at SIBUR’s capacities. 1 Financial Results

The following table presents the Group's key financial metrics for the years ended 31 December 2020 and 2019: (1)

Year ended 31 December Change RUB millions, except as stated 2020 2019 %

Income statement highlights Revenue (net of VAT and export duties) 523,010 531,306 (1.6%) Adjusted EBITDA(1) 187,346 178,442 5.0% EBITDA 179,189 170,020 5.4% EBITDA margin, % 34.3% 32.0% EBITDA of reportable segments Olefins & Polyolefins 84,292 48,979 72.1% Plastics, Elastomers & Intermediates 18,263 19,511 (6.4%) Midstream 71,368 99,788 (28.5%) EBITDA (USD millions) 2,484 2,626 (5.4%) Adjusted EBITDA (USD millions) 2,597 2,756 (5.8%) Profit for the year 25,634 141,367 (81.9%) Adjusted profit(2) 93,006 93,406 (0.4%)

Cash flow highlights Net cash from operating activities, including 176,346 124,468 41.7% Operating cash flows before working capital changes 172,184 168,472 2.2% Changes in working capital 11,980 (8,207) n/m Income tax paid (7,818) (35,797) (78.2%) Net cash used in investing activities, including (101,550) (125,555) (19.1%) Capital expenditures (112,886) (150,378) (24.9%) Net cash (used in)/from financing activities, including (66,229) 4,389 n/m Dividends paid to the Company's shareholders (33,460) (41,524) (19.4%) Net (repayment of) / proceeds from debt (10,544) 65,686 n/m

(2) As of As of 31 December 2020 31 December 2019 Key ratios Net Debt/EBITDA 2.3x 2.1x Net Debt/EBITDA (in USD) 2.2x 2.2x

In 2020, demand for crude oil fell sharply due to lower economic activity levels resulting from the COVID-19 pandemic and related restrictions. The price for Brent crude declined by 35.2% year-on-year and averaged USD 41.7 per barrel in the reporting period. International benchmarks for naphtha and LPG also fell but to a lesser extent, dropping 20% on weaker demand from key sales segments. Prices for petrochemical products also declined, largely driven by lower demand from global markets due to the restrictions caused by COVID-19, as well as capacity additions. The Russian ruble depreciated on average over the year by 10.3% and 12.1% against the US dollar and euro, respectively.

In 2020, our associated petroleum gas (APG) processing volumes decreased by 6.2% year-on-year to 21.2 billion cubic metres from 22.6 billion cubic metres in 2019, primarily as a result of lower oil production by Russian oil companies to comply with the OPEC+ agreement. This also resulted in lower production volumes of LPG and naphtha. Our raw NGL fractionation volumes remained nearly unchanged at 7.8 million tonnes due to higher purchases of raw NGL.

Sales volumes of petrochemical products increased by 36.7% year-on-year mainly due to the start of PE and PP production at ZapSibNeftekhim, partially offset by lower elastomers and MTBE sales following the divestment of the Company’s Togliatti-based assets.

(1) Adjusted EBITDA includes the Group’s portion of EBITDA of joint ventures and associates and excludes the non-controlling interest portion of EBITDA of subsidiaries. (2) Adjusted profit equals profit for the year attributable to shareholders of the parent company adjusted for any foreign exchange gain/loss and one-off items including those resulting from disposals or acquisitions that are outside the scope of normal business activities and operations. 2 Revenue decreased by 1.6% year-on-year to RUB 523,010 million from RUB 531,306 million in 2019 due to lower revenue from our Midstream and our Plastics, Elastomers and Intermediates segments which both saw lower sales volumes and negative pricing dynamics. This was partly compensated by revenue growth in our Olefins and Polyolefins segment driven by a substantial increase in sales volumes following ZapSibNeftekhim ramp-up.

EBITDA increased by 5.4% to RUB 179,189 million from RUB 170,020 million driven by higher sales volumes in the Olefins & Polyolefins segment and despite declines in both the Midstream segment, in which EBITDA declined by 28.5% due to lower external sales volumes and prices, and the Plastics, Elastomers and Intermediates segment, in which EBITDA fell by 6.4% primarily due to lower product prices. An additional factor that positively affected EBITDA was cost optimisation programme both in fixed and variable parts.

Our net profit in 2020 decreased by 81.9% to RUB 25,634 million from RUB 141,367 million in 2019 primarily due to the depreciation of the Russian ruble vs the US dollar (and the resulting revaluation of our primarily dollar denominated debt) and also due to an increase in depreciation as ZapSibNeftekhim moved new capacities into operating mode during the year. As a result, our profit net of forex dynamics in 2020 decreased by 2.2% to RUB 99,272 million from RUB 101,486 million in 2019.

Net cash from operating activities increased by 41.7% year-on-year on the back of higher EBITDA, a reduction in working capital and lower income tax paid.

As of 31 December 2020, our total debt increased by 13.3% to RUB 430,148 million vs. RUB 379,739 million at 31 December 2019 mainly due to the effect of the Russian ruble’s depreciation on the value of our foreign currency denominated debt.

Our net leverage (Net Debt/EBITDA) in ruble terms increased to 2.3x as of 31 December 2020 from 2.1x as compared to 2019 year-end, while in USD terms it remained flat at 2.2x.

For a detailed discussion on SIBUR’s operational and financial performance, see “Results of Operations” and “Liquidity and Capital Resources”.

3 OVERVIEW

With a uniquely positioned vertically integrated business model, SIBUR is Russia’s leading integrated petrochemicals company. More than 22,000 employees(1) working at SIBUR contribute to the success of its customers engaged in the chemical, fast-moving consumer goods (FMCG), automotive, construction, energy and other industries in 90 countries worldwide.

SIBUR has three operating and reportable segments:

 Olefins & Polyolefins. Produces polyolefins, including polyethylene, polypropylene and BOPP- films, and olefins, including ethylene and propylene, at our production sites in Tobolsk, Tomsk and Kstovo, which are used primarily internally by our petrochemicals segments and also sold externally (primarily sales of ethylene to RusVinyl).  Plastics, Elastomers & Intermediates. Produces a variety of petrochemical products, such as (i) plastics and organic synthesis products comprising polyethylene terephthalate (PET), glycols, expandable polystyrene, alcohols, acrylates and dioctyl terephthalate (DOTP), (ii) elastomers comprising various grades of commodity and specialty rubbers and thermoplastic elastomers, (iii) methyl tertiary butyl ether (MTBE) and fuel additives, which are sold externally. The segment also produces intermediates, which are primarily used internally with a minor share being sold to the market.  Midstream. This segment comprises (i) gathering and processing of associated petroleum gas (APG) that we purchase from major Russian oil companies, (ii) transportation, fractionation and other processing of natural gas liquids (NGLs) that we produce internally or purchase from major Russian oil and gas companies, and (iii) production, marketing and sales of energy products, such as natural gas, liquefied petroleum gases (LPG) and naphtha. We sell these energy products on the Russian and international markets and use some of them as feedstock for our two petrochemicals segments above.

(1) As of 31 December 2020, excluding the personnel of non-consolidated joint ventures. 4 RECENT DEVELOPMENTS

Despite global market turmoil triggered by the outbreak of COVID-19 in early 2020 and the ensuing sharp drop in economic activity resulting from the pandemic and related quarantine measures, SIBUR developed and successfully implemented measures to mitigate the impact of the economic slowdown on its business, including cost cutting initiatives tactical trading and supply chain management, and prioritization and optimisation of its investment programme. Nonetheless, the Company’s financial performance was significantly affected, particularly in the first half of 2020, although the successful ramp-up of ZapSibNeftekhim throughout the year, coupled with the rebound in product prices towards the end of the year, were key drivers of the Company’s annual EBITDA growth of more 9,169 million RUB.

Environmental, Social and Corporate Governance (ESG) Achievements

In February 2021, Sustainalytics reduced (improved) SIBUR’s ESG Risk Rating to Low from Medium, emphasizing the Company’s strong disclosure and accountability to investors.

In December 2020, the International Carbon Disclosure Project (CDP) upgraded SIBUR's climate change score from C (Awareness level) to B (Management level). This result exceeds both Europe's average rating and the average score among global chemical companies.

In December 2020, SIBUR signed several agreements to supply test volumes of wind and water power to its production sites. The Company plans to increase the use of renewable energy sources (RES) through its own generation and direct purchases from suppliers to meet its Sustainable Development goals.

In November 2020, SIBUR's MSCI ESG rating was revised upwards from B to BB.

In September 2020, a project to produce recycled PET granules was initiated at SIBUR’s production site in Bashkortostan. The project will rely on 34 kt of recycled plastics annually.

In May 2020, SIBUR’s Board of Directors established a new Sustainable Development Committee to oversee the implementation and ongoing development of SIBUR’s ESG strategy.

Corporate Developments

In December 2020, SIBUR and Sinopec completed the formation of their joint venture (JV) to construct and operate the Amur Gas Chemical Complex after obtaining all the necessary regulatory approvals. SIBUR and Sinopec now own 60% and 40% interests in the JV, respectively.

In December 2020, the average utilisation rate of PP and PE units at ZapSibNeftekhim, which reached its design capacity ahead of schedule in the fourth quarter of 2020, stood at 97%. In 2020, the average utilisation rate of PP and PE units was 82% (as percentage of nameplate capacity), including a planned two-week maintenance shutdown for debottlenecking in May-June 2020.

In September 2020, SIBUR returned most of its production sites to their standard working regimes following the gradual introduction of the shift camp model from April 2020. However, the Company had to reintroduce the shift camp model at several of its production sites during the second wave of the pandemic. The Company continues to monitor the epidemiological situation in its regions of operations and is ready to return to employing preventive measures that have proven their reliability if the situation worsens.

In July 2020, SIBUR raised USD 500 million of five-year Eurobonds on the Irish Stock Exchange. The coupon rate was fixed at 2.95%, which was a record low for Russian corporate issuers.

In May 2020, SIBUR issued RUB 15 billion worth of Russian ruble bonds with a record low coupon rate for Russian corporate issuers set at 5.5% per annum.

5 In April 2020, SIBUR’s Voronezh site boosted the output of thermoplastic elastomers (SBS polymers) by 50 ktpa for a total of 135 ktpa.

In January 2020, SIBUR completed the commissioning stage of new processing and technological units at ZapSibNeftekhim.

6 MACROECONOMIC TRENDS

Overall economic conditions in Russia and globally significantly impact our operations as demand for our products is driven by consumers across a diverse range of industries, each of which are dependent on the state of the global economy and the economies of their respective countries.

GDP Growth

One of the key factors that drives demand for our products or otherwise affects our results of operations is GDP growth globally. SIBUR is also exposed to economic risks specific to the Russian Federation as all of our production assets are located in Russia.

The following table contains selected data on year-on-year GDP growth for the years ended 31 December 2020 and 2019:

Year ended 31 December 2020 2019 European Union (EU-15) (6.5%) 1.6% United States (3.5%) 2.7% China 2.3% 6.1% Russia (3.1%) 1.3% Source: Eurostat, U.S. Bureau of Economic Analysis, National Bureau of Statistics of the People's Republic of China, Russian Federal State Statistics Service

Foreign Exchange Rate Fluctuations

The movements of the Russian ruble against the US dollar and the euro may have a significant impact on our financial performance.

The following table presents selected data on exchange rate movements for the years ended 31 December 2020 and 2019:

Year ended 31 December Change 2020 2019 % USD/RUB at the beginning of the reporting period 61.9 69.5 at the end of the reporting period 73.9 61.9 RUB (depreciation)/appreciation (16.2%) 12.2%

Average USD/RUB rate for the period 72.1 64.7 (10.3%) EUR/RUB at the beginning of the reporting period 69.3 79.5 at the end of the reporting period 90.7 69.3 RUB (depreciation)/appreciation (23.5%) 14.6%

Average EUR/RUB rate for the period 82.4 72.5 (12.1%) Source: CBR

SIBUR's functional and reporting currency is the Russian ruble. Our sales to countries outside of Russia (38.5% and 40.4% of total revenue in 2020 and 2019, respectively) are primarily denominated in US dollars and, to a lesser extent, in euros. In many cases our domestic sales are linked to international benchmark prices quoted in US dollars and euros. However, in case of substantial shifts in the Russian ruble exchange rate, the adjustment of domestic selling prices can take a certain amount of time. At the same time, our expenses are primarily denominated in Russian rubles. As a result, depreciation of the Russian ruble relative to the US dollar or the euro positively affects our operational margins, while appreciation of the Russian ruble relative to these currencies tends to have a negative effect on our operational margins.

In 2020, the Russian ruble depreciated by 10.3% relative to the US dollar and by 12.1% relative to the euro on average year-on-year, which had a positive impact on our revenue. 7 A significant part of our borrowings is also denominated in foreign currencies, primarily in US dollars and, to a lesser extent, in euros. When the Russian ruble depreciates against the US dollar or euro, our liabilities denominated in these currencies increase in Russian ruble terms, as do interest costs on these borrowings. Correspondingly, our financial expenses tend to increase as a result of foreign exchange losses recorded by the Group. When the Russian ruble appreciates against the US dollar or euro, our liabilities denominated in these currencies decrease in Russian ruble terms, as do interest costs on these borrowings. Correspondingly, our financial income tends to increase as a result of the foreign exchange gain recorded by the Group.

The Russian ruble as of 31 December 2020 depreciated by 16.2% relative to the US dollar and by 23.5% relative to the euro as of 31 December 2019 resulting in a foreign exchange loss reported in SIBUR’s consolidated financial statements for the year 2020, largely attributable to the revaluation of our foreign currency denominated debt. The Russian ruble as of 31 December 2019 appreciated by 12.2% relative to the US dollar and by 14.6% relative to the euro as compared to the level of 31 December 2018.

Inflation

Historically, Russia has reported higher inflation rates than more developed markets. Increases in inflation may significantly affect our financial results because of the resulting increase in operating expenses, which are linked to general price levels in Russia including staff, utilities, transportation, rent and other components of operating costs.

The following table presents selected data on inflation rates for the years ended 31 December 2020 and 2019:

Year ended 31 December 2020/2019 2019/2018 Consumer price index (CPI) 4.9% 3.0% Producer price index (PPI) 3.6% (4.3%) Source: Russian Federal State Statistics Service

Prices for Crude Oil and Liquids

Prices for a large portion of our feedstock and processed goods are directly or indirectly linked to oil or oil derivative prices. An increase in prices for oil or oil derivatives generally has a net positive effect on our financial results because our position as a net seller of energy products allows us to mitigate the negative effect that growth in oil and oil derivative prices has on our cost base. A decline in prices for oil or oil derivatives generally has a net negative effect on our financial results, which is partially compensated by a decrease in our cost base.

Crude oil prices typically influence prices for liquids (raw NGL, LPG and naphtha), which we purchase from third parties as feedstock. This correlation, however, is not perfect, as prices for LPG and naphtha are also influenced by supply and demand trends and other factors in their own markets, while prices for raw NGL, depending on its composition, largely correlate with prices for LPG and naphtha.

Oil prices have a significant impact on Russian ruble exchange rate fluctuations. Historically, the Russian ruble has typically, though not consistently, appreciated in real terms against the US dollar and the euro when oil prices increased, and depreciated against these currencies when oil prices decreased. The negative effect of declining oil prices tends to reduce our revenue, while this revenue decrease is mitigated by the positive effect of the weakening Russian ruble on export sales or domestic sales linked to the US dollar or the euro (see “Foreign Exchange Rate Fluctuations” above).

8 Oil and oil derivative prices have historically been volatile and dependent on a variety of factors including, among others, market supply and demand balances, geopolitical developments affecting the principal producing nations and force majeure events. From March 2020, we observed sharply negative dynamics in crude oil prices caused by supply and demand imbalances due to the combination of the initial failure of the OPEC+ deal and the slowdown in economic activity globally due to the COVID-19 pandemic. The price for Brent price fell to a twenty-one year low on April 21, closing at USD 13.24 per barrel and gradually rose to an average of USD 50 per barrel in December. As a result, the average Brent price of 2020 was USD 41.7 per barrel, a 35% decline year-on-year. International benchmarks for LPG and naphtha posted declines of approximately 16% and 30% respectively in 2020 year-on-year, pressured by oil price dynamics and weak demand from key sales segments.

The following table presents average benchmark international market prices for crude oil, naphtha and LPG for the years ended 31 December 2020 and 2019:

Year ended 31 December Change USD per tonne except as stated 2020 2019 % Brent crude oil (USD per bbl) 41.7 64.3 (35.2%) Naphtha CIF NWE 354.7 505.3 (29.8%) LPG DAF Brest 328.7 389.2 (15.6%) LPG Sonatrach fob Bethioua 325.2 386.2 (15.8%) LPG CIF ARA (large) 326.5 394.9 (17.3%) Source: Bloomberg, Argus

Prices for Petrochemical Products

In the first half of 2020, there was a strong negative trend in chemical demand. The decline took place in automotive, construction and consumer goods, partially offset by an increase in the medical, hygiene and food packaging segments, supporting the international benchmark prices for some of our products, including PE, PP and PET. In addition, the pandemic caused some logistics constraints and we have seen noticeable difficulties for imports and exports in both Asia and Europe. Since May 2020, there was a gradual price recovery due to demand reviving and inventory level coming down. However, in 2020 we observed negative price dynamics for petrochemical products of around 20% year-on-year. Butadiene benchmarks showed a deeper decline mainly due to a drop in energy prices, as well as the shutdown of a number of tire production facilities. Meanwhile, product margins were supported by a sharp decline in feedstock prices (also see “Cyclicality of the Petrochemicals Industry” in “Certain Factors Affecting Our Results of Operations”).

The following table presents average benchmark international market prices for petrochemical products for the years ended 31 December 2020 and 2019:

Year ended 31 December Change USD per tonne 2020 2019 % HDPE CFR China 843.6 953.6 (11.5%) HDPE FD NWE 999.6 1,163.6 (14.1%) PP CFR China 899.1 1,021.9 (12.0%) PP FD NWE 1,026.4 1,224.4 (16.2%) PET FOB China 698.1 955.9 (27.0%) MEG CIF NWE 548.8 607.4 (9.6%) Butadiene FD NWE 583.8 922.6 (36.7%) Source: ICIS

9 RESULTS OF OPERATIONS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019

The following table presents selected data on our results of operations for the years ended 31 December 2020 and 2019:

Year ended 31 December Change RUB millions, except as stated 2020 % of revenue 2019 % of revenue %

External revenue 523,010 100.0% 531,306 100.0% (1.6%) Olefins & Polyolefins 187,269 35.8% 105,717 19.9% 77.1% Plastics, Elastomers & Intermediates 121,052 23.1% 152,805 28.8% (20.8%) Midstream 152,270 29.1% 213,030 40.1% (28.5%) Unallocated 62,419 11.9% 59,754 11.2% 4.5% incl. Revenue from Project Management and Construction Services 48,358 9.2% 45,745 8.6% 5.7%

Operating expenses (409,723) (78.3%) (401,415) (75.6%) 2.1%

Operating profit 113,287 21.7% 129,891 24.4% (12.8%) Net finance (expense) / income (88,095) (16.8%) 37,424 7.0% n/m Result of subsidiary’s disposal and remeasurement of related assets 339 0.1% 1,940 0.4% (82.5%) Result of subsidiary’s acquisition and remeasurement of related liabilities (225) n/m - - % n/m Share of net income of joint ventures and associates 4,685 0.9% 6,970 1.3% (32.8%) Profit before income tax 29,991 5.7% 176,225 33.2% (83.0%) Income tax expense (4,357) (0.8%) (34,858) (6.6%) (87.5%) Profit for the year 25,634 4.9% 141,367 26.6% (81.9%)

Profit for the year, including attributable to: 25,634 4.9% 141,367 26.6% (81.9%) Non-controlling interest 5,927 1.1% 6,140 1.2% (3.5%) Shareholders of SIBUR 19,707 3.8% 135,227 25.5% (85.4%)

Adjusted profit(1) 93,006 17.8% 93,406 17.6% (0.4%)

Revenue(2)

In 2020, our revenue decreased by 1.6% year-on-year to RUB 523,010 million from RUB 531,306 million in 2019 with the following dynamics across the segments:

 Olefins & Polyolefins revenue increased by 77.1% to RUB 187,269 million from RUB 105,717, which was largely attributable to higher revenues from PE and PP due to the start of ZapSibNeftekhim production partly offset by lower selling prices;  Plastics, Elastomers & Intermediates revenue decreased by 20.8% to RUB 121,052 million from RUB 152,805 million mainly as a result of negative pricing dynamics across all product groups, as well as the sale of Togliatti-based assets in the fourth quarter of 2019;  Midstream segment revenue decreased by 28.5% to RUB 152,270 million from RUB 213,030 million largely due to lower sales volumes and prices of both LPG and naphtha;  Unallocated revenue increased by 4.5% to RUB 62,419 million from RUB 59,754 million, which was mainly driven by higher revenue from NIPIGAS services. For a detailed discussion on results in each operating segment see “Segment Information”.

(1) Adjusted profit equals profit for the year attributable to shareholders of the parent company adjusted for any foreign exchange gain/loss and one-off items including those resulting from disposals or acquisitions that are outside the scope of normal business activities and operations. 10 Operating Expenses

The following table presents a breakdown of our operating expenses for the years ended 31 December 2020 and 2019:

Year ended 31 December Change RUB millions, except as stated 2020 % of revenue 2019 % of revenue %

Feedstock and materials 111,770 21.4% 118,087 22.2% (5.3%) Transportation and logistics 73,047 14.0% 79,387 14.9% (8.0%) Depreciation and amortisation 64,696 12.4% 39,836 7.5% 62.4% Staff costs 45,846 8.8% 46,340 8.7% (1.1%) Energy and utilities 44,745 8.6% 42,702 8.0% 4.8% Services provided by third parties 29,997 5.7% 29,582 5.6% 1.4% Goods for resale 21,003 4.0% 24,481 4.6% (14.2%) Repairs and maintenance 9,382 1.8% 9,415 1.8% (0.4%) Processing services of third parties 3,885 0.7% 3,796 0.7% 2.3% Taxes other than income tax 3,029 0.6% 3,032 0.6% (0.1%) Charity and sponsorship, marketing and advertising 2,396 0.5% 2,681 0.5% (10.6%) Impairment of PPE 1,206 0.2% 293 0.1% 311.6% Rent expenses 583 0.1% 517 0.1% 12.8% Gain on disposal of PPE (931) (0.2%) (131) n/m 610.7% Change in WIP and refined products balances (2,424) (0.5%) (451) (0.1%) 437.5% Other 1,493 0.3% 1,848 0.3% (19.2%) Operating expenses 409,723 78.3% 401,415 75.6% 2.1%

In 2020, our operating expenses increased by 1.6% year-on-year to RUB 409,723 million from RUB 401,415 million in 2019. The increase was mainly driven by the launch of ZapSibNeftekhim resulting in a growth of all operating expenses including a substantial non-cash effect of higher depreciation and amortisation costs. This factor was partially compensated by (i) a decrease in feedstock costs on the back of lower purchasing volumes and prices, (ii) a decline in transportation and logistics and goods for resale lines, and (iii) the execution of comprehensive cost optimisation programme.

Feedstock and Materials

In 2020, our feedstock and materials costs decreased by 5.3% year-on-year to RUB 111,770 million from RUB 118,087 million, decreasing to 21.4% of total revenue from 22.2% in 2019. The decrease was largely driven by (i) lower purchases of terephthalic acid due to the completion of PTA capacity expansion project, (ii) lower expenses related to APG purchases following the OPEC+ agreement and lower international benchmarks for liquids, and (iii) a higher amount of recoverable excise.

The following table presents information on our costs related to purchasing of feedstock and materials for the years ended 31 December 2020 and 2019:

Year ended 31 December Change % of feedstock and % of feedstock and RUB millions, except as stated 2020 2019 % materials expenses materials expenses NGLs 57,541 51.5% 57,668 48.8% (0.2%) APG 26,844 24.0% 29,790 25.2% (9.9%) Paraxylene 3,804 3.4% 4,295 3.6% (11.4%) Benzene 2,799 2.5% 3,976 3.4% (29.6%) Change of stock 520 0.5% (3,950) (3.3%) n/m Other feedstock and materials 20,262 18.1% 26,308 22.3% (23.0%) Feedstock and materials, total 111,770 100.0% 118,087 100.0% (5.3%)

11 In 2020, our expenses related to purchases of NGLs were largely flat at RUB 57,541 million compared to RUB 57,668 million in 2019, increasing to 51.5% of total feedstock and materials expenses from 48.8% in 2019. As our NGLs purchase prices are formula-based and linked to international benchmarks for liquids, we recorded a decrease in expenses largely attributable to an 11.3% decline in the effective average purchase price in line with observed decreases in international benchmarks. This factor was almost fully offset by a 12.5% increase in purchasing volumes, or 495,615 tonnes in absolute terms, mainly attributable to higher volumes of raw NGL under supply contracts with NOVATEK and Surgutneftegas, despite a decrease in naphtha purchasing volumes in line with lower sales volumes, partly compensated by new supply arrangements for naphtha deliveries to our crackers in Tomsk and Kstovo. We also observed the redistribution of LPG purchasing volumes from goods for resale to feedstock and materials line due to the increased LPG internal use at our ZapSibNeftekhim cracker.

In 2020, our expenses related to purchases of APG decreased by 9.9% year-on-year to RUB 26,844 million from RUB 29,790 million, decreasing to 24.0% of total feedstock and materials expenses from 25.2% a year earlier. The decrease in expenses in absolute terms was primarily driven by a 6.2% decline in APG purchasing volumes following the April 2020 agreement between OPEC and other oil-producing countries, including Russia, to cut oil production from 1 May 2020. The additional factor was our formula-based supply contracts resulting in a 4.0% effective average purchase price decline backed by lower international benchmarks for liquids, partially offset by a 1.4% indexation of regulated natural gas prices as of 1 July 2019 and a 3.0% indexation as of 1 August 2020.

In 2020, our expenses related to purchases of benzene decreased by 29.6% year-on-year to RUB 2,799 million from RUB 3,976 million largely due to a decline in the effective average purchase price in line with dynamics in international benchmarks.

In 2020, we recorded an additional charge to our feedstock and materials expenses in the amount of RUB 520 million compared to a reversal in the amount of RUB 3,950 million a year earlier, which was mainly attributable to the utilisation of paraxylene and terephthalic acid volumes accumulated earlier pending maintenance shutdown as part of the expansion project at our production site in Bashkortostan.

Other feedstock and materials expenses decreased by 23.0% year-on-year to RUB 20,262 million from RUB 26,308 million mainly due to (i) lower external purchases of terephthalic acid due to the completion of PTA capacity expansion project and the subsequent maintenance shutdown at our production site in Bashkortostan, (ii) lower methanol purchases following the sale of Togliatti-based assets, as well as (iii) a higher amount of recoverable excise due to an increase in both excise rates and processed volumes. These factors were partially offset by higher volumes of feedstock purchased for ZapSibNeftekhim production.

Transportation and Logistics

In 2020, our transportation and logistics expenses decreased by 8.0% year-on-year to RUB 73,047 million from RUB 79,387 million in 2019, decreasing to 14.0% of total revenue from 14.9% a year earlier. The decrease in transportation and logistics costs was mainly driven by lower LPG sales volumes due to the increased LPG internal use at our ZapSibNeftekhim cracker. This factor was partially offset by higher transportation volumes of polyolefins produced at ZapSibNeftekhim and the corresponding increase in packaging costs. We also observed a 3.5% indexation in railroad transportation tariffs by the FAS in January 2020 (see “Transportation Tariffs” in “Certain Factors Affecting Our Results of Operations”) and Russian ruble depreciation.

Depreciation and amortisation

In 2020, our depreciation and amortisation expenses increased by 62.4% year-on-year to RUB 64,696 million from RUB 39,836 million, increasing to 12.4% of total revenue from 7.5% in 2019. The expenses increased following the launch of key processing and technological units at ZapSibNeftekhim.

12 Staff Costs

In 2020, our staff costs decreased by 1.1% year-on-year to RUB 45,846 million from RUB 46,340 million, remaining almost flat at 8.8% of total revenue. The decrease in staff costs was mainly related to (i) the sale of Togliatti-based assets in the fourth quarter of 2019, (ii) cost optimisation efforts, and (iii) COVID-19 constraints on business trips. These factors were almost fully offset by headcount growth at NIPIGAS as a result of the expansion of its operations and the start of operational activity at ZapSibNeftekhim. Our average headcount totalled 22,624 employees in 2020, down from 25,951 employees in 2019.

Energy and Utilities

In 2020, our energy and utilities expenses increased by 4.8% year-on-year to RUB 44,745 million from RUB 42,702 million, increasing to 8.6% of total revenue from 8.0% in 2019. The increase in absolute terms was largely attributable to the launch of ZapSibNeftekhim production, as well as higher electricity tariffs to compensate for the capital expenditures of generating companies under the capacity delivery agreement (CDA) modernisation programme.

Our effective average electricity and heat tariffs were up by 4.7% and 8.5%, respectively, while our effective average fuel tariff was almost flat. The decrease in heat costs was mainly driven by the divestment of petrochemical facilities located in Togliatti in the fourth quarter of 2019.

The following table presents data on our energy and utilities costs for the years ended 31 December 2020 and 2019:

Year ended 31 December % of total energy % of total energy Change RUB millions, except as stated 2020 and utilities 2019 and utilities %

Electricity 29,991 67.0% 26,886 63.0% 11.5% Fuel (primarily natural gas) 8,977 20.1% 8,806 20.6% 1.9% Heat 3,042 6.8% 4,541 10.6% (33.0%) Other 2,735 6.1% 2,469 5.8% 10.8% Energy and utilities, total 44,745 100.0% 42,702 100.0% 4.8%

Services Provided by Third Parties

In 2020, our expenses related to services provided by third parties were largely flat year-on-year at RUB 29,997 million, making up 5.7% of total revenue. The increase was mainly related to the start of operational activity at ZapSibNeftekhim, almost fully compensated by the decrease in NIPIGAS subcontractor costs following the completion of some of its former projects on the back of the launch of a new major project.

Goods for Resale

In 2020, our expenses related to purchases of goods for resale decreased by 14.2% year-on-year to RUB 21,003 million from RUB 24,481 million, decreasing to 4.0% of total revenue from 4.6% a year earlier. The decrease was largely attributable to lower volumes of MTBE purchased from Uralorgsintez under the trading arrangement, partly compensated by purchases of elastomers under trading arrangements with Tatneft following the divestment of petrochemical facilities located in Togliatti in the fourth quarter of 2019. We also observed the redistribution of LPG purchasing volumes from goods for resale to feedstock and materials line due to the increased LPG internal use at our ZapSibNeftekhim cracker.

13 Repairs and maintenance

In 2020, our repairs and maintenance expenses were almost flat year-on-year at RUB 9,382 million, making up 1.8% of total revenue. The increase due to the launch of ZapSibNeftekhim operations was fully compensated by the divestment of Togliatti-based assets in the fourth quarter of 2019, as well as the transition to less frequent renovations at certain production sites starting from 2019 and cost optimisation efforts.

Change in Work in Progress and Refined Products Balances

In 2020, we recorded a reversal in our operating expenses in the amount of RUB 2,424 million compared to a reversal in the amount of RUB 451 million a year earlier, which was mainly attributable to the accumulation of polyolefin stocks following the ZapSibNeftekhim ramp-up as well as elastomer stock due to the increased capacity of thermoplastic elastomers production at our Voronezh production site.

Operating Profit

In 2020, our operating profit decreased by 12.8% year-on-year to RUB 113,287 million from RUB 129,891 million. The corresponding operating margin totalled 21.7% and 24.4% in 2020 and 2019, respectively.

Net Finance (Expense)/Income

In 2020, we reported a net finance expense of RUB 88,095 million versus RUB 37,424 million income in 2019, which was largely attributable to a significant foreign exchange loss incurred in 2020.

The following table presents data on our finance income and expenses for the years ended 31 December 2020 and 2019:

Year ended 31 December Change RUB millions, except as stated 2020 2019 %

Interest income 926 1,189 (22.1%) Interest expense (14,666) (2,150) 582.1% Foreign exchange (loss)/gain (73,638) 39,881 n/m Other finance expense (717) (1,496) (52.1%) Net finance (expense)/income (88,095) 37,424 n/m

In 2020, we recorded a substantial foreign exchange loss in the amount of RUB 73,638 million compared to RUB 39,881 million gain reported in 2019. The loss from financing activities in 2020 was mainly attributable to the depreciation of the Russian ruble against the US dollar and euro as of 31 December 2020 compared to the end of 2019 and respective revaluation of debt denominated in these currencies.

In 2020, our interest expense increased to RUB 14,666 million from RUB 2,150 million in 2019 since the Company ceased capitalising of corresponding borrowing costs following the ZapSibNeftekhim ramp-up in 2020. The total accrued interest amounted to RUB 17,711 million and RUB 17,679 million in 2020 and 2019, respectively.

Result of subsidiary’s disposal and remeasurement of related assets

In 2020, we recognised a gain of RUB 339 million on disposal of subsidiary following the sale of 40% stake in the Amur GCC to Sinopec. In 2019, we recognised a gain of RUB 1,940 million on disposal of subsidiary following the sale of petrochemical facilities in Togliatti to Tatneft. The results represent the differences between cash consideration and value of the net assets disposed as of the disposal date.

14 Share of net income of joint ventures and associates

In 2020, we recorded a share in net income of joint ventures and associates in the amount of RUB 4,685 million compared to RUB 6,970 million reported in 2019. The decrease was largely attributable to the lower income of RusVinyl mainly due to foreign exchange dynamics related to their debt.

Income Tax Expense

In 2020, we recorded an income tax expense in the amount of RUB 4,357 million compared to RUB 34,858 million recorded in 2019. The decrease was driven by lower pre-tax profit due to a substantial foreign exchange loss reported in 2020 compared to the gain received in the previous year, as well as lower operating profit.

Profit for the Reporting Period

In 2020, our profit decreased by 81.9% year-on-year to RUB 25,634 million from RUB 141,367 million in 2019 on factors described above. Our net margin totalled 4.9% and 26.6% in 2020 and 2019, respectively.

15 SEGMENT INFORMATION

The following table presents selected financial information by segment for the years ended 31 December 2020 and 2019:

Year ended 31 December Change, % RUB millions, except as stated 2020 2019

Revenue, incl. inter-segment transfers 618,119 609,848 1.4% Olefins & Polyolefins 216,028 135,537 59.4% Plastics, Elastomers & Intermediates 125,833 156,409 (19.5%) Midstream 211,951 255,523 (17.1%) Unallocated 64,307 62,379 3.1%

External revenue 523,010 531,306 (1.6%) Olefins & Polyolefins 187,269 105,717 77.1% Plastics, Elastomers & Intermediates 121,052 152,805 (20.8%) Midstream 152,270 213,030 (28.5%) Unallocated 62,419 59,754 4.5%

EBITDA 179,189 170,020 5.4% Olefins & Polyolefins 84,292 48,979 72.1% Plastics, Elastomers & Intermediates 18,263 19,511 (6.4%) Midstream 71,368 99,788 (28.5%) Unallocated 5,266 1,742 202.3%

EBITDA margin(1) 34.3% 32.0% Olefins & Polyolefins 39.0% 36.1% Plastics, Elastomers & Intermediates 14.5% 12.5% Midstream 33.7% 39.1% Unallocated 8.2% 2.8%

Adjusted EBITDA(2) 187,346 178,442 5.0% Olefins & Polyolefins 95,354 59,255 60.9% Plastics, Elastomers & Intermediates 18,124 19,415 (6.6%) Midstream 71,436 100,411 (28.9%) Unallocated 2,432 (639) n/m

(1)(2)

(1) The Segment’s EBITDA margin is calculated as the Segment’s EBITDA divided by the Segment’s Revenue incl. Inter-Segment Transfers. The Group’s EBITDA margin is calculated as the Group’s EBITDA divided by the Group’s External Revenue. (2) Adjusted EBITDA includes the Group’s portion of EBITDA of joint ventures and associates and excludes the non-controlling interest portion of EBITDA of subsidiaries. 16 Olefins & Polyolefins Segment

The following table presents selected financial information for the Olefins & Polyolefins segment for the years ended 31 December 2020 and 2019: (1)

Year ended 31 December Change % of external % of external RUB millions, except as stated 2020 2019 % revenue revenue

Revenue, incl. inter-segment transfers 216,028 135,537 59.4% External revenue 187,269 105,717 77.1% PE 79,846 42.6% 18,588 17.6% 329.6% PP 79,429 42.4% 57,202 54.1% 38.9% BOPP-films 19,033 10.2% 18,336 17.3% 3.8% Ethylene 5,703 3.0% 6,932 6.6% (17.7%) Other polymers products 2,431 1.3% 3,509 3.3% (30.7%) Other sales 827 0.4% 1,150 1.1% (28.1%)

EBITDA 84,292 48,979 72.1% EBITDA margin(1) 39.0% 36.1% JV contribution (the Group's portion of EBITDA of joint ventures and associates) 11,062 10,276 7.6% Adj. EBITDA 95,354 59,255 60.9%

The following table presents selected operational information for the Olefins & Polyolefins segment for the years ended 31 December 2020 and 2019:

Year ended 31 December Change Tonnes, except as stated 2020 2019 %

External Sales PE 1,310,609 260,621 402.9% PP 1,117,646 736,682 51.7% BOPP-films 157,889 153,241 3.0% Ethylene 158,842 164,531 (3.5%)

External Revenue

Our Olefins & Polyolefins external revenue increased by 77.1% mainly due to positive dynamics in PE and PP, partially offset by the decline in revenue from Ethylene sales.

Polyethylene (PE)

In 2020, our revenue from sales of PE increased more than four times to RUB 79,846 million from RUB 18,588 million in the corresponding period of 2019 on a fivefold growth in sales volumes despite a 14.6% decrease in the effective average selling price. Our PE sales increased due to the start of HDPE and LLDPE production at ZapSibNeftekhim, resulting mainly in export sales growth. The decrease of our effective average selling price was caused by negative dynamics of the international benchmarks of both feedstock and refined products driven by the COVID-19 pandemic, as well as ramp-ups of Asia and US capacities added in 2019 and 2020. In 2020, our share of export sales increased to 65.2% of total PE revenue from 33.7% in 2019, while 34.8% and 66.3%, respectively, were derived from domestic sales.

(1) The Segment’s EBITDA margin is calculated as the Segment’s EBITDA divided by the Segment’s Revenue incl. Inter-Segment Transfers. 17 Polypropylene (PP)

In 2020, our revenue from sales of PP increased by 38.9% to RUB 79,429 million from RUB 57,202 million in the corresponding period of 2019 on a 51.7% increase in sales volumes despite an 8.5% decrease in the effective average selling price. The increase in sales volumes was mainly caused by the start of PP production at ZapSibNeftekhim in the fourth quarter of 2019. Our effective average selling price decreased as PP markets were under pressure following capacity additions in Asia, as well as negative dynamics of the international benchmarks of both feedstock and refined products driven by the COVID-19 pandemic. Despite negative dynamics in the domestic market, prices for PP were almost flat on the export market as a result of the development of new sales channels to American, African and Southeast Asian markets. In 2020, our share of domestic sales decreased to 51.7% of total PP revenue from 64.3% in 2019, while 48.3% and 35.7%, respectively, were derived from export sales.

BOPP-films

In 2020, our revenue from BOPP-film sales was largely flat year-on-year at RUB 19,033 million, where domestic sales accounted for 63.5% of total BOPP-film revenue and 36.5% was attributable to export sales.

Ethylene

In 2020, our external revenue from olefins sales represented by ethylene decreased by 17.7% to RUB 5,703 million from RUB 6,932 million in the corresponding period of 2019. The decrease was largely attributable to a 14.8% decline in the effective average selling price primarily on negative pricing dynamics in oil and its derivatives. Sales volumes decreased by 3.5% due to a longer maintenance shutdown in 2020 at our JV RusVinyl, which is our key ethylene consumer. We sell 100% of produced ethylene on the domestic market.

EBITDA

Our Olefins & Polyolefins EBITDA increased by 72.1% mainly due to growth in PE and PP sales volumes coupled with the declining feedstock purchase prices, partially offset by lower selling prices.

EBITDA margin increased to 39.0% from 36.1% year-on-year. The higher margin was largely attributed to the growing share of ZapSibNeftekhim sales volumes of special PE and PP grades supported by decreased feedstock prices.

Our share in EBITDA of joint ventures and associates increased by RUB 786 million due to (i) the acquisition of the remaining share stake in Poliom from Titan Group in July 2019, (ii) the acquisition of a 50% stake in Manucor S.p.A. in September 2019, as well as (iii) a wider spread between PVC prices and ethylene feedstock These factors were partly offset by the biennial scheduled maintenance shutdown which took place in 2020 at our RusVinyl JV.

18 Plastics, Elastomers & Intermediates Segment

The following table presents selected financial information for the Plastics, Elastomers & Intermediates segment for the years ended 31 December 2020 and 2019:(1)

Year ended 31 December Change % of external % of external RUB millions, except as stated 2020 2019 % revenue revenue

Revenue, incl. inter-segment transfers 125,833 156,409 (19.5%) External revenue 121,052 152,805 (20.8%) Plastics and organic synthesis products 46,850 38.7% 50,989 33.4% (8.1%) Elastomers 38,744 32.0% 55,048 36.0% (29.6%) Intermediates and other chemicals 25,622 21.2% 24,650 16.1% 3.9% MTBE and fuel additives 9,093 7.5% 20,746 13.6% (56.2%) Other sales 743 0.6% 1,372 0.9% (45.8%)

EBITDA 18,263 19,511 (6.4%) EBITDA margin(1) 14.5% 12.5% Adj. EBITDA 18,124 19,415 (6.6%)

The following table presents selected operational information for the Plastics, Elastomers & Intermediates segment for the years ended 31 December 2020 and 2019:

Year ended 31 December Change Tonnes, except as stated 2020 2019 %

External Sales Plastics and organic synthesis products 811,667 793,382 2.3% Elastomers 430,950 528,842 (18.5%) Intermediates and other chemicals 750,863 541,875 38.6% MTBE and fuel additives 348,949 517,046 (32.5%)

External Revenue

Our Plastics, Elastomers & Intermediates segment external revenue decreased by 20.8% largely on negative pricing dynamics across all product groups as well as the sale of Togliatti-based assets in the fourth quarter of 2019.

Plastics and organic synthesis products

In 2020, our revenue from sales of plastics and organic synthesis products decreased by 8.1% year-on- year to RUB 46,850 million from RUB 50,989 million on a 10.2% decrease in the effective average selling price while sales volumes were almost flat. The decline in the effective average selling prices was attributable to the overall negative pricing dynamics across the product group due to a sharp reduction in oil prices and the drop in demand due to COVID-19. In 2020, domestic sales accounted for 75.8% of total plastics and organic synthesis products revenue, while 24.2% was attributable to export sales.

Elastomers

In 2020, our revenue from elastomers sales decreased by 29.6% year-on-year to RUB 38,744 million from RUB 55,048 million on an 18.5% decrease in sales volumes and a 13.6% decrease in the effective average selling price. The decline in sales volumes was mainly caused by the sale of Togliatti-based assets in the fourth quarter of 2019, partially compensated by the increased capacity of thermoplastic elastomers production at our Voronezh production site. Our effective average selling price decreased due to negative dynamics of the international benchmarks following a sharp reduction in oil prices and the drop in demand due to COVID-19. In 2020, export sales accounted for 66.3% of total elastomers revenue, while 33.7% was attributable to domestic sales.

(1) The Segment’s EBITDA margin is calculated as the Segment’s EBITDA divided by the Segment’s Revenue incl. Inter-Segment Transfers. 19 Intermediates and other chemicals

In 2020, our revenue from sales of intermediates and other chemicals increased by 3.9% year-on-year to RUB 25,622 million from RUB 24,650 million. The increase was largely attributable to higher sales volumes as a result of (i) the disposal of Togliatti-based assets as we used these volumes internally in 2019, as well as (ii) by-product yield growth following the launch of ZapSibNeftekhim cracker. These factors were almost fully offset by lower international market prices. In 2020, our share of domestic sales increased to 79.8% of total intermediates and other chemicals revenue from 72.0% in 2019, while 20.2% and 28.0%, respectively, were derived from export sales.

MTBE and fuel additives

In 2020, our revenue from MTBE and fuel additives sales decreased by 56.2% year-on-year to RUB 9,093 million from RUB 20,746 million due to a 35.1% decrease in the effective average selling price and a 32.5% decrease in sales volumes. Lower effective average selling price in the reporting period was mainly driven by the decline of oil and its derivatives prices. The decrease in MTBE sales volumes was caused by the sale of Togliatti-based assets in the fourth quarter of 2019. In 2020, our share of domestic sales increased to 86.7% of total MTBE and fuel additives revenue from 53.1% in 2019, while 13.3% and 46.9%, respectively, were derived from export sales.

EBITDA

Our Plastics, Elastomers & Intermediates EBITDA decreased by 6.4% primarily due to lower product margins as a result of the negative dynamics for international benchmarks, as well as the divestment of Togliatti-based assets in the fourth quarter of 2019

The segment EBITDA margin totalled 14.5%, a year-on-year increase from 12.5%. The higher margin was largely attributable to lower sales of elastomers and MTBE following the divestment of Togliatti- based assets, as well as lower selling prices that fell to a greater extent than feedstock prices.

20 Midstream Segment

The following table presents selected financial information for the Midstream segment for the years ended 31 December 2020 and 2019:(1)

Year ended 31 December Change % of external % of external RUB millions, except as stated 2020 2019 % revenue revenue

Revenue, incl. inter-segment transfers 211,951 255,523 (17.1%) External revenue 152,270 213,030 (28.5%) LPG 74,272 48.8% 122,659 57.6% (39.4%) Natural gas 48,890 32.1% 51,303 24.1% (4.7%) Naphtha 23,499 15.4% 36,586 17.2% (35.8%) Other sales 5,609 3.7% 2,482 1.2% 126.0%

EBITDA 71,368 99,788 (28.5%) EBITDA margin(1) 33.7% 39.1% Adj. EBITDA 71,436 100,411 (28.9%)

The following table presents selected operational information for the Midstream segment for the years ended 31 December 2020 and 2019:

Year ended 31 December Change Tonnes, except as stated 2020 2019 %

Raw NGL production 5,138,619 5,416,134 (5.1%) Raw NGL purchases 3,234,239 2,937,349 10.1%

Raw NGL fractionation 7,773,328 7,738,725 0.4%

Naphtha purchases 816,144 1,005,175 (18.8%)

External Sales LPG 3,361,886 5,144,877 (34.7%) Natural gas (thousands of cubic metres) 17,583,086 18,816,539 (6.6%) Naphtha 975,313 1,172,101 (16.8%)

External Revenue

Our Midstream segment’s external revenue decreased by 28.5% year-on-year mainly as a result of lower sales volumes and effective average selling prices of both LPG and naphtha, as well as lower natural gas sales volumes.

Liquefied Petroleum Gases (LPG)

In 2020, our revenue from LPG sales decreased by 39.4% year-on-year to RUB 74,272 million from RUB 122,659 million on a 34.7% decrease in sales volumes and a 7.3% decrease in the effective average selling price. Our external sales volumes decreased mainly due to (i) higher LPG internal use at our ZapSibNeftekhim cracker, as well as (ii) lower LPG production volumes as a result of reduced APG supplies following the OPEC+ agreement. The decrease in our effective average selling price was driven by negative dynamics in international market prices. In 2020, our share of export sales decreased to 58.0% of total LPG revenue from 71.0% in 2019, while 42.0% and 29.0%, respectively, were derived from domestic sales.

Natural Gas

In 2020, our revenue from natural gas sales decreased by 4.7% year-on-year to RUB 48,890 million from RUB 51,303 million on a 6.6% decrease in sales volumes despite a 2.0% increase in the effective average selling price. Our sales volumes decreased due to reduced APG supplies following the OPEC+ agreement. The increase in the effective average selling price was attributable to the regulated natural gas prices indexation. We sell 100% of our natural gas in Russia.

(1) The Segment’s EBITDA margin is calculated as the Segment’s EBITDA divided by the Segment’s Revenue incl. Inter-Segment Transfers. 21 Naphtha

In 2020, our revenue from naphtha sales decreased by 35.8% year-on-year to RUB 23,499 million from RUB 36,586 million on a 22.8% decrease in the effective average selling price and a 16.8% decrease in sales volumes. The decrease in our effective average selling price was driven by negative dynamics in international market prices. Lower external sales volumes were caused by the drop in demand in international markets caused by COVID-19, as well as reduced APG supplies following the OPEC+ agreement that resulted in lower production volumes of naphtha. In 2020, our share of export sales decreased to 67.4% of total naphtha revenue from 74.8% in 2019, while 32.6% and 25.2%, respectively, were derived from domestic sales.

EBITDA

In 2020, our Midstream EBITDA decreased by 28.5% year-on-year to RUB 71,368 million from RUB 99,788 million primarily on narrowing spreads between purchased hydrocarbon feedstock and NGLs selling prices as a result of negative pricing dynamics in oil and its derivatives, as well as lower sales volumes due to lower production following the OPEC+ agreement.

As a result, in 2020, the segment EBITDA margin totalled 33.7%, a year-on-year decrease from 39.1%.

22 LIQUIDITY AND CAPITAL RESOURCES

Cash Flow

The following table presents selected data on our net cash flows for the years ended 31 December 2020 and 2019:

Year ended 31 December Change RUB millions, except as stated 2020 2019 %

Net cash from operating activities, including 176,346 124,468 41.7% Operating cash flows before working capital changes 172,184 168,472 2.2% Changes in working capital 11,980 (8,207) n/m Income tax paid (7,818) (35,797) (78.2%) Net cash used in investing activities, including (101,550) (125,555) (19.1%) Capital expenditures (112,886) (150,378) (24.9%) Grants and subsidies 1,366 17,215 (92.1%) Loans issued (190) (8,862) (97.9%) Proceeds from disposal of subsidiaries, net of cash disposed - 11,300 n/m Net cash (used in)/from financing activities, including (66,229) 4,389 n/m Dividends paid to the Company's shareholders (33,460) (41,524) (19.4%) Interest paid (15,034) (13,360) 12.5% Net (repayment of) / proceeds from debt (10,544) 65,686 n/m Effect of exchange rate changes on cash and cash equivalents 891 (642) n/m Net increase in cash and cash equivalents 9,458 2,660 255.6%

*To improve presentation and reliability of information in the consolidated statement of cash flows the Group reclassified grants and subsidies received from financing to investing activities.

Net Cash from Operating Activities

In 2020, our net cash from operating activities increased by 41.7% year-on-year to RUB 176,346 million from RUB 124,468 million. Our operating cash flows before working capital changes increased by 2.2% year-on-year on the back of higher EBITDA. Changes in working capital had a positive impact on our net cash from operating activities in the amount of RUB 11,980 million as compared to a negative effect of RUB 8,207 million a year earlier. In 2020, a positive impact of working capital changes was primarily attributable to the utilization of VAT receivable and the extension of collection period for our trade and other payables that was partially offset by NIPIGAS operations. Our income tax paid decreased by 78.2% year-on-year as a result of (i) lower pre-tax profit for the reporting period on the back of substantial financial loss recognised in the period, and (ii) the utilisation of prepaid taxes in the first quarter of 2020.

The following table presents data on changes in working capital for the years ended 31 December 2020 and 2019:

Year ended 31 December RUB millions, except as stated 2020 2019

Decrease in advances received under project management and construction services (20,446) (22,313) Increase in trade and other payables 80,518 70,554 Increase in taxes payable 1,362 120 Increase in trade and other receivables (66,541) (73,685) Decrease/(increase) in prepayments and other current assets 1,512 (1,484) Increase in inventories (5,937) (2,783) Decrease in advances issued under project management and construction services 21,512 21,384 Changes in working capital 11,980 (8,207)

SIBUR’s management monitors its liquidity and operational efficiency on the basis of the adjusted working capital (see “Appendix I” for further details). Our adjusted working capital was positive at RUB 23,819 million as of 31 December 2020. Our working capital turnover days decreased to 16.6 as of 31 December 2020 from 22.1 as of 31 December 2019.

23 Our net working capital balance may fluctuate from period to period due to factors within or outside our control, such as market conditions, our tactical marketing initiatives in response to changes in market conditions, logistical constraints as well as completion of major investment projects, which could require substantial inventory accumulation, as well as our activities under project management and construction services.

Net Cash Used in Investing Activities

In 2020, our net cash used in investing activities decreased by 19.1% year-on-year to RUB 101,550 million from RUB 125,555 million mainly on lower capital expenditures for ZapSib and smaller-scale projects, partly offset by an increase in expenses related to the financing of the Amur GCC project. Throughout 2020, we received RUB 1,366 million of grants and subsidies, compared with RUB 17,215 million in 2019. In addition, the decrease in the net cash used in investing activities was caused by loans issued to the JVs and associates in 2019. Proceeds in the amount of RUB 11,300 million were received in 2019 from the divestment of petrochemical facilities located in Togliatti.

Net Cash Used in Financing Activities

In 2020 our net cash used in financing activities amounted to RUB 66,229 as opposed to the net cash received from financing activities in the amount of RUB 4,389 million in 2019. In the reporting period, our net repayment of debt totaled RUB 10,544 million driven by an extra liquidity cushion build-up at the beginning of 2020 and a new Eurobond issue followed by substantial settlements of our debt in the second half of 2020. In 2019, our net proceeds from debt were RUB 65,686 million as a result of our Eurobond 2024 issue in September 2019 and ECA drawdowns for ZapSib funding. This was partially offset by lower dividend payouts in 2020 as we paid RUB 33,460 million and RUB 41,524 million in dividends to the Group’s shareholders in 2020 and 2019, respectively.

Capital Expenditures

In 2020, our CapEx(1) decreased by 24.9% year-on-year to RUB 112,886 million (net of VAT) compared to RUB 150,378 million in 2019, mainly as a result of (i) lower ZapSib financing that decreased by 66.4% to RUB 27,873 million from RUB 83,064 million in 2019 due to the final stage of the project, as well as (ii) lower financing of smaller-scale projects. Maintenance CapEx (see Appendix II for details)(2) decreased by 26.5% year-on-year to RUB 10,979 million in 2020 from RUB 14,946 million in 2019. These factors were partially offset by an increase in expenses related to the financing of the Amur GCC project, which amounted to RUB 43,501 million in 2020. In December 2020, SIBUR and Sinopec completed the formation of their JV and the Group’s control over the project was replaced by joint control upon transfer of 40% interest in the Amur GCC to Sinopec for a cash consideration of RUB 18,274 million (net of cash disposed), that was received in January 2021.

As a major investor in infrastructure and social projects in the regions where it operates, SIBUR has signed cooperation agreements with a number of regional authorities, including investment and financial support agreements. Under these agreements, the Company is entitled to a partial refund of capital expenditures incurred in the respective regions subject to certain conditions. During the years ended 31 December 2020 and 2019 the amounts of government subsidies received were RUB 1,366 million and RUB 17,215 million, respectively.

(1) Includes purchase of property, plant and equipment, intangible assets and other non-current assets. (2) Total maintenance expenses include maintenance CAPEX and OPEX Repairs and Maintenance line. 24 ZapSibNeftekhim (“ZapSib”) is designed to operate (i) a world-scale ethylene cracking unit with an annual capacity of 1.5 million tonnes, that is also able to produce 525 thousand tonnes of propylene and 223 thousand tonnes of butadiene and fuel components (technology provided by Linde), and (ii) polyolefin units with an annual capacity of 1.5 million tonnes of polyethylene (technology provided by INEOS) and 500 thousand tonnes of polypropylene (technology provided by LyondellBasell). The facility has direct access to the existing fractionation capacity at our Tobolsk production site. Positioned in the first quartile on the global ethylene cost curve, ZapSib is expected to be one of the lowest cost projects globally thanks to competitive feedstock pricing, economies of scale and low energy and labour costs in Russia.

As of 31 December 2019, the polypropylene unit was put-in-use, while steam cracker and polyethylene units were operating in a test mode. In January 2020, the Company completed the commissioning stage of processing and technological units at ZapSibNeftekhim.

The residual capital expenditures for the project was estimated by the Company at USD 0.3(1) billion as of 31 December 2020 with the following currency structure: approximately 45% denominated in Russian rubles, approximately 22% in US dollars and 33% in euro.

* * *

SIBUR's Board of Directors has approved the Company’s 2021 capital expenditures budget in the amount of RUB 112 billion (net of VAT), including its share of planned investments in the Amur GCC accounted for using the equity method. Additionally, these amounts represent investments into projects approved by the Investment committee, and include capital expenditures to maintain the existing infrastructure as well as the capitalised portion of the Group's expenses related to R&D, organisational and IT projects and exclude the contributions to the authorised capital of the joint ventures, loans issued to joint ventures or acquisitions.

The Board of Directors may review the budget during the year if additional investment projects are approved or in case of changes in the market environment.

Borrowings

As of 31 December 2020, our total debt amounted to RUB 430,148 million, an increase of 13.3% from RUB 379,739 million as of 31 December 2019. The increase was attributable to the depreciation of the Russian ruble against the US dollar and euro as of 31 December 2020 compared to 31 December 2019 and scheduled drawdowns to finance our investment projects and operating activity. These factors were partially compensated by early loan repayments as a part of liability management activities.

Our net debt(2) increased by 11.3% to RUB 403,247 million as of 31 December 2020 from RUB 362,296 million as of 31 December 2019 following the increase in total debt, which was partially compensated by cash accumulation as a result of an extra liquidity cushion build-up.

The following table presents data on our total debt, cash and cash equivalents, as well as net debt position as of 31 December 2020 and 31 December 2019:

As of As of RUB millions 31 December 2020 31 December 2019 Change, %

Total debt 430,148 379,739 13.3% Debt excluding related to ZapSibNeftekhim 162,377 116,213 39.7% ZapSibNeftekhim related debt 250,909 248,202 1.1% Lease liabilities 16,862 15,324 10.0% Cash and cash equivalents 26,901 17,443 54.2% Net debt 403,247 362,296 11.3% Net debt excluding related to ZapSibNeftekhim 152,734 119,390 27.9% ZapSibNeftekhim related net debt 250,513 242,906 3.1%

(1) The respective residual expenditures are calculated at the respective foreign exchange rates as of 31 December 2020. (2) Net debt is calculated as total debt less cash and cash equivalents. 25 As of 31 December 2020 all of our debt was unsecured.

The following table presents detailed information on our long-term borrowings as of 31 December 2020 and 31 December 2019:

As of As of RUB millions, except as stated Currency Due 31 December 2020 31 December 2019 Variable rate loans National Wealth Fund financing (ZapSibNeftekhim related) USD 2030 129,285 108,335 Deutsche Bank (ZapSibNeftekhim related ECA) EUR 2020-2029 100,831 83,726 Bank GPB RUB 2023 22,000 32,000 Raiffeisen Bank USD 2025 7,388 7,552 Bank of America USD 2023 5,541 - Otkritie Bank USD 2025 2,586 - Otkritie Bank RUB 2026 2,500 - New Development Bank (ZapSibNeftekhim related) USD 2021-2028 - 8,029 Citibank USD 2022 - 619 ING Bank Group EUR 2020 - 149 SNHK LLC RUB 2020 - 102 Total variable rate loans 270,131 240,512

Fixed rate loans Eurobonds due September 2024 USD 2024 36,844 30,818 Eurobonds due July 2025 USD 2025 36,840 - Russian ruble bonds RUB 2021-2022 25,000 20,000 Eurobonds due October 2023 USD 2023 22,680 18,985 Credit Agricole (ZapSibNeftekhim related ECA) EUR 2020-2029 20,793 18,180 Monotowns Development Fund RUB 2021-2026 998 1,000 Russian Direct Investment Fund (ZapSibNeftekhim related) USD 2020 - 5,307 Vnesheconombank (ZapSibNeftekhim related) USD 2021-2025 - 24,625 UniCredit Bank Group RUB 2022 - 4,988 Total fixed rate loans 143,155 123,903 Total debt 413,286 364,415

SIBUR maintains a diversified debt portfolio with a balance of fixed and floating interest rate instruments. As of 31 December 2020, our share of fixed rate borrowings (including lease liabilities) increased to 37.2% from 36.7% as of 31 December 2019. Our share of variable rate borrowings decreased to 62.8% as of 31 December 2020 from 63.3% as of 31 December 2019. These changes were mainly attributable to the new Eurobond placement with fixed interest rate, partially offset by early loan repayments.

As a result, our weighted average interest rate on Russian ruble-denominated borrowings was 6.1% and 8.2% as of 31 December 2020 and 31 December 2019, respectively. US dollar-denominated borrowings’ weighted average interest rate was 3.2% and 3.5% as of 31 December 2020 and 31 December 2019, respectively. The weighted average interest rate on euro-denominated borrowings was 1.1% as of 31 December 2020 and 1.2% compared to 31 December 2019.

The following table presents the weighted average loan tenors of our outstanding debt as of 31 December 2020 and 31 December 2019:

As of As of

31 December 2020 31 December 2019

WA loan tenor (years) 5.6 6.0 WA debt excluding related to ZapSibNeftekhim 3.2 3.4 WA ZapSibNeftekhim related debt 7.2 7.3

26 The following table presents the currency split of our outstanding debt as of 31 December 2020 and 31 December 2019:

As of % of total As of % of total Change, RUB millions, except as stated 31 December 2020 borrowings 31 December 2019 borrowings %

Denominated in: Russian ruble 57,055 13.3% 61,717 16.3% (7.6%) Euro 122,335 28.4% 102,234 26.9% 19.7% US Dollar 250,759 58.3% 215,788 56.8% 16.2% Total debt 430,149 100.0% 379,739 100.0% 13.3%

As of 31 December 2020, US Dollar-denominated debt as a percentage of total borrowings increased to 58.3%, compared with 56.8% as of 2019 year-end as a result of a new Eurobond issue of USD 500 million in July 2020. Earlier, in May 2020 SIBUR issued Russian ruble bonds for the total amount of RUB 15 billion in order to diversify its borrowings and reduce the weighted average borrowing rates.

The following table presents our key liquidity and credit ratios as of 31 December 2020 and 31 December 2019:(1)

As of As of 31 December 2020 31 December 2019

Current ratio 1.0x 1.0x Debt / EBITDA 2.4x 2.2x Debt / EBITDA (in USD) 2.3x 2.3x Net Debt / EBITDA(1) 2.3x 2.1x Net debt excluding related to ZapSibNeftekhim 0.9x 0.7x ZapSibNeftekhim related net debt 1.4x 1.4x Net Debt / EBITDA (in USD) 2.2x 2.2x

As of 31 December 2020, our net debt to EBITDA ratio in ruble terms increased to 2.3x as of 31 December 2020 from 2.1x as of 31 December 2019 because of the Russian ruble depreciation, while the net leverage in USD terms remained flat at 2.2x.

As of 31 December 2020, SIBUR had RUB 361,312 million available under its existing credit facilities denominated in Russian rubles, US dollars and euros, both short- and long-term, of which an equivalent of RUB 67,006 million was committed.

(1) Net debt is calculated as total debt less cash and cash equivalents and bank deposits. 27 CERTAIN FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Export Duties on LPG and Naphtha

The LPG and naphtha (excluding pentane and isopentane) that we export are subject to export duties, which are set monthly by the Russian Government. Export sales to member states of the Customs Union (Republic of Belarus, Republic of Kazakhstan, Republic of Armenia and Kyrgyz Republic) are not subject to export duties.

The export duty on LPG (excluding butane and isobutane) is formula-based and depends on the international benchmark price of LPG (LPG DAF Brest). When the market price for LPG is below USD 490 per tonne, no export duty is levied. In 2020, an export duty on LPG was imposed in January following a price increase to the level above USD 490. In 2019, the average LPG price was below USD 490 per tonne, therefore a zero export duty was applied in respect of LPG export sales.

Effective 1 January 2015, the Russian Government imposed an export duty on butane and isobutane, which is calculated as the percentage of the export duty on LPG grades excluding butane and isobutane. It was set at 50% for 2019 and 60% for 2020 with successive annual increases up to 90% effective 1 January 2022.

The export duty on naphtha is calculated as a percentage of export duties on crude oil (Urals). This rate was set at 55% of the crude oil export duty starting from 1 January 2017. The decrease in export duty rates for naphtha was implemented as part of the “tax maneuver” completion in the Russian oil industry.

As Russia's domestic prices for raw NGL, LPG and naphtha are based on export netback prices, higher export duties reduce the domestic price for these products, while declining export duties result in higher domestic prices. Increase in export duties negatively affects our export and domestic sales of LPG and naphtha, while at the same time reducing our feedstock purchasing costs. Decrease in export duties as a result of declining prices for LPG and naphtha supports our external export and domestic sales of these products.

The following table presents average export duties on LPG and naphtha for the periods indicated:

Year ended 31 December Change Export duties, USD per tonne 2020 2019 % LPG excl. butane and isobutane 0.3 - n/m butane and isobutane 0.2 - n/m Naphtha (excl. pentane and isopentane) 25.2 51.5 (51.0%) Source: Russian Government

Recoverable tax excise was introduced as a part of the tax maneuver. The Russian Tax Code defines a procedure for calculation of excise duties and tax deductions with respect to domestic sales and processing of naphtha, benzene and paraxylene. Local companies are eligible to receive an excise duty refund (“recoverable excise”) with a scale-up factor if the product is processed into non-excisable petrochemical products. The scale-up factor was set at 1.7x for naphtha and at 3.4x for paraxylene and benzene for the years 2020 and 2019. The excise duty for naphtha was set at RUB 14,720 and RUB 13,912 per tonne for 2020 and 2019, respectively, and at RUB 3,058 and RUB 2,929 per tonne for paraxylene and benzene for 2020 and 2019, respectively.

Natural Gas Prices

The prices at which we purchase a large portion of feedstock and sell natural gas as well as our utility costs are significantly impacted by changes in regulated domestic gas prices at which Gazprom, the major Russian gas producer, sells natural gas on the domestic market. This price regulation is executed by the Russian Government, through the Federal Antimonopoly Service (FAS). Although this price regulation does not apply to independent gas producers, the regulated price significantly influences domestic market conditions and our effective selling prices. 28 Effective 1 July 2019, the FAS increased wholesale natural gas prices for sales to all customer categories (excluding residential customers) on the domestic market by 1.4%. Effective 1 August 2020, natural gas prices were increased by 3.0%. In September 2019, the Ministry of Economic Development of the Russian Federation published the “Forecast of Socio-Economic Development of the Russian Federation up to 2024”. The forecast envisages an increase in wholesale natural gas prices for sales to all customer categories (excluding residential customers) by not more than 3% in 2020-2024. The Government of the Russian Federation continues to discuss various concepts relating to the natural gas industry development, including natural gas prices and transportation tariffs growth rates on the domestic market.

Although we are not subject to the Russian Government's regulation of prices for natural gas that we produce from APG, our effective average selling prices for natural gas are close to the regulated gas prices and are typically also indexed in line with the regulated price changes. SIBUR is a net seller of natural gas and historically our financial results have been positively impacted by increases in domestic natural gas prices.

Prices for APG, one of our key feedstocks, are not regulated by the Russian Government. There is also no benchmark market price for APG. Prices at which we purchase APG from oil companies are negotiated on a case-by-case basis and depend on a variety of factors (see “Feedstock Sourcing and Mix” below). We typically purchase APG at a price that substantially differs from the regulated domestic natural gas prices because of the significant capital expenditures required to develop and maintain the processing and transportation infrastructure. At the same time, some of our supply contracts regularly index APG prices to reflect changes in the regulated domestic gas prices. Such indexations, however, are not always synchronised with the respective changes in the regulated domestic gas prices. Additionally, there are other factors that influence our APG purchase prices; hence there may be certain discrepancies between movements in our APG purchase prices and the regulated domestic gas prices (see “Feedstock Sourcing and Mix” below for further details).

Cyclicality of the Petrochemicals Industry

Prices for petrochemical products are subject to significant fluctuations as they are influenced by trends in global and domestic supply and demand, including differences in supply and demand between domestic and export markets. Demand is generally linked to economic activity, while supply is linked to long-term investments in capacity expansion and structural changes in feedstock supply, such as, for example, the discovery and commercialisation of new feedstock sources. When significant new capacity becomes available and is not matched by corresponding growth in demand, average industry operating margins typically fall. At the same time, capacity additions require substantial lead times and when growth in demand is not matched by respective capacity expansions, average industry operating margins typically rise. As a result, the petrochemicals industry experiences periods of tight supply, leading to high capacity utilization rates and margins, followed by periods of oversupply, leading to reduced capacity utilization rates and margins. Accordingly, the profit margins of petrochemical producers historically have been cyclical.

As the Group is vertically integrated into the midstream business and is a net seller of energy products, which are not dependent on the cyclicality of the petrochemicals industry, the Group is partially protected against margin pressures during the periods of oversupply in the petrochemicals industry. Additionally, the Group's access to attractively priced feedstock, its diversified mix as well as a diversified product portfolio puts the Group in a more advantageous position compared to the majority of other petrochemical companies during market downturns in the petrochemicals industry.

29 Feedstock Sourcing and Mix

Types of Hydrocarbon Feedstock

To operate our business successfully we must obtain sufficient quantities of feedstock in a timely manner and at acceptable prices. Therefore, our access to feedstock and its mix have a material impact on our financial results. We use two major types of hydrocarbon feedstock: associated petroleum gas (APG) and natural gas liquids (NGLs), primarily raw NGL, as well as LPG and naphtha.

APG is a by-product of oil production. We process APG at our gas processing plants (GPPs) to produce natural gas and raw NGL. APG accounted for 31.8% and 34.1% of our expenses related to third-party hydrocarbon feedstock purchases in 2020 and 2019, respectively. As a percentage of total feedstock and materials costs, APG accounted for 24.0% and 25.2% in 2020 and 2019, respectively.

NGLs are used as raw material by all our operating segments. Raw NGL is produced as a result of APG processing or through stabilisation of unstable gas condensate which is obtained from the processing of wet gas extracted from gas fields. LPG and naphtha are produced through fractionation of raw NGL. We produce NGLs at our own GPPs and GFUs and also purchase them from third parties. NGLs accounted for 68.2% and 65.9% of our expenses related to third-party hydrocarbon feedstock purchases in 2020 and 2019, respectively. As a percentage of total feedstock and materials costs, NGLs accounted for 51.5% and 48.8% in 2020 and 2019, respectively.

Feedstock Sourcing

We purchase APG and NGLs from major oil and gas companies in Western Siberia, including Rosneft, Gazprom Neft, RussNeft, LUKOIL, NOVATEK and Gazprom, primarily under long-term contracts.

As of 31 December 2020, approximately 93% of our APG supplies for 2020 were guaranteed under multi-year supply contracts. Overall, as of 31 December 2020, our multi-year APG supply contracts had a weighted average maturity of 11.7 years.

As of 31 December 2020, approximately 75% of our NGLs supplies for 2020 were guaranteed under multi-year supply contracts. Overall, as of 31 December 2020, our multi-year NGLs supply contracts had a weighted average maturity of 13.4 years. Our major external raw NGL suppliers are NOVATEK and Gazprom.

SIBUR and Gazprom Neft jointly operate Yuzhno-Priobskiy Gas Processing Plant (Yuzhno-Priobskiy GPP) with an annual APG processing capacity of 900 million cubic metres, each owning 50%. Gazprom Neft supplies APG to the plant for processing into raw NGL and natural gas. SIBUR pays for 50% of the total APG volumes supplied to the plant, while the remaining 50% is processed for Gazprom Neft. SIBUR obtains 50% of all raw NGL and dry gas volumes produced, while Gazprom Neft obtains the rest. Subsequently SIBUR purchases Gazprom Neft’s share of raw NGL and sells its share of natural gas to Gazprom Neft.

We continuously work with all the largest oil and gas producers in Western Siberia with the view to extending the terms of existing agreements and/or entering into new long-term supply contracts on both APG and NGLs supplies. Multi-year supply contracts and joint venture arrangements enhance the predictability of feedstock pricing and volumes and allow for better planning of the Group's future operating expenses and investments, which is particularly important given the capital-intensive nature of the Group's investment programme.

30 Pricing

Oil companies produce APG as a by-product of oil extraction and by law must evacuate it from the field or otherwise utilise it. Failure to do so can result in fines and potentially jeopardise an oil company’s license to operate the field. Most oil companies in Western Siberia do not own gas processing facilities and have been reluctant to develop such facilities as this requires substantial capital investments, while oil companies prefer to invest in their core oil exploration and production business. Apart from being processed into hydrocarbon feedstock at a GPP, only limited volumes of APG can be used productively, mostly for power generation or for re-injection into the reservoir.

The Russian Government has consistently increased incentives for oil companies to utilise APG. According to the Russian Government’s resolution adopted in November 2012 and subsequent amendments thereto, penalties for APG flaring above permitted thresholds (currently set at 5% of total APG production volumes) have become material for oil companies. Besides the standard emission charges that depend on the pollutant type and are regularly indexed, there are multiplying factors as well. These factors have been substantially increased since 2012. According to CDU TEK, the total volume of flared APG in Russia in 2020 was 20.0 billion cubic metres or 17% of total produced volumes, increasing the APG utilization rate in Russia to 83% compared to 82% in 2019.

SIBUR provides oil companies with an attractive solution for APG utilization, enabling us to source APG at advantageous prices. Given the limited options for using APG and the lack of alternatives for evacuating it from oil fields, there is no market or benchmark price for APG. APG pricing is also not subject to government regulation. As a result, we purchase APG from oil companies at prices that are negotiated on a case-by-case basis and typically substantially differ from the FAS regulated natural gas prices. The magnitude of the difference and the absolute price for APG is dependent on the following key factors: the quality and composition of APG in terms of target liquid fractions content, distance of an APG source from our GPPs, availability of collection and transportation infrastructure and capital and operating expenditures needed to construct, expand and maintain that infrastructure. The price is also dependent on the potential capital expenditures that the oil company would need to incur to construct its own gas processing capacity as an alternative to selling APG to SIBUR.

Currently SIBUR has two types of APG purchase contracts:

 Under the first contract type, the APG purchase price once agreed upon in absolute terms, is typically regularly indexed to reflect changes in the FAS regulated prices for natural gas.  Under the second contract type, the APG purchase price is indexed in line with changes in prices for APG derivatives: natural gas and raw NGL (see “Prices for Crude Oil and Liquids” in “Macroeconomic Trends” and “Natural Gas Prices” above).

Additional volumes of APG that we source from oil companies (new volumes under new agreements or volumes under existing agreements that exceed initially pre-agreed or guaranteed volumes) can be supplied at a higher price due to additional capital and operating expenses incurred by oil companies to produce and deliver such volumes. Also, modification of terms of the existing agreements, either at expiry or as a result of renegotiation, may cause material changes in our APG pricing levels.

Our NGLs feedstock is typically priced with reference to international prices for LPG and naphtha, and to a lesser extent to domestic LPG prices, while prices for raw NGL, depending on its composition, are largely correlated with prices for LPG and naphtha. As the supply of NGLs significantly exceeds demand in Russia and particularly in Western Siberia, prices for NGLs are determined on an export netback basis, which reflects transportation costs and export duties. Transportation of NGLs out of Western Siberia is costly, with transportation costs consistently rising, reducing the prices at which NGLs are available for purchase in Western Siberia. Therefore, the domestic prices for NGLs feedstock in Western Siberia are substantially lower than those available to the majority of SIBUR's international petrochemical peers. The Group's NGLs supply contracts typically contain a formula where prices are determined by the respective netbacks and reflect the fraction content of NGLs, need for and cost of fractionation, capital expenditures required to construct and maintain the respective infrastructure as well as the availability and quality of alternative selling channels that the oil or gas company supplying the NGLs has. 31 Transportation Tariffs

We incur substantial transportation costs due to the geographic spread of our operations. We use railway, port facilities, trucks and multimodal services for transportation. While we operate our own gas and raw NGL pipelines and railway carrier fleet, we also use third-party transportation services. Third-party transportation services accounted for 17.8% and 19.8% of our operating expenses in 2020 and 2019, respectively. Changes in transportation tariffs and prices for third-party services have a significant effect on our operating expenses.

Railway Transportation Tariffs

We use rail for transportation of refined products, intermediates and feedstock, including certain volumes of raw NGL, LPG, naphtha, MTBE and a major part of our petrochemical products.

Our rail transportation costs comprise a transportation tariff charged for access to Russia's main railway and usage of locomotives (the “Railway Tariff”), which accounts for the majority of our total rail transportation costs. The Railway Tariff is charged by Russian Railways, Russia's state-owned monopoly, and is regulated by the FAS. The Railway Tariff is specific to types of products, types of carriers and their tonnage, transportation routes and the volume of a delivery. The FAS reviews the Railway Tariff on an annual basis.

In January 2019, the FAS increased railway transportation tariffs in several steps, which effectively totalled 3.6%. Effective 1 January 2020, the FAS increased the railway transportation tariff by 3.5%.

In 2019 and 2020, export tariff surcharge remained at the level of 8%.

Energy Procurement

Our business is energy-intensive. Purchases of electricity, fuel and heat account for the largest portion of our energy costs. As a result, changes in tariffs for electric power and heat, as well as natural gas prices have a significant effect on our operating expenses.

Electricity

We make electricity purchases on a centralised basis. In addition to purchases of electricity for internal needs, we also buy electricity for further resale to third parties, which, inter alia, include other companies located at our production sites. Revenue from sales of electricity to third parties is reported under “Other revenue” in the consolidated financial statements.

The Russian electricity market has been gradually liberalised over the past few years. However, electricity price ceiling remains under the supervision of the Federal Antimonopoly Service (FAS) and regional regulatory authorities. One of the most important factors that influence electricity prices is fuel cost (primarily natural gas and coal), and increases in natural gas prices tend to result in higher electricity prices. We also own our own electric power generating capacity to reduce our exposure to higher electricity prices from third-party suppliers. In 2014, SIBUR launched an 18 MW power plant at the Perm production site. In 2016, SIBUR acquired Tobolsk Heating and Power Plant with power capacity of 665 MW, all of which is sold on the wholesale market. In 2020, the share of internal electric power generation accounted for 2.6% of total electricity consumption.

32 Heat Energy

We source heat energy in the form of steam and hot water from regional suppliers at regulated prices. Heat energy prices are also largely dependent on prices for natural gas. In order to minimise dependence on third-party providers, we generate a substantial portion of heat energy at our own production sites. In February 2016, SIBUR acquired Tobolsk Heating and Power Plant with the capacity of 2,585 MW (or 2,223 gigacalories per hour) of heat. The Plant is the only supplier of steam for SIBUR’s Tobolsk production site. Additionally, in November 2019 SIBUR divested its petrochemical facilities in Togliatti, that resulted in a substantial decrease in externally purchased heat energy volumes. At the Group's level, the share of internally generated heat accounted for 89.4% and 81.0% of total consumed volumes in 2020 and 2019, respectively.

Fuel

We source fuel (mainly represented by natural gas) at the prices linked primarily to the regulated natural gas prices. We utilise fuel mainly for electricity and heat generation at our production sites. We also utilise some volumes of natural gas produced at our GPPs, as well as gas emerging as a by-product at other production sites. Starting 2016, we significantly increased fuel consumption volumes due to acquisition of Tobolsk Heating and Power Plant. The share of fuel produced internally accounted for 58% and 51% of total consumption volumes in 2020 and 2019, respectively.

SIBUR's ability to sell natural gas enables it to balance its exposure to growth in energy and utilities costs, which are largely influenced by increases in natural gas prices.

The following table presents volumes purchased and effective average tariffs(1) for electricity, heat and fuel for the 31 December 2020 and 2019:

Year ended 31 December Change 2020 2019 % Average Average Average Volume tariff Volume tariff Volume tariff

Electricity (millions of kw/hour or RUB per kw/hour) 11,029 2.70 10,992 2.58 0.3% 4.7% Heat (thousands of gigacalories or RUB per gigacalorie) 2,674 1,135 4,480 1,046 (40.3%) 8.5% Fuel (natural gas, millions of cubic metres or RUB per cubic metre) 2,232 3.90 2,437 3.88 (8.4%) 0.5%

(1) Management data. Including the volume of energy purchased for the purposes of SIBUR’s investment projects and attributed to capital expenditures. 33 OPERATIONAL DATA

Olefins and Polyolefins Segment

The following table presents data on our revenue from sales of olefins and polyolefins for the years ended 31 December 2020 and 2019:(1)

Year ended 31 December % of % of Change RUB millions, except as stated 2020 revenue(1) 2019 revenue(1) %

PP 79,429 15.2% 57,202 10.8% 38.9% Domestic 41,045 51.7% 36,764 64.3% 11.6% Export 38,384 48.3% 20,438 35.7% 87.8% PE 79,846 15.3% 18,588 3.5% 329.6% Domestic 27,821 34.8% 12,319 66.3% 125.8% Export 52,025 65.2% 6,269 33.7% 729.9% BOPP-films 19,033 3.6% 18,336 3.5% 3.8% Domestic 12,082 63.5% 12,013 65.5% 0.6% Export 6,951 36.5% 6,323 34.5% 9.9% Ethylene 5,703 1.1% 6,932 1.3% (17.7%) Domestic 5,703 100.0% 6,932 100.0% (17.7%) Export - - % - - % n/m Other polymers products 2,431 0.5% 3,509 0.7% (30.7%) Domestic 2,401 98.8% 3,199 91.2% (24.9%) Export 30 1.2% 310 8.8% (90.3%) Other sales 827 0.2% 1,150 0.2% (28.1%) Domestic 827 100.0% 1,018 88.5% (18.8%) Export - - % 132 11.5% n/m Olefins and Polyolefins, total 187,269 35.8% 105,717 19.9% 77.1% Domestic 89,879 48.0% 72,245 68.3% 24.4% Export 97,390 52.0% 33,472 31.7% 191.0%

(1) Percentages against domestic and export lines represent the percentage of revenue from the respective product sales, while percentages against the respective total product lines represent percentages of total revenue. 34 The following table presents data on our olefins and polyolefins production, purchases and sales volumes for the years ended 31 December 2020 and 2019:(1)

Year ended 31 December Change Tonnes, except as stated 2020 2019 %

Production 5,800,756 3,058,141 89.7% PP 1,107,326 813,215 36.2% PE 1,464,550 379,169 286.3% BOPP-films 155,980 153,566 1.6% Ethylene 1,857,532 819,790 126.6% Propylene 1,215,368 892,401 36.2% Transfers from PE&I 61,888 70,865 (12.7%) Purchases from third parties 153,022 147,177 4.0% Total production, transfers and purchases 6,015,666 3,276,184 83.6%

(Internal use)(1) (2,751,581) (1,529,102) 79.9% (Increase)/decrease in stock (145,463) (67,733) 114.8%

Gross sales, including 3,118,622 1,679,349 85.7% Intercompany sales to PE&I 311,748 293,409 6.3% External sales PP 1,117,646 736,682 51.7% Domestic 551,822 432,350 27.6% Export 565,824 304,332 85.9% PE 1,310,609 260,621 402.9% Domestic 435,610 164,399 165.0% Export 874,999 96,221 809.4% BOPP-films 157,889 153,241 3.0% Domestic 98,243 96,745 1.5% Export 59,646 56,496 5.6% Ethylene 158,842 164,531 (3.5%) Domestic 158,842 164,531 (3.5%) Export - - n/m Other polymers products 61,888 70,865 (12.7%) Domestic 61,266 63,142 (3.0%) Export 621 7,724 (92.0%) External sales volumes 2,806,874 1,385,940 102.5% Domestic 1,305,783 921,167 41.8% Export 1,501,090 464,773 223.0%

(1) Including internal use at the segment’s production facilities and immaterial natural losses. 35 Plastics, Elastomers and Intermediates Segment

The following table presents a breakdown of revenue from sales of our plastics, elastomers and intermediates for the years ended 31 December 2020 and 2019:

Year ended 31 December % of % of Change RUB millions, except as stated 2020 revenue(1) 2019 revenue(1) % Plastics, elastomers and intermediates, total 121,052 23.1% 152,805 28.8% (20.8%) Domestic 77,602 64.1% 86,994 56.9% (10.8%) Export 43,450 35.9% 65,811 43.1% (34.0%)

Plastics and organic synthesis products(1)

Year ended 31 December % of % of Change RUB millions, except as stated 2020 revenue(1) 2019 revenue(1) %

PET 15,256 2.9% 17,666 3.3% (13.6%) Domestic 14,923 97.8% 17,382 98.4% (14.1%) Export 333 2.2% 284 1.6% 17.3% Glycols 7,913 1.5% 10,642 2.0% (25.6%) Domestic 5,212 65.9% 7,072 66.5% (26.3%) Export 2,701 34.1% 3,570 33.5% (24.3%) Expandable polystyrene 8,127 1.6% 8,909 1.7% (8.8%) Domestic 4,944 60.8% 5,791 65.0% (14.6%) Export 3,183 39.2% 3,118 35.0% 2.1% Alcohols (including 2-ethylhexanol) 3,504 0.7% 4,542 0.9% (22.9%) Domestic 2,211 63.1% 2,972 65.4% (25.6%) Export 1,293 36.9% 1,570 34.6% (17.6%) Acrylates 4,764 0.9% 5,259 1.0% (9.4%) Domestic 2,445 51.3% 2,299 43.7% 6.4% Export 2,319 48.7% 2,960 56.3% (21.7%) DOTP 7,286 1.4% 3,971 0.7% 83.5% Domestic 5,785 79.4% 2,671 67.3% 116.6% Export 1,501 20.6% 1,300 32.7% 15.5% Plastics and organic synthesis products, total 46,850 9.0% 50,989 9.6% (8.1%) Domestic 35,520 75.8% 38,187 74.9% (7.0%) Export 11,330 24.2% 12,802 25.1% (11.5%)

Elastomers

Year ended 31 December % of % of Change RUB millions, except as stated 2020 revenue(1) 2019 revenue(1) %

Commodity rubbers 20,217 3.9% 31,517 5.9% (35.9%) Domestic 7,841 38.8% 11,033 35.0% (28.9%) Export 12,376 61.2% 20,484 65.0% (39.6%) Specialty rubbers 8,619 1.6% 12,631 2.4% (31.8%) Domestic 1,224 14.2% 1,762 13.9% (30.5%) Export 7,395 85.8% 10,869 86.1% (32.0%) Thermoplastic elastomers 9,908 1.9% 10,900 2.1% (9.1%) Domestic 3,996 40.3% 5,896 54.1% (32.2%) Export 5,912 59.7% 5,004 45.9% 18.1% Elastomers, total 38,744 7.4% 55,048 10.4% (29.6%) Domestic 13,061 33.7% 18,691 34.0% (30.1%) Export 25,683 66.3% 36,357 66.0% (29.4%)

(1) Percentages against domestic and export lines represent the percentage of revenue from the respective product sales, while percentages against the respective total product lines represent percentages of total revenue. 36 MTBE and fuel additives

Year ended 31 December % of % of Change RUB millions, except as stated 2020 revenue(1) 2019 revenue(1) %

MTBE 7,628 1.5% 17,016 3.2% (55.2%) Domestic 6,418 84.1% 7,313 43.0% (12.2%) Export 1,210 15.9% 9,703 57.0% (87.5%) Other fuels and fuel additives 1,465 0.3% 3,730 0.7% (60.7%) Domestic 1,465 100.0% 3,707 99.4% (60.5%) Export - - % 23 0.6% n/m MTBE and fuel additives, total 9,093 1.7% 20,746 3.9% (56.2%) Domestic 7,883 86.7% 11,020 53.1% (28.5%) Export 1,210 13.3% 9,726 46.9% (87.6%)

Intermediates and other chemicals(1)

Year ended 31 December % of % of Change RUB millions, except as stated 2020 revenue(1) 2019 revenue(1) %

Benzene 1,735 0.3% 2,631 0.5% (34.1%) Domestic 1,735 100.0% 2,545 96.7% (31.8%) Export - - % 86 3.3% n/m Styrene 2,826 0.5% 3,551 0.7% (20.4%) Domestic 2,327 82.3% 3,029 85.3% (23.2%) Export 499 17.7% 522 14.7% (4.4%) Terephthalic acid 247 0.0% 141 0.0% 75.2% Domestic 237 96.0% 140 99.3% 69.3% Export 10 4.0% 1 0.7% 900.0% Propylene 747 0.1% 400 0.1% 86.8% Domestic 747 100.0% 388 97.0% 92.5% Export - - % 12 3.0% n/m Ethylene oxide 5,324 1.0% 6,351 1.2% (16.2%) Domestic 4,067 76.4% 4,382 69.0% (7.2%) Export 1,257 23.6% 1,969 31.0% (36.2%) Butadiene 260 0.0% 217 0.0% 19.8% Domestic 260 100.0% 217 100.0% 19.8% Export - - % - - % n/m Isoprene - - % 106 0.0% n/m Domestic - n/m 15 14.2% n/m Export - n/m 91 85.8% n/m Isobutylene 630 0.1% 635 0.1% (0.8%) Domestic 630 100.0% 635 100.0% (0.8%) Export - - % - - % n/m Other intermediates 9,378 1.8% 5,825 1.1% 61.0% Domestic 7,660 81.7% 4,306 73.9% 77.9% Export 1,718 18.3% 1,519 26.1% 13.1% Other chemicals 4,475 0.9% 4,793 0.9% (6.6%) Domestic 2,774 62.0% 2,088 43.6% 32.9% Export 1,701 38.0% 2,705 56.4% (37.1%) Intermediates and other chemicals, total 25,622 4.9% 24,650 4.6% 3.9% Domestic 20,437 79.8% 17,745 72.0% 15.2% Export 5,185 20.2% 6,905 28.0% (24.9%)

Other sales 743 0.1% 1,372 0.3% (45.8%) Domestic 701 94.3% 1,351 98.5% (48.1%) Export 42 5.7% 21 1.5% 100.0%

(1) Percentages against domestic and export lines represent the percentage of revenue from the respective product sales, while percentages against the respective total product lines represent percentages of total revenue. 37 The following table presents data on our production, purchases and sales volumes in plastics, elastomers and intermediates for the years ended 31 December 2020 and 2019:

Plastics, Elastomers and Intermediates Segment(1)

Year ended 31 December Change Tonnes, except as stated 2020 2019 %

Production 6,709,032 5,919,581 13.3% Transfers from O&P 311,748 293,409 6.3% Purchases from third parties 179,415 110,044 63.0% Total production, transfers and purchases 7,200,194 6,323,034 13.9%

(Internal use)(1) (4,815,079) (3,893,708) 23.7% (Increase)/decrease in stock 19,202 22,683 (15.3%)

Gross sales, including 2,404,317 2,452,010 (1.9%) Intercompany sales to O&P 61,888 70,865 (12.7%) External sales 2,342,429 2,381,144 (1.6%) Domestic 1,680,564 1,501,711 11.9% Export 661,865 879,433 (24.7%)

Plastics and organic synthesis products

Year ended 31 December Change Tonnes, except as stated 2020 2019 %

Production 956,498 887,312 7.8% Glycols 271,321 292,928 (7.4%) Alcohols 162,028 159,941 1.3% PET 267,434 224,382 19.2% Acrylates 50,854 50,339 1.0% DOTP 99,551 57,738 72.4% Expandable polystyrene 105,312 101,983 3.3% Purchases from third parties 13,737 16,473 (16.6%) Total production and purchases 970,235 903,785 7.4%

(Internal use)(1) (164,606) (121,200) 35.8% (Increase)/decrease in stock 6,037 10,797 (44.1%)

External sales Glycols 205,853 243,921 (15.6%) Domestic 133,059 162,145 (17.9%) Export 72,794 81,776 (11.0%) Alcohols 74,470 90,491 (17.7%) Domestic 46,060 55,487 (17.0%) Export 28,410 35,004 (18.8%) PET 262,483 239,521 9.6% Domestic 256,130 235,678 8.7% Export 6,353 3,843 65.3% Acrylates 60,296 61,341 (1.7%) Domestic 32,982 28,239 16.8% Export 27,314 33,102 (17.5%) DOTP 101,144 54,746 84.8% Domestic 80,317 37,010 117.0% Export 20,827 17,735 17.4% Expandable polystyrene 107,420 103,361 3.9% Domestic 64,103 66,409 (3.5%) Export 43,317 36,952 17.2% External sales volumes 811,667 793,382 2.3% Domestic 612,651 584,969 4.7% Export 199,016 208,413 (4.5%)

(1) Including internal use at the segment’s production facilities and immaterial natural losses. 38 Elastomers(1)

Year ended 31 December Change Tonnes, except as stated 2020 2019 %

Production 337,038 485,714 (30.6%) Commodity rubbers 190,070 301,674 (37.0%) Specialty rubbers 40,537 101,025 (59.9%) Thermoplastic elastomers 106,431 83,015 28.2% Purchases from third parties 90,312 31,005 191.3% Total production and purchases 427,350 516,719 (17.3%)

(Internal use)(1) (113) (30) 276.7% (Increase)/decrease in stock 3,713 12,154 (69.5%)

External sales Commodity rubbers 249,166 332,431 (25.0%) Domestic 94,023 115,201 (18.4%) Export 155,143 217,231 (28.6%) Specialty rubbers 84,056 112,125 (25.0%) Domestic 9,061 11,769 (23.0%) Export 74,995 100,356 (25.3%) Thermoplastic elastomers 97,728 84,286 15.9% Domestic 40,113 44,709 (10.3%) Export 57,614 39,576 45.6% External sales volumes 430,950 528,842 (18.5%) Domestic 143,198 171,679 (16.6%) Export 287,753 357,163 (19.4%)

MTBE and fuel additives

Year ended 31 December Change Tonnes, except as stated 2020 2019 %

MTBE Production 211,109 322,997 (34.6%) Purchases from third parties 20,855 41,779 (50.1%) Total production and purchases 231,964 364,776 (36.4%)

(Internal use)(1) (98) (2,105) (95.3%) (Increase) / decrease in stock 151 2,146 (93.0%)

External sales volumes 232,017 364,816 (36.4%) Domestic 186,845 150,407 24.2% Export 45,172 214,409 (78.9%) - - Other fuels and fuel additives Production 919,042 509,793 80.3% Purchases from third parties 11,139 4,120 170.4% Total production and purchases 930,181 513,914 81.0%

(Internal use)(1) (812,688) (362,944) 123.9% (Increase) / decrease in stock (560) 1,260 n/m

External sales volumes 116,933 152,230 (23.2%) Domestic 116,933 151,267 (22.7%) Export - 963 n/m

(1) Including internal use at the segment’s production facilities and immaterial natural losses. 39 Intermediates and other chemicals(1)

Year ended 31 December Change Tonnes, except as stated 2020 2019 %

Production 4,285,345 3,713,766 15.4% Intermediates, including 2,759,627 2,624,149 5.2% Benzene 169,439 168,246 0.7% Styrene 200,124 189,560 5.6% Terephthalic acid 261,297 104,047 151.1% Ethylene oxide 297,519 323,001 (7.9%) Butadiene 207,139 281,025 (26.3%) Isoprene - 68,015 n/m Isobutylene 27,982 156,094 (82.1%) Ethylene 57,293 55,830 2.6% Propylene 56,521 65,040 (13.1%) Other intermediates 1,482,313 1,213,292 22.2% Other chemicals 1,525,718 1,089,617 40.0% Transfers from O&P 311,748 293,409 6.3% Ethylene 232,024 252,441 (8.1%) Propylene 79,724 40,968 94.6% Purchases from third parties 43,371 16,667 160.2% Total production, transfers and purchases 4,640,465 4,023,842 15.3%

(Internal use)(1) (3,837,576) (3,407,429) 12.6% (Increase)/decrease in stock 9,861 (3,673) n/m

Gross sales, including 812,750 612,740 32.6% Intercompany sales to O&P 61,888 70,865 (12.7%) External sales Benzene 58,247 74,730 (22.1%) Domestic 58,247 72,754 (19.9%) Export - 1,976 n/m Styrene 55,345 55,635 (0.5%) Domestic 45,460 47,984 (5.3%) Export 9,885 7,651 29.2% Terephthalic acid 8,647 3,934 119.8% Domestic 8,130 3,720 118.5% Export 518 214 142.1% Propylene 17,050 7,765 119.6% Domestic 17,050 7,246 135.3% Export - 519 n/m Ethylene oxide 98,622 110,513 (10.8%) Domestic 84,686 85,309 (0.7%) Export 13,936 25,204 (44.7%) Butadiene 4,587 2,959 55.0% Domestic 4,587 2,959 55.0% Export - - n/m Isoprene - 1,070 n/m Domestic - 314 n/m Export - 756 n/m Isobutylene 9,914 8,873 11.7% Domestic 9,914 8,873 11.7% Export - - n/m Other intermediates 447,589 215,909 107.3% Domestic 348,675 163,935 112.7% Export 98,914 51,973 90.3% Other chemicals 50,860 60,488 (15.9%) Domestic 44,188 50,296 (12.1%) Export 6,672 10,192 (34.5%) External sales volumes 750,863 541,875 38.6% Domestic 620,938 443,388 40.0% Export 129,925 98,486 31.9%

(1) Including internal use at the segment’s production facilities and immaterial natural losses. 40 Midstream Segment(1)

The following table presents a breakdown of our revenue from sales of midstream products for the years ended 31 December 2020 and 2019:

Year ended 31 December % of % of Change RUB millions, except as stated 2020 revenue(1) 2019 revenue(1) %

LPG 74,272 14.2% 122,659 23.1% (39.4%) Domestic 31,189 42.0% 35,575 29.0% (12.3%) Export 43,083 58.0% 87,084 71.0% (50.5%) Natural gas, domestic sales 48,890 9.3% 51,303 9.7% (4.7%) Naphtha 23,499 4.5% 36,586 6.9% (35.8%) Domestic 7,665 32.6% 9,235 25.2% (17.0%) Export 15,834 67.4% 27,351 74.8% (42.1%) Other sales 5,609 1.1% 2,482 0.5% 126.0% Domestic 5,599 99.8% 2,172 87.5% 157.8% Export 10 0.2% 310 12.5% (96.8%) Midstream products, total 152,270 29.1% 213,030 40.1% (28.5%) Domestic 93,343 61.3% 98,285 46.1% (5.0%) Export 58,927 38.7% 114,745 53.9% (48.6%)

(2)

(1) Percentages against domestic and export lines represent the percentage of revenue from the respective product sales, while percentages against the respective total product lines represent percentages of total revenue.

41 The following table present data on production, purchases and sales volumes of our midstream products for the years ended 31 December 2020 and 2019:(1)(2)(3)(4)(5)

Year ended 31 December Change Tonnes, except as stated 2020 2019 %

LPG Production(1) 7,444,635 7,628,135 (2.4%) Production, SIBUR's share 6,266,575 6,446,135 (2.8%) Purchases from third parties, including 638,329 698,498 (8.6%) Purchases for resale 233,252 681,131 (65.8%) Total production and purchases 6,904,903 7,144,633 (3.4%)

(Internal use)(2) (167,459) (12,156) 1,277.6% (Increase) / decrease in stock 41,200 53,926 (23.6%)

Gross sales, including 6,778,644 7,186,402 (5.7%) Intercompany sales to petrochemical business, including 3,416,759 2,041,526 67.4% Intercompany sales to O&P 2,771,657 1,098,970 152.2% Intercompany sales to PE&I 645,101 942,556 (31.6%) External sales 3,361,886 5,144,877 (34.7%) Domestic 1,570,443 1,847,768 (15.0%) Export 1,791,442 3,297,108 (45.7%) - - Natural gas (thousands of cubic metres) Production(3) 18,684,081 19,980,980 (6.5%) Production, SIBUR's share(4) 18,354,810 19,628,300 (6.5%) Purchases from third parties - - n/m Total production and purchases 18,354,810 19,628,300 (6.5%)

(Internal use)(2) (763,844) (803,945) (5.0%) (Increase) / decrease in stock (7,880) (7,816) 0.8%

External sales 17,583,086 18,816,539 (6.6%) Domestic 17,583,086 18,816,539 (6.6%) Export - - n/m - - Naphtha Production 1,503,793 1,574,926 (4.5%) Purchases from third parties, including 816,144 1,005,175 (18.8%) Purchases for resale - 50 n/m Total production and purchases 2,319,937 2,580,100 (10.1%)

(Internal use)(2) 262 1,523 (82.8%) (Increase) / decrease in stock 11,975 (7,177) n/m

Gross sales, including 2,332,175 2,574,447 (9.4%) Intercompany sales to O&P 1,356,862 1,402,346 (3.2%) External sales 975,313 1,172,101 (16.8%) Domestic 295,425 316,651 (6.7%) Export 679,887 855,450 (20.5%) - - Raw NGL Production(3) 5,276,701 5,568,432 (5.2%) Production, SIBUR's share(4) 5,138,619 5,416,134 (5.1%) Purchases from third parties, including 3,234,239 2,937,349 10.1% Purchases for resale - - n/m Total production and purchases 8,372,858 8,353,484 0.2%

(Fractionation)(1) (8,969,328) (8,938,725) 0.3% (Fractionation, SIBUR's share)(5) (7,773,328) (7,738,725) 0.4% (Increase) / decrease in stock (23,827) (6,636) 259.1%

Gross sales, including 575,703 608,123 (5.3%) Intercompany sales to O&P 575,703 608,123 (5.3%) External sales - - n/m Domestic - - n/m Export - - n/m

(1) Including volumes under processing arrangements. (2) Including internal use at the segment’s production facilities and immaterial natural losses. (3) Including third-party volumes processed at SIBUR’s capacities. (4) Excluding third-party volumes processed at SIBUR’s capacities. (5) Including volumes processed at third-party capacities and excluding third-party volumes processed at SIBUR’s capacities. 42 Feedstock Purchasing Volumes(1)

Year ended 31 December Change Tonnes, except as stated 2020 2019 % NGLs 4,455,426 3,959,810 12.5% APG (thousand cubic metres) 21,224,922 22,616,865 (6.2%) Paraxylene 146,504 96,079 52.5% Benzene 131,057 138,901 (5.6%)

APG Processing Volumes(2)(3)

Year ended 31 December Change Million cubic metres 2020 2019 %

APG processing(2) 21,667 23,095 (6.2%) APG processing, SIBUR's share(3) 21,225 22,617 (6.2%)

(1) Excluding volumes purchased for trading, which are reported as goods for resale. (2) Including third-party volumes processed at SIBUR’s capacities. (3) Excluding third-party volumes processed at SIBUR’s capacities. 43 DESCRIPTION OF SELECTED OPERATIONAL AND FINANCIAL ITEMS

Revenue

Revenue, unless otherwise stated, represents revenue from sales to third parties and excludes any inter- segment transfers. It is reported net of VAT, excise taxes and export duties, and it includes transportation costs incurred in relation to the delivery of the respective refined products to the customers.

Operating Expenses

Feedstock and materials. Feedstock and materials include purchases from third-party suppliers of various types of feedstock and intermediates that are used for further processing into higher value-added products, and materials. Our key raw materials are represented by hydrocarbon feedstock, such as APG and NGLs, which include raw NGL, LPG and naphtha, as well as paraxylene, which is used in the production of terephthalic acid (PTA), and polypropylene, which is used in the production of BOPP-films. We also purchase other feedstock and materials. Other feedstock includes methanol, which is used in the production of MTBE and certain intermediate chemicals such as butadiene, benzene and other products. We purchase intermediates in addition to our own production of intermediates primarily for further processing into higher value-added petrochemical products. Materials primarily include materials and spare parts used by NIPIGAS under certain contracts for project management and construction services, as well as supplementary raw materials. The amounts of recoverable excise are reported under feedstock and materials expenses.

Transportation and logistics. Transportation and logistics are comprised of expenses related to the transportation of feedstock, materials and refined products by railway, pipelines that are not owned and operated by SIBUR, truck, as well as through multimodal transportation operators. These costs also include transhipment and storage services, as well as charges for rail cars/tankers used by SIBUR under short-term transportation contracts and exclude expenses for maintenance of our own gas and product pipelines.

Staff costs. Staff costs are primarily comprised of salaries, bonuses and other personnel incentives, severance payments, pension expenses and related social taxes.

Energy and utilities. Energy and utilities costs are primarily comprised of expenses associated with purchases of electricity, heat and fuel from third-party suppliers.

Depreciation and amortisation. Depreciation is comprised of depreciation of property, plant and equipment calculated on a straight-line basis to allocate the cost of property, plant and equipment to their respective residual values over their respective estimated useful lives (except for depreciation of catalysts, which are depreciated using the unit-of-production method). Depreciation also includes the depreciation of right-of-use assets, which is charged using the straight-line method to the earlier of the end of its useful life or the end of the lease term. Amortisation is comprised of the amortisation of intangible assets calculated using the straight-line method to allocate the cost of relevant intangible assets over their estimated useful lives.

Goods for resale. Goods for resale include purchases of products from third parties for further resale externally, including refined products and intermediates.

Services provided by third parties. Services provided by third parties include services related to environmental and industrial safety, R&D, design and engineering, and security expenses, as well as legal, audit, consulting services, etc.

Repairs and maintenance. Repairs and maintenance include services for repairs and maintenance of the Group's production facilities provided by third parties, as well as spare parts, materials for auxiliary workshops and other operating supplies. These expenses also include expenses incurred in relation to the implementation of one-off targeted programmes.

Taxes other than income tax. Taxes other than income tax primarily include land tax and property tax. 44 Processing services of third parties. Processing services represent services we obtain from other manufacturers, including our non-consolidated joint ventures, to process our feedstock/intermediates into higher value-added products. Our decision to use such services depends on existing agreements, market trends, logistical issues and shortages of our own capacity.

Rent expenses. Rent expenses represent primarily payments for short-term lease of technological facilities and transport.

Charity and sponsorship. SIBUR places a very high degree of importance on social responsibility. As a major investor in the economic development of the regions where we operate, we have signed mutually beneficial agreements with a number of regional authorities, including agreements on social-economic cooperation. As part of our social initiatives, we implement a range of humanitarian projects and programmes in several regions, including Western Siberia, Nizhny Novgorod Region and other areas where we are implementing our strategic investment projects. This includes investments in regional infrastructure, improvement of the quality of life, environmental initiatives, support of sports organisations, promotion of child and youth sports, etc. We also actively promote Russia’s chemical science and professional education in cooperation with leading chemical institutions, universities and schools.

Marketing and advertising. Marketing and advertising costs are associated with the promotion of SIBUR’s corporate brand and are aimed at enhancing SIBUR’s profile among our customers, suppliers, partners and general public. The majority of our marketing and advertising expenses relate to corporate sponsorships of leading Russian and regional football, hockey, basketball and volleyball teams in different regions of Russia, including Tyumen, Nizhny Novgorod, which positions us as an active promoter of Russian sports both nationally and in the regions where we operate.

Additionally, marketing and advertising costs include promotion of SIBUR’s corporate brand and selected products at industrial exhibitions, conferences and forums, as well as via TV, print media and the Internet.

Change in work-in-progress and refined products balances. The change in work-in-progress and refined product balances represents an adjustment to expenses associated with the production of refined products to reflect changes in inventory balances of such products. When inventory balances of refined products increase at the end of a reporting period compared with the beginning of the respective period, operating expenses are reduced by an amount that represents the cost of production of such refined products incurred in the reporting period, while revenue from the sale of these products will be recognised in the future. When inventory balances of refined products decrease at the end of the reporting period compared with the beginning of the respective period, operating expenses are increased by an amount that represents the cost of production of such refined products incurred in the preceding periods, while revenue from the sale of these products is recognised in the reporting period.

Our volumes of refined product balances fluctuate from period to period, depending on market conditions, changes in marketing and distribution strategy, as well as logistical constraints. They also tend to increase in periods of completion of our major investment projects, which may trigger substantial inventory accumulation.

Operating Profit

Operating profit represents revenue, less operating expenses.

EBITDA

EBITDA represents profit/loss for the reporting period adjusted for income tax expense, finance income and expenses, share of net income/loss of joint ventures, depreciation and amortisation, impairment of property, plant and equipment, gain/loss on disposal of investments and exceptional items.

45 Adjusted EBITDA

Adjusted EBITDA represents EBITDA as defined above, adjusted for the Group’s portion of EBITDA of joint ventures and associates and net of the non-controlling interest share of related subsidiaries’ EBITDA.

Finance Income and Expenses

Finance income includes primarily interest income on bank deposits and loans issued and foreign exchange gains. Finance expenses include primarily interest expenses on debt, bank charges and foreign exchange losses, as well as interest expenses on the lease liability calculated using the incremental borrowing rate.

Share of Net Income/(Loss) of Joint Ventures

The share of net income/loss of joint ventures represents our share of post-acquisition profit or loss of joint ventures, as recognised under the equity accounting method.

Income Tax Expense

We do not pay corporate income tax on a consolidated basis since, for taxation purposes, the members of the Group are assessed individually. The statutory corporate income tax rate in Russia was set at 20% for the periods under review. The difference between our effective and statutory tax rates is typically attributable to certain non-deductible expenses and/or non-taxable income, as well as tax benefits that we may obtain in certain regions where we operate.

46 APPENDIX I: NET WORKING CAPITAL(1)

SIBUR’s management monitors its liquidity and operational efficiency on the basis of the adjusted working capital. SIBUR’s net working capital position takes into account trade receivables net of advances from customers; inventory balances of refined products, goods for resale, feedstock and materials; VAT balance; trade payables net of prepayments and advances to suppliers; payables to employees; and other assets and liabilities listed in the table below.

The following table presents detailed calculation of our net working capital position as of 31 December 2020 and 31 December 2019:

As of As of RUB millions, except as stated 31 December 2020 31 December 2019 Current assets(1) 349,760 275,029 Current liabilities (355,226) (277,928) Working capital (5,466) (2,899) Adjustments to assets, including: 7,670 37,361 Cash and cash equivalents (26,901) (17,443) Long-term advances issued under project management and construction services 33,665 42,561 Prepaid borrowing cost (1,538) (2,455) Receivables under project management and construction services 21,448 14,698 Receivable from disposal of subsidiary (19,004) - Adjustments to liabilities, including: 21,615 (2,330) Accounts payable to contractors and suppliers of property, plant and equipment 52,774 34,846 Payables for acquisition of subsidiaries 367 2,262 Interest payable 2,141 1,675 Long-term advances received under project management and construction services (44,271) (58,678) Payables under project management and construction services (19,279) (13,254) Short-term lease liabilities 6,233 5,127 Short-term debt and current portion of long-term borrowings 23,650 25,692 Adjusted working capital 23,819 32,132 Revenue for the year 523,010 531,306 Adjusted working capital turnover, days 16.6 22.1

(1) Starting 2017, net working capital was adjusted for long-term advances issued and received to reflect NIPIGAS operating activities under project management and construction services. 47 APPENDIX II: TOTAL MAINTENANCE EXPENDITURES

Year ended 31 December Change RUB millions, except as stated 2020 2019 %

Maintenance (CAPEX) 10,979 14,946 (26.5%) Repairs and maintenance (OPEX) 9,382 9,415 (0.4%) Total Maintenance Expenditures 20,361 24,361 (16.4%)

48 APPENDIX III: REVENUE BY PRODUCTS AND REPORTABLE SEGMENTS

Year ended 31 December 2020

Transportation Price, Revenue Sale of goods Transportation tariff, KRUR KRUR Midstream 152,270 124,506 27,764 n/a n/a Liquefied petroleum gas 74,272 52,071 22,201 6.60 15.49 Natural gas 48,890 48,890 - - 2.78 Naphtha 23,499 18,312 5,187 5.32 18.78 Other sales 5,609 5,234 375 n/a n/a Olefins and Polyolefins 187,269 171,650 15,619 n/a n/a Polyolefins 159,275 144,235 15,040 6.19 59.40 BOPP films 19,033 18,486 547 3.47 117.08 Olefins 5,703 5,703 - - 35.90 Other polymers products 2,431 2,431 n/a n/a n/a Other sales 827 795 32 n/a n/a Plastics, Elastomers and Intermediates 121,052 112,430 8,622 n/a n/a Elastomers 38,744 36,510 2,234 5.18 84.72 Plastics and organic synthesis products 46,850 44,951 1,899 2.34 55.36 Intermediates and other chemicals 25,622 21,969 3,653 n/a n/a MTBE and fuel additives 9,093 8,266 827 2.37 23.66 Other sales 743 736 7 n/a n/a Unallocated 62,419 62,419 n/a n/a n/a Revenue from project management and 48,358 48,358 n/a n/a n/a construction services Other revenue 14,061 14,061 n/a n/a n/a Total revenue 523,010 471,006 52,004 n/a n/a

Year ended 31 December 2019

Transportation Price, Revenue Sale of goods Transportation tariff, KRUR KRUR Midstream 213,030 168,685 44,345 n/a n/a Liquefied petroleum gas 122,659 84,780 37,879 7.36 16.48 Natural gas 51,303 51,303 - - 2.73 Naphtha 36,586 30,120 6,466 5.52 25.70 Other sales 2,482 2,482 - n/a n/a Olefins and Polyolefins 105,717 100,745 4,972 n/a n/a Polyolefins 75,790 71,245 4,545 4.55 71.39 BOPP films 18,336 17,922 414 2.70 116.99 Olefins 6,932 6,932 - - 42.07 Other polymers products 3,509 3,509 n/a n/a n/a Other sales 1,150 1,137 13 n/a n/a Plastics, Elastomers and Intermediates 152,805 143,482 9,323 n/a n/a Elastomers 55,048 52,203 2,845 5.37 98.61 Plastics and organic synthesis products 50,989 49,057 1,932 2.44 61.89 Intermediates and other chemicals 24,650 21,444 3,206 n/a n/a MTBE and fuel additives 20,746 19,491 1,255 2.43 37.70 Other sales 1,372 1,287 85 n/a n/a Unallocated 59,754 59,754 n/a n/a n/a Revenue from project management and 45,745 45,745 n/a n/a n/a construction services Other revenue 14,009 14,009 n/a n/a n/a Total revenue 531,306 472,666 58,640 n/a n/a

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