ANNUAL REVIEW and Summary Financial Statements 2009 PEOPLE, TECHNOLOGY, EFFICIENCY A new production center in the Uvat district in the south south the in district Uvat the in center production new A 2009 February in commissioned region Tyumen the of >> ABBREVIATIONS 2P (reserves) proved and probable (reserves) 3P (reserves) proved, probable, possible (reserves) APG associated petroleum gas B2B business to business DAFWC days away from work cases ESP electric submersible pump HSE health, safety and environment LOF life of field NGOs non-governmental organizations OFS oilfield services OGP The International Association of Oil and Gas Producers PRMS Petroleum Resources Management System RUR Russian roubles SEC Securities and Exchange Commission USD US dollars UNITS bbl barrel (1 bbl = 0.134 metric tons) boe barrel of oil equivalent bcm billion cubic meters bcma billion cubic meters per year bn billion ha hectare km kilometer mmboed million barrels of oil equivalent per day mbpd thousand barrels per day mmbpd million barrels per year CAUTIONARY STATEMENT This publication contains forward-looking state- ments regarding TNK-BP's assets and financial and operational performance and strategy. Actual results may differ depending on a variety of factors. SLAVNEFT TNK-BP shareholders own close to 50% of Slavneft, which is managed independently and reports as a separate entity. TNK-BP’s Net Income and EBITDA numbers include its share of Slavneft’s results. Any other figures quoted in this publica- tion exclude Slavneft unless stated otherwise. Contents 1. KEY EVENTS IN 2009 ................................................................. > 2 7. KEY FIGURES IN 2009 ............................................................ > 34 7.1: Health and safety data. > 34 2. FROM THE EXECUTIVE CHAIRMAN 7.2: Environmental data ...................................................................... > 35 Of THE BOarD OF DIRECTORS ...................................... > 4 7.3: Operational data ............................................................................ > 36 3. STraTEGIC PRIORITIES .......................................................... > 6 7.4: Financial data ................................................................................... > 37 4. INNOVATION IN TNK-BP .......................................................... > 8 8. INTERVIEW WITH THE COO .............................................. > 38 5. CORPOraTE GOVERNANCE ........................................... > 13 MAP OF ASSETS ......................................................................... > 42 5.1: Board of Directors ........................................................................ > 14 9. RESERVES AND EXPLORATION .................................... > 44 5.2: Interview with independent director Gerhard Schroeder ...................................................................... > 15 10. UPSTREAM ..................................................................................... > 49 5.3: Board committees ........................................................................ > 16 10.1: Licenses .............................................................................................. > 51 5.4: The CEO, Management Board 10.2: Technology ........................................................................................ > 51 and corporate committees ..................................................... > 16 10.3: Well stock ........................................................................................... > 51 5.5: Internal control and risk management ............................ > 18 10.4: Production ......................................................................................... > 51 5.6: Corporate structure ..................................................................... > 19 11. GaS BUSINESS DEVELOPMENT ................................... > 57 6.1 SOCIAL RESPONSIBILITY .................................................. > 23 11.1: Natural gas ........................................................................................ > 59 6.1.1: Taxes ..................................................................................................... > 24 11.2: Associated petroleum gas ...................................................... > 59 6.1.2: Government relations ................................................................. > 25 12. DOWNSTREAM ............................................................................ > 63 6.1.3: Our large-scale social programs ........................................ > 26 12.1: Refining ................................................................................................ > 65 6.1.4: Our social projects in the regions. > 27 12.2: Sales, trading and logistics .................................................... > 66 6.1.5: Our charity projects ..................................................................... > 27 12.3: Retail ...................................................................................................... > 67 6.2 HEALTH, SafETY AND ENVIRONMENT .................. > 28 12.4: Product mix development ....................................................... > 69 6.2.1: Health .................................................................................................... > 28 6.2.2: Safety .................................................................................................... > 29 13. SLAVNEFT ........................................................................................ > 70 6.2.3: Environment ...................................................................................... > 30 14. OUR FINANCIAL PERFORMANCE ............................... > 72 6.3 OUR PEOPLE ................................................................................. > 32 6.3.1: Educational programs ............................................................... > 32 6.3.2: Targeted programs ...................................................................... > 32 TNK-BP ANNuaL REVIEW 2009 PEOPLE, TECHNOLOGY, EffICIENCY > 2 Highlights of the year 1 9 January 10 May NEW SHarEHOLDER NEW OIL FIELD AGREEMENT APPROVED We launch commercial production in Our two principal shareholders, AAR and the northern hub of Kamennoye in the BP, sign an amended shareholder agree- Khanty-Mansi autonomous district in West ment which defines our corporate govern- Siberia, ensuring a significant increase in ance, strategy and financial framework. production in one of our largest greenfield projects. 16 February NEW OIL FIELDS LAUNCHED 14 May We launch commercial oil production RYAZAN TURNarOUND at the Urnenskoye and Ust-Tegusskoye COMPLETE fields in the Uvat district of the Tyumen We complete a major turnaround at the Rya- region, which have an estimated 300 mil- zan Refinery with seventeen units upgraded lion tons of oil in place. This event signified and modernized in just over 40 days on the opening of a new oil and gas province budget, ahead of plan and injury-free. in Russia. 20 May 27 February RESTOraTION OF THE AUDIT RESULTS ALEXANDER NEVSKY LaVra ANNOUNCED Restoration of part of the UNESCO-pro- We announce the results of DeGolyer tected Alexander Nevsky Lavra, a center and MacNaughton’s independent audit, of Russian Orthodox culture, is completed recording another successful year for in St. Petersburg. We sponsor St. Peters- resource renewal, bringing our three- burg’s World Architectural and Cultural year average reserve replacement ratio Heritage Restoration Program to restore to 146% under SEC-LOF criteria. historical monuments. 27 March 9 July OIL TraDING STarTED IN ST. INVESTMENT IN UkraINE PETERSBURG TNK-BP brings its effective shareholding We become one of the first oil companies in LINIK, a refinery in the Ukrainian city of to trade its oil products on the St. Peters- Lisichansk, close to 100%. This is more burg International Mercantile Exchange, evidence of our strong commitment to EVENTS promoting exchange trade as a transpar- developing business in Ukraine. ent tool for price-setting. 2009 KEY IN TNK-BP ANNuaL REVIEW 2009 > 3 KEY EVENTS IN 2009 13 July 9 October 4 December MORE RETAIL ASSETS BILLION DOLLar TNK-BP RECEIVES acQUIRED IN RUSSIA INVESTMENT IN FUEL REFINERIES INVESTMENT GraDE TNK-BP and Gazprom Neft complete the The Board support the launch of a five- Standard & Poor’s upgrades TNK-BP’s split of Russian retail assets of Slavneft year fuel quality investment program worth rating to investment grade (BBB-, stable owned jointly by the two companies. As USD 1.3 billion to upgrade our refineries outlook) on improved governance and a result, TNK-BP acquired control of 88 in Russia and Ukraine. shareholder alignment, resilient operating retail sites and 12 oil depots in the Yaroslavl, performance and strong financial metrics. Kostroma and Ivanovo regions. TNK-BP now has investment grade ratings 15 October from all three international rating agencies. PULSAR LAUNCHED 28 July We launch our new unleaded A95 gasoline, WE REPORT INDUSTRY- PULSAR, at TNK-branded service stations 21 December LEADING PRODUCTION GROWTH in Moscow and the Moscow region. PUL- AGREEMENT REacHED We report 3% year-on-year growth in our oil SAR complies with Euro-4 requirements TO EXPAND RETAIL BUSINESS and gas production for the first half of 2009. and has greater cleaning power compared IN UkraINE to common fuels. We enter into agreements to acquire a 100% interest in VikOil, a company 29 July engaged in the retail and wholesale dis- OIL FIELD SERVICES