Updated August 12, 2008

For 1H 2008, NOVATEK's net income, Russia's largest independent natural gas producer, has increased by IFRS standards (International Financial Reporting Standards) by 70,2%, to RUR 14,6 billion, as compared to the analogical period of 2007.

The company revenue totaled RUR 42,2 billion (+36,8%), the operating revenue – RUR 19,2 billion (+63,5%). Gross operating expenses went up to RUR 22,8 billion (+22,9%).

The results have beaten the forecasts of Dmitry Lyutyagin from Veles Capital Company.

"The company has gotten a positive synergetic benefit from the revenue's growth and expenses' control", the expert marks. "The overall price rise for raw materials realized by the company influenced on the revenue's growth. In early 2008, the government set prices for gas, and its price grew by about 25%. NOVATEK's core sales were made just on Russia's territory".

However, the investors were dissatisfied with

the results. On August, 13, after the reporting was published, quotations of NOVATEK's GDR (global depositary receipt) fell on the LSE by 1,9%, to $72,7 per item. By the day-end, the drop continued: by the closing a security was $71,0. The net income was lower than it had been expected, Prospekt Company analyst Alexander Kuznetsov explains.

Pavel Sorokin from UniCredit Aton was also dissatisfied with NOVATEK's reporting. "The expenses are higher than it has been forecasted.

Moreover, we expected higher prices for the sold products, taking to account the record prices for fuel in 2Q". One can mark the slow growth of NOVATEK's g as extr

action in 2007

as a negative aspect. However, as per the development strategy, the company plans to double extraction of "the blue fuel", and bring the level up to 65 bcm of gas per annum by 2015.

Pavel Sorokin is looking forward to a launch of the second extension of Purovsky plant for gas condensate' processing – it will be launched by the year-end and will perm

it to improve the production indices.

NOVATEK tries to diversify its business and enters the international markets.

In September, 2007 NOVATEK purchased a 50% stake in the Egyptian concession for hydrocarbons' exploration and extraction of El Arish' s off

shore block.