Strategy

TNK-BP goal is to become a world—class oil and gas company. To achieve this, the company will focus on the following key areas:

Upstream

Resources to reserves to production

Each year, the company concentrates up to 80% of investment in Upstream to ensure growth in the production output. TNK-BP’s aim is to replace 100% of its production with new reserves each year. To achieve this, the company uses international best-practice field—level technology and advanced computer modeling techniques to locate new reserves. TNK-BP believes there is significant potential left at its operating fields in West Siberia and the Volga-Ural Region and will therefore proceed with further exploration activity at the company mature asset base.

TNK-BP will continue to make incremental investments in major green field projects in West and East Siberia, which will ensure constant production flows for decades to come. The company will continue to explore in Timan-Pechora and Astrakhan in Russia and in Venezuela under an agreement with PDVSA, the Republic’s state oil company. TNK-BP has distinguished itself through its track record of successfully applying technology and developing mature and hard-to-recover reserves, as well as its multinational professional expertise and operational efficiency.

Downstream

Margin enhancement

TNK-BP makes targeted midstream and downstream investments with the goal of expanding its retail presence in Russia and Ukraine in the most efficient and cost-effective manner. The company aims to deliver distinctive, superior products to customers through TNK and BP-branded service stations and via B2B sales. TNK-BP will continue with its program of selective investment at its refineries as the company creates new, higher quality products and increases its output of light oil products compliant with ever-tightening international requirements.

Gas

Become a major oil and gas group

TNK-BP is currently working to monetize its large free and associated gas opportunities. The company pursues the goal of achieving a 95% associated petroleum gas utilization rate on its brown fields in 2012 and enhance its gas utilization by working with power providers to construct dedicated electric power assets. TNK-BP’s joint venture with OGK-1, a Russian generating company, was set up to operate and develop new power-generating facilities in Nizhnevartovsk in West Siberia. The company aims to construct power stations to process associated petroleum gas and generate electricity for own use at its major oil developments at the Kamennoye field and the Uvat project in West Siberia, as well as the Verkhnechonskoye oil field in East Siberia.

TNK-BP will also develop its natural gas resource base and, in particular, Rospan International, the company’s main gas asset.

Corporate governance

Improving transparency and sustainability of the corporate governance framework

TNK-BP will strictly monitor compliance with the renewed corporate governance principles agreed by TNK-BP shareholders in January 2009. The company proceeded with corporate restructuring to streamline its operations and achieve greater efficiency. TNK-BP will continue timely and full disclosure of its financial results by Russian and international accounting standards and regular engagement with all stakeholder groups. The company will also strive to adopt and embed every aspect of international best practices to further enhance corporate responsibility and performance delivery.

TNK-BP focuses on two essential enabling mechanisms to ensure strategy delivery and further refine TNK-BP’s contribution to the Russian oil and gas industry:

Portfolio management

The company will acquire and develop assets where it can create and access new value and apply distinct skills and capabilities. This will be done in Russia and Ukraine as well as select international locations, which are value-accretive to the company’s existing portfolio to support its growth over the medium to long-term. TNK-BP will also divest non-strategic assets thereby enabling higher activity, greater asset efficiencies and investment levels.

Organizational capability development

TNK-BP will develop the knowledge and skills of its people to match the long-term needs of the business and successfully execute major projects at its new and existing oil fields; develop gas opportunities as well as produce and market high-quality refined products. The company will also continue to pursue the best professional talent in the market. In 2008, TNK-BP hired over 9,600 people, including almost 600 graduates, of which more than 99% were Russian and Ukrainian nationals.