Alliance Oil Interim report for the quarter ended 31 March 2011

Total revenue increased to MUSD 678.7 (Q1 2010: MUSD 501.1).
EBITDA increased to MUSD 156.3 (Q1 2010: MUSD 100.7).
Profit before tax increased to MUSD 113.1 (Q1 2010: MUSD 58.8).
Net profit increased to MUSD 90.0 (Q1 2010: MUSD 45.5).
Basic and diluted earnings per share increased to USD 0.51 and USD 0.47, respectively (Q1 2010: USD 0.26 and USD 0.26, respectively).
6.1 mbbl (Q1 2010: 5.6 mbbl) of oil were refined and 4.1 mbbl (Q1 2010: 3.8 mbbl) produced.
Rouble bond offering raised MUSD 170 in February 2011.

Dear Shareholders,

During the first quarter, the overall macro environment remained supportive for our activities. The price of crude continued to increase with Brent trading up
to levels above USD 115 per barrel. Demand for oil products was strong, oil product prices increased, although at a slower rate than crude oil prices.
Starting January 1, 2011 higher oil product excise taxes were applied, and the Euro-3 standard came into force. According to the new Russian taxation policy,
export duties were reduced for light oil products and raised for heavy products. The Russian Rouble further strengthened against the US Dollar in the
reporting period.

Alliance Oil Company produced 4.1 million barrels and refined 6.1 million barrels of oil. Focused on organic growth, efficiency and profitability, the Company’s financial performance improved significantly and net income doubled from the first quarter last year. Compared to the fourth quarter of 2010, consolidated revenues increased by 17% with EBITDA and net income increasing by 32% and 47% respectively.

In the upstream segment, better netbacks in all markets resulted in EBITDA growth of 46% to MUSD 98.0 compared to the fourth quarter of 2010. In the first
quarter of 2011, 14 new wells were drilled, including 6 wells at the Kolvinskoye oil field. Infrastructure development progressed towards the completion of the pipeline to Kharyaga terminal and facilities at the Kolvinskoye oil field in the third quarter 2011.

In the downstream segment, higher sales volumes and higher prices for oil products contributed to the revenue growth of 20% and stable EBITDA compared to the fourth quarter of 2010. The modernization of the Khabarovsk oil refinery remained on track for completion in 2012.

In the first quarter of 2011, the Company expanded its downstream presence in the Russian Far East by acquiring Gavanbunker, a sea terminal to further
strengthen its growing bunkering operations.

The Company successfully placed Rouble bonds for a total amount of RUR 5 billion (approximately MUSD 170) in the first quarter of 2011. Our credit
ratings remained unchanged with S&P (B+), outlook “Stable”, and Fitch (B), outlook “Stable”.


The recent market developments keep up rather positive expectations for the upstream segment as crude prices have increased both internationally and
domestically. In the downstream segment, despite further mounting demand for oil products, product pricing lags and potential fiscal initiatives present
challenges going forward.

With properly balanced and integrated operations, the Company is well positioned to confirm the implementation of its key strategic projects. We
reiterate our plans in exploration and production drilling activity. The Kolvinskoye oil field is expected to be launched in the third quarter this year
when we plan to hook up the field’s production wells to the pipeline. The completion of the Khabarovsk modernisation project is scheduled for 2012.

Today the Company produces about 43,000 bopd and refines 75,000 bopd. In 2011, Alliance Oil targets to produce in excess of 20 million barrels of crude oil
and expects to benefit from an increased share of Mineral Extraction Tax exempt production when the Kolvinskoye field is launched. In the downstream segment, we plan to refine more than 23 million barrels of oil.

Our commitment to achieve organic growth, efficiency and improved financial performance is firm as we progress towards our long term targets and
continuously evaluate opportunities to further add shareholder value.

Arsen Idrisov, Managing Director

Conference call
Date: Thursday, 19 May 2011
Time: 10.00 CET

To participate by telephone, please dial:
from Sweden +46 8 505 598 53
from Russia +7 495 745 72 98, pin code: 880797#
from other countries +44 203 043 24 36

The presentation will be webcasted live at www.allianceoilco.com

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